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Panel One – Moderated by Joseph Anselmo
July 21, 1997 Cheap Access to Space Symposium |
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Panel One at the CATS Symposium.
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Introduction
Charles Miller: Good morning! My name's Charles Miller. I am the director of development of the Space Frontier Foundation and a member of its Board of Directors, and I will be your master of ceremonies for this symposium on "Cheap Access to Space: The Key to the Space Frontier". My first order of business is to introduce our first speaker. He is the President of the Space Frontier Foundation. Mr. Tumlinson is a well-known evangelist for the space frontier. His writings and quotes have appeared in the New York Times, Wall Street Journal, Los Angeles Times, Miami Herald, Reader's Digest, Space News, and dozens of other publications. He has appeared on such national television programs as ABC's "World News Tonight", "The CBS Morning Show", and "Politically Incorrect". Tumlinson worked for noted scientist Dr. Gerald K. O'Neill at the Space Studies Institute, helped pass the Space Settlement Act of 1988, testified before the National Commission on Space, and was a lead witness in Congressional hearings on NASA in 1996 and 1997. He is a founder of the Foundation for the International Non-governmental Development of Space, or "FINDS" – a multi-million dollar foundation which funds breakthrough projects and activities – and a founder of LunaCorp, a seven-year-old firm planning a commercial return to the Moon in 1999. I'd like to introduce and welcome Rick Tumlinson, the President of the Space Frontier Foundation.
Rick Tumlinson: Before we begin, a little bit of sobering business we have to deal with. They say space is dangerous; but in the last few days we've lost two great space pioneers right here on Earth. Gene Shoemaker was killed this weekend – I don't know how many of you know that – in Australia, on a highway. And Bob Quisenberry, one of the participants in this conference and a real member of the revolution – one of those who was fighting for a regulatory environment that's going to let you entrepreneurs fly out there – passed away as well. I'd like to ask that we have a few moments of silence in their memory. (We are, by the way, going to dedicate this symposium to the memory of Bob Quisenberry.)
Welcome to the revolution! The revolution begins here, and it begins now, and it begins with the people in this room. When the Space Frontier Foundation coined the term "cheap access to space", we did it on purpose. We didn't want people to think of space in terms of "relatively low cost". We knew that would happen when it hit the Beltway – it would start changing and transmogrifying into all kinds of different names. We wanted it to be cheap – the goal eventually down to as low as $100/pound to LEO. Cheap – Walmart! We wanted mainframes. We wanted Casios, not Cartiers. We wanted Fords, not Ferraris. For us, the frontier of space represents not just an economic future, and lowering the costs of getting there doesn't just mean that we're going to tweak the bottom line of a telecommunications company, or allow a national space agency to send a few more missions into space. For us, space is the greatest, grandest and most important frontier in human history, and our job in the Space Frontier Foundation – and the job of many of you here – is to open that frontier to the people of America and the people of the world. For us, space is not a series of linear programs, one following another like dominoes into the future – but much more like the Oklahoma border when they fired the gun in the air and people went west on wagons, on horses, on trains and canals, and used their own dreams, their own imaginations, to carve the greatest nation on earth and thereby transform the world. That is what we are about. Oh, and by the way, if we get cheap access to space, the bottom lines of those telecommunications companies will look a lot better, and missions such as the recent Pathfinder mission to Mars will be spread all over the Solar System because it will be so much cheaper to do so. But our job is to get the people out there. For us, cheap access to space was the answer to the question "How do we throw open the gates of the frontier?" – but we very soon realized that there were a lot more questions underneath that one – questions such as "Who cares?" Not the people, ironically enough – they've been trained very well, like the serfs of pre-New World Europe, to believe that only the knights in shining armor are allowed to ride horses. We have to shatter that myth, by getting them out there and giving them a chance. Or the poor regulators; they have a question: "Why me?" Because down the pike is coming a whole series of new questions and new possibilities and new lawsuits – and it's coming fast, and they're going to have to deal with it.
We have ahead of us, answering over the next couple of days, one of the great ones for me, and one of those I use quite often when I talk to the media – pointing out to them that it is legal to fly a rocket into space and test it, but it is illegal to return to the Earth in that rocket. This is like – well, I can see the Wright brothers at Kitty Hawk, trying to take off with some federal regulator telling them that they cannot land. Imagine where we would be! Or Mr. Ford: you can take the car out, but you can't bring it back. There is a reason nothing is happening in space right now.
We have questions: What is the appropriate government role in space? Is to enable and enhance the capability of American industry and science to get out there and do things – all kinds of things? Is it to fund projects, like the X-33, that allow innovation and create competitive markets – to be a market-maker themselves? Or is it to refurbish old space vehicles with new methods that lower the costs of their operations and forever maintain a stranglehold on that frontier? These are the questions we have ahead of us, and the questions we hope to answer in the next couple of days. As Robert Heinlein – the great science fiction author and, I think, one of the inspirations of a lot of people in this room – once said, "If you can get to LEO, you're halfway to anywhere in the universe." If you can get to LEO, you're halfway to the future, because the future lies up there – and the people in this room are the people who are going to open up that future. It is up to you. It is up to all of us to get past the squabbling and the finger-pointing, and get down to the answers, and create some opportunities.
There are a lot of people who say, "Well, what's the market?" It is those very same people who don't know they are the market, who are the market. It is those same people who came over from Europe to this new world, who did not know they were the market. It is the same people who bought cars, who did not know they needed cars – who bought computer but who did not know they needed computers until somebody came up with a better, cheaper, faster way of getting one to them. It is those people – the people you will pass on your way home in those cars, the people you will talk to on your computers, the people you will watch on your televisions and speak to on your telephones – all products we did not know we needed until they were created in a method that got them out to those people. The market – well, ladies and gentlemen, when you go home and look into the eyes of your children, that's the market. That is the customer. Those are the people for whom we are opening the frontier. Welcome, and have a wonderful couple of days! Thank you very much.
Miller: Before we begin, I want to give everyone a few changes of the agenda. First, on the afternoon panel, in place of Bobby Quisenberry will be Mr. Greg Sullivan. Also, I am told that Dr. Paul Coleman will not be here today, and he will have his executive director of the University Space Research Association sitting in for him. Tomorrow, to be announced is our luncheon speaker, and that will be Mr. Jerry Rising of Lockheed-Martin Skunk Works. He's the X-33 program manager. Recently there were changes, and the entire program got consolidated under his leadership. Tomorrow afternoon there has been one addition to the panel: Col. Simon "Pete" Worden of the Dept. of Defense. Finally, Mr. Tom Clancy will not be making it today.
I'm going to introduce our primary keynote. This gentleman, who is a member of the Board of Advisors of the Space Frontier Foundation and has been a long-time friend of ours, is known to all of you. In September 1962, he was selected as an astronaut by NASA, and his first flight was on Gemini 5. He then served as commander of Gemini 11, and helped set the world altitude record. After that, as some of you may know, he served as commander of Apollo 12, the second lunar landing; and on his final mission he served as commander of Skylab 1, the first space station of the United States. Later in his long career, he joined the Space Systems Company of McDonald-Douglas, and became flight systems manager of the Space Systems Company's single-stage-to-orbit vehicle, the Delta Clipper. After successfully its series of flight tests, the DC-X was modified, renamed the DC-XA, and turned over to NASA to continue flying at White Sands Missile Range. Mr. Conrad retired from McDonald-Douglas in 1996 to form Universal Spacelines, the first commercial space services company. As chairman of Universal Spacelines, he manages assets in space. I'd like to have a warm welcome for Charles "Pete" Conrad, Jr.
Conrad: Gosh, I don't know what the answer is to coming on after "The Hunt for Red October"; I was sort of counting on following Mr. Clancy there.
