Congress Space Subcommittee Hearing: Future Markets for Commercial Space
FYI,
"Subcommittee on Space and Aeronautics Hearing Charter: Future Markets
for Commercial Space"
House Science Committee via SpaceRef.com
http://www.spaceref.com/news/viewsr.html?pid=16241
: Subcommittee on Space and Aeronautics Hearing Charter: Future
: Markets for Commercial Space
: Future Markets for Commercial Space
: April 20, 2005 9:30 a.m. to 12:00 noon
: 2318 Rayburn House Office Building
: Purpose: On Wednesday, April 20, at 9:30 a.m., the Subcommittee on
: Space and Aeronautics will hold a hearing to examine the future of
: the commercial space market and the government's role in that
: future. Last year, the President signed into law the Science
: Committee's Commercial Space Launch Amendments Act, which dealt
: with regulating one aspect of commercial space - private, human
: suborbital flights, which are generally intended for space tourism.
: Prepared Statements
: - Chairman Ken Calvert
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: - Burt Rutan
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: - Molly Macauley
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: - Wolfgang Demisch
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: - John Vinter
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: - Elon Musk
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: - Will Whitehorn
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: The first panel at the hearing will examine the potential of space
: tourism, with a focus on last year's successful flights by
: SpaceShipOne, the world's first privately-built and human-piloted
: space craft.
: Built by famed aircraft developer Burt Rutan, SpaceShipOne last
: summer won the Ansari X Prize, a $10 million kitty raised by space
: enthusiasts to stimulate entrepreneurial interest in space flight.
: Rutan's ship was the first to fly to an altitude of more than
: 100 kilometers twice in two weeks, beating 25 other teams from
: seven countries.
: Virgin Galactic, founded by the Virgin entertainment and airline
: company owner Richard Branson, has announced plans to buy a fleet
: of space craft based on SpaceShipOne's design to carry tourists
: into suborbital space (an altitude not sufficient to orbit the
: Earth), possibly as early as 2008.
: The second panel will examine the potential of the wider commercial
: space market, which includes rockets to launch satellites and the
: satellites themselves, which provide services ranging from beaming
: images of landscapes and weather patterns, to global communications
: and entertainment. The commercial space market has had a spotty
: record of success. The government is very involved in the
: commercial space market in a variety of ways, including providing
: permits for launches, insuring private parties against catastrophic
: accidents. Perhaps most significantly, the government is a leading
: purchaser of both satellites and launch services.
: Another potential aspect of the commercial market - private
: provision of services for the National Aeronautics and Space
: Administration (NASA) to service the International Space Station
: - will not be a focus of this hearing.
: Witnesses:
: FIRST PANEL:
: Mr. Burt Rutan founded his company Scaled Composites, Inc. in 1982.
: For SpaceShipOne's achievements, Mr. Rutan this month received the
: Collier Aerospace Trophy, the most prestigious prize in
: aeronautics.
: Mr. Will Whitehorn is the President of Virgin Galactic and Group
: Corporate Affairs and Brand Development Director for Virgin
: Management Limited.
: SECOND PANEL:
: Mr. Elon Musk is the CEO and Chief Technology Officer of Space
: Exploration Technologies (SpaceX) in El Segundo, CA. He formerly
: founded two Internet companies, PayPal and Zip2 Corporation.
: Mr. John W. Vinter is Chairman of the International Space Brokers
: (ISB). ISB represents nine of the twenty satellite companies in the
: world and is the only insurance broker that is focused exclusively
: on the space industry.
: Mr. Wolfgang Demish, the founder of Demisch Associates, LLC, is an
: aerospace financial analyst.
: Dr. Molly Macauley is a Senior Fellow and Director of Academic
: Programs at the Resources for the Future.
: Overarching Questions:
: The Committee will focus on the following questions at the hearing:
: 1. What is the outlook for the various aspects of the commercial
: space industry over the next five to ten years?
: 2. What should the government do or not do to encourage the nascent
: commercial space industry?
: 3. How can the commercial space industry avoid some of the pitfalls
: that have led to unrealized expectations in the past?
