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Astronautics
Research Projects Agency (DARPA) in the US and
others have provided project based capital that has
allowed many concepts to be developed from the
bench or lab to proof of concept. From this stage,
companies have much greater success attracting
angel capital and continuing on the capital
lifecycle fly wheel.
Space policy can also be helpful in terms of
protecting intellectual and property rights.
For example, Planetary Resources, a start-up
based in Seattle which is focusing on asteroid
mining was instrumental in helping to pass
the US Space Act of 2015 which provided for
ownership protections of certain space bodies
for commercial use. Other resource oriented
companies, such as Deep Space Industries, have
also been involved with shaping policy regarding
economic rights in space.
The other aspect of policy that drives economics
is certainty. That is to say clarity around what
are the priorities, the funding sources and
the architectures that global sovereign space
programmes are focused on. The more specific,
consistent and long term these priorities are,
the more comfort investors and companies have
regarding their ability to align with them.
Switching from one priority to another or
being vague about what the priorities are has the
opposite effect. For example, it is unclear whether
the new Trump administration will make the Moon
a priority once again. If it does, this could be a
boon to companies such as Astrobotics, Moon
Express and Golden Spike.
I predict that in the future the commercial
sector will take an even larger role in shaping both
the priorities and the laws and policies governing
space. I see this as a consequence of traditional
Traditional space companies
How is the traditional space sector adjusting
to the NewSpace paradigm? Clearly the larger
more established space companies have
competitive advantages. Such companies are
typically large, well-capitalised, with large
amounts of institutional knowledge, talented and
experienced professionals.
However, with that institutionalism comes
perhaps a risk aversion to new ideas and a
classic case of innovator’s dilemma. That
is to say the incentives internally within
traditional space companies reward status quo
behaviour and typically punish disruption. As a
consequence, the inertia of large organisations
leads to incremental improvements in existing
technologies and processes rather than radical
new ways of solving problems.
Another constraint for innovation with many
traditional space companies has been the cost-
plus pricing model. In this model, the company
charges a fee above their cost for delivering the
product or service.
While this has many benefits to the company,
for example consistent and predictable profits,
it provides a disincentive to create new ways
of delivering the product or service that might
reduce its cost or efficiency, since the profits of
the company would also be decreased.
Think of it as runners competing in a race. One
runner is an established athlete and is guaranteed
to always run a five-minute mile, rain or shine,
health or illness. Another set of runners were
literally pulled off the street and start out very
slow, say six minutes or greater. However, there
are hundreds of them and they are all competing
and training every day. Eventually one of those
aspiring runners will overtake the fixed speed
athlete and, since the athlete has not trained
or competed, their ability to then respond
and become more competitive themselves has
atrophied if it ever existed at all.
Impact of space policy
In addition to capital sources, space policy can
have a large impact on industry dynamics and the
economics of space. In recent years, the focus on
using commercial elements for sovereign space
programmes has created large blocks of capital
that have allowed companies such as SpaceX to
flourish and provided credible long term business
plans that have attracted early stage capital for
company formations.
In addition, early stage contract awards by
organisations such as NASA, the Defense Advanced
In addition
to capital
sources,
space policy
can have a
large impact
on industry
dynamics and
the economics
of space
Installation in August
2016 of the NanoRacks
External Platform on the
International Space
Station (ISS). Houston-
based NanoRacks was
formed in 2009 to provide
commercial hardware
and services for the US
laboratory on the ISS via
a Space Act Agreement
with NASA.
NanoRacks