I think Rick started the thing off correctly by saying, "There are whole new horizons out there. "I'd like to go back to about 1927, when Charles Lindbergh flew across the Atlantic. In my eight years at the Douglas Commercial Aircraft Company, I learned a lot about commercial transportation. If somebody had stood on the beach when Lindbergh passed by on his way across the Atlantic and said, "In 1990, fifty million people will fly the Atlantic for summer vacation, you'd have said the guy was crazy. I just wonder where, sixty years from now, we will be with commercial space transportation. I would have to predict that people will be routinely flying in space for vacations; I believe we will long since have landed on Mars; we will probably have returned to the Moon. And I believe a lot of that will be done for commercial reasons.
Now we are really on the frontier of commercial space. I really don't consider putting satellites up on ex-ICBMs out of what are now called "civilian launch sites" at Cape Kennedy or Vandenberg, going right back into a government tracking network to get up there – I don't really call that "commercial space". What is happening, though, is that people are getting ready to build truly commercial reusable and expendable launch vehicles. The infrastructure is about to start being put around the world for a true "commercial tracking network". I was talking this morning with people from the FAA, and that whole system is in the dawning. We all have to work very hard to see that that gets up successfully. My personal feeling is that the commercial infrastructure, although it will have to operate to government regulations – and certainly it should, for the purpose of safety and to assure (just as the FAA does today) safe air traffic control and so forth – that this infrastructure will probably be run commercially under the government regulations because I firmly believe that that will be the cheapest way to do that. If you look at what goes into launch costs today, commercial spaceports are going to have to beat by a long margin the costs of just launching. And, as was pointed out, eventually when we're allowed to reenter commercially – which, hopefully, will take place very shortly because of a change in the Act – all these things will operate to give us cheap access to space.
I believe we're going to have to build the vehicles differently from what's being built today. Just as the DC-X really revolutionized the thinking of a lot of rocket people, we're still going to have to apply that kind of shifting in our thinking to the whole commercial network. The market is certainly there.
I think that there is an even fantastically larger market when we really get into giving cheaper access to space. It's going to be sort of self-generating. I kind of laugh at the people who are saying in the communications business that, if they put up all these comsats that they're talking about, there isn't enough business out there. I think that's absolutely ridiculous. If there's one place we're seen where they can suck up capacity, it's in the communications business. The more communications you can put out, the more people suck it up, whatever it is – data, television, on and on. And so I think that's sort of like the people who said the commercial jet airliner is too efficient, that there's not enough people to ride on it because it flies twice as fast as the other ones and therefore it can carry twice as many people. That certainly didn't prove to be true. I think the same thing is there in the commercial space world.
And let's not forget that there's is no place on Earth that's more than forty-five minutes away on a sub orbital flight in a space vehicle. And it's not that far to get to the Moon if you can do a little refueling in orbit with some potential vehicles that have been looked at. So, I don't think we're that far from getting back to the Moon.
I don't think we're that far from seeing people ride in space for vacations. I know that in Germany – this March 1997 – they held the first symposium on space tourism. I wish I'd had the time to go just to see who showed up there. I know that the Japanese, through the Shimizu Corporation, have been looking at a space hotel for a long period of time. I know that they've been working on total closed-loop environmental control systems, thinking about long-term space operation, or thinking long-term in putting people on other planets where we're going to have to supply our own complete ecological cycle. So: Much work is going on, but I think the dawn is just coming. I'm sure that you're going to hear some interesting discussions today and tomorrow, and I look forward to being a part of the great boom that I believe is about to take place. Thank you very much.
Miller: One of the things about this symposium that we're doing is that we're trying to add a little audience participation, which you'll get later during the session. So we'd like to invite some questions for Mr. Conrad.
Q: [unintelligible]
Miller: The question was: In light of the press conference this morning by another launch vehicle company, does Pete see Universal Spacelines buying rockets from other companies?
Conrad: All of the above – and I have to say that because right now it seems to me that some of the potential out there will make good commercial vehicles, and Universal Spacelines' ultimate objective is to be a commercial reusable launch vehicle operator, a la spacelines/airlines. And if we have to ultimately wind up building our own, I think we'll do that. If we can buy one sooner that will do the job, we'll do that. Right now there's a couple out there that have a lot of potential in my opinion – and I'm talking strictly commercial. Not that the others won't work; but when it comes to cheap access to space, it's going to have to be done very, very simply and efficiently, or you're not going to have cheap access to space. What's out there is developing, and we want to be in a position to go either way.
Q: [unintelligible]
Miller: What is the best way to do on-orbit refueling?
Conrad: I'm not exactly sure whether you're talking about going to the Moon. I haven't really thought of tactical ways to do it. The reason I brought the subject up is that it turns out that, with the right kind of vehicle, if you can refuel it fully in orbit, it has the delta-V in it to go to the Moon and to return and land safely on the Earth. If you want to talk about schemes: If you could put Shuttle external tanks into orbit, they would make great gas stations for other vehicles. Obviously, you have to take propellants up to refuel – although on-orbit is the easier place to store cryogenic propellants because of the vacuum; you can make good thermos bottles, you don't have big boil-offs, and you can have things like that.
But I think it's probably going to get done. It may become part of a big space station complex. I haven't really thought out how you do that; I just wanted to mention that it's a possibility for going to the Moon cheaply with a cargo if you can get propellants cheaply to orbit and store them. Like I say, I haven't really tried to think out big things like that. What we really have to do is get the cheap on-orbit going first, and the rest of it will come.
Miller: I'll add my own little two bits to that. The best way to do on-orbit refueling is to it commercially.
Q: [unintelligible]
Conrad: There's no doubt about it that you can move packaging around the world – as long as the price is right. And I think that there's a great market out there for that kind of delivery service. You know, a hundred dollars per pound has been kicked around as a nice number – and I don't know how many of you think about it, but you pay over a hundred dollars a pound whenever you ship a Fed-Ex letter. (It's about $17.50 for two ounces.) So if the price is right, the market's there to move goods from one place to another around the world in a 45-minute time frame.
And if you add on the ability to have close landing sites to where you want the cargo delivered, that's where my vertical-vertical background comes out, because it takes very little infrastructure in comparison to airplanes or large horizontal-takeoff spaceplanes to come in vertical-vertical. That, I think, also lends itself to cheap transportation.
Again, if the cost is right, people will ship something. As a stupid thought about that: Having spent a lot of time in Las Cruces, New Mexico, some of my friends that I met down there are commercial produce brokers. Apparently there's a great delicacy of raspberries being transported to France. It has to be refrigerated and all that other stuff; and if 3 Gs doesn't mash the raspberries, you could get them there in 45 minutes or less from Las Cruces out of the New Mexico spaceport! That sounds silly now, but just remember those guys in 1927 who would laugh at fifty million people flying the Atlantic for vacations in the summer of 1990. So nothing's out of the realm of possibility if you can do it cheaply and for a profit.
Q: [unintelligible]
Miller: The question was about the law that prohibits re-entry. Is it U.S. or international? How close are we to getting it changed, and what can the people in the audience do to help?
Conrad: I think it's the lack of a regulation – not that it's prohibited. . . It is? I don't really know what the problem is; I just know that when somebody tried to have a commercial reentry vehicle, they ran into all kinds of problems because it wasn't covered by the law. I don't think it's an international thing. I suspect that if you could get the license to go out and you wanted to come back in right now, you could land over the ocean or something like that and it would be fine. The problem, as I remember, was that somebody wanted to land a recoverable capsule in Idaho or somewhere, and they just ran into one problem after another because it wasn't really covered. So it went away -- and I believe they're going to change that with this forthcoming Space Act.
Miller: I'll just add two bits to that. That will be covered in very much detail in the afternoon panel on the regulatory environment for RLVs. We'll have people from the Department of Transportation here, and the companies who are most at risk from that regulatory environment. All five of the major new start-up RLV companies will be sitting on the panel. It will be covered in detail.
