Conclusion #1: This Future Space Transportation Study was a limited scope effort that analyzed approximately 20% of the potential future markets, as outlined by the Commercial Space Transportation Study (CSTS) published in 1994. The results of the limited market analyses conducted here supported the general conclusions put forth by the CSTS: that the space launch market is inelastic above a certain launch price point (approximately $600 per pound) and elastic for prices below. At this time, AS&T has conducted insufficient analysis to make further recommendations on the size, shape and slope of the elasticity curve. We maintain that conducting further market analysis to define elasticity is critical to the continued growth and evolution of the space launch industry.

Conclusion #2: Many of the future markets will be enabled once the frequency and cost of space access achieves thresholds that allow established terrestrial industries to make money in space. This fact, that new revenues will come from multiple established industries, reduces the investment risk of fielding a 2nd Generation Launch System. As an example, many emerging launch vehicle companies (i.e. Kistler Aerospace Corporation, Kelly Space & Technology, Pioneer Rocketplane, Rotary Rocket, etc.) relied almost solely on the emergence of LEO communication satellite constellations, a new and unproven industry itself, to attract investment and achieve commercial viability. This created a situation where business risk was piled on top of business risk. In contrast, this market study indicated that future market revenues will come from many different business sectors and consist of capturing very small fractions of large established industries. Figure A highlights an example based on the markets studied as part of this report.

The tourism industry has annual revenues of US$1 trillion. Adventure Travel comprises approximately US$200 billion of those. Assuming that safety can be improved and costs significantly reduced, it is not unfathomable that a 2nd Generation Launch System can capture (or add) 1% or US$2 billion in annual revenues from commercial passenger travel and tourism.

The semiconductor and pharmaceutical industries, which have approximately US$550 billion in combined annual revenues, spend between 10% and 15% on Research & Development. High technology industries are typified by a fierce competitive landscape, which has everyone looking for a competitive advantage and causes companies to take high risks. If a 2nd Generation Launch System could provide the companies with frequent low-cost access to orbiting research facilities, it is well within the grasp of reality that these companies could spend at least 1% of their annual R&D budgets on space based research, which could easily total another US $500 million. These revenues, US$2.5 billion for R&D and passenger travel, are nearly equal to current commercial GEO satellite launch revenues, and can significantly impact the business case of a commercial 2nd Generation LV.

Conclusion #3: Based on this path finding study, which represents the first comprehensive system study to derive transportation design requirements for the future markets, the study team concluded that a 2nd Generation Launch Vehicle, designed to address future markets, must be designed to work around the business cycles demanded by the future user community . As an example, both airline companies interviewed outlined the need to limit the time from when a passenger boards a vehicle to when they arrive at their destination. Specifically, the airlines would prefer to limit the time between when a passenger boa rds to when they are launched to two hours, and to limit the transit time from launch to arrival at the destination to six hours. For the Space Shuttle, this span averages approximately two to three days due to the relaxed launch window and extensive orbit phasing operations. To correct for this, a 2nd Generation vehicle must routinely meet a very narrow launch window (measured in seconds) in all-weather conditions. As another example, semiconductor companies develop a new generation of microchips, build multibillion-dollar factories, pay off their capital investments and generate huge profits (80% profit margins) all in the span of 18 to 24 months. For these companies, R&D campaigns are measured in hours, days and weeks. Currently, it takes years to plan, design, and implement orbital tests. Until these disparate business cycles are reconciled by improvements in space transportation and on-orbit infrastructure, many of the future markets will remain unaddressable.

Conclusion #4: Future markets must be developed in concert with a 2nd Generation Launch Vehicle. It was clear from the study team's interviews that very few people outside the space industry understand the benefits of space and how it could benefit their business. Furthermore, the space infrastructure required to address the needs of the future markets is very different than what is operating today. Many of these future markets require new facilities and processes, in addition to the Earth to Orbit transportation infrastructure, which require years to develop and deploy. As a result, any space transportation service provider who expects to address future markets can not, must not, rely on a "build it and they will come" philosophy. It is incumbent upon industry and NASA to devise a future market incubation plan that serves to: 1) promote space awareness to non aerospace companies; 2) incubate near term future markets (e.g. space tourism); and 3) act as "stepping stones" that will lead to fully developed, robust commercial space commerce.

AS&T interviewed potential future users to:

1. develop business concepts for the user's particular market;
2. identify market price pressure points; and
3. derive RLV design attribute requirements to address the particular market.

