The Farthest Shore – Chapter Twelve Creating Space Markets

Chapter Twelve Creating Space Markets: Understanding the Economic Rationale

Patrick Cohendet, Peter Diamandis, Ozgur Gurtuna, Walter Peeters and Vasilis Zervo

“Clearly our first task is to use the material wealth of space to solve the urgent problems we now face on Earth: to bring the poverty-stricken segments of the world up to a decent living standard, without recourse to war or punitive action against those already in material comfort; to provide for a maturing civilization the basic energy vital to its survival”. -- Gerard K. O’Neill, The High Frontier (1976)

12.1. The Vision of Space Commerce

Throughout human history, exploration and commercial interest have gone hand-in-hand. From Magellan’s circumnavigation of the Earth to Zheng He’s oceanic expeditions, one common theme in past exploration missions was the objective of extending the economic sphere of the exploring entity by discovering new resources and establishing new markets. Commerce and trade have been influential not only in the economic realm, but also in the cultural one, by helping to diffuse ideas, cultures and practices.

Exploration of space and utilization of space-based assets are also based on a strong economic rationale. Today, the economic footprint of our civilization reaches beyond Earth’s orbit and extends all the way to GEO, with proposals for space mining. Tomorrow, it is very likely that this economic frontier will reach the Moon and other celestial bodies in the solar system. Achieving this expansion will no doubt require technical expertise. However, it will also require mastery of disciplines such as business, management, and economics, in addition to legal and regulatory systems, as they relate to space activities.

Economics and business studies are branches of social sciences, and their main topic of interest is allocating scarce resources for the production of goods and services, as well as production technologies optimization, innovation and development. These resources include labor, intellectual capital, financial capital, land and natural resources. Such “factors of production” are used to transform raw materials into goods and services. The outputs include not only everyday consumption items, but also services such as national defense, education and healthcare. Technologies and innovation can be seen as exogenous, or endogenous, but are in any way crucial for development and prosperity.

Space projects can provide many economic benefits and contribute to the production of goods and services on Earth. In fact, we can argue that this production function has already extended beyond Earth, such as in the commercial utilization of space stations. In earlier chapters, we have covered a myriad of space applications and emerging markets such as space tourism. These are only some examples of goods and services enabled by our space-based capabilities.

In this Chapter, we explore the current status of the space industry, various underlying trends, emerging opportunities and the changing nature of the industry. The factors driving this change include a growing space workforce, space entrepreneurship and new collaboration models across the world.

12.2. Setting the Stage

The space industry has a number of dimensions and characteristics that makes its imprint, dynamics, and geographic and strategic scope different from those of many other industries.

12.2.1 Current Outlook

If the space industry were a jet airplane, it would have two engines thrusting it forward: commercial services and government spending. Even though reliable industry statistics are a scarce commodity in the space industry, initiatives such as the Global Forum on Space Economics of the OECD, the US Bureau of the Census, various reports published by the Satellite Industry Association, “Industry Facts & Figures” published by Eurospace and “The Space Report” published by the Space Foundation are providing us with very useful metrics. We should note that the data compiled by these different sources are not always in agreement and a good dose of common sense is required to interpret these metrics.

It is estimated that the global footprint of the public-sector space budgets could be as high as $80 billion as of 2016 if not higher. The Space Foundation’s report for 2016 reported that U.S. combined expenditures for 2015 were at $44.6 billion and the rest of the world’s governments made expenditures at the level of $32 billion for a combined total of $76.6 billion.^[1]. The budgets of NASA and other space-related U.S. departments and agencies for military activities easily dwarf the amounts spent by other governments. Nevertheless, significant increases by China in space activities indicate that the gap is decreasing.^[2]

The estimates for the commercial sector are shown in Figure 12.1. The combined annual revenues from the three main types of satellite services (telecommunications, Earth observation and navigation) as well as other space products and services, such as satellite manufacturing, launch services, ground equipment manufacturing and various support services, are estimated to be in the range around US$ 350 billion^[3]. Indirect benefits, such as technology spin-offs, as well as the book value of space infrastructure, such as launch pads, are not included in this estimate. (See Figure 12.1).^[4]

Figure 12.1. Distribution of satellite industry revenues (in US$ billions) 2016 (Graphic courtesy of the Satellite Industry Association)

Satellite applications constitute the bulk of the commercial products and services in the space industry, and about 70% of the aggregate revenues come from a single market segment, satellite telecommunications. The satellite navigation segment has been growing at a very rapid pace in recent years, as navigation equipment and related services are becoming essentials of our modern economy. Together, direct-to-home broadcast and navigation segments constitute the dynamic duo of the space industry, with high revenue growth rates, while Earth observation (EO), a relatively mature segment of the space industry, accounts for a small fraction of the total revenues.

12.2.2 Evolution of the Space Industry

Given that the commercial space activities are dominated by satellite communications today, it is no surprise that the first truly commercial space launch placed an experimental telecommunications satellite, Telstar, into orbit in July 1962. Now more than 55 years later, Earth’s orbit is bustling with activity with over 1,450 operational satellites serving both civilian and defense sectors.^[5] In fact, contrary to the image of space as an infinitely vast ocean, there is a real estate crunch above our heads: it’s getting more and more challenging to acquire orbital rights and frequency allocations due to the increasing demand for various satellite services. The estimated annual value of a slot in Geosynchronous (or Clarke) Orbit (GEO) can run into several millions of dollars for the more desirable locations. The current large number of filings to create large scale satellite constellations with over 10,000 new satellites proposed to deploy in the altitudes between 500 km and 1500km has not only raised concerns about orbital congestion, but orbital space debris as well.

The private sector is playing an increasingly important role in the space industry. Given the dominance of governmental and military budgets in the early stages of the space age, this is a relatively new phenomenon. During the last two decades, a major trend in space activities has been increasing levels of commercialization with relatively stable levels of public funding. In the early to mid 2000s, commercial space activity leveled off and governmental spending increased, but commercial space activities have been rising since. Two developments, namely the bursting of the dotcom bubble in 2000 and the attacks of 11 September 2001, interrupted the longer-term trend of the growth of private enterprise in space. This results from several factors including the technical maturity of space technologies, new market opportunities created by changed geopolitical circumstances, the overall impact of globalization, and supporting legislation to encourage private initiatives in space, particularly in the U.S.A.

