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Category: Space (Page 1 of 12)

Private Capital, Investment, and Innovation in the Space Sector

Introduction


A fundamental shift is well underway in the “outer space sector” – the industry, individuals, and innovation ecosystem that constitute the creation of marketable in-space products, services, and technologies. Over the past two decades, a massive influx of private capital has, through its investment, spurred the creation of a burgeoning commercial space industry.[i] This, in turn, has led to the development of novel capabilities, processes, and business plans, which may lead to the creation of new markets and spheres of economy in outer space.[ii]

These technologies and capabilities include: constellations of cheaply-developed, rapidly deployable small satellites and “CubeSats” capable of continuous Earth imaging, radio occultation, and wireless broadband, internet, and telecommunications services; reusable small- and medium-payload launch services; in-space satellite refueling and robotic repair services; planetary spacecraft, including asteroid prospecting and mining spacecraft and lunar landers; and ground-station, data relay, and data analysis support stations and software. They are often characterized by their utilization of commercial off-the-shelf parts, novel production techniques such as additive manufacturing, iterative design practices, and maintenance of their own intellectual property.[iii]

This shift is significant for several reasons. First, it represents a major departure from the traditional approach to aerospace investment and financing – an approach that, over the past half-century, was defined predominantly by public investment in research and development by the government and managed through federal agencies such as the National Aeronautics and Space Administration (NASA). Rather, much of the current financing of this development is done by private capital and investment, particularly venture and angel investment. Second, and related, it is driven by non-traditional entities and actors, particularly small- and medium-sized enterprises and start-ups, in contrast to the traditional large aerospace corporations and contractors. Third, again and related, it is characterized, by the deliberate search for and utilization of new design and development processes and techniques, the fielding of new technologies and capabilities, and new business practices. Fourth, resulting from above, it is done in deliberate pursuit of new markets and opportunities for profit from the utilization from space. Whereas the space economy has, for most of its history, been defined by two large markets – launch and satellite services, predominately communications and television broadcasting – the trend today is toward new applications such as those listed above.[iv]

Much about this trend has been made in the media, in industry dialogue, and in political/regulatory discussions, with an emphasis placed on the different design, development, marketing, and operating cultures and philosophies that exist in dichotomy between the established and the emerging segments of the industry – between “Newspace” and “old space.” While many debate whether this delineation accurately depicts fundamental differences between these sectors, or indeed whether those differences exist at all,[v] it is nonetheless the case that the outer space sector is being disrupted by new entrepreneurial entrants, new capital, and new business ideas.

Is there an underlying catalyst for that disruption? Innovation, and particularly the forces that drive it, is challenging to specifically quantify. However, this paper argues that, in part, this disruption and innovation is being driven, influenced, and sustained by the sources of capital that are flowing in in investment of it. Much as was the case with other “frontiers” of technology and business such as the internet, computing, and biotechnology, the interactions and dynamics between private investors and entrepreneurs in the space sector aid and abet the innovation process, leading to or reinforcing the aforementioned new technologies, procedures, and business plans.

There exists a broad field of literature analyzing the relationship between private capital investment, the sources of that capital, and innovation and innovative behaviors in market-participating firms. Likewise, there is a growing set of data tracking the investments made into the commercial space sector, along with the breakdown and characteristics of those investors. However, there has been little work done to synthesize and cross-compare this literature with this data. To achieve that end, this paper explores the ecosystem of private capital financing start-up and early-stage companies in the commercial space sector. Drawing from theoretical and empirical literature on innovation and on private equity, it draws conclusions about the recent effects of private investment, particularly venture capital and angel investment, on the outer space sector.

This analysis is important for understanding future trends in the outer space economy. Literature on innovation has indicated that the process of innovation is necessary and vital for continued technological development and economy growth.[vi] Likewise, it has found that small firms such as start-ups are major drivers of economic growth and technological innovation, indeed outpacing larger corporations. Small firms have advantages as sources of innovation because they facilitate structures and organizations that value originality and ideas; they are quick to adapt to new and risky initiatives; and they can reap substantial reward from market share in smaller niche markets, such as the outer space markets.[vii] Analyzing the trends and implications of private investment in the outer space sector and its impact on start-up innovation may suggest the future direction and character the in-space market may take.


Defining “Innovation”


To begin, the concept of “innovation” needs to first be defined. Innovation, as a favorite catchword of policymakers and of business-people and as a term often used to describe the products of the Newspace sector, cannot be narrowly qualified. Innovations are not necessarily new inventions. Innovations do not need to be technical, nor technological, nor even tangible. Innovations may be new ways of doing or thinking about a product, service, or process; often, innovations build off technologies already in existence. Likewise, innovations do not necessarily, or indeed often, lead to new businesses, new markets, and profits. It is often that innovations fail to gain market traction.

To those points, the Organization for Economic Cooperation and Development formally defines innovation as “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.”[viii] It expands on these definitions further by offering the following descriptions:

  • Product innovationA good or service that is new or significantly improved. This includes significant improvements in technical specifications, components and materials, software in the product, user friendliness or other functional characteristics.
  • Process innovation: A new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software.
  • Marketing innovation: A new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing.
  • Organizational innovation: A new organizational method in business practices, workplace organization or external relations.

            Are these forms of innovation already apparent in the commercial space sector? Looking at the activities within broad ecosystem of space start-ups and firms that have emerged in the last two decades, particularly those that have relied on private investment, it would seem so. These examples include (but are not limited to):

  • Product innovation: SpaceX, using reusable rockets to drive down the cost of launch; Bigelow Aerospace, using expandable/inflatable modules to create lower-cost, higher-volume space stations.[ix]
  • Process innovation: Rocket Lab, using 3D printing and carbon fiber for its rocket design.[x] OneWeb, using an end-to-end assembly line for satellite manufacturing.[xi] Ixiom, using discarded rocket upper-stages as space station modules.[xii]
  • Marketing innovation: Spaceflight Industries, offering ‘rideshare’ services that connect small satellite operators with launch companies for tailored launch services and flight opportunities (akin to how vehicular ride-sharing apps such as Uber connect riders to drivers).[xiii]

How, and why, does innovation occur? Its catalysts are fundamental to its definition and characteristics. The economist Joseph Schumpeter, whose early work contributed greatly to the foundations of the study of innovation economics, posited that innovation occurs because industries must revolutionize their economic structure from within by creating better or more effective processes and products. This, in turn, leads to broader market distribution and capture, which then leads to greater profit.[xiv]

This profit motivation is important. Entrepreneurs are continuously looking for better ways to satisfy and grow their consumer base through improved quality, durability of product, services, and prices. Again, these come to fruition through the process of innovation with organizational strategies, marketing techniques, and new advanced technologies.[xv] In short, entrepreneurs and firms seek to innovate so that they may outperform competition (securing a “competitive advantage”), establish new markets where they can hold dominate market share, and return investments made by stakeholders.

