Thoughts on Commercial Space, Part IIC

Commercial Space 2.0, Big LEOs and EELV

The next wave of commercial space began in 1991 with the establishment of Iridium.  The idea was conceived in the late 1980’s by engineers at Motorola to provide satellite phone service to the globe.  Iridium is named for the 77^th element in the periodic table because the constellation would have 77 satellites.  It was subsequently reduced to 66, six orbital planes of eleven satellites each.  [The sixty-sixth element is called dysprosium, perhaps a more apt name in hindsight!]  The project attracted investment from many industry giants including Lockheed Martin (LM), Sprint and Sony.  But it was Motorola that footed most of the bill. Iridium was the first of the low earth orbit constellations to be proposed and one of the few to be fielded.

            The first launch of five satellites was in May 1997 on board a Delta II rocket from Vandenburg AFB. The launch campaign was an international effort with the Russian Proton and the Chinese Long March each getting some of the launches.  The system was declared operational in December 1998.  As a major space project, Iridium was a technical success.  Seven years from conception to operational service is respectable even by today’s standards.  But nevertheless, the company filed for Chapter 11 bankruptcy in August 1999.  What went wrong?

            Lots of things.  Fundamentally, Iridium was unable to sell enough subscriptions.  To pay off the seven billion in initial investment, Iridium needed to sell one million subscriptions within the first year.  They managed only fifty-five thousand.  It turns out that while Iridium was spending billions and taking years to deploy a sixty-six satellite constellation, other companies like Verison and AT&T were installing cell towers fast and cheap and building a customer base with small pocket sized phones and low cost deals.  In contrast, Iridium’s phones were large and clunky and the cost per call was many times that of the cellular competitors.  True, you could take a call using Iridium in a remote canyon in a remote region of the world, but most of the customer base didn’t need that capability.

            I was at Lockheed during the Iridium years and I remember the excitement.  Lockheed built a special purpose factory to assemble the satellite bus for Iridium.  Lockheed lost close to one hundred million dollars when the wheels came off, a significant sum, but far less than the billions lost by Motorola.

            The excitement generated by Iridium attracted many copycats and competitors.  Globalstar was also formed in 1991 as a partnership between Loral and Qualcomm.  It launched its first satellites, built by the Italian Aerospace company Alenia, in 1998.  I remember touring the Alenia plant outside Rome sometime in the late 1990s.  Globalstar production was already complete, but the idea of rate production of dozens of identical satellites and the manufacturing efficiencies gained thereby has stuck with me ever since.  Sadly, Globalstar also filed for bankruptcy—in 2002.

            Motorola had grand plans for more Iridium-like constellations.  M-star and Celestri were the most ambitious.  I remember hosting several Motorola executives at the Lockheed facilities near Denver in the late 1990’s.  I was working on the Atlas V development program at the time and we couldn’t afford to ignore a potential customer needing to launch hundreds of satellites. But the Motorola representatives insisted on pricing far below market pricing at the time.  I remember being lectured that Motorola’s buying power would force us to play ball or go out of business.  Atlas V is still going strong.  All of Motorolas’ space ambitions are ashes—just saying…

            Perhaps the most ambitious of the big LEOs of the nineties was Teledesic. An independent company unassociated with any large aerospace prime, Teledesic nevertheless had some impressive backers including Craig McCaw, Bill Gates and the Saudi Prince Alwaleed Bin Talal Bin Abdulaziz.  Their concept went beyond satellite phones to broadband services, the internet in the sky.  The Teledesic constellation was originally 840 satellites, not including spares.  The figure below shows what this might look like.  We used to joke that Teledesic would “darken the sky.”  In July 1997, Teledesic selected Boeing to be the prime contractor, beating Lockheed, and Boeing engineers quickly resized the constellation to 288 satellites. 

            For a time, I was the Lockheed capture manager for Teledesic launch services.  This was before I was drafted onto the Atlas V development program.  Our solution was a modernized version of Titan, a configuration that was much like the never fielded heavy version of Atlas V.   One feature of our vehicle was the composite payload fairing (PLF) supplied by the Swiss company Contraves (now part of Ruag).  That feature did eventually get incorporated into Atlas V.  I took many trips to Teledesic’s headquarters on the shores of Lake Washington near Seattle. 