One of the things that you can do to make a difference: There are a couple of laws up on the Hill. One is HR 1275, the Civilian Space Authorization Act. The other one is HR 1725. The Authorization Act passed the House; it has it in it, and it will be coming up before the Senate probably later this summer. The Commercial Space Act of 1997 – HR 1725 – is expected to come up very soon before the House of Representatives. Senator McCain has said that they are looking at it closely. We don't have a sponsor in the Senate yet. But you can get involved with some of the pro-space organizations like the Space Frontier Foundation, and they can give you more information on what you can do to help. One more question.
Q: [unintelligible]
Conrad: I believe that the question was about. . . I didn't quite get the part about the currency, but Mir is a joint operation, and we see ourselves as possibly supplying -- is that right? -- the International Space Station.
Q: [unintelligible]
Conrad: We haven't even thought about that sort of stuff. I'll tell you what I do foresee, though: I see commercial space stations performing specific functions. I heard Dr. Goldin speak the other day, and he talked about the three-dimensional growing of human tissue that has been going on – I guess – either in the American side of Mir and/or on the Shuttle. He talked about the fact that the doctors have figured that nerves that have been severed – you know, some of them will grow back down their old path, and some of them won't – if they're allowed to do that in zero-G, nerves will find the old passage and will regenerate themselves down that passage.
There are just so many things that can be done with a commercial space station – we can think of it as a factory. It's all in bringing down the cost to get the stuff up there and to get it back. Bring those costs down, and there's no telling what's going to happen later.
Miller: Thank you, Pete. That's a very good question, and I'd just like you to think of it in this way. Before we move on, I'll just throw a few comments in. The outstanding question to look at: Isn't it ironic that the Russian space station is a hotbed for entrepreneurial commercial activity? That they are actually using cash and treating it like a commercial market?
You should know that another issue of the Space Frontier Foundation, like cheap access to space, is what we call "Alpha Town", where we are champions of a low-earth orbit that is a rapidly growing, evolving entrepreneurial-commercial center for activity based on the best concepts of how we do commercial development on earth. And one piece of that is that we believe that the International Space Station should be privatized after construction is complete, and that it could take a variety of forms. One idea that's been tossed around is that it be an International Space Station Port Authority that then purchases all its supplies and services in a commercial manner. Wouldn't that be a neat way to open the space frontier? When you run out of volume or you need more power, they can purchase it commercially. And then they serve all the science needs of all the nations that participate in the Space Station. That's just something to think about – but that's an issue for another symposium.
Before we go on, I'd like to thank the sponsors of this symposium. The primary sponsor is NASA, and in particular the RLV program. The primary co-sponsor is Air Force Phillips Lab in the Dept. of Defense. Also co-sponsoring are AeroAstro, Rotary Rocket, Boeing-North American, and Lockheed-Martin.
A correction on something I said earlier: The Commercial Space Act of 1997 is HR 1702, not HR 1725.
Our next presenter is one of our honorary co-chairs of this "Cheap Access to Space" symposium. He is the director of the Office of Air and Space Commercialization of the U.S. Department of Commerce. Keith Calhoun-Senghor was appointed director of the Office of Air and Space Commercialization in March 1993. In his position, Keith is responsible for advising the Undersecretary for Technology and the Secretary of Commerce on policies to foster the growth and international competitiveness of the U.S. Commercial space sector, and to encourage and promote the use of outer space by U.S. private industry. His areas of responsibility include acting as the senior Commerce Department official responsible for developing and implementing the President's commercial remote sensing policy, the President's policy on the commercial use of the Global Positioning System, the President's national space transportation policy, the negotiation of space launch trade agreements with China, Russia and Ukraine, and formulating the role of commercial satellites in the national information infrastructure and global information infrastructure.
Keith earned his A.B. with honors from Stanford University and his J.D. from Harvard Law School. He has practiced law with a number of major law firms, including Gibson, Dunn and Crutcher. He most recently served as founder and president of an international trade and project development firm engaged in identifying opportunities for U.S. firms in eastern Europe and eastern Germany, and was Washington counsel to the New York law firm of Wood, Williams, Rafowsky and Harris. Prior to this, he served as the vice president and general counsel of a Washington-based high technology firm. He was a Fulbright Scholar to Germany, and subsequently studied the German legal system on a fellowship awarded by the German government. He also clerked with the Honorable John D. Butsner Jr. of the U.S. Court of Appeals for the Fourth District Court. Please have a warm welcome for Keith Calhoun-Senghor.
Calhoun-Senghor: Good morning. I usually don't like to disclose my legal background in a room full of non-lawyers – I usually try to pretend, at least, that I have some technical grounding on this. But I've been uncovered, so I'll try to make the best of it by not boring you with anything that's related to law. I like to say that I'm a recovering lawyer. (Sometimes you can't help it.)
I want to say that it's a pleasure to be here today. I always find these kinds of conferences – and particularly this type of conference that deals with launches – very exhilarating. It's an important issue, and I want to thank the Space Frontier Foundation – and particularly Charles – for the invitation to be here. It is actually our honor to be one of the honorary co-chairs, along with Patty Smith of the Department of Transportation. This is because, from our point of view, we are at a fairly pivotal point in this industry's development. A lot of very exciting things have been happening over the past – well, I'd say from about 1990 on, with the collapse of the Berlin Wall and the end of the Cold War – and it has simply been accelerating over time. In the four and a half years that I have been in this position, I have seen a dramatic change, and I think that change is going to accelerate. One of the features of this industry is that change is probably the only constant, and I expect that conferences like these give us an opportunity to talk and think about what's happening and to get ahead of the curve, and therefore to help policy-makers and those in business anticipate where the future will be heading.
I want to give you a context, if I may, as to why we at the Dept. of Commerce – and, I think it's fair to say, this Administration – think that launch is so important. It's a pivotal industry in terms of a much larger aerospace industry, and it's pivotal in terms of a larger and fast-growing information industry, although I think it has not been thought of traditionally as an information industry. Many of the satellites that are going up – the remote-sensing satellites, the GPS satellites, the telecom satellites – are really an extension of information technologies, and the launch industry in particular is the way to get these products there. And so it becomes critical that Cheap Access To Space becomes a reality.
When I first took this job, I used to be able to joke that "commercial space" as a term was an oxymoron, because it was very difficult to put the two together since it was so heavily dominated by government. I think it is true that in the short time that I've been involved in this area – and many of you here were here at the birth, at the creation – I think it is the driver for what space is going to be in the 21st century. I have a term that I've coined because it helps me remember it: "New Space", the concept that we have entered a new era of space, one that has transitioned away from government-dominated and largely science-dominated space – not that it's separate; it's just increased the distance between those endeavors which are scientifically oriented and those which are commercially oriented. I think that when the history is written on this particular chapter – years or decades from now – this period that we are now in will be remembered as a time when "New Space", commercial space, became a reality.
There's an analogy, an image I like to use, about how the evolution has taken place. If you think about trade and commerce as essentially starting off at the village and community level, and you trade with individuals within your village and then your city and then your nation, the expansion of that went beyond national borders, and then it eventually became one of the driving forces for exploration – certainly European exploration, and I think exploration in all cultures – across the ocean. So a lot of the early voyages of discovery were essentially voyages to find ways to make it economically feasible to do trade. The Northwest Passage, and a lot of the routes around Africa to get to India, were alternatives to very expensive and very hazardous land routes. But the circle, the zone, the sphere of commerce constantly expanded. I think that if you look at that analogy, and if you look at where the Law of the Sea was until very recently, the territorial boundaries outside your coastline were essentially what you could defend from a battleship; so you had zones that were, first, three miles offshore, and now 200 miles – and the expansion and extension of the economic zone of commerce has increased.