This last point is significant in the context of private investment. Private investors seek out companies which hold the promise of long-term profit and market gain, invest financial capital in them, and then, after the company’s product or service has developed, reap a positive return-on-investment. It is intuitive, then, that investors will put capital into companies that are or could be innovative, as these companies hold the potential for the largest positive return-on-investment.


Defining “Investment” and Investors


Investment is broadly defined as the production of goods that will be used to produce other goods.[xvi] In the context of this analysis – discussing business investment – it is often done through the provisioning of capital to a company for their operating, research, and development expenses, in return for shares in the company. While the categories of investors continue to shift and evolve, the generally-accepted typology can be summed as below:[xvii]

  • Angel investors: Individuals or families (to include family offices) that have accumulated a high level of wealth and seek potentially high returns by investing in ventures during their earliest stages.

Angel investors “get in at the ground floor,” in that they invest when a company is just starting development on its product or service. By doing so, an angel investor can realize an attractive potential return, as the early investment will secure a significant foothold and stake in the company. Angel investors generally seek to realize their return in about five to seven years from the date of the investment.

  • Venture capital firms: Groups of investors that invest in start-up, early stage, and early growth companies that have high growth potential, doing so while accepting a significant degree of risk.

Venture capital funding generally comes in stages (or rounds), usually designated by “series.” The form of investment is equity; specifically, venture capital firms generally seek to acquire stock in the company in which they are investing, so that they take an ownership stake in the company. These shares are usually convertible to common stock upon the time of a stock market launch, an initial public offering, or if the company is sold.

  • Private equity: Private equity firms are formed by investors to directly invest in companies. They generally invest in established companies at large transaction sizes or acquire an entire company or group of related companies that can be merged.
  • Corporations: Corporations have long provided funding necessary to bring technology start-ups to initial operating capability, and to sustain their ongoing programs.

Corporations both invest internally, or provide funding for a venture in the form of either straight equity or sometimes in the form of debt with the option to convert the instrument into equity. Some companies may also invest through a corporate venture fund, which doubles as company-owned VC equivalent.

  • Banks: Banks are heavily involved in providing funding for research and development programs managed by large, established firms. Investment banks often focus on very-large transactions, typically in the hundreds of millions to over one-billion-dollar range.

As banks tend to be risk-adverse in their investments, they are less likely to have major roles in providing financing for start-up ventures. Even before the financial crisis of the last decade, banks were reluctant to lend to small and young firms because of their perceived riskiness and their lack of available collateral.[xviii] As such, they have largely been absent in the emerging entrepreneurial space sector.


The Role of Private Investment in Innovation


Where do these sources of capital fit in to the start-up ecosystem, and how do they contribute to innovation? Entrepreneurs that launch a technology-based venture, such as a space company, face high risks as they innovate while assessing technological feasibility, the credibility of their business model, and the viability of their product or service. Given the high risks of early-stage entrepreneurialism, capital sources are heavily limited. Angel investors and venture capitalists, who often invest in portfolios that manage these risks, fill the need for capital by assuming risk alongside the entrepreneur in exchange for equity in the company. As these sources of capital are often the first from which new firms in the space sector receive investment, this paper first turns to them.

First, venture capital. Literature suggests that venture funding has a strong positive impact on innovation.[xix] This is done through at least three different “transmission” mechanisms by which venture capital exerts an influence on overall economic performance:[xx]

  • Financing function: Venture capital markets generate new business cases that may not have had access to adequate financing through traditional sources of capital.

As noted earlier, this function is particularly useful for companies that are pursuing high-risk products or exist in immature markets. These ventures require significant amounts of capital to move from inception to their early stages, yet struggle to find that capital from larger sources such as banks.[xxi] Indeed, research has indicated that financing from loans is often not available for nearly half of start-ups, and over 90 percent of venture capital backed firms have said that further financing through their ownership alone had been either impossible or insufficient.[xxii] This gives start-up firms with innovative ideas but not the capital wherewithal to execute on them the opportunity to begin research and development.

  • Selection function: Venture capital funds and venture capitalists vet and select projects with the best prospect of profitability given their risk, and allocate financial resources proportionally to those that have higher chances of innovative success. In effect, ‘selectively breeding’ the most innovative firms.

Venture capital firms often go through rigorous vetting processes by which they select start-ups with the most mature or lucrative business plans, the most realistic or ready technologies, or the highest levels of technical expertise, management experience, and industry knowledge.[xxiii] Research has shown that venture equity tends to finance firms deemed “above average” in their levels of innovative culture. While it is difficult to evaluate or determine whether a start-up’s innovative approach will be successful in the long-run, venture capital succeeds by allocating resources to innovation probabilities, which, through large sums of investment across wide portfolios, ultimately produces innovation “wins.”[xxiv]

Moreover, research suggests that the optimal behavior of companies that are competing for the same financial resources from a venture capital firm is to differentiate and focus on distinct lines of research, development, and business. This “proximity” of venture capital deters convergence of innovative activity for similar companies, and instead forces companies to seek different areas of specialization. This creates broader innovation across entire industries and fields.[xxv]

  • Value added function: Venture capital firms contribute not only capital, but also managerial experience, access to informal networks, and offer professional business models and entrepreneurial training to the owners of the firms in which they are investing.