            A unique aspect of launching these large constellations was the requirement for a dispenser, the structure within the PLF to hold and deploy multiple satellites.  In one of our briefings of different concepts we showed a graphic of a huge pez dispenser (remember pez candy?) with Bill Gates’ head on top.  Got big laughs.  I wish I had saved it. 

            Once I moved to Atlas V, the marketing responsibility moved to Lockheed International Launch Systems (ILS) and the solutions shifted to Proton (ILS, since sold by Lockheed, continues to be the marketing arm of Proton) and Atlas V.  To reduce the cost per satellite as much as possible, we created a whole new version of Atlas V consisting of a 5 meter PLF (from Contraves) and strap-on solid rocket motors (SRM).  The original configuration had up to 4 SRMs, but in a frenzy of last minute marketing/engineering we increased it to 5 to squeeze a few more satellites and lower our cost even further.  Increasing to six would have required wholesale design changes due to the location of the engine feedline and avionics pod.  My systems analysis team was responsible for figuring out how to fly such an asymmetric configuration, and convincing management that we weren’t completely nuts.  Furthermore, I convinced them that we could fly with any number of SRMs, up to five.  To date, all versions: 0, 1, 2, 3, 4 and 5 SRMs have successfully flown—although I admit it is somewhat disconcerting to see the single SRM version crab off the pad. (I know it will work just fine…)

            Teledesic raised a billion dollars (of the estimated $9B cost) and managed to launch one test satellite (in 1998).  However, faced with the direct evidence of the business failures of Iridium and Globalstar, Teledesic folded in 2002.  By then, ILS had managed to sell them a single launch service, which was eventually executed by ICO in 2008, a venture founded by Craig McCaw from the wreckage of Teledesic.

The Evolved Expendable Launch Vehicle program

The US Air Force (AF) EELV program began in 1994 with the release of the Moorman Report.  A team, led by General Tom Moorman, conducted a study to determine what to do about the military’s aging and increasingly expensive launch fleet.  At the time, the military used three separate systems for launch depending on the size of the spacecraft.  Delta II was used for the smaller satellites like GPS.  Titan was used for the largest satellites including many of the most sophisticated spacecraft for the Intelligence Community.   Atlas was used for spacecraft in between the capabilities of Delta II and Titan.  Moorman presented four options:  1) maintain the existing systems; 2) evolve the existing systems; 3) develop a new expendable system; 4) develop a new reusable system.  The Air Force chose option two and in 1995 released the first Request for Proposal (RFP).  Four companies were awarded 15-month study contracts:  Lockheed Martin, Boeing, McDonnell Douglas and Alliant Techsystems, with the idea that just one would be the eventual winner. 

Phase II of the program began in December 1996 with the competitive selection of Lockheed Martin and McDonnell Douglas for $60M Pre-Engineering & Manufacturing Development (pre-EMD) contracts.  It was at the beginning of the pre-EMD phase that I joined the program.  The circumstances were interesting and worth relating.  The Lockheed Martin concept was a family of vehicles based around the Common Core Booster powered by the Russian RD-180 engine, Atlas V. During phase I, the LM team had struggled to meet the mass to orbit requirement of the heavy (three core) version of the system.  However, the severity of the performance shortfall was not fully communicated in LM’s proposal for the pre-EMD phase.  After award, the AF discovered the issue, was justifiably furious and threatened to cancel the contract.  LM’s response was to completely change the management team while assuring the AF that the issue would be resolved ASAP.  I was part of that “second wave” as we called it.  The “first wave” was shown the door.  My first assignment was to lead an emergency performance improvement program.

In 1997, in the face of the general industry optimism with respect to the commercial launch market and the big LEOs, the Air Force decided that they would keep two winners.  Furthermore, instead of a single winner receiving a $1.6B development contract, each winner would receive only $500M and had to make up the balance of the cost with private investment.  Clearly, this was far less attractive to Lockheed Martin and Boeing (who had just bought McDonnell Douglas).  A senior Lockheed executive who complained was told to play along or else risk other more lucrative AF business like the F-22.  Those of us in the trenches had drunk the big-LEO Kool-Aid and wasted no time building business models to justify the investment.