I see the fact that we are now talking about really doing commercial activity in space as a logical extension of expanding the zone of economic activity off the planet. It is as natural as getting in a boat and sailing beyond the horizon to see if there's somebody else out there to trade with. And if you think about a lot of the telecommunications satellites and remote-sensing satellites and other types of satellites that people talk about as being commercially viable, it is a very logical – and, I think, inevitable – expansion of the zone, the sphere, of economic activity off the surface of the planet.
If that's the case, then it becomes critical that we have what was absolutely necessary in the early days of navigation; and that is the technology to get off the planet, the same way people had to have the technology to move and navigate offshore and find their way back – ship designs that allowed you to take advantage of wind conditions and be seaworthy on the high seas, and to make it affordable for you to take a voyage sailing west to try to reach east. So therefore, in my opinion, the commercial launch industry is the pivotal industry as to whether we are going to extend that zone, that sphere of economic activity, off the planet. And there is certainly no reason why we should stop in the immediate area surrounding the planet – why it cannot extend to near-Earth asteroids, or to the Moon, or Martian exploration projects. The fact is that it's solely a function of finding a cheap way to get there. And so from our perspective, it's not the launch industry by itself which is critical; it's the launch industry as a critical component for taking advantage of the economics that lie beyond the planet. You know, one of the things that is true about extending the economic sphere is that more often than not the people who are financing that expansion are on the planet. I mean, let's face it; the fact is that a lot of what was being financed – it's a different analogy, I understand, so the economists out there please bear with me on this one – but the Hudson's Bay Company and the East India Company were financed by people who basically sat in London and said, "I think I can make some profit off this", and so they basically financed it. The money, the economic activity, the jobs – well, certainly the capital that was created and was deposited – largely went back to London.
In this case, the economic effect of extending the sphere of activity off the planet is of direct benefit for us here on Earth. So, therefore, I think it's critical that we do what I think Winston Churchill did. I love this quote, so for those of you may have heard it before, you'll have to forgive me – Churchill led England during World War II, and after his death one of his biographers asked one of his close friends: "What was it about Churchill that made him great? What was his single greatest contribution to winning World War II?" The person thought for a second, and then he said, "He talked about it. He talked about the importance of winning the war. He talked about its importance in terms of Western civilization. He talked about it in terms that average people could relate to and could therefore get fired up about." And I say that all the time: I think people underestimate the importance of engaging in a public dialog about things that are important. And I think we have to talk about launch, not just in the context of itself, but in the context of 21st-century jobs for this country; in the context of keeping the U.S. technologically ahead, not just in launch technology, but in space-based information technologies also.
Therefore I think this is a very, very important gathering. I certainly welcome the opportunity to be here. I did not know – I heard Charles mention at the end that H.R. 1702, the Space Commercialization bill, was something that he had made reference to earlier – to me that's a perfect example of how things that really matter need to be brought to our attention. Regardless of how you feel about the bill, the fact remains that it is a commercial-space bill – which is now moving through the House – that will have real impact on this industry as well as other industries. And symbolically it's significant in terms of how Congress and the Administration relate to those provisions. So I say that anyone who has an interest in this should take the time to take a look at it and see whether or not it affects your interests.
I'm out of time, so it was a pleasure to talk with you today, and I wish you a good conference. Thank you very much.
Miller: Thank you, Keith. Before I introduce the moderator of the next panel, I'd like to add a little more about H.R. 1702. That's this year's bill – for those of you who don't know – and I mentioned that it was coming up in the House and is expected to pass. Last year, the week before Congress ended, an almost identical piece of legislation passed the House of representatives and was strongly pushed to be passed by unanimous vote in the United States Senate. Two, or maybe three, senators objected to that in the last week of Congress and it failed to pass. So your participation and voice as a citizen may make a difference this year.
Panel One: How Can America Create Free and Competitive Markets for Space Launch Services?
Our next panel is on free, open and competitive markets for space transportation to lead toward Cheap Access To Space". The Space Frontier Foundation believes that market-oriented and market-driven space transportation is a requirement and principal criterion for opening the space frontier. We cannot do so without it. Everything America's done and developed that has been done over the long term, that is sustained and irreversible, is by using the free enterprise system, the market system. In the rest of the world, there used to be a great debate about this. The debate is over. The entire world uses, or is moving toward, the capitalist system to serve their countries and their people and to deliver goods and services. That is on this planet Earth. "Off the planet" is a different issue. So we'll have a panel discussing that.
The moderator of the panel is Mr. Joseph Anselmo. He is the Space Technology editor of Aviation Week and Space Technology magazine. Based in Washington, he covers the science, politics and business of commercial, military and civil space programs. He began covering the space industry in 1992, and reports on numerous space and military programs in the U.S., France, and across the world. He has won an award from the National Space Press Club for his coverage of NASA.
I'd like to have Joe come up with the rest of the panelists, and give them a warm round of applause. We have a substitution for Dr. Coleman; it's David Cummings. He's the executive director of the University Space Research Association. Joe, the party's yours.
Anselmo: I think it would be fair to open this by noting the obvious: The market conditions today are ripe for new launchers. Demand is booming; satellite manufacturers are saying that launch demand far outstrips supply. If you look at some of the projections: Arianespace is projecting that in the next three years alone, the number of geostationary communications satellites is going to increase by 40 percent, and the number of transponders in orbit will go up by 80 percent. So what this panel has been set up to do is sort of address the question: How should the U.S. government help spur the development of the launch industry and the space industry that drives it? Charles has asked me to address several broad topics. We've set up five broad topics that we're going to address over the next hour or so.
The first topic is: What is the role of the government in encouraging new space companies? The second is: In 1990, Congress passed and the President signed the Launch Services Purchase Act, which would require the government to start getting out of the business of managing launch services. How can the government complete the transition from a launch services operator to a customer purchasing launch services? They go on; I'll go through them one at a time when we get to them. What we'll do is go through these five topics for about an hour, then we'll take questions from the audience. Hopefully, we can get in at least a good half-hour of questions.
I'll briefly introduce our panel here: Keith has already been introduced. To Keith's right is Dr. Rick Fleeter. Rick is the president and founder of AeroAstro, which is a small satellite and space transportation company. Rick's been responsible for the development of over 20 small and miniature satellites. Dr. William Claybaugh is the business advisor for NASA's Reusable Launch Vehicle Program. After that, in place of Dr. Coleman, is Dr. David Cummings, who is executive director of the University Space Research Association, which is a non-profit corporation owned by 80 universities. It promotes space-related research and development, and technology development. Finally, we have Mark Bitterman, who is vice president of government relations at Orbital Sciences Corporation. Mark sort of addresses a wide array of federal and military policies related to commercial space for his company. I guess I'd like to start out by letting everyone do a free-for-all on this first question we had here: What is the role of the government in encouraging new space companies? Should the government provide new companies with competitive advantages, such as grants and subsidiaries? And what barriers to entry into the launch services market do new companies face which the government can help mitigate? So, I guess, Keith, you're the first guy I should pick on.
Calhoun-Senghor: I look on this strategically. First of all, I have to share a microphone with the moderator, so I thought, "Great; I don't have to say very much because he'll want to keep it most of the time. Second, I get the advantage of hearing what the rest of the industry has to say before I respond. "But I'll make a brief comment and maybe reserve a few seconds towards the end.
I think the role of the government – that's a fairly complex question. In the policy environment in which we operate, I think it is very legitimate for the U.S. government to create the kind of economic and policy environment that allows individuals with imagination and energy – and, hopefully, capital – to put together creative solutions to the launch problem. I think that that is, in broad strokes, the best use of government, as well as a clear indication that an industry is important – because once we define it as important, things follow from that. It is easier to remove impediments; it is easier to track information and to disseminate it. I think a government model that extends what was the previous model of the government being in the launch business is one which I don't think, in the long term, will work. So, therefore, my short answer is that I think we have to be creative in terms of how we support the industry, in terms of policy, consistency and transparency – but not necessarily guarantee a market that might artificially skew what would be a commercially viable enterprise.
