The Future of the Space Station
From a Business Impact Perspective
A space station is a satellite which is designed to orbit the Earth. It is the basis through which exploratory expeditions are launched, satellites are repaired, research is conducted, and other space related activities are done. There are humans which are working in the space station. (The American Heritage Dictionary, 2003)
We know of two countries which have made their presence known in space, they are America and Russia. The ideas of going into space now are more conceivable and easy to adopt than it was a hundred years ago. (Zimmerman, 2003)
Now space travel has become a reality for even a layman, the businesses have started to gear up to make space travel a commercial avenue for their profitability. People today who are not concerned with space activities are basically not interested in commercializing space and they do not know if this is even possible. It is only those businesses, who have some connection to space related activities, think in these terms. There is some confusion as to how things would work out if this venture was taken up. People are not sure of how they will be able to regulate the space business sector and what laws would prevail and who would implement these laws.
Businesses talk about rewards along with risks. There are some businesses which have ventured into this area but they are still confused and not clear on some aspects of the sector. When starting any business, even a venture company, the risks are known as well as the regulations. The businessmen or the investors know what will happen if they take a certain action. People have different views on how to solve the problem of regulations. Some believe that specific organizations should be formed while others believe that it would be better to take the current United Nations treaties to court.
Costs of businesses who want to venture into the space station business are increasing because of internal conflicts at the ground level between institutions such as NASA and FAA. Also the amount of uncertainty associated with this type of venture is high, these costs are understandably high.
There are many conflicts between the institutions that are imposing the laws and creating the regulations. For example: the Commercial Space Launch Act of 1984 sets up the Federal licensing mechanism, but this Act notes that the “authority of States to regulate space launch activities within their jurisdiction, or that affect their jurisdictions, is unaffected by this Act.” (Livingston, 1998) These make it difficult for businesses to operate and can act as a discouragement for investors to start their operations. Solving these conflicts would lead to a positive effect on the business community.
Such an investment would change the way the general people think, it would make them more aware of the situation and the possibilities. For businesses to be able to start this venture, they need to be able to avail long term financing which should also be not very costly. Businesses can obtain this sort of financing from two options. The first option is the introduction of a Space Development Bank; a concept taken from Development Banks which help the developing nations. Through these banks, space bonds can be sold by the federal government lowering the cost because the risk associated with these bonds would be less as the U.S. government would be backing them.
Venture capital is another source of funding that is available to the commercial space ventures. The article written by Livingston (1998) studies the relationship that exists between the two variables that is, the venture capital industry and the commercial space industry. The findings show that the funding available from this source is substantial and that the venture capital industry is a primary source of seed, it is in its early growth stages but it still requires much development financing.
The venture capital industry is interested in high returns and had some reservations about this venture but on the other hand was also concerned about this venture. The study has shown that younger people are more interested in going into space as compared to the older generation. The interest of going to space is substantial enough to generate an income of approximately $10 billion per year. If an individual is charged $ 10,000 for a five day trip, there are one million customers who are interested. A table is given in this article to show us the use of space vehicles for commercial purposes.
A new business venture that took place in space was initiated by Richard Garriott who takes off from Baikonur Cosmodrome in Kazakhstan this month for space. He wants to manufacture protein crystals in space. This project may lead to a series of new medicines and medical treatments worth tens of millions of dollars. Those people that will be able to get treatment through this project can be a productive part of the economy by themselves. (Dinerman, 2008)
There has been much growth in the industry in the past few years due to the advancements made in the telecommunications sector that supports the knowledge and communication during space missions. The space industry does encourage economic growth in other sectors as well and much research has been undertaken to support space industry.
The combined revenues that were received from the space applications in 2000 were $39.5 billion. However, for business’s point of view According to this article, published by the National Defense University, the space industry can be divided into four sectors, which are: the civil sector, which consists of primarily NASA; the military sector, which is led by the Air Force; the intelligence sector, in this sector the dominant party is the NRO; and the commercial sector. (NDU, 2001)
Year 1 2 3 4 5
2 (a) Expendable Launch Vehicles
Vehicles made 50 50 50 50 50 Launches 50 50 50 50 50
2 (b) Reusable Launch Vehicle: 50 flights/yr.
Vehicles made 1 0 0 0 0 Flights 50 50 50 50 50
2 (c) Reusable Launch Vehicles: 50 flights/yr.