Andrews Space & Technology developed an approach for FSTS that was divided into four distinct phases, interleaved with two interview opportunities with each selected industry representative. In the initial market analysis step, the targeted market is gauged by applying the defined Measures of Effectiveness (MOE). The following MOE's were defined and used:

• Technology Readiness Level (TRL)
• Business Readiness Level (BRL)
• Utilization of Space Unique Resources
• Product Value per Unit Mass
• Value Chain Intersection with Space Unique Resources
• Market Size
• Market Trends
• Space-based Market Concept Maturity

If the market was found to be attractive as indicated by these metrics, it became a candidate for the next step in the process. Prior to soliciting interview opportunities with industry representatives, the identified market was analyzed for emerging customer opportunities. The following criteria were developed to determine the feasibility of each customer's business opportunity:

• Product Quality
• Product Quantity (Yield)
• Product Innovation (Uniqueness)
• Product Development (Roadmap)
• Time to Market
• Production Cycle Time
• Profitability

After these parameters had been quantified, a plausible business scenario was put forth to selected industry representatives. In the first of two interviews , initial reactions were solicited from select industry representatives. Interviews consisted of a brief presentation of the proposed scenario (including the video trailer), followed by a question and discussion session for a total duration of approximately 90 minutes. Andrews Space & Technology (AS&T), in conjunction with Digital Empire, created a brief (4.5 minute) video that characterizes the opportunity of Future Commercial Space Markets.

The video trailer, which presented a scenario of business activity in 2012, was highly effective in setting the mood of the meeting toward an out-of-the-box discussion of future market possibilities. The video trailer can be viewed at http://www.andrews-space.com/en/corporate/FSTS.html

The approach developed by AS&T has proven to be an effective tool to systematically explore the emerging markets of commercial space utilization. The process has resulted in a broad scope overview of the requirements of any future launch system that is to serve these emerging markets. Additional iteration of the process is expected to refine the fidelity of the obtained mission and operations model data.

The potential of space-based semiconductor manufacturing for the foreseeable future (present to 2012) is low. Industry leaders are continuing to scale down geometry features via wet processes and limited vacuum application. The potentially cleaner environment of space may not reduce defects and increase yield of semiconductor production because 95% of the contamination in today's processes are believed to come from process tools and are thus inherently internal to those processes. Radical tool redesigns, aimed at eliminating those contaminants, are not anticipated in the future 10-year scope of this investigation. In two more generations microchips will have features less than 30 nm and semiconductors as we know them will not function due to quantum mechanical limits (electronic tunneling through CMOS gates). There are a number of a lternate approaches in work and the availability of laboratories with microgravity and ultra hard vacuum were definitely of interest.

A few small companies are pursuing the development of "dry resist" processes that are amenable to space-based semiconductor manufacturing. However, these conceptual-phase development efforts have yet to show a significant improvement over terrestrial processes.

Although it was not the focus of this effort, interviews with "traditional" semiconductor manufacturers did uncover a significant interest for an On-Orbit Research Facility. We highly recommend the investigation of an On-Orbit R&D facility as part of future studies. This stems from the fact that, within the next seven years, semiconductor companies will reach physical limits of material and present manufacturing processes, which they have refined over the last decade. Currently, they are searching for "revolutionary" methods of manufacturing follow-on generations of products. If an on-orbit research facility existed today, interviewees would be willing to pay up to US$20 million for a single flight to conduct tests and build certain production elements that could lead to breakthrough material and manufacturing advancements. However, this market is only addressable if the companies are offered routine access: no less than once a month. Demand would significantly increase if the price for a week's research could be reduced to less than US$1 million.

The semiconductor market spends between US$20B and US$30B annually on R&D. This works out to between US$385M and US$577M per week! Based on the interview feedback, if a 2 nd Generation Launch Vehicle could provide weekly access, semiconductor companies could spend up to US$20M per week (3% of the world semi-conductor R&D funds) for the use of an Orbital R&D Facility. At this time, AS&T has insufficient data to develop elasticity demand curves for On-Orbit R&D expenditures as a function of price per pound to LEO.

Current and on-going research demo nstrates the significant advantages of on-orbit research and manufacturing which has attracted the interest of pharmaceutical market leaders.

Liver tissue is the most likely early candidate for commercially viable space-based tissue engineering. Tissue eng ineering technologies have the potential to address diseases and disorders that account for about half of the nation's total healthcare costs. Tissue culture experiments performed on the shuttle and Mir have demonstrated the positive effects of microgravity on three-dimensional tissue growth and differentiation, and thus the potential for improved products. Liver disease in the United States resulted in 25,175 deaths in 1997, while only 4,000 people received a liver transplant (in 1996). Based on 1985 data, liver and gall bladder disease cost the US health care industry US$17 billion (adjusted for inflation). Space based tissue engineering could possibly save tens of thousands of lives and has the potential of saving the US health care industry billions of dollars.