During the late 1990s, the massive investment in information technologies spilled over to commercial space, and many new, ambitious and technically risky projects were funded. These included projected mobile satellite systems like Iridium, ICO, Globalstar, and Orbcomm, and broad-band systems such as Astrolink and Teledesic and as many as 15 other broadband communications satellite systems operating in the Ka-band. These projects that anticipated the manufacture and launch of hundreds of satellites triggered an unprecedented surge in projected demand. However, the finances and the stock market valuations of these ventures collapsed, and the interest in new commercial space ventures abruptly declined. One reliable metric that covers this period is the number of commercial launches. Although this metric cannot capture the economic value of each launch, it can nevertheless act as a barometer measuring the health of commercial space. As can be seen in Figure 12.2, the number of commercial launches peaked in 1998 with 41 launches. The early 2000s were a period of consolidation and, after the initial shock of 2001 with only 16 commercial launches the numbers increased again. The fact that the launchers now often carry heavier and heavier payloads (up to around 22,000 pounds, or 10,000 kilograms) and are lifting two, three or even in one recent case over 100 small satellites into orbit makes the charting of launch numbers more difficult to monitor accurately the level of satellites that are being deployed. This period shown in Figure 12.2 ^[6] below from 1957 to 2014 shows clearly this period of rise, fall, and rise again. Since 2004 the launch industry has generally been rebounding for a series of reasons discussed below.

Figure 12.2. Commercial and non-commercial launch events between 1957 and 2014 (Graphic courtesy of Charles LaFleur, The Spacecraft Encyclopedia)

Since 2007 global space launch revenues have climbed upwards from around $4 billion (US) per annum to nearly $6 billion (US) a year. The number of governmental and commercial launches have climbed back to exceed greatly the number associated with the early 1990s. Commercial launches for 2015 numbered 65, and governmental launches exceeded 100. The explanation as to why this has happened is complicated. There are more launch options, including smaller launchers developed for small satellites. There are many more small satellites, including cube satellites being launched. One launch by an Indian launcher actually launched over 100 cubesats in a single launch. New commercial launch capability such as that offered by SpaceX as well as those launch capabilities offered by China and India are also more cost effective. All of these factors impact not only how many launchers are undertaken, but how many satellites are actually launched. In general, the space industry has grown consistently with about a 3% to 4% growth rate for the last ten years. Commercial launches have shown the most dramatic growth rate. While the commercial space market was going through its ups and downs, military space expenditures, especially in the United States, went into overdrive following the attacks of 11 September 2001. Although the space budgets of civilian space agencies have been largely stable, the overall government expenditures are on the rise, especially in the United States. It is conceivable that this increase can be perceived as a threat by other nations and potentially could trigger a new arms race, but it can also have a positive impact. This is because most space technologies can be used for both civilian and military purposes; this recent wave of investment in military space may eventually result in many civilian applications^[7]. This type of “spin off” of military space into revitalized commercial space activities occurred beginning in the early 2000s with the efforts to develop commercial space planes as the “new space” efforts to design and build low cost small satellite constellations. This is in fact, the second wave of ‘new space’ (following the 1990s first wave), focusing on telecommunication services again, but also to launching services with ambitious plans for further exploration and exploitation of space resources. These “New Space” activities are discussed in detail in Chapters 13 and 14.

Figure 12.3. Major Aerospace Firms. (Graphic Courtesy of the OECD)

Faced with the trend of increasing commercialization, the space industry embraced a more global and collaborative approach that triggered a series of consolidations, mergers and strategic alliances. In the U.S.A., out of the twenty major space companies in existence during the 1980s, only three ‘prime’ ones were left by 1997 (Boeing, Lockheed Martin and Northrop Grumman). A similar consolidation took place in Europe in the 1990s, leading to the creation of two major space conglomerates that are currently operating at the prime contractor level (Airbus Astrium and Thales Alenia Space). In Japan, there has not been so much consolidation due to the division of roles between various contractors in terms of subsystem design and manufacture. In China, virtually all space projects are carried out by CASC (the Chinese Aerospace Corporation) and, in Russia, industry has either consolidated or moved to partnership with aerospace corporations from other countries. In other countries with space industries, such as India, the Republic of Korea, Canada and Australia, various moves toward consolidation and global alliances have also occurred. Of the top aerospace firms depicted in Figure 12.3 ^[8], only the first three have major space segments offering integrated space products and services.

Although such strategic alliances decrease the number of players in the industry (and arguably decrease the level of competition as well), they also bring many benefits, including the creation of end-to-end capabilities, larger internal R&D divisions and broader access to technologies. More-over, due to the increased financial strength of such conglomerates, they have better access to new capital and risk sharing mechanisms.

12.3 What Sets the Space Market Apart?

The space market is notably different from other sectors of economic activity. Some of these differences result from the challenging technical requirements demanded by this very harsh environment. Some are related to the origins of the space industry and the strong military rationale that remain an important part of global space activities. There are three main aspects that set the space market apart.

12.3.1 Meet the Number One Customer: The Government

Up until the 1990s, against the backdrop of the Cold War, public space markets were shaped by the Space Race as the U.S.A., the former U.S.S.R. and Europe managed their space programs as an extension of their political ambitions. Governments invested in launch vehicles in the 1950s, human spaceflight in the 1960s and space stations in the 1970s. These commitments were all perceived as national priorities closely related to “defense”. The role of the private sector was limited to fulfilling the requirements set by public sector clients (with very high-level military involvement on both sides of the Atlantic).

Thus, from the very early days of the space age, governments played a very active role, along with the military, in shaping the space industry. Faced with very significant technical challenges and fueled by national pride, enormous amounts of taxpayer dollars were spent on space programs. At the height of the Apollo program, the U.S.A. spent nearly 0.8% of its Gross Domestic Product (GDP) on financing NASA’s space activities. However, compared to the Apollo era, today’s government space budgets are more modest. Today, the U.S. government’s total space budget, including both civilian and defense spending, corresponds to less than 0.3% of the U.S. GDP, as reported by the OECD. (See figure 12.4 ^[9])

The motivations of private sector entities for investing in space activities are fundamentally different from the motivations of the public sector. For instance, if a company invests in a satellite system capable of covering a wide geographical area, it is natural for it to explore this whole region as a potential market for the products and services generated by this satellite, irrespective of national borders. Compared to the purely commercial motivation of the private sector, a government entity investing in a similar system may be motivated by building national industrial capability or enabling international cooperation through a similar satellite system.

