Commerce changes the fate and genius of nations.
–Thomas Gray
In Part 1, I covered Nationalism as a value proposition for human spaceflight, and pointed out the challenges that must be addressed to make it an enduring one in a changing world. Today I continue the examination on value propositions for human spaceflight in Part 2: Commerce.
Reason 2: Commerce. The development of transportation infrastructure in the United States and commerce are inextricably linked. The need to transport goods quickly, tying into existing waterways and reducing or eliminating over-land routes that were slow or non-existent, drove development of the canal system in the northeast by private interests in the early nineteenth century. The same drive is what led to the subsequent ascendency of the railroads, again achieved mainly through private investment with minimal federal guidance. As for aviation, one doesn’t have to go very far to point out the successes of the Wright Brothers, funded from their own sweat equity, versus the comparatively expensive and unsuccessful Government-backed Langley efforts at “heavier than air” travel. Subsequent aviation was fueled by the airmail contract of the 1920s and 1930s, then by passenger service started in the 1930s, then “took off” following World War II and exploded in the 1970s following deregulation. The National Highway System leveraged off the development of the automobile to transport goods and peoples to a wide ranges of destinations, plus provide Americans with a degree of mobility not available with any other form of transportation. (That is, until we get the flying cars of the Jetsons.)
Historically, NASA has not played a strong role in commerce. Instead, NASA has had a long history of technological developments that have been licensed to commercial companies. These “spinoffs” have made their way into numerous products that many of us take for granted today, and yet the impact of NASA on the economy is one that the Agency continues to struggle to communicate. So in that regard, NASA and commerce have been at best a second-order effect.
Until now.
In human spaceflight, we are seeing today the emergence of a for-profit commercial space sector that seeks to provide transportation services for people and cargo to low Earth orbit, and possibly beyond someday. Here, NASA serves somewhat in a venture capitalist-like role by providing seed money for additional investment from the private sector, as well as in a certification mode for those systems.
Can Commerce become a value proposition for human spaceflight? It does have a number of appealing characteristics. First is the “multiplier” effect of using tax dollars in combination with private capital to fund development. Second is constraining the cost for services through alternative acquisition methods by putting more risk on the firms competing the work via fixed-price contracting, versus the Government carrying most of the risk through cost reimbursable contracts. Third is taking advantages of the efficiency of the private sector through innovation, competition, and economies of scale with a greater customer base than the Government. Finally is the direct application of the value equation, where value equals benefit minus cost; in a Commerce value proposition, the common unit of measure is currency, which makes the benefit-cost trade easier to understand.
One of the critical challenges with Commerce as a value proposition is in “closing the business case.” In previous transportation infrastructure development efforts, there existed a critical mass of destinations and demand that drove investment and development using the technologies in hand at the time. For space transportation services, there is one destination and one customer today: the International Space Station, and NASA. A “build it and they will come” proposition with regards to future customers is fraught with risk and uncertainty that must be accounted for as part of the business case. Can several competing private firms close their business cases, so that failure of any one does not jeopardize accessibility? Can Government (i.e., NASA) act as venture capitalist, certifying agent, and sole customer for a period long enough to obtain critical mass of destinations and demand?
Perhaps closing the business case, at least in the near term, will rely upon an altered paradigm: instead of destinations, provide “experiences” that to date have been limited to the 500 or so professional astronauts that have traveled into low Earth orbit and to the moon. Something profound to the human condition happens when one is able to step away, so to speak, and look at life on Earth from a totally different perspective. Is there sufficient demand for the “experiences” of traveling into space to help close the business case? (Sir Richard Branson thinks so.)
Another ancillary challenge is one of change, impacting the traditional roles served by NASA in human spaceflight. A Commerce-drive value proposition will require transitioning NASA into different roles from today. For this type of change to be successful, modifications are needed to NASA’s organizational structure (maybe even closing field centers in a BRAC-like approach, gasp!). Additionally, changes would be needed to the existing systems of policies and procedures in place for human spaceflight, and to the individual skills and abilities of the NASA workforce needed to make NASA’s new roles a reality.
For the change to be successful, the level of engagement by the NASA leadership team must be higher than that for maintaining the status quo. The leadership team would need to grapple with the tough issues on how to acquire and retain those capabilities with the greatest value, and to let go of those that are of little to no value. Additionally, that would mean dealing with deeply ingrained cultural norms that no longer add value, for convincing the NASA workforce that change is needed, for restructuring the top team, for identifying and valuing the pockets of strength within the Agency, and for defining what constitutes success at all levels, from the individual level on up.
In other words, we would need to see a level of engagement by the NASA leadership team commensurate to the start-up atmosphere of Apollo. That is a tall order for an Agency with 50 years of history behind it. Therefore, with regard to a Commerce value proposition, do we have the intestinal fortitude to let go of the past, to alter and deconflict roles, and to take on the risk of the untested?
Next time: Part 3.
Text © 2011, Joe Williams. All rights reserved.