In June 1998, two development contracts of $500M each were awarded to Lockheed Martin and Boeing.  These contracts were under the Other Transaction Authority (OTA) of the FAR. This innovative acquisition approach levied top level performance requirements but left the details up to the contractors.  Insight was achieved by a small government team. (This approach was much like what NASA did later for COTS).  In addition, the companies submitted proposals for the initial 28 missions.  These were awarded in October 1998, nineteen going to Boeing and only nine to Lockheed Martin.  Those of us on the Lockheed side were shocked and bitterly disappointed.  With both Atlas and Titan, we were the incumbents and had the expertise for the big complicated missions.  The other guys had only ever launched the small Delta II.

It turns out Boeing had offered very low prices predicated on huge production rates of dozens per year serving the commercial market.  Lockheed had done the same but was a bit more cautious.  For example, Boeing built a new manufacturing plant in Decatur Alabama sized to build 40 Delta IV cores per year.  Lockheed facilitized for “only” 19 Atlas cores.  The precision of the number 19 is an indication of the false rigor we had put into our market analysis.

Much drama ensued over the next few years.  Having won no heavy missions and having no commercial demand for the heavy, LM renegotiated its development contract to eliminate both the heavy and the west coast capability.  Boeing received a heavy demo launch and LM’s west coast launches in consideration.  Later, Boeing was found to have obtained and used LM pricing data in its proposal.  This violation of the Procurement Integrity Act cost Boeing some of its west coast launches and a new contract for LM to develop west coast capability.  As you can imagine, animosity between the two contractor teams was intense.

Nevertheless, the technical work went well.  The first launch of Atlas V occurred in August 2002 from complex 41 at the cape.  It was one of the highlights of my career.  By then, I had become the Chief Systems Engineer and Director of the Systems Engineering and Integration Team.  It was my responsibility to ensure all the myriad different pieces worked together as intended.  We launched on the first launch attempt at first second of the launch window.  The Eutelsat commercial communications satellite was deployed perfectly in its intended orbit.  Amazingly, there were no significant flight data findings.  Everything worked just as predicted.  I was at the press sight giving interviews during the launch.  My most memorable quote was “Whoo hoo” as we got word of the successful spacecraft separation.

I could keep going.  The history of EELV continues to this day amid even more drama, some of which I will cover in subsequent posts. But let me take stock of where the program stood at the time of the first launches in 2002 (Delta IV first launched in November 2002).  From the perspective of the US government, the program was an amazing success.  It got two independent launch systems, each capable of launching most or all of the required missions.  They invested a total of $1.2B in the development, including the initial phases.  In return, they extracted about $4B in contractor investment.  All the cost risk was born by the contractors.  Each system was fielded on time and worked perfectly the first launch (and have been essentially 100% successful since).  The prices for the initial 28 launches were less than the 50% cost reduction target from the heritage systems. A great deal for the taxpayers.

From the contractor perspective, things were not so rosy.  Both had invested very large sums in the expectation of a burgeoning commercial market.  By 2002, however, the big-LEO bubble had collapsed—in conjunction with the dot com bubble.  Iridium and Globalstar had declared bankruptcy, Teledesic had folded its tent.  Both Boeing and LM counted on this market to recover their investment and to support the prices they bid on the initial 28 AF launches.  Making matters worse, the 28 launches were already starting to slip as government satellite development programs experienced massive delays.  Eventually, some of these slips exceeded 10 years!

In summary, both companies were hemorrhaging money with no clear way to stop the bleeding.  It took four years, threats to exit the business, wholesale contract restructuring, and the shotgun marriage of the two company’s launch divisions into United Launch Alliance (ULA) before the business situation stabilized.  Even under ULA it was only in the last couple of years that the Atlas V investment was recovered.  With ULA’s plans to retire Delta IV, Boeing’s full investment will never be recovered.

Coincidently, 2002 was also the year that SpaceX was founded.  Over time, that small startup became the next disruptive force in the launch market.  But that is the story of the next post, Commercial Space 3.0.

             

Lesson Learned #3:  Beware the terrestrial competitor who has a scalable business model. Competing with terrestrial businesses from space is fraught with peril.  The terrestrial business model is generally scalable.  The cell phone company can put in some cell towers, gain some customers (revenue), then put in some more—on a timescale measured in months.  The space business (in the mode of Iridium) must get everything fielded before any revenue accrues.  The timescale is measured in years.