Figure 12.4. Public space budgets as a percentage of Gross Domestic Product for various countries. (Graphic Courtesy of the OECD)

When the motivations of the private and the public sector intersect, there is a potential for cooperation in the form of a “public-private partnership”, or PPP. The core concept of the PPP model is to involve the public sector in the early stages of a project as an investor and the private sector as the designer and manufacturer. During the operational phase, the project will then be exploited by the private companies that, in theory, will reimburse the initial public investments (e.g., via royalties, tax payments, or free access to satellite data for government entities). Although the PPP model can be very useful in sharing both the risk and benefits of space projects, as evidenced by the Canadian Radarsat program and other programs, it can result in complications, such as a smaller return on investment for the government than was hoped for, as well as delays. The PPP model also has had important failures in the space arena, such as the European Galileo navigation program that initially proposed a PPP program, but which did not find private partners and is now wholly operated by the EU itself.

Yet another key mechanism for government support is through “anchor tenant” contracts when a space agency gives a very large contract to a specific firm in order to decrease the level of uncertainty and provide some funding stability for complex projects. NASA’s multi-billion-dollar contract to SpaceX for launch contracts is a prime example of this particular mechanism.

Figure 12.5 The Space Industrial Base (SIB) Complex. (Graphic courtesy of Vasilis Zervos)

Government space budgets are still very substantial, as are the number of regulations that aim to control the diffusion of sensitive technologies. Given the scale and complexity of operations and the hefty price tag for reaching orbit, apart from commercial satellite telecommunications and the booming market for satellite navigation, most of the space business takes place between governments and businesses. In fact, despite the rapid growth of commercial space it still true in terms of rocket launches that the number one client of space products and services today is often governmental programs, although this could change with the proposed launch of a number of very large small satellite constellations for telecommunications and remote sensing. The economics (market failures) and security aspects associated with space technologies and capabilities are driving forces behind the critical role of the government (Figure 12.5)^[10].

Although government budget allocations can translate into more stability for the space market and protect it against the whims of consumer spending patterns, they also limit the dynamism of space business (crowding out). Further as noted in Chapters Thirteen and Fourteen commercial space systems represent not only an accelerating market but also a source of new space services and market innovation. Thus, the new generation of space entrepreneurs is determined to bring more dynamism and to attract more private capital into the space industry.

12.3.2 The Double-edged Sword: The “Dual use” of Satellite Tech-nology and Systems for Commercial and Military Purpose

The second special characteristic of space markets is the “dual use” of the technology for both military and civilian markets. Many building blocks of the space industry, such as launch vehicles and satellite technologies, have military origins and they continue to be used extensively for defense related purposes. The dual use of space technologies and applications is in the genes, or “DNA”, of the space market. Just like any other technology, space technologies can be used for both civilian and military purposes. For companies involved in both commercial and defense space markets, this characteristic can provide a strong advantage, enabling some of the key technologies and capabilities gained through defense contracts to be commercialized into civilian markets^[11]. However, dual use can also cause a lot of headaches for the industry and restrict many new commercial initiatives due to regulations such as the U.S. “International Traffic in Arms Regulations” (ITAR). The dreaded ITAR clearance process is widely viewed to be cumbersome and protracted in nature and can be a showstopper for increased commercialization, especially for international contracts.

12.3.3 Investment Horizon

The very long lead-times associated with most space products, services and markets is the third key factor that sets space markets apart. The technical complexity of space projects generally results in an extended period between project kick-offs and the commencement of operations. Although some of this delay is inevitable, such as transit times to Mars, a large portion of it is driven by the complexity of space projects. The Iridium, Globalstar and ICO mobile satellite ventures of the 1990s, for instance, were victims of long lead times and changing market conditions. When these various systems were first conceived, the global market for wireless services looked and acted one way. By the time these space communications systems had been designed, built and deployed their terrestrial competition had evolved to provide a service that was technically different, more robust and available at lower cost. Managing the complexity associated with space markets requires the combination of several bodies of knowledge and maintaining a highly skilled labor force throughout a project’s lifetime. As a result, achieving economic returns from space projects tends to take longer than in many other industries. Although that could be acceptable from a government’s perspective, most private sector players are interested in shorter financing horizons.

12.4 The Space “Value Chain”

A value chain is a useful conceptual tool to understand the scale of operations in the space market as well as the link between major actors. In economics, “value-added” refers to the additional value created at each stage of production, as raw materials are transformed into finished goods and services through factors of production (e.g., labor and capital).

Consider the following example that highlights some of the characteristics of the space value chain. A direct-to-home TV broadcast subscriber is an end user of satellite telecommunications. The benefit that this end user derives from this service is entertainment and access to information, and this benefit is enabled, to a large extent, by the signals transmitted by a satellite in GEO. TV content providers lease satellite capacity from fixed satellite operators who ensure that the satellite is functioning in an optimal fashion, maintaining a high quality of service while maximizing opera-tional lifetime. In turn, the satellite operators are dependent on the reliable services of launch service providers (who are in charge of placing the satellite in its planned orbit), ground equipment manufacturers (who provide the capability to operate the satellite), and satellite manufacturers who originally built the satellite. Thus, a vast space “value chain” works “behind the curtains” to ensure high-quality service when the subscriber tunes into the evening news with the flip of a switch.

In a similar fashion, all space-related goods and services follow a “value chain” on their way from blueprints to clean rooms to the launch pad. Therefore, when we estimate the size of the space industry, we have to include the economic value added of each chain as it contributes to the final value of goods and services produced. (See Figure 12.6)

Figure 12.6 The value chain of direct-to-home broadcast services. (Graphic Courtesy of Turquoise Technology Solutions Inc.).

12.5 Measuring the Economic Impacts of Space Program

Based on a purely economic perspective, the space industry is a relatively small sector of economic activity. However, given the strategic importance of space, the economists have for long devoted considerable attention to measuring the economic impacts of space programs. Their concern is attributable to a growing awareness of the economic significance of technological change, especially from complex and risky projects generally supported by public funding, as in the case of space projects. The economic effects of space programs can be broken down into three main components, a direct industrial effect, an indirect industrial effect and social effects.

Space products and services can be perceived as direct industrial effects. Since the 1950s, space programs have generated a whole range of space products and services including space hardware, software and a multitude of space-enabled services. These outputs would not have existed without the budgets allocated by space agencies and the wave of private sector investment that peaked at the turn of the millennium. These products and services also constitute our main statistical indicators and helped us to determine the magnitude of the space market, as discussed above.