Vehicles made 50 50 50 50 50 Vehicles operating 50 100 150 200 250 Flights 2500 5000 7500 10000 12500
(Livingston, 1998; The Business of Commercializing Space)
Space tourism is the direction that the space industry has taken in the business world. People are trying to make the first space hotel. The launch of Bigelow Aerospace’s experimental Genesis module is another step in the same direction. The industry is making vehicles so that tourists can enjoy an orbital flight and have a place to stay when they reach space. (Dinerman, 2006)
America has become increasingly dependent on its space-based capabilities. The country has made huge amounts of investment in this area. The space industry is a good investment area and it can result in extremely successful a commercial venture but the environment in which it will operate, that is space, is not very cooperative. The environment is not only hard to get in to but also hard to operate in. The industry has many barriers of entry and is high in risks. These features create a slip in the market which gives way to competitors because it takes time to actually launch a satellite or a spacecraft, not to mention the costs.
The U.S is ahead of its competitors but is losing face in the commercial market share to foreign enterprises. Efficient regulation needs to be maintained by the government agencies so that the competitive edge is not lost.
The International Space Station program, which is a research facility in space, does not have a space tourism program. The ISS should change its philosophy to be able to cope with the changing needs of the people today who want to explore the space. ISS is concerned about this change in its philosophy because then it would have to distribute the primary research missions of the facility. The ISS should base its research on ways of helping people go to Mars and surviving there. Hotels will eventually be built in space and there is a need for hardware and tools which would help in supporting life in space or for that matter Mars. The ISS needs to keeps these things in mind and evolve itself accordingly. It should also function under the assumption that thousands of people will eventually be going into space. (Haskell and Rycroft, 1999)
Today we need to be able to fully utilize the resources we have and to make use of the scientific research that we have carried out over the years. This utilization will help us upgrade ourselves in the future in the field of space travel. ISS is major part of this program and huge amounts of money have been invested in it. The program can be successful only if the correct decisions are taken and some barriers are overcome. (Launius, 2006)
On the other hand there are some people, including NASA, who have started to think of the ISS as a mistake. Much has not been achieved by this program over the time that it has been launched. Mike Griffin said and was reported in USA Today on September 29, 2005, “It is now commonly accepted that was not the right path,…We are now trying to change the path while doing as little damage as we can.” (Launius, 2006)
There are many factors that are limiting full utilization of this facility, the first one being not being able to remain in contact with the ISS. Another issue is the time that the crew can remain in orbit; the third problem is the funding availability. Last but not the least of the problems are the bureaucratic challenges that the industry faces on both an international level as well as the domestic level. There are some operations centered on the ISS which could open the space environment to the entire human race. (Launius, 2006)
All in all we have realized that there are many business opportunities in space as long as the market can be tapped in the right manner and the right amount and type of funding is made available. The market exists and people are willing to go into space and experience new things all the time.
Dinerman, T. (2006). Genesis and the future space hotel. The Space Review. Accessed on October 26, 2008 from http://www.thespacereview.com/article/660/1
Dinerman, T. (2008). Business on the ISS beyond space tourism. The Space Review. Accessed on October 26, 2008 from http://www.thespacereview.com/article/1226/1
Harland, D. M. & Catchpole, J. (2002). Creating the International Space Station, pg: 90-102, Springer
Haskell, G. & Rycroft, M. J. (1999). International Space Station: The Next Space Marketplace: Proceedings of International Symposium, pg: 74-77, Springer; France
Kagirov, R. (2001). Symbolism of Space. Space Future, Accessed on October 26, 2008 from http://www.spacefuture.com/journal/journal.cgi?art=2001.07.30.symbolism_of_space
Launius, R. D. (2006). Making the Most of the International Space Station, Space Times, pg: 8-10, Accessed on October 26, 2008 from http://www.spaceelevatorblog.com/Images/Space%20Times%20-%20Mar-Apr%202006%20Final.pdf
Lindroos, M. (n.d). Space Station Freedom. Accessed on October 26, 2008 from http://www.astronautix.com/craft/spaeedom.htm
Livingston, D. M. (1998). The Business of Commercializing Space. Accessed on October 26, 2008 from Space Future website http://www.spacefuture.com/archive/the_business_of_commercializing_space.shtml
NDU. (2001). Space. Accessed on October 26, 2008 from http://www.ndu.edu/icaf/industry/reports/2001/pdf/2001_SPACE.pdf
New York Times Editorial. (2005). Is the Space Station Necessary? The New York Times, http://www.nytimes.com/2005/08/14/opinion/14sun1.html
The American Heritage Dictionary of the English Language. (2003). Houghton Mifflin Company
Zimmerman, R. (2003). ‘Leaving Earth’: The space station’s future, Joseph Henry Press, excerpted by National Academy of Sciences. Accessed on October 26, 2008 from http://www.msnbc.msn.com/id/5378337/