Lesson Learned #4:  Be deeply suspicious of your own market analysis.  You should start from the premise that all commercial space business models suck (See Lesson Learned #1).  I still shake my head at the wild market analyses we used to justify the investment into Atlas V and Delta IV. We were assuming that the worldwide launch market would grow by 4 to 5 times its then size in just a few years. The fact that everyone got it wrong is little consolation.  If it seems too good to be true, it probably is.  Compounding the problem was that each side assumed they alone would garner the lion’s share of that new market and priced accordingly.  Obviously, in the real world, the market will be shared among many competitors, some of whom don’t have to recover investment or make a profit.  (See Lesson Learned #2).

The Case for Space Resources

Here are the charts for the seminar I gave today at Colorado School of Mines.  The timing was good given that Mines has just announced the first ever graduate program in space resources.

Thoughts on Commercial Space, Part IIB

            The next four posts will be a detailed account of each of the four phases of commercial space starting with the communications satellite market, Commercial Space 1.0.  My career has spanned all four phases.  After a two-year stint working for Martin Marietta on Titan III and 34D in the early 1980’s, I spent five years in graduate school learning about quantum field theory.  I returned to Martin to work on the Commercial Titan program, Martin’s entry into the (launch) supply side of Commercial Space 1.0.  I then shifted to military space with Titan IV.  In the late 1990’s I moved to the Atlas V development program where we aggressively pursued both Commercial Space 1.0 and 2.0.  In the 2000’s, I spent much time and energy helping create—and chasing—Commercial Space 3.0.  Most recently, I’ve partnered with and competed with Commercial Space 4.0.  The remainder of my career will be spent trying to get Commercial Space 5.0 (the cislunar economy) off the ground.

Commercial Space 1.0

The first wave of commercial space began with the launch of the first Intelsat spacecraft in 1965.  Ironically, it wasn’t commercial at all.  Intelsat was formed as an Inter-Governmental Organization (IGO), a consortium of 11 countries.  By the time Intelsat was privatized in 2001, membership had grown to one hundred countries.  Intelsat remains one of the largest communications satellite operators.  Another major player, SES, got its start in 1988 as an initiative of the Luxembourg government who remains a major shareholder of the company.  The company became publicly traded in 1998.  Intelsat and SES currently operate the majority of communications satellites in geosynchronous orbit.

Other major communications satellite players started as IGO’s including Inmarsat and Eutelsat.  Both are now private companies, Inmarsat based in England and Eutelsat in France.

One of the first pure commercial ventures was DirecTV which launched its first satellite in 1993.  Originally a spinoff of Hughes Aircraft, it is now part of AT&T and operates a fleet of 13 satellites.  Another pure commercial satellite venture is Echostar, headquartered in my home state of Colorado.  It launched its first satellite in 1995 and competes with DirecTV through the affiliated DISH Network.

The rise in demand for satellite launches coming initially from IGO’s spurred the development of new launch systems.  The development of the European Ariane family of launchers began in the 1970’s as a mostly French initiative to create an indigenous European space launch capability.  Arianespace was formed in 1980 by CNES (the French Space Agency) to market the Ariane family of launchers worldwide.  Arianespace is now majority owned by Safran Airbus, the primary manufacturer of Ariane launch vehicles.

Funds to develop the Ariane family of launchers have been almost entirely public (ESA member states).  And though now privatized, Arianespace began as a quasi-governmental entity owned by CNES.  Its customer base is a mix of commercial and government entities.  Over the years, Arianespace has struggled to make a profit, often having been “bailed out” by ESA or CNES.  Nevertheless, it is often viewed as a pillar of the commercial launch business.

The NASA owned and operated Space Shuttle was originally conceived to be a launch systems serving all markets. The first Shuttle launch was in 1981.  The first Shuttle launch carrying commercial communications satellites (two) was STS-5 in 1982. Eleven Shuttle launches carried commercial satellites through 1986.  The 1986 Challenger accident put an end to the Space Shuttle as a commercial launcher.  After the return to flight in 1988, the Shuttle was only used for government missions.

After the Challenger accident, the United States entry into the commercial launch market came from the private sector: McDonnell Douglas with the Delta, General Dynamics with the Atlas and Martin Marietta with the Commercial Titan, all vied to fill the gap in commercial launch capability left by the exit of the Shuttle.  (The US national security community also scrambled to get off the Shuttle, starting the Titan IV program and scrapping its plans for an all military “Blue Shuttle.”)