Cummings: From our point of view – I guess, the university community – and in the R & D area, we still see a role for the government in long-term high-risk R & D research that benefits the whole industry; and the model that we often use is the old NACA, which performed the same sort of thing for the aircraft industry.
Bitterman: If I can just add a comment: I'd agree with that. I think there's an appropriate role for government in fostering new technology. In Orbital Sciences' case, we see it very clearly with the X-34 program. There are some very unique issues there. First of all, X-34 is going to demonstrate new technologies for X-33 and the RLV, very important for the future of space transportation. But also the current mode or structure of the contract is very unique, in that the contractor is really in the lead. The NASA centers are in effect our subcontractors, and that process is a new process, and it's working extremely well. I think those are appropriate ways in which the government can foster new development.
Miller: Mark, what kind of barriers do you see that maybe the government can help companies such as yours overcome?
Bitterman: Well, there are several types of barriers. First of all, if you look domestically at the regulatory environment in which we all have to operate, there are certain new regulations that need to be adopted. Now, there are some serious problems in this area. Number one: The Congress has not enacted new legislation in the commercial space launch arena in over five years. It's not for want of trying. As discussed earlier, the House has already passed legislation. Things look very promising in terms of the issues addressed in the legislation in the Commercial Space Bill, as well as in the NASA authorization bill. But prospects for enactment are still iffy this year. The Senate has yet to take action. Congress adjourns for the summer in just two weeks, and then will come back in September and have to pass numerous appropriations bills before adjournment for the year. So I think the challenges are pretty significant. But the needs of commercial space launch companies are very great in terms of new legislation that needs to be passed. There was discussion earlier about re-entries. There's no legislation currently providing a legal framework for re-entries. There is legislation needed in terms of licensing pre-launch activities that companies like Orbital Sciences are involved in, since we integrate in one site and often fly from another site. So there's a whole range of issues that need to be addressed there.
And then just jumping over to the international side: We have to look at barriers a little bit differently internationally. There are launch trade agreements in place. They expire just after the turn of the century. Those agreements are important in terms of easing the non-market economies into the launch environment. However, these agreements have not been very effective in ensuring the level playing field that companies like ours look for. Some others may have comments on that; but we're of the view now that, at least in the case of the Russian agreement, in the absence of enforcement of that agreement you might as well phase it out as quickly as possible because it has no effect.
Calhoun-Senghor: I would agree with the high-risk R & D; I think that's a need. Our office was involved with the X-33 and ELV selection; that makes a lot of sense. The fact is that with a lot of these technologies, what you have to do is buy down the technological risk, and I think that's a very appropriate role for government. I have a couple of follow-up comments on yours, Mark. I don't disagree on it fundamentally, but I just wanted to enhance on it. I agree that congressional action on commercial space has a significant impact in terms of the climate, because it shows that this is a front-burner issue and that it's important. Again, it comes under my category of talking about it. And you're right; there are significant hurdles between here and there. But I think a constructive bill is a good thing for the industry, because I think it focuses attention on it. Licensing of pre-launch activities is something I would defer to Transportation, since I don't have anything. . . And, you know, you touched on the last thing, the international launch trade agreements, and that's a very good point. There are very, very interesting issues on that. The launch trade agreements are, I think, by definition imperfect instruments to get at the essential problem. And I think that, frankly, we need to spend a lot of time thinking about how we move from here in terms of a transition. I know that your company in particular has some real issues because you're at the smaller end, and frankly you face a lot of the competition involved with excess ballistic missiles and things like that. I think that, frankly, we haven't cracked the code on how the launch agreements can deal with that end of the spectrum. And I'd be willing to hear good ideas on that and move that up in terms of our priorities, because that's an important issue.
Fleeter: They put me on these panels because they know that I'll say anything. But I was reluctant to say anything on this panel, because the first note I made was that if I ever get a chance to work in a free and competitive market, then maybe I'll have something to say on a panel like this. But then I thought: Well, are there really very many free and competitive markets out there? They all work in the environment of the country that you're working in, the government that you're working under, and so on. And it is hard to find one – I don't think that our problems in the launch vehicle industry are so unique. We tend to think that way because many of us – myself included – spent our whole lives working in this market.
My perspective is a little different from Mark Bitterman's because I'm coming from the "trying to get into the business" side of things, whereas AeroAstro has been trying to become a provider of launch vehicles. We are making a little progress in that area, in the meantime selling satellites and subsystems for rockets. And one of the things that I've talked about already with several people this morning is the tendency of the government to pick winners and losers. I have trouble with that. I agree with Mark's comment that it's hard to be against support for R & D, and it's easy to be for it, and it seems that that's something that everybody thinks is a good thing. On the issue of trade, we look at it from a little bit different point of view, because one of the obstacles we face – and I think the major obstacle you face trying to get into the launch vehicle business, and I bet you that a lot of the entrepreneurial companies out here would agree with me – is that it takes a lot of money. You have to raise a lot of money in order to get enough capital together to build a launch vehicle.
We have two government-related problems in raising that money. One is that a lot of times you want to work with other companies and try to pool your resources to raise that money, and sometimes those other companies aren't U.S. companies. We've particularly had this problem in the satellite business, but we have it even more in the launch vehicle business, because of the historical restrictions on export of rocket technology. It's very difficult to team with a company even in a fairly friendly environment. We've worked with the Swedes and the Australians quite a bit, and it's a constant impediment caused by the government – to the point that those customers will quite often team with some other country rather than team with a U.S. company, because the perception is that it'll never happen because the U.S. government is so restrictive in that technology area. This is not a trade import restriction problem; it's a technology export problem that we've also seen in our satellite business. We quite often lose contracts to foreign satellite providers because the ultimate customer has faith that the U.S. government will be slow and bureaucratic in approving the export of whatever it is that we're offering to sell them.
And the other thing that you need to raise a lot of money to build launch vehicles is: you need customers, because investors like that – they like to see that you've already got people signed up for this thing, so that if they put their money in, and if you really know what you're doing, and if you really build the rocket, at least if all those "ifs" come to pass there will be somebody out there who wants to buy it. And I think the government has kind of a mixed record in being a customer. It's not that hard a thing to do, because they really are a customer – they buy rockets all the time. But they tend to buy rockets from people who are already selling rockets, and it's a lot harder to buy rockets from people who don't have a rocket to buy – and yet that's what you need. And, again, I think that I speak for a lot of the entrepreneurial firms out here when I. . . "Entrepreneurial" is a euphemism for "You're not there yet. "You're still entrepreneurial even if you have a product, but for some reason no one uses it. So when you're in that situation, you really need a government that's capable of buying something and realizing that it's going to be experimental, it might fail – and therefore the government might want to be prepared to buy a launch vehicle and buy the insurance, so that if that new vendor who has never done it before should fail, the government's interest is kind of protected.
Anselmo: Anyone else want to jump in before we move on to the next topic?
Claybaugh: Just a couple of comments from my point of view sitting in the RLV program office. After 30 years of no significant change in the real price of a space launch, I think we can dispatch the question of whether the market is either free or competitive. It plainly is not. The issue, then, is what we do about it – and that is a matter with profound government policy implications.
Any good graduate student in economics will tell you that the standard response to a failed market – which I believe is an accurate description of the space transportation business – the standard correct response on the part of government is to intervene in that marketplace. That looses a vast world of policy implications that are very, very contentious. Our system is an adversarial system; there are ultimately three branches of government, each of which has its input into these kinds of decisions. How that might roll out, and whether the thing that comes out of the end of that process has any relation to the going-in need, is a wide-open question on almost any issue.