: Background:
: The Rise of Commercial Space Industry and the Role of Legislation
: From the dawn of the space age through much of the 1980s,
: governments dominated efforts in space. Governments financed and
: own most satellites, which were launched on government-owned
: vehicles, including the Space Shuttle.
: The Challenger accident in 1986, however, helped spur private
: sector ownership of both satellites and launch vehicles. After the
: Challenger accident, for example, government agencies, particularly
: the Department of Defense, viewed the Space Shuttle as too risky
: for launches and began looking for alternatives.
: The Science Committee passed the Commercial Space Launch Act (CSLA)
: of 1988, which required NASA to purchase launch services for
: satellites from private companies rather than the launch vehicle
: itself. The CSLA ensured a market for the nascent launch industry
: by requiring the government to be a customer.
: The CSLA also provided another element intended to foster the
: success of the new industry - indemnification against catastrophic
: accidents. Because a single launch failure had the potential of
: causing billions of dollars of damage should the debris fall on
: populated areas, the private sector argued that no private
: insurance company would offer coverage to a satellite company of
: launch provider unless the government agreed to indemnify (that is,
: pay for) at least a portion of the potential damages.
: The CSLA indemnifies companies for catastrophic losses - losses
: above the amount of damages that private insurers calculate to be
: the maximum probable loss (for which private insurers themselves
: provide coverage) to a ceiling of $1.5 billion. While there is
: debate over whether indemnification is necessary as the satellite
: launch industry matures, Congress last year, led by the Science
: Committee, extended the indemnification provisions of the CSLA
: through December 31, 2009.
: The CSLA also established a permitting process within the Office of
: Commercial Space (known as AST), now housed within the Federal
: Aviation Administration (FAA), for all private commercial launches.
: Last year, as SpaceShipOne became the first privately funded,
: developed, and operated spacecraft to carry a person into
: suborbital space, the Science Committee passed legislation designed
: to foster a commercial space tourism industry. The Commercial Space
: Launch Act Amendments of 2004 gave AST explicit authority to permit
: launches with humans on board and provided guidance on how to use
: that authority. One key provision created a new kind of permit that
: would facilitate flights by experimental vehicles, modeled on the
: regime another part of FAA uses to regulate airplanes. (That part
: of FAA is known as AVR.) Another key provision limited the extent
: to which AST could regulate passenger safety in the near term.
: (A summary of the Act is attached.)
: The Challenges Faced by Commercial Space Industries
: Commercial space industries today include communication satellite
: developers (including radio, television, and telecommunications),
: launch service providers (whose customers include the government),
: satellite imagery companies, and perhaps soon, space tourism
: companies like Virgin Galactic and companies servicing the
: International Space Station.
: One of the first challenges these companies face is securing
: financing. Space assets are expensive, and launching into space is
: fraught with risk. One or two launch failures can drive a company
: into bankruptcy. Finding investors is thus very difficult for new
: entrants in the space business, who frequently must court risk-
: seeking, "angel investors" rather than relying on more established
: financing firms.
: Space industries must also secure insurance. But there are limits
: to the private pool of insurance available, which can pose a
: challenge to newcomers to the space business, who necessarily lack
: a track record to demonstrate their reliability to insurers.
: Moreover, costly failures in one portion of the space industry can
: affect the availability of insurance for the rest. Perhaps the
: greatest challenge commercial space industries face is capturing a
: market large enough to sustain them. Unfortunately, their history
: of success in doing so has been spotty. The commercial satellite
: imagery or remote sensing industry has failed to develop as
: originally expected. But satellite radio seems to be gaining in
: popularity despite the abundance of free competition on more
: traditional airwaves.
: Still, markets can be elusive. For example, optimism for
: communications satellite manufacturers ran high in the 1990s when
: markets opened in China and the former Soviet states, where there
: was little permanent communications infrastructure. Three U.S.
: companies raced to take advantage of the seemingly boundless
: opportunities. Iridium, a Motorola spinoff based in Chicago, was
: the first company in the race. It launched 66 communications
: satellites into orbit. Next was Globalstar, which launched
: 48 satellites.