Research shows various mechanisms behind the value added functions that venture capital contributes. First, venture capital firms facilitate communication among companies in their portfolio and enable the diffusion of knowledge within their networks.[xxvi] The literature on innovation suggests that “networks” play major roles in fostering innovation n, particularly within single industries. Firms that promote open forms of collaboration benefit from having access to different capabilities and knowledge; this enhances their competitiveness and accelerates the process of innovation. For start-ups, it allows them to partner with each other and take advantage of different resources.[xxvii]

Second, venture capital firms appear to certify the value of particular innovations to the general public. Venture funding increases awareness of companies’ innovations and spurs follow-on innovations and technologies by other inventors. Likewise, having access to venture funding adds a level of credibility to the firm being invested in – as that firm has to go through the vetting process – and therefore opens market opportunities for that innovative approach to more easily access and exploit.[xxviii]

Next, angel investment; in many ways, angel investment provides the same benefits to innovation as venture capital, though at lower levels which correspond with the lower level of investment. Angel investors who are investing their own money, tend to be more flexible and less focused on immediate financial returns, allowing longer-term experimentation which can lead to more innovative products or services. In addition to providing start-up capital, angel investors play a key role in providing new firms strategic and operational expertise as well as social capital through their personal networks, expanding the knowledge network upon which firms can draw.[xxix] They often have deep knowledge of the industry they are investing in and of other entrepreneurs that drive them. As a result of these value-added benefits, start-ups that have been financed initially be angel investors tend to have much greater success rates in attracting subsequent venture capital – hence angel investment often serving as a “gap” for very early-stage start-ups.[xxx]

Finally, corporation venture funds may abet innovation. Corporate venture capital tends to invest in start-up firms in earlier stages than venture capital firms, and in less mature markets and more research and development intensive industries. It is thus more tolerant of failure, and allows for wider latitude of experimentation on technologies and business plans, thereby creating the environment for innovation to flourish.[xxxi]


Capital in the Space Sector


Having reviewed the impact of and relationship between private investment and innovation, this paper returns to the case-study of the space industry by exploring the status of capital in the space sector. Since 2000, “start-up” space ventures – defined as space companies that began as startups backed by angel- and venture capital – have attracted over $18.4 billion in investment, including $6.3 billion in early- and late-stage venture capital, $2.3 billion in seed financing, and $4.5 billion in debt financing.[xxxii]

More start-up space companies reported private investment in 2017 than in any previous year, surpassing the total from 2016 by nearly one-third. In 2017, 164 investors put nearly $2.5 billion into 73 start-up space ventures across 77 deals. The number of companies that reported new funding in 2017 likewise broke records from any previous year.

Figure 1

More than 250 venture capital firms have invested in the space sector since 2000. In 2017 alone, 87 VCs invested in start-up space companies, nearly returning to the peak level seen in 2015 and surpassing the 2016 total. Of the 87 VCs that invested in start-up space companies in 2017, 44 had reported investment in start-up space companies in previous years, while 43 appear to be new additions.

Since 2000, over 140 angel investors have invested in start-up space companies. While specific data about the level of investment funding that these angels have provided is not available, as it is often kept proprietary, data suggests that the number of angels investing in start-up space companies and the number of start-ups that benefit from angel investment are both increasing.[xxxiii]

Figure 2

Notably, while private equity investment in space start-ups has totaled $1.7 billion since 2000, there has not been any reported private equity investment in 2016 or 2017.

In terms of corporations and corporate venture capital funds, 103 have invested in start-up space companies since 2000. The number of corporations investing increased over forty percent from 2016 to 2017, from 32 to 45.  Both space companies and non-space companies are investing in start-up space ventures. According to data, existing space corporations represent 35 percent of this investor group, while non-space corporations represent 65 percent.


Analysis


As can be seen, particularly by Figure 1, the amount of private investment flowing into the emerging space sector is growing at an accelerating pace. Accordingly, considering the relationships identified between innovation and private investment, it can be extrapolated that the rate of innovation, or at least the possibilities for innovation, will concurrently grow. Indeed, according to venture capitalists involved in space investments, the decision to invest in outer space firms is borne largely out of the possibilities for innovative new products that may disrupt established markets or establish whole new markets.[xxxiv]

Several of the factors identified above can be seen in the case-study of space. This is particularly true for the value-added function of venture investment. Venture firms in the space sector have established several incubators and business accelerators that they run concurrently with their investments, drawing in the entrepreneurs in which they invest.[xxxv] Likewise, rich ecosystems of space-startups funded by angel or venture capital have emerged in distinct regions, such as Hawthorne in California or in Cape Canaveral, where they have access both to these accelerators, to established sources of venture capital, and to the resources of space start-ups, universities, and other entities which contribute to the innovation-incubating knowledge environment.

It has, again, been found that small firms contribute almost half of the innovation in the economy. Looking at this further, however, research has indicated that small firms tended to be more important in less concentrated, immature industries.[xxxvi] This is particularly the case for the space industry, which remains at present an immature industry. Moreover, it has been shown that newer, smaller firms choose risky product introduction strategies when compared to more established firms; they fail at higher rates, but are also successful at bringing risky, high-impact innovations to the market quicker and more often.[xxxvii] Looking at the samples of innovation in the space sector listed at the beginning of this paper, these innovations were predominately produced by small or medium-sized firms that have entered the market within the recent decades. As such, the sources of capital that finance these firms, such as venture and angel funding, are important for spurring this innovation.

Finally, it is important to remember that, although government-funded investments in research are important components of an innovate economy, particularly at the basic research level, innovation in an advanced economy is predominately funded by the private sector.[xxxviii] Again, the fact that private sector funding for the space sector is growing and accelerating suggests that higher rates of innovation will follow.


Outstanding Issues


The next few years could, if trends in investment continue, radically alter the start-up space ecosystem. Investors will be closely monitoring dynamics in revenue and operational performance of maturing startup space firms, particularly those that have benefited from venture and angel capital. The coming years are a “proving period” in which many of the services and products that attracted investment are deploying or planning deployment shortly and investors are seeking indications they will realize returns.

This presents a major outstanding issue for innovation in the emerging space sector. Many, if not most, of the innovative business plans, technologies, and processes that are currently driving and being driven by private investment have yet to demonstrate their market value; instead, they are currently still going their stages of preliminary research, design, and testing.

Investors, particularly venture capitalists, focus on valuations and “exits” – the opportunity to sell their stock in an invested company either through a stock offering or the sale or acquisition of the company itself. However, at present, some financial analysts caution that companies in the emerging space sector hold exaggerated valuation and risk not having initial public offerings for several years.[xxxix] While billions have flown into space startups in the last several years, there have only been a handful of “exits” that offer investors an opportunity to recoup their investment.[xl] A lack of available exits, whether it be through an initial public offering or a merger or acquisition, puts a heavy strain on angel and venture investment and enthusiasm for future investments.[xli]

There is also the issue of capital needed for more high-risk, high-innovation businesses in the space sector. While many startups have been successful in raising capital on the order of tens or hundreds of millions of dollars, the most ambitious and potentially disruptive ideas – such as long-term asteroid mining initiatives, interplanetary landers and tugs, or satellite mega-constellations, will likely require billions of dollars from private equity investors. These will require much larger pools of capital than what early-stage venture capitalist and angel investors are capable of or willing to offer. As such, some analysts in the industry see a bifurcation in business plans for emerging space companies, where many will attempt to reach a minimum viable product – though one that may not be as potentially innovative or disruptive of the market – in order to secure an early winning of investment from venture capital firms.[xlii] This may have a dragging effect upon innovation in the sector over the long-term.