I spent several years on the Commercial Titan program in the late 1980’s.  One failure in four flights and very risk intolerant management spelled a quick demise.  Though commercial Titan didn’t make it, commercial Atlas and commercial Delta survived.  Commercial Atlas had a rocky start with three failures in the first few years.  In part, this poor track record resulted in the sale of Atlas to Martin Marietta in 1993—though Martin really wanted the Centaur upper stage for Titan IV and took Atlas as part of the negotiation.  It is notable that all the debt accrued by General Dynamics during the development of Atlas I, II, IIA and IIAS remained behind and was written off.  With the debt written off, Atlas became nicely profitable for its new owners through the remainder of the nineties and into the early 2000’s.  Martin Marietta and Lockheed merged in 1995 to become Lockheed Martin (Lock-mart for short).

By the early 1990’s there were really only three vehicles serving the commercial market:  Ariane (Ariane 4 series), Atlas (Atlas I, II series), and Delta (for smaller spacecraft).  The stage was now set for Commercial Space 2.0.

            I extract two critical lessons from Commercial Space 1.0 through the early 1990’s.           

Lesson Learned #1:  Commercial Space is incredibly risky.  Capital requirements are very high, technology is pushed to the limit, operations are complex and the markets are fragile.

            These facts make it tough for any commercial company to break into commercial space on either the demand side (satellite operations), or the (launch) supply side.  All the initial satellite companies got their start as some sort of IGO or other heavily government supported entity.  The initial launchers were also government.  It was only after the trail was blazed that the private sector could or would step in.

            Even then, profits proved elusive.  Martin Marietta lost close to $100M on the Commercial Titan before they pulled the plug.  Don’t feel sorry for them.  They more than made up for it on the Titan IV program.  General Dynamics also lost hundreds of millions on commercial Atlas before selling it to Martin Marietta.  McDonnell Douglas made small profits on commercial sales of Delta, but the program was heavily supported by US Air Force.  Of course, Arianespace has never consistently delivered any profit.

Lesson Learned #2:  It is very difficult for companies to compete with countries.

            This is a corollary to Lesson Learned #1.   Private companies have limited resources and must deliver healthy financial returns to stay in business.  Governments have no such constraints.  The mere presence of a government entity in a market space will suppress any private sector interest.  An example is the early 1980’s.  So long as the Space Shuttle was launching commercial communications satellites, no US private company was willing to take the risk.  Only Ariane, itself supported by European governments, could compete.

Thoughts on Commercial Space, Part IIA

            The history of commercial space is fascinating and dramatic.  It is full of spectacular technical and business failures and some success.  I’ve had the privilege of living through much of it and what follows is largely from my memory, though I have made liberal use of the internet to get the facts and dates correct.

            I like to think of commercial space, so far, as being divided into phases called 1.0, 2.0, 3.0 and 4.0.  Not a terribly creative nomenclature, but I’ve used it in talks in the past and will stick with it here.  I’ll briefly sketch each phase and subsequent posts will do a deeper dive on each.  I will also distinguish between the demand side of commercial space and the supply side, this from the perspective of a launch service provider.  This reflects my personal perspective as a career launch guy, but it is also instructive to see how each sector influences the other.  Any space business counts launch as one of the largest costs as well as one of the highest risks.  Access to space remains a significant barrier to entry for any prospective commercial space business.

            Commercial Space 1.0   This is the beginning of commercial space from the launch of the first Intelsat spacecraft in 1965 to the present day.  It is dominated by communications satellites in geosynchronous orbit and has benefitted by large synergies and cooperation with the government satellite and launch sectors.  Growth in this marketplace stimulated the first round of entrants into the commercial launch sector in the mid to late 1980’s, including Ariane, Proton, Atlas, Delta and even Titan—a classic case of strong demand stimulating supply.

            Commercial Space 2.0  This was the age of the big LEO constellation.  The timeframe was the mid to late nineties.  It was commensurate with the rise of the internet and several visionaries dreamed of an “internet in the sky.”  Names like Teledesic, Iridium, Globalstar, Celestri and Skybridge and talk of hundreds or even thousands of spacecraft stimulated a lot of activity and investment on both the supply and demand sides of the market.  The USAF EELV program was born during this time and was shaped by dreams of this burgeoning commercial market.  Other commercial launch business came into the marketplace such as Sea Launch. Fundamentally flawed business models and the bursting of the dot-com bubble doomed Commercial Space 2.0.  Some of the wreckage of Commercial Space 2.0 survived and was transformed including Atlas V and Delta IV currently operated by the Lockheed-Boeing joint venture, United Launch Alliance (ULA).