Photo courtesy of iStockphoto/MCCAIG
There has been a lot written about the corollaries between “new space” government subsidies with those of earlier times, especially aviation in the early 20th century. However, these “analyses” tend to be fairly superficial – no one really mentions the timespan involved, or the ties to the defense establishment. Likewise, no one really mentions the fiscal hardship that commercial air travel companies face. How many times has the government rescued airlines from bankruptcy?
As posted in response to part 1, I do think that the move toward commercial providers is a good one. However, the insistence by OSTP and NASA HQ that these companies will be ready to routinely put humans in space after less than a decade of development, while advancing the state of the art and slashing costs, seems right out of Pollyanna. Do one or two have a chance in the next few years using the existing technology? Yes. Should we play games with traditional Programs to stack the deck in their favor? Absolutely not – it not only hurts NASA’s credibility, it costs more in the long run.
The rhetoric tends toward faster, better, cheaper. While that philosophy can work, it is more appropriate for robotic exploration systems than for humans. Rapid development and nimble organizations are not the norm in the large projects that typify human spaceflight. And it requires an Agency, a government, and a public that is willing to accept that some attempts will end in failure. For NASA to act in a VC role, that must change – and Congress must also agree and fund the Agency accordingly. With the on-going divide between Congress and OSTP on NASA’s future and the nation’s fiscal issues, that is doubtful. And as for economies of scale, even if new space can cut costs by an order of magnitude – to about $1,000 per pound – that still means a person has to be willing to pay $150,000 to $200,000 for a flight. Very few people can afford that. It will take a revolutionary combination of new technology and processes to get passenger costs to something like affordable for the average person – and without huge infusions of cash that the government can’t afford, it will never happen…
Bottom line – for me, human spaceflight is a long way from being a driver for commerce in the American economy.
Good contributions, Brian. Thanks for sharing your perspectives.
Of course satellites are at the core of a $100 billion a year global telecommunications industry. So obviously, without government investment in the space rocket, satellites and the satellite based telecommunications industry would not exist (there would be no CNN, HBO, or Direct TV or GPS technology for consumers).
I don’t consider the ISS an essential service. In fact, I believe that the ISS program hurts NASA’s ability to fund manned beyond LEO programs like a lunar base. So I consider any commercial crew programs associated with the ISS program as extremely expensive make-work programs.
Space tourism and space hotels for the wealthy and possibly for space lotto winners looks like the next multi-billion dollar a year profitable venture. There are about 100,000 people wealthy enough on Earth to potentially pay for a $25 million ticket to a space hotel. And there are probably billions of people on Earth willing to risk a dollar or two for a chance to fly into space.
The burial for cremated remains in space or on the Moon might be another multi-billion dollar a year venture since tens of millions of people die every year.
Suborbital transcontinental spaceflight might be another multi-billion dollar a year industry since, in theory, it should be possible for a spaceplane or vertically landing rocket to transport passengers anywhere on Earth in less than an hour. That would be a blessing for anyone who hates those grueling 12 hour plus transcontinental flights.
Marcel F. Williams
I’m OK that you feel that way about ISS. In the framework I established in this series, I got comfortable with the ISS as representative of Science, with it leading the evolution of establishing national laboratories beyond low Earth orbit. It also serves as proof that we can build large structures on orbit (which I cover in Part 4). Finally, it represents an ability to work internationally, which I don’t cite as a value proposition but feel is a reasonable means to an end.
Thanks for your continued contributions in the comments. I appreciate it.
I thunk that the relationship between the private firms and NASA could extend beyond LEO. It is almost certain that the business case will close for private firms delivering cargo and satellites to LEO. NASA’s funding for COTS is resulting in ongoing separate business even when the ISS supply contracts expire. I think that the business case for humans to LEO (e.g. Bigelow) is harder but probably doable. CCDev definitely helps to position SpaceX et al to try and clyde that business case.
BEO is much harder. AFAIK, Space Adventures has signed up one but not two tourists for an around-the-Moon trip. So I think that NASA should fund the development of a lunar lander (cargo/manned) and also the surface teleoperated equipment for a lunar ice mining/processing/delivery program. Then NASA should guarantee the purchase of a certain amount of lunar-derived propellant. Closing the business case would probably be through continued such propellant deliveries for NASA & DOD, boosting large comm sats to GEO, orbital servicing, and tourism.
I believe there is an unspoken path for Government and private sector cooperation: “walking before running.” Once we prove that routine access to LEO can become a viable business endeavor for the private sector, I suspect the minds will be much more open to entertaining some degree of public-private partnerships for BEO.
> I suspect the minds will be much more open to entertaining some degree of public-private partnerships for BEO.
Yes, I agree. But it would help if there was a good, named plan which would help governments to understand what would be the next step and what benefit that plan would provide the government(s) who were being asked to financially support it. I could easily imagine fuel depots being something that could help both public and private entities. Although more of a stetch, I think that an OTV and lunar lander (cargo and later manned) could serve dual purposes.
Ironically, if SpaceX, et al achieves reusability, this might undermine both fuel depots and OTVs. Why store fuel at LEO when you can deliver it straight from Earth’s surface at low cost?