Testimony

Space Policy and Space Tourism

By Edward L. Hudgins
June 26, 2001
Subcomittee on Space and Aeronautics
Committee on Science
United States House of Representatives

I want to thank the committee for inviting me to submit testimony on space policy in general and space tourism in particular. This is a very broad topic about which books have and are being written. This fall, for example, I will publish a book entitled Space: The Free-Market Frontier, based on a Cato Institute conference earlier this year.

In this discussion I will highlight certain points that I should be useful for policy makers who wish to see space become a realm opened not only to a handful of government astronauts but to all individuals seeking adventure, discovery, knowledge and beauty.

The Benefits of Space

It is first useful to put the topic in perspective by considering some of the past, present, and potential future benefits to society of space travel and the ability to live and work in space.

The ability to travel outside the Earth’s atmosphere already has ushered in important commercial benefits, most notably from communications satellites and remote sensing, the sectors in which private suppliers have been freest to operate. Data from the FAA’s Office of Commercial Space Transportation places the value of America’s space-related economic activity at $61.3 billion annually, generating earning of $16.4 billion and employing nearly 500,000 workers. The Satellite Industry Association estimates that worldwide satellite industry revenues alone were $83 billion in 2000, up from $69 billion in 1999, with the American portion currently valued at $37.5 billion. SIA estimates that there are 253,600 jobs in that industry worldwide, up from 205,400 in 1999, with 136,500 Americans employed. The International Space Business Council puts space current industry revenues even higher, at $96 billion in 2000. A Merrill Lynch study in 1999 projected that the global satellite market will grow to $171 billion by 2008. These figures to not take account of all secondary and tertiary effects.

The contributions to human knowledge and, I might add, to the human spirit, generated by access to space have been at least as important as the commercial benefits. The philosopher Aristotle said “All men by nature desire to know.” From the days that early humans looked up at the Moon and the stars from the warm savannas and cold caves, they wondered about the nature of those lights in the sky. Telescopes were the first great leap forward in revealing the nature of the universe. Space travel was the next leap, allowing us to place scientific instruments and observatories in orbit, to send robot probes to the planets, and to travel into space and to the Moon ourselves.

But the full benefits of human space activities lie in the future. In the long run, the capacity to travel and work in space could literally ensure the human race’s survival, for example, by allowing us to detect, divert or destroy meteors or comets heading toward Earth. Further, spacefaring could be as valuable as the opening of the Americas was to humanity. Men some day not only will land on Mars but will terraform it, making it into a second habitat for humanity in this solar system.

The future also promises more commercial benefits. Much has been said about the potential for creating and manufacturing new materials in the mircogravity environment of space. Space also could help guarantee cheap and unlimited sources of clean energy. Current or near-future technologies can allow solar arrays in orbit to collect energy and beam it to Earth via lasers of microwaves. As an intermediate step, natural gas that currently is flared off as a waste product in Middle East oil fields could be converted into another form of energy, bounced off of a device in orbit and received in California or some other energy-starved part of the world.

But currently launch costs are too high to make such projects commercially viable. For example, some estimates suggest that for solar energy collectors to be commercially viable, launch costs might need to fall by as much as two magnitudes, from about $10,000 per lb. to $100 per lb.

Private space travel offers one of the most promising potential space markets for the future. Surveys by the Space Transportation Association and other groups and scholars suggest that a majority of Americans would take a trip into space if they could afford it. Surveys that examine the prices individuals would be willing to pay to go into space place the value of that market at least at about $10 billion.

I suspect that if the actual prospect of going into space materializes, the market would grow even larger. After all, consider the place of space in popular culture. Some 20 million people each year visit the Air and Space Museum in Washington. Science fiction movies, television shows, books and magazines are enjoyed by more than a billion people worldwide and generate billions of dollars in revenue. These figures suggest that if rides on real rockets were readily available at reasonable rates, millions more would want to go. But the high costs as well as lack of availability keep those who dream of flying in space chained to the Earth.

The Unrealized Revolution

Even given the impressive private-sector commercial space achievements, for example, with communications satellites, and the technological and scientific achievements of the National Aeronautics and Space Administration (NASA), space enterprise so far as been an unrealized revolution. Looking back to civil aviation, we find that 40 years after the Wright brother’s first flight, probably at least a million people had taken flights in planes. By contrast, 40 years after the first men traveled into space, fewer than 500 individuals have followed them. When the movie 2001: A Space Odyssey was released in 1968, it depicted what most people expected for that future year; commercial flights into space and orbiting space hotels. The year 2001 has arrived and the vision of Arthur C. Clark and Stanley Kubrick is unrealized.

Contrast space enterprise with the explosive growth in the past two decades of information and communications technology. Most Americans appreciate that pioneers like Microsoft’s Bill Gates and Apple’s Steve Jobs have made a revolution in the private sector, offering hundreds of billions of dollars in new goods and services, making them affordable for most Americans, and capturing the imagination and enthusiasm especially of young people who see what man at his best can accomplish. Even where the government did initial research, for example, developing primitive internet technology, it was the private sector that made it available at affordable prices to millions of consumers.