            Commercial Space 3.0  This was the time of COTS, NASA’s commercial orbital transportation services.  The driving force was the retirement of the Space Shuttle and the opening of new market to the US private sector.  NASA’s promise of new demand to service the international space station stimulated private sector investment in new launch systems, Falcon and Antares, as well as cargo and crew carrying vehicles, Cygnus, Dragon, Dreamchaser and Starliner.  We are currently part way through Commercial Space 3.0, with several of the new vehicles yet to fly.  Commercial Space 3.0 is a long way from pure commercial but it reflects a large shift in the commercial direction from a government owned and operated space shuttle to private sector owned and operated systems, funded with a mix of government and private investment, servicing a government market.  Hopes that these Public-Private Partnerships would stimulate other commercial demand-side enterprises remain unfulfilled.

            Commercial Space 4.0  This is the most recent set of developments and is characterized by the phenomenon of the billionaire space entrepreneur, the emergence of the smallsat/cubesat, and round two of the big LEO constellation. 

            As with any simplistic organizational scheme, there are aspects of commercial space that don’t fit cleanly into any of these categories.  And there are companies and programs that span all the phases.  For example, SpaceX was born in 3.0 but clearly extends into 4.0 and has reached in to disrupt the (launch) supply side of the communications market (Commercial Space 1.0).

            My next post will provide a more detailed look at Commercial Space 1.0 and extract some lessons learned.

Thoughts on Commercial Space, Part I

            I decided to officially kick off my blog with some thoughts on commercial space.  I anticipate three parts.  This first part will contain some general observations.  Part II will chronicle the somewhat torpid history of commercial space activities and a few key lessons learned.  Part III will be my thoughts on the future of commercial space and how we can escape the doldrums.   

I am passionate about space in general, but commercial space occupies a special place in my heart.  It represents an intersection of many of my beliefs:  my libertarian political philosophy, my capitalist economic philosophy, my overarching philosophy of power which elevates human exploration and exploitation of space to a moral imperative.  You see, for the space enterprise to be sustainable and grow, we must harness the power of the free market.  And that means commercial space.

Over the years, I participated on several commercial space panels that bogged down in defining what it is we mean by commercial space.  I, for one, am tired of discussing the question so hopefully I can settle it here once and for all.  There are many definitions and which is appropriate depends on the context.  The real distinction is between the public sector and the private sector.  Any given space activity can include a mixture of both elements.  The purest form of commercial activity takes place entirely within the private sector.  It is performed by private-sector companies for the benefit of private-sector customers using private-sector capital. At the other end of the spectrum is a pure public-sector activity where the activity is performed entirely by public-sector agencies using public-sector employees, entirely funded by public funds for a public purpose.  In between are all manner of hybrids involving a mix of investment funds, executing entities and customers.

A few examples from current space activities illustrate the spectrum.

1.      A satellite for television broadcast (e.g. Direct TV) is close to pure commercial:  private-sector capital, private-sector operating company and private-sector customers.  However, it is likely to be launched by a rocket that benefitted by a large government investment (Atlas V, Ariane V or Falcon 9, for example).  And much of the R&D into the satellite itself is spun-off from government programs.

2.      Commercial remote sensing is a hybrid.  While the satellites are operated by commercial companies (e.g. DigitalGlobe), much of the investment has been from the government and most of the customers are government agencies.  New companies like Planet might be moving the needle closer to pure commercial.  We’ll see how it turns out.

3.      NASA’s much ballyhooed COTS (Commercial Orbital Transportation Services) program that rolled into the CRS (Commercial Resupply Services) program was an innovative government acquisition approach but not very commercial.  Much (if not most) of the investment came directly from the government and to date, the government has been the sole customer.  The commercial moniker comes from the fact that commercial companies are performing the activities and commercial-like contracts are employed.  Though the CRS contracts are still governed by the FAR.

4.      NASA’s SLS (Space Launch System) program is about as far to the other end of the spectrum as it gets.  All the investment is public.  NASA is the managing agency and thousands of NASA employees are engaged.  NASA is utilizing private-sector companies to perform much of the work, notably Boeing, Aerojet Rocketdyne and Orbital ATK, but none of those contracts were competitively awarded and NASA has full design authority and close oversight of all work performed.  By the way, I have heard some NASA folks claim that SLS is commercial because commercial companies are involved.