: But the ground-based cell phone industry was quicker. Its
: penetration into the former Soviet and Chinese markets soon
: rendered Iridium's and Globalstar's investments practically
: useless. Iridum's assets were ultimately sold at a loss to the
: Department of Defense (which saw a use in some of the company's
: satellites). Globalstar, too, declared bankruptcy and, now known as
: Loral, has only recently regained its financial footing. A third
: company, Teldesic, had planned to launch 288 satellites, but could
: not attract enough investors after the failure of Iridium and
: Globalstar. As satellite producers saw their fortunes fade so did
: those companies who had hoped to put those satellites into orbit.
: Lockheed Martin and McDonnell Douglas had earlier invested large
: sums, aided by the government, to develop a new generation of
: launch vehicles. Boeing launches Sea Launch and the Delta series of
: rockets (obtained when Boeing took over McDonnell Douglas), and
: Lockheed launches the Atlas series of rockets. The Europeans have a
: competing Ariane rocket.
: Unlike the Space Shuttle, these rockets are used only once, so they
: are known as Expendable Launch Vehicles (ELVs). The most advanced
: of the Atlas and Delta class vehicles, developed with the U.S. Air
: Force, are known as Evolved Expendable Launch Vehicles (EELVs).
: Elon Musk is developing a series of rockets dubbed Falcon, which he
: believes will launch at a significantly lower cost. With the
: decline of the satellite industry, the rocket manufacturers were
: left with too few customers to easily recoup their costs. That has
: raised the cost of launches to the government. The recently
: released White House Space Transportation Policy is designed to
: find a way to provide enough business to keep two competing U.S.
: entities in the launch market. NASA's pending decisions on how to
: launch its scientific satellites and on how to launch the planned
: Crew Exploration Vehicle would affect the market.
: SpaceShipOne
: Burt Rutan's SpaceShipOne is an effort to open a new aspect of the
: commercial space market - space tourism. Rutan's had to complete
: two consecutive successful flights to earn the X-Prize. Those
: flights were not trouble-free. The vehicle rolled 29 times during
: the first flight; the vehicle shook but had only a "little roll"
: during the second flight, according to the pilot. No one was
: injured in either case.
: Questions Asked of the Witnesses:
: In their letters of invitation, the witnesses were asked to address
: the following questions in their testimony:
: Mr. Burt Rutan:
: 1. What is the future of your commercial SpaceShipOne program and
: do you see other customers beyond Virgin Galactic?
: 2. What should the government do or not do to encourage commercial
: space endeavors?
: 3. If you develop other vehicles, where would you expect to find
: investors? Do you think the traditional investors of Wall Street
: are likely to step forward?
: 4. As you move into the commercial world, how do you expect to be
: able to get insurance coverage?
: Mr. Will Whitehorn:
: 1. When does Virgin Galactic plan to take ownership of the five
: SpaceShipTwos that it has ordered from Scaled Composites? How soon
: do you expect to be flying? When do you expect to make a profit?
: 2. What is different in preparing to take ownership of a fleet of
: spaceships vs. Virgin Atlantic taking ownership of a fleet of
: airplanes?
: 3. What preparation are you engaged in for the commercial use of
: these vehicles?
: 4. What, if anything, should the government be doing or not doing
: to encourage commercial space?
: Mr. Elon Musk:
: 1. What business plan do you have to make your launch vehicle a
: success in the commercial market?
: 2. What do you see as the outlook for commercial space activities
: in the next five years? The next ten years?
: 3. What, if anything, should the government do or not do to
: encourage the nascent commercial space industry?
: 4. Are there implications for the commercial space industry as you
: see it in the President's announced Vision for Space Exploration?
: Mr. John H. Vinter:
: 1. What kind of activities does your company include for insurance
: purposes in its definition of "commercial space?"
: 2. As insurance brokers, what do you see as the outlook for
: commercial space activities in the next five years? The next ten
: years? How do you think we can avoid exaggerated expectations for
: the industry, such as those that occurred in the low earth orbit
: (LEO) market in the late 199s?