There are also issues related to the ownership structure that comes with venture capital. Investors expect excess returns from the companies that they invest in, which may sour long-term business prospects regardless of the level of innovation that a company can achieve. More troublesome, however, is that venture capital firms often require entrepreneurs to relinquish control rights over their intellectual property to outside investors. Control over intellectual property is fundamental to innovation, particularly within technology-based industries such as the space industry, as patenting that innovation is often the only means to ensure profit from that innovation and thus invest the time and effort into producing it.[xliii]

Finally, while it does not appear likely that the commercial space sector will have an “exit” through an initial public offering soon, there are issues associated with the quality and capacity of innovation produced in firms that have “gone public.” Some have suggested that a major “brain drain” occurs in these firms. IPOs lead to different management incentives, and executives at publicly held companies may become more cautious because they are subject to market pressures and worry more about career threats and takeovers. Hence, once a small firm “goes public,” it loses many of the qualities that once made it innovative and disruptive.[xliv]


Conclusion


The innovative nature of a company – its capacity to produce disruptive products and innovative solutions that capture new shares of or establish entirely new markets – is the result of multiple different, though often interrelated – features. One of them is the source of capital which they use during their early stages. As noted in this paper, the commercial space sector is experiencing a massive influx of private capital that is financing a segment of emerging companies. The impact on innovation that this capital and its source has can be anticipated as feeding into the commercial space sector.

As research suggests, there is a general consensus that private capital, particularly from venture capital firms and angel investors on small- and start-up companies, can support and abet their innovative nature. This capital comes with several functions beyond simply offering financing that may not be available from traditional loaning sources because of the risks involved in an immature market such as outer space services. Venture capital firms offer value-added functions by connecting entrepreneurs with other entrepreneurs, creating a knowledge ecosystem that reinforces innovative thinking and the sharing of ideas. Likewise, venture capital can help entrepreneurs develop the skills – or be offered the service of the skills by the investor – of managing and running a business so that their innovative ideas can actually come to market.

However, there are serious challenges that innovation through private capital and investment presents. Investors expect returns on investment. It does not appear likely that that return on investment will materialize in the space sector within the near- to mid-term. If it does not, there is a risk that innovation in the sector could stall or, worse, “bust” following this current boom. Moreover, the innovation that is currently seen is driven in part by the character of the emerging space sector being small; small firms, as noted, are empirically more capable of innovation than larger, more established firms. If markets do materialize, it should be expected that the current rate of innovation will slow, especially as firms begin pursuing public offerings of stock.

At any rate, the commercial space sector serves as an interesting case-study for how private sources of capital may assist innovation in an emerging market; likewise, it demonstrates some of the challenges and outstanding issues that arise in “frontiers” of technology that largely rely on private capital to create innovations for markets which do not yet exist.


Works Cited


[i]. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018, pg. ii.

[ii]. Joshua Hamosin, “The Future of Space Commercialization,” Niskanen Center, January 25, 2017.             https://science.house.gov/sites/republicans.science.house.gov/files/documents/TheFutureofSpaceCommercializationFinal.pdf. pg. 4

[iii]. Gary Martin, “NewSpace: The “Emerging” Commercial Space Industry,” NASA Ames, 2014.             https://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/20140011156.pdf

[iv]. “New Space: Private Capital And Public Support Enabling Growth of a Wider Array of ‘Space Players,” LCA, November 5, 2017.             http://www.unoosa.org/documents/pdf/hlf/HLF2017/presentations/Day1/Session_1/Prese ntation5.pdf. pg. 9.

[v]. “AIA’s Fanning at 2018 Space Symposium: New Space V. Old Space A ‘False Dichotomy’,” Aerospace Industries Association, April 24, 2018. https://www.aia-aerospace.org/news/aias-fanning-2018-space-symposium-new-space-v-old-space-false-dichotomy/

[vi] “Executive Summary,” U.S. Chamber of Commerce Foundation,             https://www.uschamberfoundation.org/enterprisingstates/assets/files/Executive-  Summary-OL.pdf, pg. 1.

[vii]. C J Isom & David Jarczyk, “Innovation in Small Businesses: Drivers of Change and Value Use,” Small Business Administration, March 2009,            https://www.sba.gov/sites/default/files/rs342tot_0.pdf. Pg. 7

[viii]. “Innovation,” OECD, September 9, 2005. https://stats.oecd.org/glossary/detail.asp?ID=6865

[ix]. Loren Grush, “Bigelow Aerospace wants to put an inflatable space habitat in orbit around the Moon,” The Verge, October 17, 2017.        https://www.theverge.com/2017/10/17/16488646/bigelow-aerospace-united-launch- alliance-b330-habitat-lunar-depot

[x]. Tim Fernholz, “A 3D printed, carbon fiber rocket flew for the first time in New Zealand,” Quartz, May 25, 2017. https://qz.com/991156/rocket-labs-electron-test-flight-succeeds-a-3d-printed-carbon-fiber-rocket-flew-for-the-first-time-in-new-zealand/

[xi]. Kendall Russell, “OneWeb Satellites Inaugurates Production Line for its First Satellites,” Via Satellite, June 27, 2017. https://www.satellitetoday.com/innovation/2017/06/27/oneweb-satellites-inaugurates-production-line-first-satellites/

[xii] Loren Grush, “How one company wants to recycle used rockets into deep-space habitats,” The Verge, June 14, 2017. https://www.theverge.com/2017/6/14/15783494/nasa-nanoracks-ixion-nextstep-habitats-rocket-upper-stage

[xiii]. Melissa Crowe, “Satellite ride-share: Spaceflight Industries prepares for outer space revolution,” Puget Sound Business Journal, July 6, 2017.             https://www.bizjournals.com/seattle/news/2017/07/06/spaceflight-industries-satellite-ride-sharing.html

[xiv].  J.A. Schumpeter, “Capitalism, Socialism, and Democracy (6 ed.),” (Routledge 1943): pg. 81–84.

[xv]. P. Heyne. P.J. Boettke, & D.L. Prychitko, “The Economic Way of Thinking (12 ed.),” (Prentice Hall 2010): pg. 317–18.

