Changes in the U.S. Commercial Space Industry

Changes in the U.S. Commercial Space Industry

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June 2, 2016
Changes in the U.S. Commercial Space Industry
The Space Economy
 enhancements of safety by providing data to first
Rockets, satellites, and the services they provide, once the
responders at oil spills and forest fires and preventing
domain of governments, are increasingly launched and
train collisions with geolocation services.
managed by privately owned companies as well.
Commercial activities accounted for 76% of the $330
Satellites are placed into different types of Earth orbits
billion spent on global space activities in 2014, according to
depending on their planned use: low Earth orbit (LEO),
the Space Foundation. Governments and companies in more
medium Earth orbit (MEO), geosynchronous Earth orbit
than two dozen countries have built and launched an orbital
(GEO), and high Earth orbit (HEO) (Figure 1). The altitude
payload, but the Federal Aviation Administration (FAA)
of the orbit determines the spacecraft’s speed around Earth,
estimates that the United States was responsible for about
with those closer moving more quickly. Some types of
38% of total global space spending in 2014.
space activities require closer proximity to Earth for supply
and maintenance and to provide higher-resolution images of
The space economy is made up of both commercial and
Earth. Others operate further in space to more effectively
government components. Commercial products and
deploy their services. The International Space Station (ISS),
services are generated by companies providing launch
in LEO, for example, takes just 90 minutes for a full orbit,
services, manufacturing satellites and ground equipment,
while a television or weather satellite in GEO will take a
and operating satellites; government investments in space
full day. A satellite in geosynchronous orbit matches
make up the rest of space economy spending. Typically,
Earth’s rotational speed, so unlike other types of satellites,
commercial launch providers are also manufacturers,
it will remain in the same place above Earth. GEO enables a
designing and assembling the rockets they use. Service
satellite to monitor the same locations for changes in
providers (such as television broadcasters) may design and
weather or to facilitate telecommunications.
build their own satellites, or may purchase them from third-
party manufacturers.
Figure 1. Types of Earth Orbits
The U.S. space industry supply chain has changed in recent
years as new forms of competition have arisen. Launch
vehicle manufacturers produced vehicles only under
contract to the National Aeronautics and Space
Administration (NASA) or the Department of Defense
(DOD) until 1982. Until then, the U.S. government
launched all civil and commercial payloads into orbit. Now
commercial payloads are increasingly launched by private
providers, including long-standing aerospace contractors
such as Boeing and Lockheed Martin, and new entrants
such as Space Exploration Technologies (SpaceX), Blue
Origin, and Virgin Galactic. Commercial space technology
services include
 communications systems utilizing satellites to transmit
television signals (satellite television alone accounts for

almost a third of all space-related commercial activity),
Source: CRS.
in-flight calls from airplane passengers, and some
smartphone data;
Developments in the Industry

Three developments are changing the shape of the
environmental monitoring of oceans, forests, deserts,
commercial space industry: a shift in government space
wildlife habitats, and natural disasters;
activities toward the use of commercial services, new

entrants with new launch products, and an increase in the
weather applications monitoring hurricanes and El
launch of small satellites.
Niño on a global scale, as well as measuring soil water
content to assist in prediction of droughts and floods;
During the final years of the space shuttle program, NASA