In addition to these products and services that are directly attributable to space programs, an indirect industrial effect of these programs is the so-called spin-off . Most space projects require the integration of new bodies of knowledge as well as new methods of management. From these sources of novelty, contracting companies participating in space projects have generated new ideas, new products, opened up new markets, and learned new organizational methods as their production teams gained more expertise. The process then expands outwards, spreading first to other parts of the contracting companies themselves and subsequently throughout the society itself. As an example, composite materials developed for the European Ariane launcher have been successfully transferred to design the breaking systems of high-speed trains. Additional examples are shown in Table 12.1.

Spin-offs represent all those indirect economic effects that were not anticipated and scheduled in the contracts between space agencies and the industry. Measuring spin-offs is difficult, but specific methods based on direct interviews with the industry tend to show that the benefits accrued from spin-offs is about three times the original government investments in the form of space industry contracts^[12].

Table 12.1. Some examples of products arising from spin-offs from space programs. (Courtesy of NASA)

The third significant effect of space programs is the social effect: this includes all the societal benefits that result from the existence of space products and services. For instance, space meteorological systems have significantly improved meteorological forecasting, which in turn has induced benefit in a considerable number of economic sectors (tourism, maritime operations, airlines, insurance, etc.). All the space programs dedicated to satellite applications have thus created a societal impact with associated economic benefits. For measuring these benefits, economists generally use cost-benefit analysis, a well-known method that identifies the net benefit for each well-identified market.

Instead of measuring each component individually, economists have also tried to capture “in one shot” all the macroeconomic effects of the space programs by using econometric models. For more background, see the more detailed explanation in the endnote.^[13] These models, designed to identify and measure the portion of economic growth attributable to space activities, were particularly popular in the 1970s and 1980s. For instance, the Midwest Research Institute (MRI) study of the relationship between NASA R&D expenditures and technology-induced increases in Gross National Product (GNP) indicated that each dollar spent by NASA on R&D returns an average of slightly over seven dollars in GNP over an eighteen-year period following the expenditure. Assuming that NASA R&D expenditures produce the same economic payoff as the average R&D expenditure, MRI concluded that the US$25 billion (in 1958 dollars) spent on civilian space R&D during the 1959-69 period returned US$52 billion through 1970 and continued to generate benefits through 1987, for a total benefit of US$181 billion. There is some danger in looking at such returns on an averaged basis. Some R&D activities have been projected to have returned twenty times their original public investment while other activities have shown much more modest returns. Further, some activities of a “public good” nature, such as preventing climate change or protecting the planet from cosmic destruction by a comet or meteorite, may not have a pay off in the commercial market but could prove to have an almost infinite value based on their societal returns.

All the above studies converge in proving that space activities have positively impacted the whole economy through the creation of new industrial activities, the generation of successful transfers of technology and spin-offs, and the formation of important social and environmental effects. However, through time, the nature and importance of the economic effects may change. For example, if spin-offs were an important argument at the beginning of the space era to the mid-1980s, it seems that, as time passes, there is less emphasis on spin-offs, and more on “spin-ins”; this is the adoption of technologies developed within various “high tech” terrestrial sectors by the space sector. This trend is a result of several factors including (i) the relatively limited circulation of technology in the space industry due to restrictions such as ITAR, (ii) the slower emergence of global players due to the limitations posed by national security priorities, and (iii) the longer lead times associated with designing, manufacturing and launching space assets that can severely limit the incorporation of recent innovations.

With the emergence of the knowledge-based economy, new economic benefits can be advocated for supporting space projects. Space is, for instance, a key vector of globalization . It is an ideal vector for deregulating and globalizing telecommunications and broadcasting. It has the capacity to be both local and worldwide, and offers large spectral coverage and virtually real-time services. Also, space applications have an inherently cohesive impact on society. This is because space systems in Earth’s orbit are largely independent of terrestrial infrastructures, provide very wide accessibility, and can be cost effective with high, medium or sparse population densities. Since satellite services can be accessible to large geographical areas at relatively low cost, their development can often be very beneficial to the peripheral and less developed zones of the globe. Finally, when considering the main issues facing humanity at the beginning of this new century^[14], such as climate change and clean energy systems, space appears to be always involved as a key complement that adds value to critical problem-solving activities. However, such essential aspects of space are rarely measured, or even recognized. Thus, economists have avenues of research to accomplish in this domain.

12.6 Cost Engineering in the Space Sector

The hefty price tags of projects have become a defining characteristic of the space industry. Although stringent performance requirements are an important driver of cost, the one-of-a-kind nature of most space projects lies at the core of the problem. Estimating the cost of a project without precedence is certainly not an easy endeavor. In most other industrial sectors, some form of extrapolation or benchmarking is possible, even for projects that incorporate many novel processes and materials. The inability to use extrapolation from past projects as a reliable cost estimation method is still a major issue in space programs. Especially in the early days of the space age, during the first human spaceflight missions, cost estimation was a recurrent problem. Right from the start, cost overruns marred space programs, with both the Mercury and Apollo programs running over budget. A direct consequence of inaccurate cost estimates has been the increasingly strong criticism of cost overruns, as the final costs of the programs often exceeded the original estimates by a large factor. Although cost overruns are still observed in the industry, as evidenced by the Space Shuttle and International Space Station programs, significant progress has been made to develop reliable cost estimation methods and cost control practices.

By definition, a cost overrun implies deviation from an original estimate. Therefore, developing accurate estimates at the beginning of a project’s lifetime is one of the biggest cost engineering challenges. Moreover, changes imposed on the project definition in early project phases can have major consequences on the actual cost. There are four main types of cost estimation methods: i) cost by comparison, ii) cost by analogy, iii) parametric costing, iv) Grassroots costing.

Cost by comparison is the riskiest estimation method from the perspective of the client. Without estimating the cost in advance, the client can issue a tender and then compare the cost of the received offers. Although some variations have been introduced, such as eliminating the lowest offer, the risk of cost overruns is still significant due to misinterpretation of the requirements by all bidders, or price fixing between competitors.

Cost by analogy may be applicable in sectors that have a more repetitive character with high similarity in performance characteristics. This methodology requires the involvement of costing experts with significant experience who can compare the cost of a new project to analogous ones in the past. In areas where a space industry has existed for decades, such as satellite tele-communications, this can be a very useful tool. In many aspects of the space industry, such an approach is often not viable due to differing technical and performance characteristics. For instance, we can use the Apollo program cost data to estimate the cost of a human exploration mission to Mars, but the difference in performance requirements, life support systems, and mission duration can skew the results very significantly.

