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Competition in Space – The commercial regime of private players

By Hariharan Vignesh Launching satellites into orbit, once the exclusive domain of the U.S. and Soviet governments, today is an industry in which companies in the United States, Europe, China, Russia, Ukraine, Japan, and India compete. In the United States, the National Aeronautics and Space Administration (NASA) owns and launches its space shuttle. Private sector […]

By Hariharan Vignesh

Launching satellites into orbit, once the exclusive domain of the U.S. and Soviet governments, today is an industry in which companies in the United States, Europe, China, Russia, Ukraine, Japan, and India compete. In the United States, the National Aeronautics and Space Administration (NASA) owns and launches its space shuttle. Private sector companies provide launch services for other NASA launches, and many of those for the Department of Defense (DOD). Commercial customers purchase launch services from the U.S. companies or their competitors. Since the early 1980s, Congress and successive Administrations have taken actions, including passing several laws, to facilitate the U.S. commercial space launch services business. The Federal Aviation Administration (FAA) regulates the industry

Several entrepreneurial U.S. companies have been attempting to develop RLVs through private financing. Many have encountered difficulties in obtaining financing from the financial markets, and some have sought government loan guarantees or tax credits. Some have received limited direct government funding through various contracts. One company, SpaceX, headed by Elon Musk (creator of PayPal), asserts that it will dramatically reduce the cost of reaching orbit with its partially reusable Falcon launch vehicle i.e The first Falcon launch, of small DOD communications satellites.

Europe, China, Russia, Ukraine, India, and Japan offer commercial launch services in competition with U.S. companies. Most satellites are manufactured by U.S. companies or include U.S. components and hence require export licenses, giving the United States considerable influence over how other countries participate in the commercial launch services market. The United States negotiated bilateral trade agreements with China, Russia, and Ukraine on “rules of the road” for participating in the market to ensure they did not offer unfair competition because of their non-market economies.

Europe: The European Space Agency (ESA) developed the Ariane family of launch vehicles. The first test launch of an Ariane was in 1979; operational launches began in 1982. ESA continued to develop new variants of Ariane. Ariane 5 is the only version now in use. ESA also is developing a smaller launch vehicle, Vega, whose first launch is expected in 2005. Operational launches are conducted by the French company Arianespace. Arianespace conducts its launches from Kourou, French Guiana, on the northern coast of South America. Arianespace also markets Russia’s Soyuz launch vehicle and ESA is planning to build a launch site for Soyuz at Kourou.

India: India conducted its first successful orbital space launch in 1980. Its ASLV and PSLV launch vehicles can place relatively small satellites in low Earth orbit. India is developing a larger vehicle (GSLV) capable of reaching geostationary orbit. The GSLV, which uses Russian cryogenic engines that were the subject of a dispute between the United States and Russia (discussed earlier), made its first operational flight in September 2004.

The U.S. Congress has been debating issues involving the domestic launch services industry for many years. Part of the debate has been focused on satellite export issues (discussed below). Another part concerns what the government should do to stimulate development of new launch vehicles by the private sector, particularly in a market that is stagnant or declining. That debate focuses on whether tax incentives or loan guarantees should be created for companies attempting to develop lower cost launch vehicles. Tax incentive advocates argue that loan guarantee programs allow the government to pick winners and losers; loan guarantee advocates argue that tax incentives are insufficient to promote necessary investment in capital intensive projects.

Thereby, it is evidently clear that competitive regime needs to established in order to feed both public and private partnership between governmental and non-governmental entities to survive and thrive in the market of the future.