But the issue here is plain enough. The market has stabilized in a position where revenues are maximized to the industry – relatively few launches at relatively high price. There is good evidence in the data that the market is inelastic at this position in the demand curve. If you lower prices, launches do not increase. There is some evidence that even dramatic lowering of prices does not dramatically increase the demand. We have non-market economies offering launches at a thousand dollars a pound, in effect, and no significant additional demand has appeared. More distantly, for much of the 1980s one could buy a GAS can ride on the space shuttle for effectively $50 a pound. Nothing happened. There was no significant demand for those uses. And so there is some question to be raised about the elasticity of the market at its current price point, and all of that suggests that something needs to be done. The details of what that might be are far beyond my ticket level.
Anselmo: I'd also like to encourage the panelists that, if anyone says something you don't agree with or have a contrary point of view, please jump in and express your views.
I'm going to go to topic number two that the Foundation wanted to address: In 1990, Congress passed and the President signed the Launch Services Purchase Act, which required the government to start getting out of the business of managing launch services operations. How can the government complete the transition from a launch services operator to a customer purchasing launch services in a market-oriented manner?
Cummings: [Unintelligible] That is, again, from the university research community, but there are at least some trends that we're encouraged about. And those are – you mentioned handoff, which we've experienced, and we think is in the right direction -- but also giving more control and accountability to Mission PIs in the sciences. This has happened on our Student Explorer Demonstration Initiative, which USRA managed; and it's also in the other NASA Explorer lines and in comparable lines in the earth sciences and the planetary sciences. The problem is, the control and the accountability only goes down through the satellite and the operations, but it doesn't go to the launch vehicle. We're looking for the day when the Mission P.I. can trade off cost between mission operations and launch vehicle cost; and that, it seems to us, is going to take a lot more competitiveness in the low end of this market than we have now. And it causes us, in an unlettered way, to be not so against opening the markets to the Israelis or whoever else can create some competition and allow some choices to be made as we move further down the line towards allowing the Mission P.I. to make those choices.
Claybaugh: I'll just observe that competition in and of itself does not guarantee lower prices. And in particular, if one is in a marketplace where there are, for example, twelve launches per year available and it takes ten launches per year to make a profit, then if you have two competitors, what you are assured of is that both will go out of business.
Anselmo: Anyone else?
Bitterman: Joe, if I can just comment not specifically on that, but in terms of the government moving away from being a manager of launch services to becoming a purchaser: we've seen some positive trends recently. About a year ago, Orbital Sciences and several of the other larger launch companies began negotiating with the Air Force on something called the Commercial Space Operations Support Agreement. Initially, the Air Force's position was quite different from the industries', and very much on the order of really managing the process exclusive of commercial realities. However, we've worked extremely closely with the Air Force in a working group for over a year, and we see the approach changing at least in the military) to one where industry's concerns – whether they be launch rates, or financial requirements like insurance – all those things are being taken into consideration, with an eye down the road toward the international competition question – how to enable U.S. companies to be the most competitive around the globe.
Calhoun-Senghor: I want to just sort of raise a macro-issue on this because I think it's important – at least for me – I understand it better when I look at the context.
You know, many of the problems that we're discussing here – in terms of the ability to team with foreign companies, in terms of being able to make trades that have the U.S. become more of a purchaser of launch services as opposed to providing them – is a function of the fact that the history of the development of launch vehicles really was driven by a defense-oriented ability to launch nuclear weapons. So therefore what we're really talking about now is how we manage the transition from a period where launch vehicles principally had a different function, to one where they are moving from a defense-oriented function to a commercially-oriented function – or dual-oriented functions, since you never lose that second aspect. Therefore it seems to me that part of the difficulty we're having is how to wrestle with that fact, that these are ballistic missiles as well as commercial satellite launchers. And so therefore, the technology transfer issues are going to be real, and it is hard.
I think that, in the end of the day, the way you do that is that the answer will be very simple when 90 percent of this industry is devoted to commercial launches, and when the overwhelming emphasis is on putting up commercial launches, and we have some other shift where nuclear uses of them are less relevant. I don't know if that day will ever come, but all I'm saying is that we carry a lot of baggage in this industry – that we carry in other industries too; this is not the only one. (I mean, you see it in remote sensing, you see it in GPS, in others. But it is a real live function of this, as well as the fact that we now have embedded capability – certainly NASA knows how to build this stuff and the DoD too. So the heritage of it is a large part of the current problem that we're wrestling with. And I see it as a transition issue, and we'll hopefully get it right.
Fleeter: I didn't have much to say on this issue, which is because I can't think of a time when the government really did a very good job at this business of stimulating companies to be competitive and to act in a commercial way. I was thinking a little bit about the X-Prize. That is a situation where you stimulate a lot of different competitors to all try to do something. And I don't see the way the government traditionally acts as being a way to stimulate a lot of different companies to come in with a lot of crazy ideas, and try them and take risks and have these conversations with some of the launch procurement people at NASA.
Basically, there isn't room for that kind of risk-taking that you will see in a kind of Silicon Valley-type environment where people will fund a lot of high-risk, high-return ventures. As long as the government is a large customer, high return doesn't tend to be there, and so the people who invest in high-risk, high-return things don't tend to want to bother. And that is a problem in the launch vehicle business. People will say to you, "Well, show me one company where the investors got enormously wealthy because somebody built a launch vehicle", and the answer is that it's pretty hard to find an example like that. This whole business of doing something risky that might fail has never really been a part of the government agenda. And so I guess I'm also just a little bit lost on how the government could create a more commercial market, because it's not a commercial market; it's a government market.
So I agree with you that if we ever reach that day where 90 percent of the customers were commercial customers, you might see a difference. But the question of, well, "How do you get the government to simulate that environment? " – I don't think they really can. That's my answer to that question.
Anselmo: I think that's a perfect segue into topic number three, which is: "In the light of U.S. efforts to encourage free trade, and governmental efforts to reduce trade barriers and indirect subsidies around the world, does the U.S. government still have a role in protecting domestic launch services from foreign competition? "And a subset of that is: "If it does have such a role, what is that role? "Maybe you can get into some specific issues. Keith talked earlier about launch quotas, Proton and Long March. There's also this Israeli proposal to launch a Shavit derivative from the U.S.
Fleeter: I'll put my hand up right away; I don't want to be accused of sitting around and waiting for the answers and then spitting them back to you. I did have something to say about this, and that was: Do a thought experiment and say to yourself: "I don't care about building satellites; I don't care about building launch vehicles. I'm kind of an angel, and all I really care about is that I want to see a lot of people doing a lot of stuff in space as cheaply as possible. "And then how would you answer that question? Should there be quotas, and should we take launch resources from all around the world and not use them?
If you do that thought experiment, it's kind of obvious that that's not the thing to do. And so the thing that you would do – I kind of think of myself a little bit that way; I'd probably be running a bigger company today if I was a little more parochial in my attitudes. But my attitude is really that I'd like to see a lot of people doing a lot of stuff in space as cheaply as possible. So my answer to that question is: No, I wouldn't have quotas, and I would go ahead and import all the Russian and Chinese and Israeli launch vehicles I can if they're really cheap, because it's going to help people do cheap things in space. And I think the biggest argument to not do that is the one Bill made, which is that you'll drive the existing companies out of business. In fact, I don't think that's true – but there's two roads: Either you do or you don't. If you drive them out of business, well, I guess they'll have to come back some day when they figure out how to be competitive in that market.
I had this conversation with Paul Coleman once, and he was saying, "Well, you know, the commercial aircraft business was like this after World War II. There were all these airplanes out there that we built for the war, and how could companies actually make a commercial business when we had all this World War II surplus lying around out there? But they made a business out of that, and the way they made that business was that they took those airplanes and they got into what one of our customers calls "the van-conversion business". They took those airplanes – which are not really what the customer wants; I mean, the executives from companies didn't want to be flying around in WW II surplus airplanes. They wanted something a little quieter, a little more comfortable, maybe a little roomier – so they started changing, modifying, these existing airplanes. The same thing can be done with – I mean, ballistic missiles are really not very excellent launch vehicles, when all is said and done. They have all kinds of problems.