Grassroots costing, a commonly used method in the construction industry requires a very high degree of precision of the final design. For most space contracts, this is simply not possible in the early phases of development. In the space industry, the client and the contractor typically work hand in hand to complete the feasibility and design phases, and only after this stage is the design frozen. Also, contrary to other sectors such as the construction industry, unit costs have higher levels of uncertainty due to the uniqueness of each space project in terms of propulsion and fuels, unique materials, dissimilar thermal conditions, etc.

This leaves parametric costing as one of the most used tools for cost estimation in the space sector. Parametric costing is defined as a technique employing cost estimating relationships (CERs) to estimate costs associated with the development, manufacture, or modification of a project. A CER defines a quantifiable correlation between certain system costs and other system variables, either of a cost or technical nature (e.g., the mass of a subsystem versus its cost)^[15].

12.7. Space Marketing and Public Outreach

Since the 1950s, marketing principles have been successfully employed for consumer products and services in many different sectors. However, due to some of the characteristics of the space industry examined above (such as the dominant role of the government and security related secrecy issues) during the Cold War, marketing principles were, by and large, absent from the space sector. Increased commercialization in the 1990s and competition for capital and talent with the other sectors (such as information technology (IT) and biotechnology) resulted in the introduction of marketing in a systematic way into the space sector.

12.7.1 The Concept of the 4P’s of Marketing

In classical terms, a marketing strategy is composed of four main elements, known as the 4Ps. These stand for Product, Price, Promotion and Physical Distribution. The idea behind this simple classification is the ability to manage all four aspects in order to create successful marketing strat-egies. In other words, any project or service has to meet the quality and functionality expectations of the market (Product) at a fair, market-driven and competitive price (Price). Moreover, the customer must be made aware of the availability and features of this offering (Promotion) and the product must be brought, via appropriate channels, to the final user (Physical Distribution).

Depending on the nature of the project or service, more emphasis will be put on one of these elements. For example, for marketing automobiles, product characteristics such as power, acceleration, and fuel consumption are likely to be emphasized; on the other hand for marketing cosmetic products, promotion is more likely to be the main focus.

Therefore, one of the most important objectives of a marketing strategy is to determine the ideal “Marketing Mix”, thereby ensuring that all four elements are managed in a balanced manner, depending on the nature of the project or the service.

12.7.2 The Fifth Element in Marketing

When it comes to applying these principles to the way we manage space activities, we need to consider a fifth “P”; this is the philosophical element. The discipline of anthropology documents many historical and current perspectives that consider space as the “Final Frontier” to be conquered by humankind. Throughout history, when confronted by a frontier, our species – and rather uniquely so – seems to be driven by a desire to breach it. When we were confronted with the vast seas, we built more powerful ships. When we yearned to fly, we invented balloons and airplanes. In a very similar fashion, the challenges and mysteries posed by the space environment have once again fueled the human desire to reach out and explore.

This rationale has always been a driving force for space exploration and, if managed properly, it can unlock a high level of public support for space activities. In addition, the political climate at the time also plays a key role in shaping space activities. Just as international competition and the so-called “cold war” were the big motivating factors of the 1960s, today’s space activities are driven by other priorities. For instance, recent concerns on climate change and the potential for space-driven solutions has increased the need for the space sector to attract more public attention, and to develop more structured marketing approaches.

Space professionals often assume that the general population usually views space exploration very positively. This assumption is not supported by structured surveys. Surveys made in Europe have shown that less than 50% of the Europeans find space important. Recent studies in the USA reveal a similar picture. Hence, there is an acute need for space professionals to “market” space activities better. They need to understand the components of an effective marketing mix and to communicate the benefits of space to the general public more effectively.

12.7.3 Strategies for the Improved Marketing of Space

Some of the past achievements of space exploration have certainly garnered high public interest, one of the highlights of the 20th century being the landing of Apollo 11 on the Moon. It is estimated that 538 million people watched the grainy image of Neil Armstrong’s first steps on the lunar surface in July 1969 on TV, the first truly global satellite broadcast and the largest television audience ever to that point in history. This unprecedented diffusion was enabled by the Intelsat global satellite network with coverage of all three ocean regions of the world (Atlantic, Pacific and Indian Ocean areas) that was only completed just a little over a week before the lunar touchdown.

Given the significance of the event and the proliferation of telecommunications technologies in the meantime, it is likely that more than two billion people would tune in if something similar were to happen today. Similarly, in the early days of the Internet, NASA’s Pathfinder mission sparked worldwide interest and various Pathfinder websites attracted more than 500 million web hits within a month. Today’s space websites are even more popular. Besides these spectacular events, spin-off products and services that constitute a significant portion of space benefits for our society deserve to be better known by the general public.

12.7.4 Pricing Space Project

Space projects suffer from an unfortunate reputation for being very expensive and prone to large cost overruns. There is indeed a basis for this reputation: space projects have to operate in very harsh and hostile environments, both on the ground as well as in space. Furthermore, barring very few exceptions such as the Iridium, Globalstar and larger constellation satellites, mass production practices have not been applicable, up until the latest “new space” revolution and the surge of effort to manufacture and then to launch perhaps thousands of small satellites at a time. The first step along the way was for satellite manufactures to adapt to creating developing basic platforms that could be used for many different types of satellite applications. This step is similar to the way that automobile manufacturers streamline their production methods. Clearly satellite manufacturers that in the past dealt with production runs in the dozens are a long way away from automobile production runs that may run to millions. The next step, however, has come with the advent of 3 D printing and plans by Air Bus to manufacture nearly a 1000 small satellites for the One Web system and announced plans by Boeing, Thales Alenia, SpaceX and others to manufacture thousands of satellites by very large scale low earth orbit constellations.^[16]

Nevertheless, it would be unfair to declare space activities as being a waste of taxpayers’ money. We should always consider the relative cost of space activities in the light of the associated benefits, discussed earlier (see also Figure 11.6). Consider the following cost comparisons. Annually, the ISS project costs the U.S. taxpayer the equivalent of one movie ticket, while the cost of European space programs is in the range of only three eurocents per day for each European taxpayer.

Furthermore, as discussed in the section on cost engineering, many methods have been developed to manage the cost of space projects and to reduce cost overruns. These methods have gained considerable successes recently and, if used properly, they can help manage costs much more effectively than was done in the past.