On this spectrum, what I mean by commercial space is pure commercial space, or at least as close to the top of the list as possible.  The reasons are economic.  If space continues to be (mostly) the purview of governments, it is constrained by government budgets, subject to political winds, subject to hijacking by special interests both inside and outside government and subject to the gross inefficiencies and lack of accountability of any government enterprise.

On the other hand, a pure commercial enterprise is subject to the tyranny of consumers who will vote with their feet if the product or service does not meet their needs in both price and performance.  It is subject to competition not just from other space companies, but any other idea that meets the same consumer demand.  For example, satellite communication services compete with terrestrial communication services. Furthermore, it is accountable to investors who expect a return on their investment.  All these pressures drive innovation and efficiency resulting in a continual reduction in cost and increase in performance. 

To make a profit and thus survive, a commercial space business must provide value to its customers more than the value of the materials and labor it took to generate the product or service.  Profit is a direct measure of the value added by the business and, by the way, the wealth added to society.  [Political aside:  I am astounded by people who decry profits as being somehow evil.  To the contrary, everyone in the chain comes out ahead.  The consumer is better off for having the product or service—otherwise they wouldn’t have bought it.  The wealth created (i.e. profits) will either be spent for other goods and services or invested in the means to create even more wealth.  It’s called capitalism and is the greatest system for producing wealth and eliminating poverty ever devised by humankind.  Wealth creation works far-far better than wealth redistribution.]

In summary, the growth and sustainability of the space enterprise requires a strong and robust pure commercial sector.  However, so far, only telecommunications has provided a semblance of a nearly pure commercial market.  It turns out to be very difficult to make a profit in space other than by selling stuff to the government.  In part II, I will review the history of commercial space activities, the few successes and many failures, and try to extract some lessons learned.  With the lessons from history, part III will look to the future.  New technologies, new discoveries and new players all afford great hope that we can overcome the failures of the past and usher in a new age of commercial space.

Introduction to Mad Scientist Musings

           

Welcome to my blog!  Those that know me need no introduction.  Those that don’t can see my professional website SowersSpace.com for my qualifications as a scientist and engineer or my personal website GeorgeSowers.com for my book, The Philosophy for the Future, and some of my other writings.  Or you can follow me on twitter:  @george_sowers

My intent with this blog is to express my opinions on a wide range of topics including Space, Philosophy, Science and Politics.  Any ideas contained herein are my own, not those of my former employers or current clients—or anyone else for that matter, unless expressly indicated. 

As a matter of orientation, I come from a pragmatic-scientific point of view.  Debate is useful as a means to approach truth. I will often take a contrarian stance just to see how the arguments play out.  But as a local talk show host was fond of saying, before I tell you where I stand on a particular issue, I need to tell you where I sit.

I’ll start with philosophy, for that is the subject that underpins all else.  I am a pragmatist in that I believe that outcomes and consequences are what ultimately matter.  This belief functions as judge and jury in most debates.  I spent twenty years building a philosophical edifice based on the principles of logic and science and pragmatism.  In it, power, defined as capability to effect outcomes and deliver consequences, becomes the highest value for humanity.  In fact, the quest for ever increasing power, on multiple levels is a fundamental aspect of human psychology, which I call (after Nietzsche) the Will to Power.  If that intrigues you, see my book.  A warning, however, it is heavy going.

My views of science follow.  Science is the combination of logic (math) and empiricism that is the best approach yet discovered for acquiring power. It’s offspring, technology, is pure power, simply put.  Sad to say, I believe the institution of Science is in a (mild) crisis.  Politics has infiltrated, turning some scientists into political activists and turning science from a pursuit of knowledge to a tool of the state.

My political philosophy is libertarianism.  I believe it follows from my philosophy of power and the ethical theory it engenders, that individual freedom should be among the highest social values.  As such, I am an advocate for a smaller state and very suspicious of “well meaning” encroachments on liberty.

Space is easy.  From the philosophy of power, it is imperative we harness the infinite resources of the wider cosmos to the benefit of humankind.  My thirty years in the industry has provided me a perspective how to do that most effectively and expeditiously.

Finally, I welcome comments and suggestions so long they are in the spirit of a productive debate, with the express purpose of inching closer to truth.  To quote Chapter 1 of the Philosophy for the Future:

I believe in the anarchy of ideas—ideas battling it out in the arena of selection.  The selection criteria: pragmatism!

George Sowers, May 2017.