[xvi]. Kevin Hassett, “Investment,” Library of Economics and Liberty,             http://www.econlib.org/library/Enc/Investment.html

 [xvii]. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018, pgs. 7 -12.

[xviii]. “Financing High-Growth Firms: The Role of Angel Investors,” OECD, 2011, https://www.oecd.org/sti/ind/49310423.pdf, pg. 9.

[xix]. Sameul Kortum & Josh Lerner, “Assessing the Contribution of Venture Capital to Innovation,” Harvard Business School, http://www.people.hbs.edu/jlerner/vcinnov.pdf., pg. 4.

[xx]. Michael Peneder, “The impact of venture capital on innovative behavior and firm growth,” Austrian Institute of Economic Research,          http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.587.7492&rep=rep1&type=pdf   pg. 4.

[xxi]. Supradeep Dutta & Timothy Falta, “A comparison of the effects of angels and venture capitalists on innovation and value creation,” Northeastern University,      http://www.law.northwestern.edu/research-            faculty/searlecenter/events/innovation/documents/Dutta_angel_VC.pdf

[xxii]. Michael Peneder, “The impact of venture capital on innovative behavior and firm growth,”   Austrian Institute of Economic Research,          http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.587.7492&rep=rep1&type=pdf   pg. 4.

[xxiii]. Alexander Popov & Peter Roosenboom, “Does Private Equity Investment Spur Innovation?” European Central Bank, June 2009,   https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1063.pdf?8ad255c424c32d3fbf0de610 c5a8da85

[xxiv]. Michael Peneder, “The impact of venture capital on innovative behavior and firm growth,” Austrian Institute of Economic Research,          http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.587.7492&rep=rep1&type=pdf   pg. 4.

[xxv]. Juanita Gonzalez-Uribe, “Venture Capital and Innovation,” Columbia University, 2013

[xxvi]. Supradeep Dutta & Timothy Falta, “A comparison of the effects of angels and venture capitalists on innovation and value creation,” Northeastern University,      http://www.law.northwestern.edu/research-            faculty/searlecenter/events/innovation/documents/Dutta_angel_VC.pdf

[xxvii]. “Collaborative Innovation: Transforming Business, Driving Growth,” World Economic Forum, August 2015, http://www3.weforum.org/docs/WEF_Collaborative_Innovation_report_2015.pdf

[xxviii]. Supradeep Dutta & Timothy Falta, “A comparison of the effects of angels and venture capitalists on innovation and value creation,” Northeastern University, http://www.law.northwestern.edu/research-            faculty/searlecenter/events/innovation/documents/Dutta_angel_VC.pdf

[xxix]. “Financing High-Growth Firms: The Role of Angel Investors,” OECD, 2011,  https://www.oecd.org/sti/ind/49310423.pdf

[xxx]. Antonio Davila, George Foster, & Mahendra Gupta, “Venture-Capital Financing and the Growth of Startup Firms,” August 2002,             http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.201.2971&rep=rep1&type=pdf

[xxxi]. E. Chemmanur, X. Loutskina, & Tian X, “Corporate venture capital, value creation, and innovation,” unpublished working paper, cited in M. Da Rin, T.F. Hellmann and M. Puri,  A Survey of Venture Capital Research, 2011, pg. 54

[xxxii]. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018

[xxxiii]. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018

Figure 1. “Space Investment Quarterly,” Space Angels, Q1 2018,             https://spaceangels.docsend.com/view/t3axt46

Figure 2. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018, pg. 13.

[xxxiv]. Jeff Foust, “Surge of new space companies has impressed even veteran industry observers,”  SpaceNews, March 7 2018, http://spacenews.com/surge-of-new-space-companies-has-impressed-even-veteran-industry-observers/

[xxxv]. Robert Jacobson, “Accelerating Space Startups: How to Break into the Next Trillion-Dollar Industry,” Observer, August 9, 2017, http://observer.com/2017/08/space-startup-   accelerator-incubator-aerospace-entrepreneurs/

[xxxvi]. Zoltan Acs & David Audretsch, “Entrepreneurship and Innovation,” Max Planck Institute of Economics, May 2005,             https://pdfs.semanticscholar.org/205c/86cfc095a22f5510a76826338600cac5c3d5.pdf

[xxxvii]. Josh Lerner & Joacim Tag, “Institutions and Venture Capital,” Industrial and Corporate Change, Vol. 22, 2013.

[xxxviii]. Daniel Waggoner, “High Risk Finance,” in Innovation Policy: A Practical Introduction,  (New York: Springer 2015): pg. 85.

[xxxix]. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018, pg. 24.

[xl]. Jeff Foust, “Surge of new space companies has impressed even veteran industry observers,” SpaceNews, March 7 2018, http://spacenews.com/surge-of-new-space-companies-has-impressed-even-veteran-industry-observers/

[xli]. John Callahan & Steven Muegge, “Venture Capital’s Role in Innovation: Issues, Research and Stakeholder Interests,” Carelton University, November 2002, http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.202.5710&rep=rep1&type=pdf

[xlii]. Jeff Foust, “Surge of new space companies has impressed even veteran industry observers,”   SpaceNews, March 7 2018, http://spacenews.com/surge-of-new-space-companies-has-impressed-even-veteran-industry-observers/

[xliii]. Mario Cardullo, “Intellectual Property – The Basis for Venture Capital Investments,” World Intellectual Property Organization,             http://www.wipo.int/sme/en/documents/venture_capital_investments_fulltext.html

[xliv]. Shai Bernstein, “Does Going Public Affect Innovation,” Stanford University, July 3, 2014, https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/IPOInnovation%20-  %20July2014.pdf

A Guide to Space Shuttles: How They’re Made and What Keeps Them Safe in Space

Article kindly provided by Casey Heigl (casey@heigltech.com).


Introduction


Since 1981, the space shuttle has hauled more cargo, carried more passengers, and traveled practically as many miles as all other U.S. manned spacecraft’s combined. Astoundingly, it’s now been almost 50 years since President Nixon signed off on the development of the space shuttle. Since that time, the shuttle has offered the most ambitious method of transporting humans into space in over five thousand years of effort.

Although most of us are familiar with the spectacle of manned space flight, those who are younger among us may not be. At the moment of liftoff, the shuttle both created and harnessed about 6.5 million pounds of raw thrust. Its three main engines, tiny in comparison to the unleashed power of twin solid-rocket boosters, generated the equivalent output of the Hoover Dam 23 times over.