: 3. What, if anything, should the government do or not do to
: encourage commercial space endeavors?
: Mr. Wolfgang Demisch:
: 1. Considering some of the difficulties in the past for commercial
: space business, (the low earth orbit launches anticipated for
: Iridium, Teledesic, etc.) and the slow growth of the commercial
: remote sensing industry, what is your outlook for this nascent
: commercial space launch business and how do we avoid the failures
: of the past?
: 2. In the entrepreneurial commercial space arena, when would you
: expect traditional Wall Street investors to become classic "risk-
: reward" investors, in place of the "angel" investors that we see
: today?
: 3. What, if anything, should the government do or not do to
: encourage commercial space endeavors?
: Dr. Molly Macauley:
: 1. What kinds of activities would you include in "commercial
: space?"
: 2. Is the U.S. the leader in "commercial space?" How does it
: compare with the status of international commercial space?
: 3. What do you think the government should do or not do to
: encourage commercial space?
: 4. What do you see as the outlook for commercial space activities
: in the next five years? The next ten years?
: APPENDIX - COMMERCIAL SPACE LAUNCH ACT AMENDMENTS OF 2004
: Commercial Space Launch Amendments Act of 2004
: H.R. 5382, the Commercial Space Launch Amendments Act of 2004, is
: designed to promote the development of the emerging commercial
: human space flight industry by putting in place a clear, balanced
: regulatory regime.
: The Act assigns to the Secretary of Transportation jurisdiction
: over commercial human space flight and requires the Secretary to
: craft a streamlined experimental certification process for
: suborbital reusable launch vehicles. The Secretary of
: Transportation must ensure that only one license or permit is
: required to conduct human space flights. By its licensing or
: permitting of flights, the United States does not certify the
: safety of the flights for passengers or crew.
: The Act requires the Secretary of Transportation to protect the
: uninvolved public when licensing commercial human space flights.
: The Act also requires that crew receive training and satisfy
: medical standards. Space flight participants must undergo
: appropriate medical exams and training requirements, and must
: provide written informed consent for their participation. For the
: first eight years after enactment of the legislation, the Secretary
: of Transportation may issue regulations governing the design or
: operation of a launch vehicle only if the design or operation has
: indicated likely safety problems through operational experience.
: The Act extends the existing liability indemnification regime to
: the commercial human space flight industry, but excludes launches
: under an experimental permit.
: SUMMARY OF H.R. 5382 The Commercial Space Launch Amendments Act of
: 2004
: Introduced by Mr. Rohrabacher (CA) and co-sponsored by Mr. Boehlert
: (NY), Mr. Hall (TX), Mr. Gordon (TN) and Mr. Lampson (TX)
: Key features of the Act include:
: The Act will make it easier to launch new types of reusable
: suborbital rockets by allowing the Secretary of Transportation to
: issue experimental permits that can be granted more quickly and
: with fewer requirements than licenses;
: Under the Act, permits will allow an unlimited number of
: experimental flights, rather than requiring a license for a single
: launch or small number of launches;
: The Secretary of Transportation must ensure that only one license
: or permit is required to conduct human space flights;
: - The Act will require the Secretary of Transportation to issue
: regulations for crews relating to training and medical condition;
: - The Act will limit requirements for paying passengers (or "space
: flight participants") a medical exam, training, and to being
: informed of the risks of their participation and providing written,
: informed consent;
: - By its licensing or permitting of flights, the United States
: does not certify the safety of the flights for passengers or
: crew;
: - For the first eight years after enactment of the legislation,
: the Secretary of Transportation may only issue regulations
: governing the design or operation of a launch vehicle if the
: design or operation has indicated likely safety problems
: through operational experience.
: - The Act will require paying passengers to execute waivers of
: liability with the federal government; and
: - The Act will extend the existing liability indemnification
: regime to commercial human space flight launches, but the bill
: will not grant indemnification for flights conducted under
: experimental permits, which will be more lightly regulated.
--
Mark Reiff <markreiff@xxxxxxxxxxxxx>
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