But if they're really all that cheap, and there's really a business there to use them, then companies will fill that niche. They'll say, "Well, maybe I shouldn't be building rockets from scratch. Maybe I shouldn't be machining my valves myself in the back room. Maybe I should take what's out there which is free, and if I can get people into orbit more cheaply that way, that's my business. "So, yes, if your picture of your business is very narrow, and that picture is "My business is to build launch vehicles from scratch and launch them, and if it costs a lot of money, too bad", if you switch to a mode where you say "My business is to get people into space as cheaply as possible and I'll use whatever resource is out there", then there are businesses that you can imagine. Yes, some companies will fail. That's exactly how efficient markets work – they drive out companies that are not producing product at the lowest possible cost.
So I guess I'm a little bit of a libertarian in this regard, and I can only think of a couple of exceptions where I would be protectionist. One is that there are certain national security requirements that we meet with our launch vehicles, and so maybe it's not to our advantage to become totally dependent on importing launch services from other countries – and I think that part of the industry will always survive like that, and I think that's fine, and I think that may be a relatively poorly performing segment from a commercial point of view compared with people who are actually providing product at the lowest possible price.
The other half of that question is – getting back to "Either they all go out of business or they all don't go out of business" – I don't think they will all go out of business. I think that – being a small-satellite guy, what you have to endure is doing launches from China and Russia, and I would pay a lot more for my launch vehicle to be able to launch it from Florida or California. And so it's not clear to me that our indigenous industry would curl up and die. And I'd hate to think that it only exists because we have some lawmakers who are protecting our market. If that's the only way we can survive, then we're really not very clever. I think we're more clever if we can survive by doing a better job; and in some respects, we already do a better job.
Bitterman: If I can comment on that: Protectionism is kind of a strange word in this context, because it's not something that any of us is really for. However, I think we all want a level playing field to exist – but we can't just wish it true; we all have to work for it through government policy and implementation of those policies. The problem that I think we face: If the U.S. government and all the non-markets were to suddenly make all their Cold War hardware available – all their Minuteman IIs, SS-25s or SS-18s – you can just pick your missiles. I think that there you will find a problem in the stifling of new technology. I think that a lot of the new startups that you see coming out today – many of them are here at this conference talking about their new concepts – would probably go away, even though their technologies are certainly warranted, certainly exciting, and certainly going to move us down the road. If we're only going to rely on former Cold War hardware, I don't know where that gets us in, say, five to ten years. That's one comment.
Also, in the area of protectionism: Orbital Sciences is one company that's not at all in favor of quotas. We don't think quotas are the way to go. I think you had to have them early on in the trade agreements to enable competition to evolve, but I think that's happened. The problem is that these agreements and protectionist measures need to be evaluated by the market. In our market, which is a small market, there are very few launch vehicles and relatively few satellites. Our market doesn't consist of the Teledesics and Globalstars and Iridiums, so we're in a much smaller market with different sorts of payloads – scientific payloads. And there really are very few launchers. We're only talking about Pegasus, Taurus, and the Lockheed-Martin Launch Vehicle at the moment. And those U.S. launch vehicles really have to be the only standard that we have now in terms of pricing; and if foreign launchers at very subsidized levels are coming in at half or less than half of those levels, we don't know how else to fight that issue. We can't just simply lower our prices; we'd go out of business in that case. Our margins certainly aren't that high anyway on our Pegasus and Taurus launch vehicles. So I think although we're not in favor of protectionism, we need to be very careful about how we make this transition. And I think all it really takes is the U.S. government being a little bit tougher with some of the non-market economies as we make this transition to the year 2001.
Anselmo: Keith, let me put you on the spot. When are the quotas going to disappear? Is this going to be accelerated? Could we see this happen in the next year or two?
Calhoun-Senghor: I don't have Karnak out here, so I can't really predict. "I don't know" is the short answer. Let me tell you what I do know, though. What I do know is that this is likely to be the subject of some debate, and it should be, because the implications are pretty clear.
The irony of this, from a policy-making point of view, is that you, Mark, and those of you who operate at the small end of this -- if you take the template of your position in relation to what Rick was saying, people who would like to make a business out of what's out there – it's a fairly compelling analog to the larger launch industry folks versus those who were saying "We'd like to make a business out of it or create a new one. "What's the lesson of this? Well, if you've got something to lose, you'll probably care about quotas, I guess. If you don't have anything to lose, then maybe you don't. I guess that's probably the best lesson to draw from that.
From a government point of view, though, we have to care. There is a technology base issue; there is a national security reliance issue. There is also, however, an economic stimulation issue. You don't want to stifle new ideas. You don't want to skew the market. As I said, I don't have all the answers on it, which is why I guarantee it will be a very interesting debate. I mean, the university community is looking at this and saying, "Hey, we've got experiments we'd love to get up there. We've got these things sitting around."
The analogy of the airplanes is interesting because I've had people tell me: "Well, after World War II there were a lot of Jeeps, and what they did is they dumped them off of aircraft carriers in order to prevent flooding the market with that. "It's an imperfect world, and unfortunately you'll probably end up getting a little of both. But it would be nice if there was some clarity, because I think the implications are huge for both ends of that spectrum – those who have something to lose, and those who are trying to break into the game.
Claybaugh: There's also one other issue that is germane to this discussion, and that is that protectionism is not a unilateral activity. And in that regard it is important to recall that, at the initiation of the European Union, space launch services were not subject to the GATT. And in consequence, whatever the U.S. government might do in this regard has to be taken in the context of what other governments might do and are doing.
Anselmo: Without objection, to leave time for questions, I will move on to the next topic.
Topic number four: Should reusable launch vehicle manufacturers also operate these vehicles? It's noted that the Airmail Act of 1934 forbids aircraft manufacturers from operating as airlines. And the question is, basically: Should this also apply to space transportation? Bill, do you want to start off?
Claybaugh: A real quick notation: my background is finance and venture capital, and this sort of thing immediately strikes me as depending on what you want to pay. If I'm the manufacturer of a vehicle and I also operate that vehicle, then I get my return on the cost of developing and building that vehicle from those services which I provide. If I have to sell that vehicle to somebody who then goes into that business, then I tack on a 20 percent gross profit, which that operator then has to pay and price accordingly. So the quick answer is: do you want to pay 20 percent more?
Anselmo: Anyone else?
Fleeter: We all decided while we were waiting to come up that we didn't know anything about the Airmail Act.
Senghor: Really, on this one, I'd probably be more interested in listening to what those who plan to build and operate these systems want to say. The question is – if those of you who have worked in this area, either in the audience or on this panel, can help me – is, do we do this with other areas? In other words, are satellite manufacturers prohibited from operating those, and is there a rationale for not extending it?
Claybaugh: I actually had to look up the Act at one point and find out what it was about. At the core, this was a response to the perception of a monopoly developing by Boeing Corporation's ownership of United Airlines. Centrally, that was the point of the Act, although it was (in the way of policymaking) couched in much different terms. The question here is one of monopoly. Clearly, at some point in the development of a marketplace, you don't want manufacturers owning airlines and therefore giving those airlines preferential treatment with respect to the availability of the newest model, the newest equipment, that sort of thing. And there will no doubt be some day in the space travel business when that may be an appropriate government action. But in the relative near term, I really do think it comes down to a question of how much extra you would like to pay.