Departing the launch pad, the space shuttle was all rocket. When it cleared the tower at a relatively slow 100 miles per hour, the shuttle was a study in thunderous vibration that grew in intensity over the initial few minutes of flight until the tail-off and drop of the solid rocket boosters.


Shuttle Safety in Space


 

Those who designed the shuttle envisioned a rough and tumble four-wheel-drive type of spacecraft that can handle the rugged back roads of space. It would come equipped with a standard array of overtly redundant systems—as many as four deep, in some cases—to heartily defend against any possible hardware or software problems. The systems onboard were meant to be nimble enough to return the crew home safely even if up to three levels failed.

The space shuttle’s thermal protection system or TPS was comprised of thousands of thermal tiles that served as a barrier to protect the vehicle during the scalding 3,000-degree heat of reentry into the Earth’s atmosphere. The TPS also protected the vehicle from the extreme cold and heat of outer space while in orbit.

The shuttle, in contrast with other vehicles, such as the Apollo, was designed to stay perfectly balanced on its own wings for the duration of the long, steep return to Earth. This balance was achieved through pure force. Scientists knew there were no aerodynamic forces on the shuttle above Mach 10. However, the real problem existed between Machs 8 and 1.

Scientists even broke down the Mach numbers into tenths, throwing all of the possible parameters back into a hopper, running and rerunning scenarios over and over until they could run a thousand times or more without a problem. If there was a single failure, they went back and made corrections to the system until 1,000 runs without failure were achieved for every possible Mach number.

Engineers used 50 or more wind tunnels of various speeds to shape and hone the vehicle since theory alone could not possibly account for every complexity of a typical shuttle flight.

Over time, the design of the shuttle accumulated over 100,000 hours of time in wind tunnels, which amounted to four times the testing of both the Boeing 757 and Boeing 767 developmental programs.


Tiles


The Challenger disaster came about in part due to a weakness in the tiles used to guard against the extreme heat of reentry. Later space shuttles used tiles made of ceramic fibers and a special silicone glue that bonded the tiles directly to the aluminum frame of the shuttle.


Plans Versus Budget Cuts


What the creators failed to realize, however, was that politics affects technology, which affects budgets. In practical terms, it meant there was a spending cap, and, to stay under that cap, compromises in the shuttle’s performance had to be made. Over the subsequent ten years, those budget cuts resulted in a painful hit to the program. Although painful, the compromises seemed somewhat reasonable at the time.

Although it might seem unheard of today, it’s interesting to consider even some of the elements that were included on the list of items NASA planned to include with their proposed 60 shuttle flights per year. The list included seven shuttles, three dedicated launch pads, a space station, and a fleet of “space tugboats” to pluck and place satellites in and out of Earth orbit. For some reason, not one of those “wish list” items was totally fulfilled, yet there was no change in the performance expectations of the shuttle program.


It’s a Go for Launch


In spite of all they had to go through, work on the space shuttle program continued and, eventually, the fleet began flying. Other than a couple of catastrophic events, the shuttle went on to become one of NASA’s most reliable vehicles for space launch and exploration. Indeed, its success-to-failure ratio indicated a much higher reliability than any other launch vehicle in the United States among space launch vehicles that have been in operation for more than 30 years. In comparison, Europe’s Ariane booster rocket had five failures within its initial 40 flights.

In its first ten years of operation, the space shuttle flew every week, yet it managed to launch nearly half of the entire mass of everything the United States has ever deployed into space.


The Space Shuttle Legacy


There are still other ways in which the space shuttle has stood the test of time. Its seemingly retro 1970s design template is still standard and state-of-the-art in many areas, including airframe design, automated flight control, thermal protection systems, electrical power systems, and the main propulsion system. The space shuttle’s main engines proved to be the world’s best chemical rockets, and they remain the only ones to date that can actually be throttled.

The space shuttle’s flight software is among the most advanced aerospace code on Earth, even years after the shuttle’s been retired. The space shuttle was also the only space vehicle that offered any kind of practical capability to return space cargo back to Earth. Additionally, it remains the only human-carrying vehicle type to be emulated by all other major space-faring nations.


The Future of NASA Space Travel


Who knows how history will ultimately judge the space shuttle? When the speed of sound was first broken, it was done with a research airplane. After flying a dozen times, the plane was discarded, donated to a museum, and work was initiated to create the next model with intelligence gained from that experience. The space shuttle did a tremendous job of serving both as a launch vehicle and a spacecraft which was capable of remaining in space for days or even weeks at a time. Perhaps the next generation of manned space vehicles will improve upon some of the space shuttle’s shortcomings. We are all still learning.

For the early American astronauts who pioneered high-speed flight, who worked on missions like the Apollo, and who helped turn that experience into the space shuttle, this was their goal all along.

Revisiting ‘Non-Interference’ Zones in Outer Space

Few topics in the field of space law have been as widely debated in the recent past as those of space property rights. The interest is understandable, given that talk of commercial lunar development has been going on for years. Of the several companies with plans to land on the Moon within the next year or two, some intend to eventually set up mining operations. Other companies are raising investment for asteroid mining. A number of countries, including the United States, have set up favorable legal regimes for the extraction and ownership of physical resources derived from space. The United States’ apparent pivot back to the Moon has renewed interest in establishing a long-term human presence on the lunar surface.

Despite the body of work analyzing issues such as space property rights and the notion of territorial appropriation, several outstanding questions may require practical experience to be answered, suggesting the fallibility of regulating too far in advance. The answers to others, however, can be teased out in proposals and ideas that might have future applicability. One such question is of interference in surface activities on other worlds. Can a mining activity on an asteroid or a habitat on the Moon, for example, be protected from interruption or intrusion by a competitor? How might a company ensure that it will have unfettered access to the surface location upon which it has placed hardware, or the resources which may lie within? These are critical concerns for business certainty and investor confidence, as well as continued safety of operations.It may be that many, if not all, of these plans fail to come to fruition in the timelines currently envisioned. Challenging technical, economic, and business hurdles will need to be overcome before commercial space mining or Moon bases begin in earnest. Nonetheless, these proposals are effective catalysts for the establishment of an enabling legal and regulatory environment. Indeed, it seems that policy and regulation for commercial operations on other worlds are outpacing the technologies and activities they intend to oversee.

