Posted inCommercial

Stimulating Private Investment To Develop Space

The president’s Vision for Space Exploration (VSE) as well as more recent statements by NASA senior officials served as a call to action urging the private sector to engage further in the economic development of space. In a March 2006 address to the American Astronautical Society , NASA Administrator Mike Griffin gave voice to this reality when he stated: “Sooner rather tha n later government space activity must become a lesser rather th an greater part of what humans do in space.”

While the Commercial Orbital Transportation Services (COTS) initiative does provide a good starting point for industry involvement, activities and vision well beyond COTS will be necessary if we are to truly meet the goals of the VSE. Stronger policy by the federal government is required to step up to and accelerate private sector investment in the economic development of space.

The government has the opportunity to play a key role in accelerating the commercial development of space and dramatically increasing private-sector investment in space infrastructure.

My experience working in the commercial space arena has convinced me that stronger government policy can shift space infrastructure investment from the government to the private sector. That shift will encourage commercial entities to invest in such general capabilities, thereby freeing the government to fund focused, strategic initiatives.

NASA, the Department of Defense and the commercial satellite community currently rely on several commercial companies to provide mission critical services leveraging private investment to reduce the cost of space access and operations. Universal Space Network, as one example, invested tens of millions of dollars in a global network of satellite communications ground stations to put in place mission-critical telemetry, ranging and command services to support virtually all segments of the space industry with infrastructure to meet the daily mission operations needs of their spacecraft.

Other segments of the aerospace industry currently use commercially based shared infrastructure for services, which offers significant cost savings and operational flexibility. For example, commercial providers perform satellite processing for most launches conducted at Cape Canaveral and Vandenberg Air Force Base, Calif. The Defense Department uses a significant amount of commercial satellite and terrestrial communications infrastructure and services in place of dedicated, government-owned systems. A successful commercially based shared infrastructure also supports the space imaging market.

The economics and operational flexibility are extremely compelling for customers using shared infrastructure and services. In many cases, these customers face a much lower risk profile than the one they would face if they maintained their own capabilities. The technical competence of shared service providers is very high and is constantly strengthened, as they gain insight into industry best practices supporting a wide range of NASA, Defense Department and commercial industry requirements.

In addition commercially based shared service providers ensure that they maintain reliable and state-of- the-art service infrastructures to remain competitive in the market, as well as maximize return-on-investment for their shareholders.

The financial markets are accustomed to investing billions of dollars in infrastructure projects provided they map a clear path to future profitability. The challenge faced by the space industry is demonstrating a viable market for new infrastructure investment when the current infrastructure users are both large potential customers as well as significant competitors.

Clearly government policies such as one that strongly encourages and holds agencies accountable for leveraging commercial infrastructure and only authorizing spending to build publicly owned space operations infrastructure for services as a last resort would send the right signals to the commercial investment community.

Commercially based, shared services have the potential for investment in a private-sector-financed replacement of legacy satellite ground networks and provide substantial infrastructure cost savings to the government. Based on my interactions with the private investment community, I believe the private sector is ready and willing to consider making this investment, but it will not happen unless government policy and demonstrated practices make the use of commercial infrastructure the first, not last choice.

This is not to say that commercially based shared infrastructure and services is the best option or even a viable one for all programs. Some applications, like those with unique performance requirements or national security concerns, justify dedicated infrastructure. These are the exception, however, rather than the rule. Even in cases where dedicated infrastructure is appropriate, investing in unique infrastructure to meet only the non-standard requirements, while relying on available commercial infrastructure for redundancy, routine operations and surge services, often provide the most cost-effective and low-risk solution.

Our nation is at a critical point — the government has the opportunity to play a key role in accelerating the commercial development of space and investment in space infrastructure. Using government policy to shift space infrastructure investment from the government to the private sector is not a new idea; it has been done successfully in the past.

Significant up-front and long-term operating cost savings to government space programs are possible if future systems planners and policymakers embrace the use of commercially based services as a solution rather than a threat.

Joe Rothenberg is president of Universal Space Network of Newport Beach, Calif., and Horsham, Penn.