Space-based manufacture of recombinant drug could represent a substantial market. Recombinant protein drugs and diagnostic agents are one of the fastest growing segments of the pharmaceutical industry generating US$20 billion in annual revenues. Microgravity production of recombinant drugs offers the potential of improved quality and yield. An improvement in yield of only a few percent has the potential to save millions in production costs.

While biotechnology firms are aware of some of the advantages of microgravity, very few have performed microgravity experimentation for the manufacturing of biotechnology products. Like the semiconductor industry, biotechnology firms are in an extremely competitive and risky market space. Also like the semic onductor industry, biotechnology firms spend between 10% and 15% of their annual revenues on R&D. In addition to the actual products identified as part of this study, and their potential revenues, there is a significant demand for unique research and dev elopment facilities, which would likely include an orbital R&D laboratory. The biotechnology industry has US$365 billion in global annual revenues, which translates to between US$700 million and US$1.05 billion in weekly R&D expenditures. The benefits of an orbital R&D facility to this industry are significant. Although AS&T has insufficient data to develop an accurate elasticity curve, our research indicates that there would be significant interest if a space transportation infrastructure could support the biotech industry's business and research requirements. At this time, these are nebulous because so little applied research and product development has been done in this area. Increased access to laboratories on the International Space Station and fro m commercial services will be a necessary precursor to large-scale development of an on-orbit biotech research and production market.

LEO Passenger Market

The LEO Passenger Travel market is real and exhibiting a growing demand for LEO passenger services. Unlike many other s-business opportunities, this market is exerting a "pull" for products to supply LEO Passenger transportation and infrastructure services. During 2000, multiple companies; including MirCorp's "Citizen Explorer", BrainPool's "Space Commander", and NBC's "Destination Mir" television program; announced intentions to fly "citizen explorers" to orbital destinations, many as part of entertainment endeavors. The value of these commitments, publicly listed as US$20 million per flight, is estima ted at US$140 million. World wide, the tourism industry has US$1 trillion in annual revenues, with US$200 billion of those coming from adventure travel related activities. Given that the current market can support demand at US$20 million a ticket (for Dennis Tito), market growth potential is significant. Kelly Space & Technology, as part of their NASA NRA8-27 effort, conducted a survey and placed the demand at 10,000 tourists a year at a ticket price of US$400,000, which would yield annual revenues of US $4 billion at that price point. This value is consistent given the adventure travel industry revenues (US$200B). As part of this study, Andrews Space & Technology did not have the resources to conduct a thorough demographic study. Our effort was focused on interviewing the airline industry, gauging their interest in the space travel market, and using the interviews to derive space transportation design requirements. However, we strongly recommend that a broader sampling (Kelly's survey, conducted by Harris Interactive, interviewed 2000 people in the United States) would benefit the business case development and aerospace industry acceptance of the market's credibility.

2nd Gen RLV System Requirements Derivation

AS&T analyzed the data collected from the interview process and utilized a system engineering process to identify a broad requirements set of 50 requirement / attribute pairs. The various attribute/requirement pairs were chosen to reflect the needs of the markets that are to be served, while mainta ining the minimum number of limitations imposed on the transportation system designer. All of the collected attributes were sorted in six major categories (Scheduling, Operations Performance, Interfaces, Business, and Provider Specific), including the important distinction between requirements imposed by the customer of a space transportation industry (Customer Specific), and those determined by the "space line" and imposed on the vehicle manufacturer directly (Provider Specific).

Requirements values were derived for each individual market segment and the most limiting values distilled based on the investigated markets (see Table A as an example). Based on the three markets analyzed, the Space Travel market has the most limiting requirements (Figure C). The current uncertainty of these numbers is significant, but the accuracy of the model will further increase with the collection of additional data.

Severity 4-2-10 Pressure Environment
Range of pressure and maximum rate of change acceptable to the payload customer.
Semiconductor Market	No Data
Biomedical Market	0 - 2 atm
LEO Travel Market	FAR Part 25 Subpart D Sec 25.841
Limiting Values	FAR Part 25 Subpart D Sec 25.841

This study examined three future space markets. Of the three, one, microchip manufacture showed limited in application as a space market driver. The other two, biomedical processing and adventure travel showed high potential for near term mission applications and large revenue potentials