To understand the barriers to private space travel, it is important to keep in mind three important facts:

First, travel is tied to the general fate of most other private space efforts. Less costly rocket designs or the ability to place private habitats in orbit are the essential elements for a successful space tourism sector. Reforms that help the space industry in general can benefit, both directly and indirectly, private space travel. Regulations that hinder the industry in general will smother commercial synergies that arise in a healthy industry.

Second, since the beginning of the Space Age, the activities by NASA, U.S. government policies, and international treaties have systematically hindered or barred many private space endeavors. The past two decades have seen numerous policies struggles to free the private sector, some successful, some not.

Third, America’s general regulatory regime and that part of it in particular that governs commercial space activities is the principal barrier to the expansion of those activities. If such a regime were in place earlier in this century, civil aviation would not have developed as it did and air travel might be as rare as space travel. If such a regime had been applied two decades ago to emerging personal computer, software and internet firms, the communications and information revolution would have been stillborn.

With these points in mind we turn to a more detailed examination of space tourism.

Dennis Tito and the Current Situation

The demand for trips into space by private citizens offers a potential market that could usher in a breakthrough in the fight to lower the costs of traveling to space. It might be more accurate not to describe this as “space tourism,” a term used in a pejorative manner by opponents of Tito’s flight. Those opponents meant the term to conjure up pictures of people in shorts and sandals and loud-colored shirts taking pictures of things they had little understanding of or respect for. In fact, Tito and those who follow his lead are better described as adventurers, individuals willing not only to spend money but to take risks to have the thrilling and profound experience of traveling into space.

It is necessary to place Tito’s flight in its full context. Tito, of course, originally planned to visit the Mir space station. Russia has planned to deorbit it when private parties came to its rescue in the form of MirCorp, a company 40 percent owned by private Western investors and 60 percent owned by Energia, Russia’s mostly privatized rocket company. MirCorp planned to make the station financially self-supporting facility. For example, it signed a deal with the producer of the TV show “Survivor” to allow contestants to train and compete at Russia’s Star City with the winner traveling to Mir for a 10-day stay.

Top NASA officials in part were responsible for Mir’s demise. For example, behind the scenes they pressured Energia to abandon Mir so it could devote more resources to fulfilling International Space Station (ISS) commitments. Also MirCorp wanted to pay for the use of several Russian “Progress” supply rockets that were sitting unused but on which NASA had first call. Even though they could have been replaced before NASA would need them, NASA would not let MirCorp purchase them. Finally, MirCorp wanted to export a tether needed to supply energy to Mir from the United States to Russia for launch. The U.S. State Department, under pressure from NASA, delayed the export license for 10 months, until after the Russians decided to abandon Mir.

Thus Tito’s flight to ISS was made necessary because of Mir’s demise. It is also important to note that the budget of Russia’s space agency is just over $100 million. That means that an offer from Tito of $12 million to $20 million to travel into space was a an important source of revenue. Further, SpaceHab, an American company, is paying the Russian government to be allowed to place module on the Russian part of the ISS to provide a variety of commercial telephony and communications services. The Russians likely will sell more rides to the ISS.

The public’s interest, enthusiasm and support for Tito’s flight was in sharp contrast to the strong opposition from NASA’s top management. Now the ISS partners are discussing how to limit access to the station, to head off other private travelers and commercial activities.

Thus it is necessary to raise the question of what should be the role of the NASA or governments in private space travel as opposed to the private sector? The problem arises in large part because governments rather than private parties own the ISS. If an American citizen offers NASA money for a ride to the station, a number of problems would arise.

As a general principle, should NASA devote resources paid for by taxpayers to help private individuals who have the money to purchase the services? Generally government resources should not be used in this manner.

Should NASA be providing such services in competition with potential private sector providers? Again, government agencies should not be competing with private providers to offer any goods or services.

So should we expect governments not provide private trips to space and leave it to the private sector? Ultimately yes! And a number of entrepreneurs indeed are planning such efforts. For example, Bigelow Aerospace is designing a private space station that it hopes to launch in several years for a fraction of the cost of the ISS, providing a place for private travelers to stay as well as for scientific and other commercial activities. Other companies are developing suborbital systems for quick trips above the atmosphere and to place cargoes and people in orbit.

But there are several policy and governmental barriers to these efforts.

Regulatory Chains

It is important to remember that private companies are still fighting a decades-long struggle to remove regulatory barriers to their efforts. From the beginning of the Space Age most American policy makers assumed that governments would be actors operating in space and thus made no allowance for private actors. In the 1970s when private companies did arise that wanted to sell services rather than hardware to NASA and other government agencies, NASA was not interested in giving up its bureaucratic empire. Starting in the Carter years, government agencies were barred from using private carriers to place cargoes in space.

The 1982 private launch of the Conestoga rocket brought to light the regulatory barriers to private companies. The rocket’s maker had to spend six months and $250,000 to get permission to launch.