12.7.5 Physical Distribution of Space Related Result

Traditionally, a culture of secrecy was prominent in the space industry that limited the sharing of information and know-how, as well as the diffusion of best practices. Luckily this has changed and a more open approach has emerged. In particular, space agencies have realized that the taxpayer needs to be better informed about the benefits of space programs. This realization resulted in more interactive websites, targeted outreach efforts and the use of modern multimedia tools for establishing better communications with the general public. Figure 11.7 illustrates such an approach adopted by NASA for communicating the benefits of spin-off products and services. Other examples are the NASA TV channel that allows the general public to follow particular events, such as Space Shuttle launches and important ISS related operations. Specialized cable television channels such as Discovery, CNN, National Geographic Television and the History Channel also produce a number of shows with space themes, many of which are distributed internationally. European, as well as Japanese, Chinese, Canadian, and Australian, TV networks also have many productions with space-related shows. These have proven particularly effective when astronauts from various countries are in space, or in special instances such as when a Japanese network (NTT) sends a high definition camera into space.

Fig.12.7 A NASA image showing spin-off results. (Graphic Courtesy of NASA).

12.7.6 Space Promotion

These examples illustrate the growing awareness of space agencies about strategic communication. In particular the shift from printed material to social media and online content offers a range of options to capture the imagination of the general public and build support for space programs. Indeed, the combination of appealing images (such as images from the surface of Mars, astronaut spacewalks or artist impressions of scientific missions) and a sustained interest in space exploration opens up many possibilities.

Space agencies also work with the media and film producers to reach a broader public. A good example of this was the Apollo 13 movie, where NASA gave advice to the filmmakers; an experienced astronaut was supporting the different scenes. In addition, space is often used as a theme in advertising, in some cases with the support of space agencies such as a high-profile ad by Givenchy that featured a photogenic astronaut.

Following the end of the “space race”, and confronted with new competitors for public funding and stagnant space budgets, the space sector finally realized the importance of a favorable image and learned not to take the public’s support for granted. In the meantime, marketing has also become a socially accepted tool within the non-profit sector. The classical marketing mix methods are becoming an integral part of the outreach and communication efforts of the space agencies.

The philosophical foundations of the public support for, and interest in space exploration are still strong, and our curiosity of the unknown and the desire to explore are natural allies of the space programs. However, the space agencies must always make a concerted effort to sustain this interest, help educate tomorrow’s space workforce and convince taxpayers that space programs are wise investments.

12.8. Partnerships in Space: Lessons Learned and Opportunities for the Future

The space industry can be characterized as a strategic industry based on both its economic importance and its key role in security. Still at the dawn of its commercialization, this industry both inspires the public and provides valuable services to businesses, households, and governments. Yet it is also one of the most secretive areas due to its national security significance.

The space industry participants in general and the space “integrators” (who synthesize various stages of manufacturing and services towards a final space product), in particular, are largely government-dependent entities. These industries are generally geographically confined. This is for a variety of reasons that include security, the need for highly specialized and costly testing and manufacturing facility, and the recruiting demands associated with a highly skilled labor force. The first major multi-national aerospace integrator is the European Airbus, but the trend towards global value chains that are based on distributed factors of production is here to stay.

Examples of transnational alliances:

• Alcatel (France), Loral (U.S.) and NPO-PM (Russia)
• Starsem: Aerospatiale and Arianespace (France) with RAKA and Progress (Russia)
• OHB (Germany) with Fiat-Avio (Italy) and Yuzhnoe (Ukraine).
• SES Global (ASTRA of Europe, New Skies, SES Americom, and AsiaSat)
• EurasSpace: a joint venture between EADS/Astrium and the China Aerospace Corporation (CASC).

Two distinct, but parallel, processes have taken place since the end of the Cold War. The first has to do with the consolidation of European and U.S. space capabilities through mega-mergers resulting in major space integrators. The second relates to marketing and, partnerships between U.S. and European space firms and their Russian and Ukrainian counterparts. Recent geopolitical tensions between these actors have put some strain on collaborative efforts, but nevertheless for mission critical operations such as the resupply of International Space Station, partnerships are still functioning. The advantage of consolidation is that it is presumed to facilitate the commercialization of space, while safeguarding national interests. The drawback is that there could well be an incentives problem, whereby national champions may not have very strong incentives to be highly efficient locomotives of commercialization. Increasingly, commercial entities that are not government-controlled are making a mark in space; their success could well reshape the industrial landscape in space and rewrite certain regulations and policies across the world. When we look at how private and public sectors have transformed their roles with regards to space activities and how they are likely to proceed, the formation of further transatlantic partnerships driven by commercial pressures seems quite likely, and could result in major industrial restructuring within the next decade.

From a commercial perspective, the most mature segment of the space industry is satellite telecommunications, which is shaped by the traditional dynamics of consumer demand and multiple service providers. In contrast, less commercialized segments such as navigation and Earth observation are still heavily supported by the public sector. The cost of this support relates not only to the resources reallocated by the governments, but also to the closed nature of the markets and the formation of a space-industrial complex.

This has clear benefits in terms of safeguarding the technologies and enabling the scale necessary to develop new programs, but negatively affects new entrants and inhibits a competition-enhancing environment and, in the long run, it may have a negative impact on innovation. Examples are numerous, but a recent one is the case of the European Galileo program, where the public sector started with the intention of establishing competition for the choice of the contractor and ended up with supporting the two remaining competing consortia to merge. In the U.S., similar problems have surfaced, as agencies find it increasingly difficult to follow competitive processes when their pool of contractors is declining.

Thus, the remedy of increasing the number of national competitors by expanding the base of qualified contractors and allowing overseas competitors has its limitations. Not only are there political issues of moving jobs overseas, there are also security considerations and technology transfer issues associated with many of the government-led programs. The bottom line is that some form of government control over the resulting industrial partnerships and processes will almost undoubtedly be present.

In general, the public sector in most space-faring countries tends to favor the involvement of the private sector in space programs. However, the public policy on space commercialization cannot be taken for granted; it depends not only on the space programs, but also on “policy” factors, with the most prominent one being security concerns. An extreme case of this was observed after the collapse of the U.S.S.R., when ex-Soviet countries started to market their space infrastructure to international clients. This was only possible with the relaxation of security constraints imposed by the Cold War. Thus, there is a constantly changing dynamic balance between perceptions of security and commercial dynamics driven by economic realities.

12.8.1 Changing Patterns of Space Partnership – Partnerships in Space through Time: The Dawn of Commercialization?

There are two particularly interesting examples illustrating the scale and pace of change in the global space industry. One is the former International Telecommunications Satellite Organization (now known as Intelsat Ltd., a corporation licensed in Bermuda). The other is the former Interna-tional Mobile Satellite Organization (now known as Inmarsat Ltd). In their early stages, both of these global satellite operators were characterized as natural monopolies in terms of their efficient scale of operations. In addition, most of their members were government-owned entities. These national monopoly entities were seen as safeguarding national and security interests in the sensitive area of global telecommunications. Today, both former global monopolies are multinational companies, capable of buying and selling other corporations, assuming major corporate debt, and involved in aggressive corporate maneuvers. These organizations are owned by equity investment organizations and pay corporate taxes. Eutelsat, the European Telecommunications Satellite Organization, made a similar transition from a regional monopoly to a private commercial enter-prise.

