On 12th April 1961, cosmonaut Yuri Alekseyevich Gagarin became the first man in space when he completed one orbit of the earth in the Russian Vostok spacecraft. A similar, yet equally extraordinary event occurred 43 years later when, on 21st June 2004, Mike Melvill crossed the 100-km boundary line that marks the edge of space in the rocket-powered aircraft SpaceShipOne. With this achievement, he became the world’s first commercial astronaut, securing the US$10 million Ansari X Prize for the SpaceShipOne team.
Melvill’s flight harnessed all the latest aeronautical technology – the culmination of more than 45 years of human space exploration. However, SpaceShipOne’s mission is memorable for what it did not use: a single government dollar.
“Making the cosmos profitable may prove harder than putting a man on the moon.”
Since that pivotal moment, space has become increasingly commercialised. According to analytics and research firm Bryce Space and Technology, space-related start-ups attracted over US$18.4 billion of investment from 2000 to 2017.
Hundreds of new companies have formed, countless entrepreneurs have mobilised, and along with a few charismatic billionaires, they have all entered a different kind of space race. The idealistic milestones of the Cold War space race are no longer relevant – this contest is far more pragmatic. Making the cosmos profitable, however, may prove harder than putting a man on the moon.
The new space companies looking to build a free market beyond the Kármán line – the boundary where space begins: 100 km above sea level – all face a nagging incongruity. Unlike public agencies such as NASA and the European Space Agency, privately funded companies must eventually turn a profit. Currently, however, the only reliable way of generating profit has been through contract work for publicly funded space agencies.
Satellite, equipment and crew launches, along with research opportunities paid for by public coffers, have enabled the burgeoning private space industry to grow. Moreover, government support for private companies in space is only set to increase. The most recent budget presented to the US Congress calls for NASA to end direct funding for the International Space Station by 2025, effectively handing off earth’s lower orbit and the maintenance of the ISS to outside agencies. Another more lucrative opportunity for new space companies came in late 2018 when NASA announced the allocation of US$2.6 billion over the next decade for private companies to fly small payloads to the moon.
NASA is candid about their rationale to contract private companies for lunar exploration and development. The move may have a basis in cost-cutting, but NASA’s stated intention is to increase competitiveness thereby encouraging the complete commercialisation of space. The realisation of this goal, however, is not unlike our knowledge of deep space: nobody knows what it will look like or how to get there.
An Economy in a Vacuum
In terms of funding, current activities in space are entirely public or a mixture of both public and private. For true space commerce to exist, private sector companies must offer products or services for private sector customers using solely private sector capital. Presently, satellite television is one of the only viable industries which meets these stipulations, but other commercial endeavours are starting to take off.
Private space travel or space tourism is perhaps the most visible expression of the commercialisation of space. Regardless of its viability, it’s certainly the most publicised among the services offered by the private sector through companies like Richard Branson’s Virgin Galactic. The company plans to launch its first paying passenger in 2019, with more lining up ready to pay US$250,000 for an extraterrestrial ride. The potential scope of space tourism was further elucidated in September 2018 when Elon Musk’s SpaceX announced it would ferry Japanese billionaire Yusaku Maezawa around the moon in 2023.
Commodities are another consideration: the precipitous demand for metals resulting from the exponential growth of populations reliant on digital technologies has private companies looking elsewhere for resources. Not only has this recent push generated extensive interest in excavating the ocean’s floor, but it has also seen the inception of several new space mining companies. In the near future, the private industry hopes to make significant profits by securing valuable minerals from asteroids and other celestial bodies.
A 2017 report by investment firm Goldman Sachs declared that the financial and technological barriers presented by asteroid mining were low – even comparable to terrestrial mining operations. The Government of Luxembourg is invested: their Space Resources initiative, worth US$227 million, seeks to establish Luxembourg as the European hub for space resources.
Still, there are some who believe the best opportunities for the commercialisation of space lie in the immediately viable GPS and imaging sectors. Orbiting satellites that can provide everything from communication to spectrum optics services for private industry can turn real profit today rather than sometime in the next 30 years.
Then there’s logistics – closer to the ground and less glamorous but arguably as important are the start-ups developing practical solutions for space infrastructure. Life support systems, crew habitats, traffic management and food products are the framework that other, more grandiose ventures will depend on over the next several decades.
Space Need Not be Free
During the height of the Cold War, the USA and USSR not only made space travel a competitive objective, but they made the laws that govern space a point of contention. America saw space as the high seas – an area where they could operate outside the restrictions of international borders. Conversely, the USSR wanted to extend national airspace boundaries. Yet, the physics of orbit seem to negate the possibility of staying within bounds. In fact, it was the Soviet Union’s Sputnik 1 that set the standard when it streaked across international borders and across the sky in 1957.
Attempts to amend that freedom over the decades have met with varying success. Currently, the Outer Space Treaty of 1967 has the most signatories with its 108 countries and deals primarily with peaceful exploration and the non-weaponisation of space. This lack of strict regulations concerning industry makes space an enticingly infinite free market, ripe for the unfettered exploitation of private companies. However, many feel that the unchecked commercialisation of space is unlikely, and there is a precedent to support that position.
The 1982 United Nations Convention on the Law of the Sea (UNCLOS) and the establishment of the International Seabed Authority (ISA) were a direct result of the potential for impactful mining operations in previously unregulated international waters. It’s likely that similar measures will attempt to limit space operations where there is potential for environmental disruption that could affect the entire planet.
“…It’s easy to forget that any successful commercial space venture must deliver value to shareholders on earth.”
Will Ambition be Enough?
Regardless of the form or degree a regulated free market in space will take, the sheer vastness of that market is likely to seed enormous opportunity, spur competition and stimulate innovation. Energy, mining, transportation, construction, hospitality and real estate are expected to benefit first, but crossover into virtually every industry is all but inevitable.
With this excitement, it’s easy to forget that any successful commercial space venture must deliver value to shareholders on earth. Concepts from science fiction do not necessarily guarantee investment capital, and the challenges of conducting business off planet are as unlimited and unforeseeable as space itself.
The private sector may be poised to fill the vacuum left by the departure of public space agencies, both literally and figuratively, but their will has not always translated to results. When the Space Shuttle program was cancelled, NASA rallied the private sector to develop spacecraft for astronauts to shuttle to and from the International Space Station. Both Boeing and SpaceX have tried and, so far, failed. During the 60s, it took NASA only eight years to put Neil Armstrong on the moon.
That said, the business of space will eventually transform commerce on earth. For the most part, however, the opportunities represented by the commercialisation of space are still telescope dreams, but in the words of the author and aeronautical engineer Robert A. Heinlein, “The stars will never be won by little minds; we must be big as space itself.”