Established space law does not help the issue. Article II of the Outer Space Treaty prohibits territorial appropriation in outer space by claims of sovereignty or means of occupation. A country cannot simply declare that a plot of land on the Moon or an asteroid is theirs in order to keep others out. By the treaty, a company has no legal right to a location in space, even if it has stationed permanent equipment there. Without a current legal foundation for non-interference in space operations, a solution to emergent issues will need to evolve through state practice and norms of behavior.

One such possible practice may be the concept of a “non-interference zone,” an area around a spacecraft or surface facility in which others may not enter or conduct their own activities. It’s an idea that’s been floated in the United States before, as a part of licensing requirements for operating a non-governmental spacecraft. Nothing about it, as proposed, overtly violates the Outer Space Treaty. Now, with commercial surface activities on the Moon seemingly imminent and the government close to reforming the regulatory regime to enable it, the non-interference zone is a concept that will likely come up again.

This brief essay explores the non-interference zone idea to frame continuing discussions on the topic. As background, it looks at the history of the concept and offers considerations for its implementation—if it is to be implemented. To that, the essay examines whether current proposals to resolve the regulatory gap for “authorization and continuing supervision” of on-orbit space activities are conducive to these zones and offers thoughts on possible developments in the future.


Background


In late 2013, Bigelow Aerospace submitted a request for a payload review of a proposed lunar habitat by the Federal Aviation Administration’s Office of Commercial Space Transportation (AST). Though the company had no immediate plans for a lunar base, it sought to identify any issues that could hinder private development of the Moon. Bigelow asked AST to confirm that no future licenses would be issued that would interfere with the operations of the lunar habitat, seeking the creation of a zone of operation in which other US entities would not be able to enter.

A year after Bigelow’s request, AST issued a reply largely affirming Bigelow’s non-interference zone idea. The letter to Bigelow stated thatThe concept of this non-interference zone has parallels. AST’s licenses already stipulate that payloads not destined for rendezvous with the International Space Station may not enter a 200 kilometer “safety zone” that surrounds the station. The International Telecommunication Union (ITU) allocates orbital slots in geostationary orbit to minimize frequency interference by satellites. While operators of space objects are not, by the Outer Space Treaty, required to abide by ITU’s slot allocations, or foreign governments with the space station’s safety zone, they do so in good faith to minimize risks of collision, frequency interference, and diplomatic incidents. Licensing regimes for non-governmental spacecraft have codified adherence to these non-interference zones as requirements, establishing what amounts to de facto rights to locations in space.

[w]e recognize the private sector’s need to protect its assets and personnel on the Moon or on other celestial bodies. Supporting non-interference for private sector operations will enhance safety and only add to the long history of preserving ownership interests in hardware and equipment. Per Congressional guidance, we intend to leverage the FAA’s existing launch licensing authority to encourage private sector investments in space systems by ensuring that commercial activities can be conducted on a non-interference basis.

In its fiscal year 2016 transportation, housing, and urban development appropriations bill, the House of Representatives’ Committee on Appropriations also endorsed the idea, writing in page 21 of its report that,

[t]he Committee applauds actions taken by the FAA Office of Commercial Space Transportation confirming the FAA’s willingness to leverage its existing launch licensing authority to encourage private sector investment in lunar systems that will work in tandem with SLS and Orion, by ensuring that commercial activities can be conducted on a non-interference basis. The Committee urges the FAA to continue to add details, such as specified zones of exclusive operation on the lunar surface.


Issues of implementation


While straightforward as a concept, the non-interference zone becomes more far more complicated in implementation. The wide variety of objects and possible operations in space suggests that non-interference zones would require significant flexibility instead of being a “one-size-fits-all” standard. The proper scope of non-interference, both in physical space and acceptable activities, would likely differ from space resource to space resource and based on potential conflicting uses and users of a location. The characteristics of a zone—its size and protections offered—would be shaped by several environmental and operational factors that would need to be taken into consideration when issuing a license.

For example, the horizon on the Moon is less than 2.5 kilometers away, while the horizon on a small asteroid may be merely dozens of meters. The likelihood that an activity would interfere with another operation beyond a horizon would be small, suggesting that a non-interference zone surrounding an object would be relative to the size of the body on which its located.

However, depending on the characteristics of the location and the activities taking place on it, interference beyond the horizon may be possible. Dust and debris kicked up from the lunar regolith during excavation may fall a considerable distance from the mining activity, perhaps past the horizon. Perturbances to a small asteroid during mining on one side may affect activities on the other. There is no simple way to reconcile these challenges. Moreover, certain locations are more “valuable” than others; the lunar south pole, for example, contains significant and concentrated water-ice deposits. It will be difficult to protect an object at the pole without establishing de facto claim of rights for its operator on the entirety of the location’s vital resources.

As thought experiments alone, these are complicated issues; as questions that require answers if non-interference zones are to be realized as part of the regulatory regime, they become even more important and troublesome. There are, of course, methods by which they may begin to be tackled. For example, in its endorsement of the non-interference zone concept, AST’s advisory committee, the Commercial Space Transportation Advisory Committee, suggested that a variety of tools, such as probabilistic risk analysis, could be used as a dynamic approach for establishing reasonable zones of non-interference. However, it is likely that these zones would need to be determined on a case-by-case basis, at least in the early years.

Meanwhile, the scope and scale of missions would need to come into consideration. Early missions to the Moon or asteroids are likely to be conducted with small, simple robotic landers or rovers. Space mining or lunar development plans will unfold slowly, with years between the identification of targets, in-situ prospecting, and actual operations. Likewise, creation of a lunar base will take place over a significant span of time, probably beginning with robotic site planning, excavation, and construction before any direct human involvement. While it is surely possible that some level of “interference” could occur between operators during these early stages, it is difficult to qualify all interference as “harmful.” For example, would the operation of two resource-prospecting lunar rovers scouting mining sites at the same location really risk meaningful damage or interruptions in all but the most extreme circumstances, such as a collision? Would the transit of a rover through a static lunar base’s non-interference zone pose a real threat to that base’s operation, except in instances of gross negligence? What “phase” of an activity demarcates its need for more stringent protection in the form of a larger or more restrictive non-interference zone?

This poses its own challenges. Writing at length about how agencies such as FAA establish new regulatory and licensing mechanisms, Laura Montgomery, former manager of the Space Law Branch in the FAA’s Office of the Chief Council, noted that the regime “will evolve over time, but each phase will possess its own burdens.”

When regulating on a case-by-case basis, an agency that seeks to provide the industry some flexibility will try to avoid imposing the same requirements on everyone regardless of their circumstances. However, fairness and the law require that they treat operators doing similar things in the same way. They also require transparency in the administration of a regulatory regime, so operators will need and want to know what precedents have been created by an agency’s treatment of other operators like them. All these good, well-intentioned concerns slow the review process down.