encouraged and funded commercial providers to develop
transportation uses providing geolocation services to
systems that could transport crew and cargo to the ISS. The
delivery trucks and ride-sharing services and their
first of these were the SpaceX Dragon capsule and Falcon 9
passengers; and
rocket, which have ferried supplies to the ISS since 2012.
Last year, four ISS cargo launches were conducted by
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Changes in the U.S. Commercial Space Industry
Orbital ATK and three more by SpaceX. (Boeing and
The White House National Space Transportation Policy
SpaceX are each developing ISS crew transportation
provides guidance to federal agencies about commercial
capabilities for first use in 2017 or 2018.)
and governmental space transportation. The policy calls for
use of commercial products and services to help fulfill the
New entrants are changing the economics of launches by
federal government’s space needs, and encourages
reuse of rocket boosters. SpaceX’s entry into the launch
partnerships with industry to increase scientific knowledge
market provides NASA and DOD with new options, and it
and reduce government space expenses through use of
is also cutting into the international launch market formerly
hosted payloads. (Hosted payloads utilize capacity on
dominated by foreign providers. SpaceX has had several
commercial satellites to accommodate federal government
successful launches and relandings (e.g., placing a Japanese
instruments and other space-bound items.)
telecommunications satellite into GEO from a Cape
Canaveral launch site). Blue Origin has to date launched
Selected issues of congressional interest that may affect the
several prototypical rockets that have returned to their
U.S. commercial space launch industry include the
launch pads.
following:
The newer entrants are taking advantage of venture capital,
Debate over ICBMs
which is increasingly being invested in space-related
The Commercial Space Act of 1998 permits the conversion
industries. According to the Tauri Group, a space industry
of excess intercontinental ballistic missiles (ICBMs) for use
research organization, this trend has accelerated over the
by the federal government as space launch vehicles. Some
past five years: 2015 saw a record level of space-related
see this use as an efficient way to dispose of the nearly 400
venture capital investment ($2.3 billion). The biggest
missiles no longer needed for military purposes and less
growth stems from investments in commercial space
expensive than destroying them. It has been proposed that
industry infrastructure such as launch facilities, ground
these ICBMs could be sold for commercial launch vehicles.
stations, and satellite manufacturing. Of 86 global launches
However, large-scale conversions of ICBMs into space
in 2015, 22 were commercial (26%), while 40% of U.S.
transportation vehicles could undermine the commercial
launches were commercial, according to FAA.
production of space launch vehicles, stall the development
of more efficient spacecraft, and diminish private
An increased interest in the launch of small satellites—
investment in the sector.
often called CubeSats—is also bringing into the industry
new entrants, new technologies, and new private investors.
Using Indian Launch Services
Smaller satellites for Earth imaging and establishing space-
U.S. nuclear nonproliferation policy has historically not
based Internet networks from LEO are now possible
supported the development of space transportation systems
because satellite components have been miniaturized and
in countries that are not members of the Missile
standardized. Groups of small satellites are referred to as
Technology Control Regime (MTCR), such as India.
constellations; Planet Labs, for example, has a constellation
However, U.S. companies may receive a license to export
of 36 small satellites in orbit, with customers paying for the
satellites to such countries for launch if the federal
images it can capture from closer to Earth than traditional,
government waives the MTCR prohibition. Some U.S.
large satellites in more distant orbits. Some observers argue
satellite manufacturers are urging increased access to Indian
that demand for data may be driving the market for small
services because of a perceived shortage of other launch
satellites, as much as the new technologies.
capacity, especially for smaller satellites. Several U.S.-
made satellites have been launched on Indian vehicles. The
Issues in Commercial Space Policy
Office of the U.S. Trade Representative announced last year
The legal basis for commercial space launch policy was
that it is reviewing the current policy as the demand for
established in the Commercial Space Launch Act of 1984
commercial launch services increases.
(as amended), which authorized FAA to regulate
nongovernmental launches and reentry sites, while also
Servicing the ISS
encouraging the development of private-sector commercial
When NASA’s space shuttles were retired in 2011, Russian
space activities. Congress has amended that statute from
spacecraft became the only means to ferry U.S. crew and
time to time, most recently enacting the SPACE Act of
cargo to the ISS. U.S. commercial providers now provide
2015, which extends indemnification and financial
cargo transportation, and NASA is funding Boeing and
responsibility requirements for space flight participants
SpaceX to develop commercial crew transport to and from
through 2025, reaffirms federal policies to promote
the ISS and potentially other destinations in LEO. Some
commercial space launches and reentries, and revises the
argue that commercial providers will reduce NASA’s costs
Commerce Department’s role in promoting geospatial
and encourage development of the domestic commercial
technologies and the technological advancement of the
space industry. Others contend that there will be few non-
domestic commercial space industry. (In addition to FAA
NASA customers, question whether there is enough
and the Department of Commerce, the National Oceanic
business for more than one provider, and express concerns
and Atmospheric Administration, the Federal
about astronaut safety.
Communications Commission, and the Department of State
also have regulatory responsibilities for commercial space
Bill Canis, Specialist in Industrial Organization and
activities.)
Business
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Changes in the U.S. Commercial Space Industry

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