The creation of the Office of Commercial Space Transportation (OCST) in the Department of Transportation was suppose to avoid the jurisdictional confusion that Conestoga faced. The Challenger disaster in 1986 eventually led to the removal of the ban on government payloads from private rockets. In 1995 the OCST was transferred to the Federal Aviation Administration.

Securing permission to launch still involves safety requirements, reentry licensing, financial responsibility requirements, site operations licensing, and various environmental impact requirements. If this sort of regime had been in place in the early part of this century, the civil aviation industry probably would still be a dream waiting for a deregulated future to be realized.

Because of this regulatory regime, Kistler Aerospace, which is developing a reusable launch vehicle, was required to meet with local interest groups and Indian tribes, and draft extensive environmental impact statement as part of its effort to secure permission to launch from a federal test facility in Nevada. J.P. Aerospace of California was competing for the private Cheap Access to Space (CATS) prize of $250,000 for placing a payload 124 miles above the Earth by November 8, 2000. It began the effort to secure permission to launch from the Black Rock Desert in northern Nevada in May, 2000. The company was informed in late September by the government that it would take another two months to process the license. J.P. Aerospace missed the deadline. Other companies too have lost business because of the licensing process. Potentially customers generally want two month lead time for launches. Since it often takes launchers six or more months to secure a license, it is obvious how private providers are hindered.

It is no wonder that other countries, for example, Australia, are openly courting American companies to launch from their less-regulated facilities. Add to the licensing difficulties the fact that many government branches and agencies still have jurisdiction over the activities of space enterprises and it is also little wonder that they have failed to develop faster.

The Commercial Space Act of 1998 sought to remove barriers to private space efforts. It did, for example, remove the ban on private providers bringing vehicles and payloads, including private travelers, back from space. It also required NASA to purchase services rather than hardware whenever possible. But due to lack of enforcement, NASA has not had to honor this mandate.

Further, the fact that the regulatory regime continues to change introduces uncertainty to a sector in which uncertainties in technologies are already major problems. This uncertainty concerning the regulatory regime itself is a major barrier to investments and the expansion of private space activities.

Another extremely serious hindrance to private space activities in general is the export control regime. In 1998 Congress passed the Strom Thurmond National Defense Authorization Act. That law transferred jurisdiction over exports from the Commerce Department to the State Department, which has been much stricter and slower in approving exports. Already the American satellite industry is being seriously harmed. We saw how the delay in authorizing the export of a tether helped kill the Mir space station. This law is harming the private space sector in general and certainly will hinder the emergence of private space travel.

Perhaps one way to deal with the regulatory problems faced by private space entrepreneurs, in addition to changing the laws, would be to establish an ombudsman both to help such entrepreneurs through the regulatory process and to monitor each step of the process. This monitoring will illuminate the regulatory roadblocks and thus better allow policy makers to eliminate them.

Other ways to help the space sector in general and thus private space travel would be to create and enterprise zone in orbit, to not tax or regulate commercial activities off the Earth’s surface. After all, taxes are one of the greatest burdens on private commerce. Private parties in space would provide all of their own services and thus the government would have little cause to charge them for services provided on Earth. In the long run potential problems with the Outer Space Treaty also will have to be dealt with to ensure that private space travelers and the companies providing such services are secure in their property and liberties.

The ISS

In addition to changing the regulatory regime, something must be done about the ISS. We have seen how NASA often uses its influence to stifle private space efforts. There is also always the danger of unfair NASA competition with the private sector. The ISS and NASA’s role in it poses just such a problem. Those dangers must be contained if private space travel is not to face even more roadblocks.

It would be best if the station were privatized, but that would be politically difficult since the United States is in partnership with other governments in the ISS. Thus a possible alternative would be to organize the ISS like an airport authority or a multi-jurisdictional port authority like the Port Authority of New York and New Jersey. Such a station authority would be chartered among the station’s owners, that is, the governments that are participating. NASA would not be U.S. government representative on the authority though it could be a customer or tenant on the station. That authority initially would provide infrastructure, safety, utilities and a regime that would allow private parties to run commercial operations on the station. The private sector could take over even those functions at some point. The authority would not be allowed to finance any station business operations, to expand into unrelated businesses, or to own any stock in station contractors. Those restrictions also would apply to NASA itself. In addition to commercial activities, the private sector would provide and pay for all future travel to and from the station, station operations, maintenance, and expansion.

Such an approach would mean that station resources would be allocated for the highest valued activities. A real market would be created. Because market prices would be paid, this approach would help contain the danger of unfair competition from a government station to a private station.

It is also important that a station port authority arrangement allow for private sector expansion and perhaps even eventual takeover of the station. For example, perhaps to expand activities, one provider wants to add infrastructure that would provide energy cheaper than the shared energy facilities. It would not be sound policy if the station owners, the governments, could veto such a move in order to hold on to their control and stake in the station.

Conclusion

The discussion above highlighted the potential for private space travel. The potential of such a sector can serve as a reason for policy makers to renew their efforts to reduce and eliminate regulations on the private space sector.

If the right policies are initiated, space can become a realm not just for NASA astronauts but for all Americans.