Much of this probably sounds like a case study from a history book to the younger generations, growing up in an era of explosive choice when it comes to telecommunication services. A new equilibrium between security considerations and commercialization has emerged, with private satellite operators and service providers capitalizing on new market segments and new commercial opportunities. New constellations are constantly developing in Medium Earth Orbit (O3B absorbed by SES) and LEO (OneWeb in partnership with Intelsat) are examples. New filings by Boeing, Thales Alenia, Space X as well as new filings from Norway, Canada, and other parts of the world suggest that there is a major shift in the commercial satellite services world is now afoot.

The shrinking of the size of electronics, the use of many off the shelf components obtained at low cost, and the ability to manufacture small satellites using 3-D printing and lower cost manufacturing techniques have combined to provide new opportunities for the manufacturing and launch of small satellite constellations. Almost all of the current trends have prompted new entrants into the commercial satellite world. The story is often summed up in this way Silicon Valley has discovered the space world and started to radically re-invent it.

Another example comes from the Earth observation sector where once all satellite networks were owned and operated by governments, only a couple of decades back. Today the resolution of commercial images is sufficiently high to identify individual buses and trucks on highways, a capa-bility that is light-years ahead of remote sensing systems of the past. New space markets are created, just as in any other sector, when product variations are introduced that can profitably segment the market, in particular in the presence of public goods (such as television broadcast and navigation services).

However, this is a necessary, but not sufficient, condition for commercialization, as the reactions to the development of the new Galileo satellite navigation system revealed both within and outside Europe. Who controls access to the services of these strategic assets in the event of a clash of interests between security and financial returns from operations? Whoever it is had better take note of the fact that security is more likely to take precedence over profits.

The different objectives of stakeholders often result in compromises expressed in the form of partnerships. Historically, partnerships between governments have been used as a means of enhancing scientific and political common objectives of the different partners. Primary examples of such partnerships include the International Space Station and Spacelab. In fact, many scientific programs and even one of the most well-known space agencies, the European Space Agency (ESA), were created by “upgrading” the nature of collaboration from a programmatic to an institutional level. (See Figure 12.8)

Finally, private-public partnerships have often formed in the Earth observation sector, such as Landsat, with mixed results, but newly emerging prominent examples include the Terrasar-X Earth observation satellite program. Here the German public sector funds the program, with the private partner then having marketing rights to data. Radarsat 2 is a similar case involving the Canadian Space Agency and industry partners. In the latest version of the U.K. Skynet defense communications satellite system, Thales is manufacturing and deploying the system on the basis of providing military communications to the U.K. government on a long-term lease basis, but is able to sell excess capacity on a commercial basis. Variations on this theme can be seen in other European countries, as well as in the dual use (commercial and military) of Inmarsat, Intelsat and Eutelsat ser-vices.

12.8.2 Security, a Driver in Public-Private Space Partnership

It must be noted that many of these public-private partnerships are of a national or, at best, geopolitically confined nature. This is largely due to security considerations and the involvement of the military as a prominent end user at the public-sector side. These “quasi-commercial” partnerships made by considering national security objectives in a unilateral manner face restricted markets which, given the scale and nature of the program, is not a critical drawback.

Such partnerships are less stable when they assume a multinational nature since balancing political and security considerations becomes more challenging; the political complexity of the partnership starts shadowing the technical challenges. Again, the European Galileo satellite navigation system is a case in point, where political and security considerations both from within and outside Europe played a key role in undermining this partnership which was meant to bring together public and private sector actors from multiple countries. (See Figure 12.8 ^[17])

Figure 12.8 Complex Geopolitics in Europe(Graphic courtesy of Vasilis Zervos)

12.9 Is the Future Bright?

Space is by no means the only sector of economic activity with a prominent security dimension, where the private sector is expected to respect and work with national security concerns. Other sectors, such as the oil and gas industry, share similar characteristics in this regard. Their best practices and lessons learned can be very useful for the management of future partnerships in space.

The oil and gas industry has many privately held companies that control strategic interests. This structure is often viewed as a way to safeguard national interests, while limiting the direct involvement of governments in industrial affairs. In a similar fashion, space integrators across the Atlantic can establish Galileo-type partnerships of a multi-private-public partnership (MP³) nature. Such a partnership structure can facilitate, rather than complicate, finding the delicate balance between security concerns and commercialization.

In the era of global markets and vast international supply chains, there are many other segments of the space industry that can benefit from new international partnerships bringing together businesses and governments. For instance, if the projections for the space tourism market are accurate, there will be great demand for reusable spacecraft that can reach suborbital trajectories. Operating these spacecraft requires not only expertise in design and manufacturing, but also a significant investment in the supporting infrastructure such as spaceports and air traffic management. The motivations of the public sector are not just limited to ensuring safe operations, but also to creating brand new industries and new jobs. The private sector can benefit from a decreased uncertainty in regulations, a streamlined business environment, and the provision of the necessary supporting infrastructure. Thus, if the involved parties are ready to sacrifice some autonomy, they can create a very favorable environment to stimulate the space tourism market by adopting a multi-private-public partnership model. This could result in many beneficial acts, including removing barriers to enhanced competition or controls on various security aspects, and achieving economies of scale.

12.10 Space Workforce in the Age of Collaboration

One of the enablers of international cooperation is the availability of human capital accustomed to working in diverse, globally distributed and interdisciplinary teams. In addition to the obvious requirements such as language skills, the smooth functioning of such teams also requires an intercultural spirit, even if socio-cultural differences continue to exist.

It is only natural that one of the by-products of increased international cooperation is increasingly complex legal and policy issues and processes. International endeavors such as the Sea Launch consortium, or compliance with ITAR (International Traffic in Arms Regulations) in the U.S.A. require space professionals with specialized skills sets built on top of a solid interdisciplinary foundation.