Over time, the regime would mature. As operations evolve and the agency gains experience with activities involved in non-interference zones, it could,

issue regulations that it could apply generally. At the same time, however, they would set those requirements into regulations that would take years to change through rulemaking. If a private operator wanted to do something other than what a regulation required, the operator would have to prove that it qualified for a waiver. This is also a time-consuming process.

As Montgomery argues, regulating new activities in space on a case-to-case basis is a burdensome and time-consuming process, which is itself unconducive to business certainty. However, “[i]f the agency attempted to set standards for activities that had not yet happened, those standards would likely fail to account for lots of variables and unduly constrict what an operator could do.”


The broader context


The non-interference zone idea and its issues of implementation are threads in two larger stories of the United States’ evolving commercial space regulatory regime. The first is expanding that regime to encompass “non-traditional” space activities that fall outside the scope of launch and reentry, remote sensing, and telecommunications licensing. (See: “Seeking regulatory certainty for new space applications,” The Space Review, December 4, 2017.)

While AST’s letter to Bigelow endorsed the non-interference zone, it also noted that the agency did not have the necessary authority to implement it. In particular, the letter highlighted the Department of State’s concern that the commercial space regulatory regime was not equipped to enable the United States’ government to fulfill its Outer Space Treaty obligation of “authorization and continuing supervision” for activities on the Moon and other celestial bodies. To that, AST noted that it was,

committed to working within the federal government to put in place the necessary framework to support such activities and provide Bigelow with the security it seeks to conduct peaceful commercial operations on the lunar surface without fear of harmful interference by other AST licensees.

In the time since Bigelow’s payload review, policymakers have taken steps toward providing a regulatory agency the authority to authorize and supervise non-traditional space activities. One proposal, the “Mission Authorization/enhanced payload review” process offered by the Obama administration and written into legislative language in Rep. James Bridenstine’s “American Space Renaissance Act,” expands AST’s payload review to include licensing commercial on-orbit activities. The other, written into the “American Space Commerce Free Enterprise Act,”(ASCFEA) gives the authority to license on-orbit activities to the Department of Commerce’s Office of Space Commerce (OSC).

These two bills take starkly different approaches on how streamlined and permissive the regulatory environment for commercial spaceflight should be—the other story into which the non-interference zone fits. The ASCFEA is designed as a distinctly and deliberately “lighter” regulatory regime than that in the American Space Renaissance Act, which in turn is modeled off existing practices. ASCFEA’s model seeks to minimize government regulation and oversight of commercial space activities, so as to lessen the burden on commercial operators. Considering Montgomery’s review of burden and challenges posed by the rulemaking process, the impact of these different approaches on the future of the non-interference concept could be significant.


Enabling legislation(?)


To that, what do these pieces of legislation do?

Bridenstine’s bill implicitly endorses the non-interference zone. In the Mission Authorization/enhanced payload review process, approval of a license can be conditioned on a payload’s deployment not resulting “in harmful interference with approved and operating payloads and associated activities.” Presumably, if this regime is instituted, AST would proceed through the aforementioned rulemaking process to define the scope and characteristics of what “harmful interference” entails, effectively establishing non-interference zones around “operating payloads” and their “associated activities.”

Conversely, the authorization and supervision regime in ASCFEA presumes approval of a certificate application without condition. This is unless the Secretary of Commerce, determines, with clear and convincing evidence, that the proposed operation of a space object under an application for certification under this chapter is a violation of an international obligation of the United States pertaining to a nongovernmental entity of the United States under the Outer Space Treaty.

If the Secretary does make this determination, they may “condition the proposed operation covered by the certification only to the extent necessary to prevent a violation of such international obligation.” However, the bill stipulates that the

“Federal Government shall interpret and fulfill its international obligations under the Outer Space Treaty in a manner that minimizes regulations and limitations on the freedom of United States nongovernmental entities to explore and use space.” Moreover, the Secretary of Commerce may not “deny an application for a certification under this section in order to protect an existing certification holder from competition.”


Toward the future


As evidenced by its language, the ASCFEA is not nearly as receptive to the notion of non-interference zones as the American Space Renaissance Act. Indeed, at face value, it appears to prohibit or at least significantly curtail their establishment. Consider that a non-interference zone would likely be a condition placed on an approved certificate: for example, “you may carry out this operation, so long as you remain X meters away from operator Y” or “you may carry out this operation, but you may not carry it out at location X.” The language of the ASCFEA is relatively clear in minimizing limitations such as this, as well as sharply restricting when conditions may be placed. Of course, implementation will come down to how the Department of Commerce interprets and executes the language in statute. It is conceivable—indeed, probable—that a regulatory or legal expert more astute than this author will find a justifiable argument for how a non-interference zone, or something similar, would be possible within the bounds of ASCFEA’s provisions.

As of today, only ASCFEA is up for consideration and potential adoption, as the American Space Renaissance Act has not been reintroduced in the current Congress. ASCFEA passed favorably out of the House of Representative’s space subcommittee in June of 2017, though it has not yet been taken up for a vote on the House floor nor does it have a companion Senate bill.

And so, the idea of a non-interference zone remains simply that, with several outstanding questions still to be answered. Yet, as noted by Mike Gold, who at the time of Bigelow’s proposal was working as the company’s head of DC affairs, “[t]his is the beginning of a process, not the end… this response represents a first step by the AST to use what authority it has to create a safe and attractive environment for commercial lunar development. The first step is always the most challenging…”

As seen, the future of the non-interference zone will depend on the regulatory regime that is ultimately instituted in the United States. It will be informed and shaped by the practice of operating on the surface of other worlds. Its many outstanding questions simply reflect the challenge of regulating—or thinking about regulating—too far in advance. However, as noted at the beginning of this piece, proposals and ideas such as the non-interference zone may have future applicability and can shape thought and discussion for when the time is right to reconsider them.

To that, though this essay focused particularly on issues and context of implementation, there is much more to be said of the non-interference zone idea. For example, it could, if implemented, serve as a framework to minimize interference between international operations on other worlds. It is premature at this stage to delve deeper into the idea, though others have lent their thoughts.

Whatever the future may hold for the idea, it will surely come up again in discussions of how to protect business and investment on other worlds. Considering the progress being made in the development of ever-more ambitious commercial capabilities and plans, those discussions may not be too far away.

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