he year now drawing to a close has been a mixed bag of positives and negatives for the global space community, with enough unfinished business and lingering uncertainty to set the stage for an eventful 2008 in the civil, military and commercial arenas.

China literally started off 2007 with a bang with its ill-advised and destructive test of an anti-satellite weapon, generating a flurry of debate and complaining in Washington but little in the way of a discernable response.

On the other side of the ledger, China launched its first lunar orbiter, while Japan launched the biggest Moon mission since Apollo. Europe finally settled on a realistic plan to finance the delayed Galileo satellite navigation system, albeit with key details yet to be decided. In the commercial sector satellite operators beat back the wireless industry’s attempt at a C-band spectrum grab at the World Radiocommunication Conference and continued to enjoy a strong financial performance despite two launch failures and growing doubts about a key new market application: hybrid systems featuring satellites and extensive ground repeater networks.

A big piece of unfinished business is the 2008 NASA budget and what that holds for the space shuttle replacement program. Like most other U.S. federal agencies, NASA operated throughout 2007 on its 2006 funding level, with no adjustment for inflation. Congress’ failure to pass a spending bill in time for the Oct. 1 start of the 2008 fiscal year means NASA is still at the 2006 level, which is not nearly enough to make headway on the Orion Crew Exploration Vehicle and Ares 1 launcher programs.

The U.S. space agency already faces a five-year gap between the shuttle’s planned retirement in 2010 and the scheduled 2015 debut of Orion and Ares. That gap will be stretched further if the 2008 budget for the new vehicles ends up being less than U.S. President George W. Bush’s request. While the House and Senate individually passed appropriations bills that would have kept things on track, the final measure has become mired in a dispute between Democrats, Republicans and the White House over other spending priorities. At press time the House and Senate were trying to hammer out a compromise, but it remains to be seen how NASA would fare in such a measure. A continuing resolution that keeps NASA’s budget at 2006 levels next year will be disasterous.

On top of that, U.S. voters will elect a new president and Congress next year, with serious implications for NASA: One candidate, U.S. Sen. BarakObama (D-Ill.), has pledged that if elected, he would increase education funding in part by deferring the space shuttle replacement by five years.

The European Space Agency (ESA), meanwhile, is preparing to ask its member governments for large funding increases to support initiatives in Mars exploration and even human spaceflight. While this is unquestionably good news, the prospects for ESA governments coming through with the proposed increases are uncertain at best.

Military space is another area teeming with question marks, particularly in the United States, where the costs of ongoing wars in Iraq and Afghanistan have begun to eat into Pentagon development budgets. The biggest pending U.S. military space contracts – GPS-3 and the Transformational Satellite Communications System (T-Sat) – have been pushed into 2008. The future of T-Sat looks shaky now that Congress has directed the U.S. Air Force to procure a fourth in the Advanced Extremely High Frequency series of communications satellites, the funds for which almost certainly will come out of T-Sat’s hide. The impact to the program’s schedule will become more clear this coming February when the Air Force reveals its 2009 budget request.

Meanwhile, the U.S. intelligence community, with substantial input from the military, will spend much of 2008 deciding the makeup of its next optical-imaging satellite architecture, which replaces the canceled portion of the Future Imagery Architecture program. The exercise will help determine whether medium-sized companies capable of building relatively low-cost systems can carve out a significant place for themselves alongside the traditional primes. For commercial imaging satellite operators, the choices made in the year ahead could well make the difference between growth and stagnation in the future.

In the commercial space arena, satellite operators continue to rake in impressive profits everywhere except for parts of Asia, where transponder prices remain depressed due to a surplus of capacity and operators. But even there the outlook is improving, and some have even dared to speculate that consolidation in that region finally could be in the offing.

The weeks and months ahead will bring a decision by U.S. regulatory authorities on whether satellite radio operators XM and Sirius can merge – which would greatly improve this industry’s outlook – and probably a shakeout among companies planning hybrid satellite-terrestrial mobile communications networks. These firms have large satellite systems under construction or planned but have yet to secure the financing necessary to deploy their ground-based networks, known as ancillary terrestrial components. A U.S. Federal Communications Commission terrestrial spectrum auction scheduled for the January-March timeframe might determine which of these companies has a future; the hope is that a large Internet portal or telecommunications provider that loses out in the bidding will turn around and invest in one of the proposed hybrid systems.

All of which is to say that 2008 is shaping up as a big, perhaps even pivotal, year for the space sector – even without the inevitable surprises, bumps, twists and turns that lie ahead. The ride will not be for the faint of heart; fortunately, that won’t be anything new to anyone with experience in this business.