In addition to this “quality” dimension, there is also an imminent challenge with the quantity of qualified space professionals. During the 1960s and 1970s, aerospace was identified as a priority area in higher education and the subsequent hiring wave resulted in a large workforce mostly con-sisting of “baby boomers”. Many of these pioneers are still part of today’s workforce, but they are quickly approaching the retirement age. A further complication is the decline in the number of aerospace and space science graduates over the years and the smaller number of younger employees. Overall, space employments seems to be on the rise in emerging space faring nations like China, while appearing stable in mature countries like the U.S.A. where age-replenishing is the driving force. (See Figure 12.9)^[18].

For most other sectors of economic activity, a common strategy to cope with this problem would be to attract skilled workforce from other sectors and train them for aerospace careers. The peculiarities of the space sector and the need for significant domain expertise render such a solution less powerful for space. The space business is not like any other business; space products and services have many unique characteristics. Therefore, it is not easy to attract specialists from other sectors. In fact, a certain degree of brain drain from the space sector to other industries is more common than the other way around.

Figure12.9. Employment Trends in Selected Space Sectors . (Source: OECD)

As a result of increased commercialization, the space sector has considerably changed during the last few decades. The need for bigger and financially more powerful alliances has resulted in major conglomerates, prepared for worldwide competition. Initially, reduced public funding was the prime catalyst for this commercialization process, as companies started exploring new ways of doing business. Now that this trend is established, a key factor that will increasingly shape the future is the availability of a highly qualified workforce composed of individuals who can thrive in an international and interdisciplinary work environment. Several were taken to address this need. In the academic realm, higher education institutions such as the International Space University and other university programs were established to help to train tomorrow’s space leaders. Companies have also started to invest in intercultural training to cope with the challenges of a global space industry. Hopefully, in a broader context, these efforts will also lead to an increase in mutual respect for different cultures, and the recognition of space as a global catalyst for better communications in a global society.

12.11 New Space: Space Reinvented

Whether we call it “New Space”, “Space 2.0” or “Emerging Space”, a confluence of factors has propelled private companies to the forefront of space exploration. This may initially sound counterintuitive. After all, based on the characteristics of the space industry and various cases pre-sented here, it is almost natural to think that space must be a very hostile environment for budding entrepreneurs. It is clear that the space market is still very much dominated by government contracts. Only satellite telecommunications and, to a limited extent, satellite navigation services resemble a truly commercial market.

Nevertheless, there is a change agent disrupting this relatively static picture: this is the small group of dedicated individuals who are determined to bring an entrepreneurial edge to the space industry. This group is slowly but surely starting to convince private investors to target specific areas of the space industry, such as launch services, space tourism and even natural resource prospecting. This new generation of space entrepreneurs, called “astropreneurs” by Peter Diamandis, has at least two traits in common: a fascination with space, and the know-how to raise capital in high-tech industries, most notably in the IT sector. Individual space investors such as Paul Allen, Jeff Bezos, Robert Bigelow, Sir Richard Branson, John Carmack, and Elon Musk, having achieved tremendous successes in other sectors have identified space as one of the next big challenges for their careers. Meanwhile, a new generation of space entrepreneurs, such as Will Marshall and Robbie Schingler, are disrupting the space industry from within with innovative space products and services.

Compared to the rather conservative approach of space agencies, especially when it comes to human spaceflight, space entrepreneurs are prepared to take risks. They are also more interested in achieving efficiency at the company level, rather than fulfilling social objectives, such as creating employment. Therefore, their work teams tend to be much smaller than their space agency counterparts, reducing the labor cost of running these operations drastically.

Well known serial space entrepreneurs such as Peter Diamandis or Ed Tuck, as well as those that raise money to back innovative space ventures such as Space Vest and Burton Lee’s new Space Angels, have a common message. They all argue that most breakthroughs come after many serial failures; however, the government does not accept failure easily or learn effectively from past mistakes. Moreover, they argue that when it comes to space projects a top priority for the governments is creating jobs, not achieving efficiency of operations and driving down costs. Elon Musk’s SpaceX have clearly demonstrated this trend by successfully landing the first-stage of a launch vehicle and reused it in a subsequent launch. This very significant step towards reusable launch vehicles came after many public failures.

Currently, space tourism (also called personal space travel) and entertainment attract significant attention of space entrepreneurs. Space tourism can be broken down into orbital, sub-orbital and terrestrial market segments, as discussed earlier. Space entertainment aims to expand the space experience to the general public through private missions to the Moon and other celestial bodies, various contests and races in space broadcast on TV/Internet, as well as other private space activities.

For many space visionaries, space tourism and entertainment are just the tip of the iceberg. They see space resources and space settlements as the ultimate market and believe that, in the vastness of space, almost all of the primary goods of economic importance can be found in abundance. The resources are real estate (such as International Telecommunications Union licenses for GEO orbital slots), minerals and metals (such as helium-3 on the lunar surface, and titanium and platinum rich asteroids) and solar energy (vast amounts of which exist in the inner solar system). To find innovative ways of using these resources will be the greatest economic challenge of the Space Age, and it will also create a very strong motivation for space exploration. Combined with the innate philosophical rationale for exploring space, this economic incentive should be a very powerful motivator for future generations.

It is widely believed that a healthy dose of competition can accelerate the development of space activities. The dynamism of the 1960s can be achieved in a more peaceful and efficient environment by focusing the energy of private capital on selected space activities. The founder of X PRIZE, Peter Diamandis, believes that the most important accomplishment of this competition was to change the way the world thinks about spaceflight. X PRIZE was designed to spawn, stimulate and support the commercial public spaceflight industry. It has created an emerging market, and pushed the boundaries of private space exploration to the Moon and beyond with initiatives such as the Google Lunar X Prize. Further, it has demonstrated that prize-based incentives do work and can pave the way for personal space travel at an affordable price. As clearly shown by the success of X PRIZE, and embodied in the words of Margaret Mead: “Never doubt that a few committed individuals can change the world. Indeed, it is the only thing that ever has”.

12.12 The Start of a New Era

There were certainly no accountants or management consultants among the twelve astronauts who set foot on the Moon (and it is probably a safe bet that this situation will not change when the crew of the first human spaceflight mission to Mars is chosen). However, without a thorough understanding of business and management aspects, we cannot build sustainable space exploration programs.

Furthermore, it is becoming increasingly clear that the space industry is on the cusp of change. The effects of globalization, increased commercialization and managerial innovations, such as X PRIZE, are changing the landscape of the space industry. As the existing market segments such as satellite telecommunications and navigation mature and our technical and financial risk management skills improve, more private investors will be attracted to the space industry. Their presence is already transforming the satellite telecommunications business. We are also witnessing the first steps of disruptive change: as the suborbital space tourism market evolves, it will bring with it a new era of space products and services.