Insight - Commercial Space: Sustainability and Value

Wednesday, November 2, 2016

By Ian Christensen, SWF Project Manager

Space activities are inextricably linked to humankind’s instincts to explore and develop new knowledge. Founded in 1904 and headquartered in New York City, the Explorers' Club is a professional society dedicated to international and multidisciplinary exploration and research.The Explorers’ Club headquarters hosts many historical artifacts and records of exploration – including several articles from the Apollo program – and on October 18, 2016 was the site of an invite-only Roundtable on Value Creation in Commercial Space hosted by Secure World Foundation and the Heinlein Prize Trust.

If the instinct to explore represents one of the original sources of our activities in space, development and expansion of markets and financing sources represent one of the sustaining factors allowing societal benefit from those space activities. Creating and sustaining economic and societal benefit through space applications and services is a core reason why space sustainability is an important topic. The Roundtable was an interactive investor and industry actor discussion of how developments in commercial space are creating and sustaining value beyond the start-up, angel and venture capital phases, with a focus on how value is defined, measured, and communicated.

Just under 50 people participated in the event, collectively representing a cross section of the space industry. Participants included both service and hardware providers from several different industry sectors (telecommunications, launch, space resources, satellite manufacturing, etc.) as well as investors from various stages of the funding cycle including angel investors, venture capital firms, and institutional investors. Industry participants included both established (“legacy”) firms and “NewSpace” firms.

Over the course of the day, three discussion sessions were held, each focusing on a thematic topic: launch, disruptive technology and business models, and the beyond-LEO economy. Each session began with short presentations from invited speakers followed by a moderated dialogue between all attendees with the emphasis being placed on open conversation between all participants. General themes discussed during the Roundtable included: concepts of social and economic value generation (and the link between them); the impact of reusable and dedicated small satellite launch vehicles in the market; the importance of creating intermediate revenue streams to support long-term business venture; and the relationship of legacy and emerging companies as part of a broader ecosystem among other topics. Much work remains to analyze the information generated and to publish the insights gained, but a few preliminary thoughts are below.

One key recurring discussion point during the Roundtable was the role of commercial space development in creating social – not just economic – value, and accompanying investment models based on social value. Both economic and social value are delivered through applications of space technology and services. New and innovative space business approaches – of the type discussed at the Roundtable – are bringing novel services and applications to market. This creates increased complexity in how commercial space operators interact with each other and with the regulatory system. Recognizing this, and cognizant of the potential societal value of many space applications, Secure World Foundation has been exploring the application of corporate social responsibility (CSR) concepts in the space sector. CSR is a business strategy approach that links corporate performance to social impact; not just fiscal performance. On October 27, 2016 SWF Project Manager Ian Christensen presented a paper at the 2016 Reinventing Space Conference in London, United Kingdom, describing links between CSR-related principles and industry efforts to develop norms of operations in response to increasing operational complexity.

Our setting at the Explorers’ Club reminded us of humankind’s experience in pushing limits of exploration and technology – new approaches in commercial space are also pushing current limits of regulatory approaches and requirements. The development and fielding of “non-traditional” commercial space applications (e.g. asteroid mining, on-orbit servicing, and commercial space stations) has raised questions of where the regulatory authority and process to authorize these on-orbit activities lies.

This issue – and industry’s need for regulatory certainty – was also among the topics raised at the Roundtable. SWF has been active in facilitating conversations around this topic as well. Our role as a partner in The Hague Space Resources Governance Working Group is helping to facilitate a multilateral discussion of the regulatory approach to enable one such application. On October 25, 2016 SWF was honored to host a dinner session of the U.S. Federal Aviation Administration’s Commercial Space Transportation Advisory Committee (COMSTAC) – which is actively considering how to approach regulatory frameworks for on-orbit activities. On November 3rd SWF Project Manager Ian Christensen will participate in a panel at the World Space Risk Forum in Dubai, which will discuss, among other topics, this issue of the regulatory framework for non-traditional space applications. SWF will continue efforts linking commercial space development, the economic and social value it generates, and space sustainability.