Anselmo: Anyone else? Okay, our last topic here: Some projections are that the Evolved Expendable Launch Vehicle (EELV) could capture 20 commercial launches or more per year – not government launches. A commercial spin-off of the X-33 – Lockheed-Martin's VentureStar vehicle – is projected to capture most of the commercial market. So the question for our participants is: Number one, do you believe these projections? Are they credible? And number two: Do you think VentureStar and EELV are sort of a threat to the smaller entrepreneurial companies? The third part of the question is: Is it appropriate for the government to subsidize competition in the commercial marketplace? Who wants to jump in first? Mark?
Bitterman: Well, there are really only a couple of things here that I can comment on. First of all, as a policy guy I don't know whether these projections are accurate. In terms of the capability of EELV to capture that much of the market, I certainly wish the program well. But, again, I can't really characterize it. VentureStar and EELV are certainly not a threat to Orbital Sciences' business – quite the contrary. X-34 is part of the Advanced Space Transportation program, and we're hoping to demonstrate the technologies necessary to move forward. So, clearly, even though these are two government-sponsored programs, they're very clear spin-offs here for commercial companies. Is this, in effect, government subsidization of competition in the commercial marketplace? I don't think so. You're dealing here with programs that would not happen but for the resources of the federal government. I think that's a very important test as we move forward. The federal government should not be subsidizing new ventures. . .
{technical break}
Claybaugh: . . . who knew what he was talking about, and who pointed out to me that the whole airmail exercise was an unmitigated disaster – that all the companies that were involved in doing it failed, and that the U.S. Army had to be brought in to take over the air carriage of the mail. This particular staffer then asked me what exactly I was talking about. One wants to know one's history when one goes up on the Hill. There are some very, very bright people there.
Existing law already requires government managers to purchase commercially, and at least at NASA, with the exception of the Shuttle, that is what we do. And I think that the question is implementation, to a large extent, rather than any need for further legislation.
Anselmo: Okay, does anyone from the press have a question?
Q: Keith Cowing from NASA Watch. A question for Mr. Senghor: Is space commercialization better today than it was when Mr. Clinton took office? And, specifically, can you cite one act or change in regulation or rule that has caused a specific bit of commercialization to occur that would not otherwise have occurred? And I don't mean to refer to privatizing launch operations. I mean something that somebody is building or selling now that the Administration has caused to exist by its activism in this area.
Senghor: First of all, I want to say that none of this takes place in a vacuum. I think there were some specific things that the Administration did, but there were also a lot of people in a lot of areas -- a lot of people here -- who helped in that. So obviously I want to toot the Administration's horn, because I think it was forward-leaning in a lot of these areas; but there were a lot of people who recognized this also, and a lot of work done before, and a lot of work will be done afterwards. I just want to make that point clear.
Let me give you a couple of examples. Let me give you one outside the launch industry first. I'd start with commercial remote sensing. In March 1994, there was a presidential policy which allowed for one-meter resolution imagery to be taken by commercial companies. That was preceded by the Land Remote Sensing Act Amendments of 1992, and before that the original Act of – 1985, I believe. But what it did is that it essentially allowed companies to take imagery that was at a commercial level. It helped create an industry, I think – we'll see how far it goes – I'm very hopeful about what the results of that will be. But that's one concrete example. I think that, depending on how it works and how successful Bill and others are, that the Space Transportation Policy in 1993 (I believe it was 1994 also ), which basically set out the path that NASA will work on the technology demonstrator X-33 and DoD will work on the EELV, also was a significant step in the development of a new generation of launch vehicles and putting the money there to do that – but also in the development in real terms of a reusable commercial launch industry. Again, we'll have to see where it goes. But I think those are two examples that are significant steps in that direction, and – I think that, when we look back on it – hopefully will have a major impact.
Anselmo: Do we have another press question?
Q: Tom Green of Defense Daily and Space News. Within the industry there was a lot of criticism about the way the Air Force handled the Delta 2 investigation in the wake of the explosion. I'm just curious if you can address that issue frankly. And secondly, what this agreement with the Air Force – it sounds good on paper, I guess – but what exactly it's doing? I'm a little bit confused as to the results of the agreement.
Anselmo: Are you addressing that to anyone in particular?
Green: That would be to the panel. Mr. Bitterman mentioned the agreement earlier.
Bitterman: On the Delta failure issue, I'm probably not in the best position to comment on that. On the broader issue of the Commercial Space Operations Support Agreement, there were some very significant differences between industry and the Air Force on the financial responsibility issues involved in striking up a commercial agreement with industry. We had commercialization agreements in force; but in coming up with a brand-new agreement that would bind all the launch companies, the Air Force in fact tried to put – in our view – quite a bit more burden on industry than was reasonable. And rather than just being put in a take-it-or-leave-it position, we became part of these working groups, and actually demonstrated to the Air Force, we believe, what the ramifications were of these new financial requirements – insurance and otherwise. And we were able to come back and further demonstrate what value commercial launch companies had brought to the government, and there were some significant contributions there as well. I think all that give-and-take is going to lead to an agreement that is satisfactory to both the Air Force and industry. But I'm sorry I can't comment on the Delta failure; I'm just not in a position to do that.
Anselmo: Did anyone else on the panel want to address the question? . . . Okay, I'll move on. Rick, your comment about the market being inelastic has generated a few comments. One person here said that, if the market is inelastic, maybe the market is too small. The question is: What other markets can be encouraged by the government to increase demand for more launchers? And the second part of the question is: Are tax holidays for profits from space activity a viable incentive?
Claybaugh: In precise order: I don't know, and could be.
Anselmo: Dr. Cummings, do you have any comment?
Cummings: I don't think so. If I could just make a comment on something Mr. Claybaugh mentioned about it now being NASA's policy to go for a commercial launch in any case: It seems to me that that's still not solving the university user's problems. An example is our Student Explorer Demonstration Initiative, where the only provider in town is to my right here [Bitterman], and NASA is so dependent on that provider – it's essentially so much a part of the government – that when there are delays, the delays are just accepted. This is a frustrating thing for us. It hasn't helped that you've gone to the commercial provider in this case.
Fleeter: I hear what you're saying about the inelasticity, but I don't buy it. When the Getaway Special program shut down, they had a backlog of 330 to 360 payloads waiting to launch. That's huge. And not very many of those were satellite payloads. But I built three of those satellite payloads. It was an enormous incentive when you could go to a university group or to a customer who wanted to put their first toe in the water in space, and for $50,000 – that's kind of a meaningless size satellite from a lot of missions' point of view – but even if they didn't end up using the Getaway Special, it was there. You could start off with that.
And the University of Utah Defense Systems got started that way – Orbital Sciences has just bought the remnant of that back from CTA – really got started building Getaway Special satellites. They used me – this was back in the early Eighties – as a consultant to help them build those satellites. They got into that whole business primarily because they went to one customer and said, "We can build, launch and operate a satellite for you for about half a million dollars. "And the customer basically said, "At that price, it's worth giving it a try. "
So I think there is elasticity there. And I'll tell you another reason why I think so: I see our satellite customers shopping all over the world for price – and if they can't reach that price, they can't make their numbers, and their businesses finally just don't do it. Our biggest customer right now just signed an agreement for three launches in Russia. And I remember writing an E-mail just the other day saying, "Well, who are you going to find to spend a year in Plesetsk? Because that's what it's going to boil down to now. " It's not that they wanted to go to Plesetsk. It's that they couldn't show the return on investment that they needed if they had to pay U.S. market prices – and coming from Australia, they really had no reason to want to pay those prices. So I think there is elasticity there.
And as far as tax holidays go, Wall Street is kind of like what Churchill said: it's a lousy system, but it's the best one we've got. Wall Street's in the business of picking winners. When they don't want to invest in a business – it pays to look at the biggest investor the world has ever known and say, "Why don't these guys want to invest in that business? "And the answer is usually that they don't think they can make money in that business. Okay, our space business is maybe a little marginal in that regard, and we're struggling to attract that kind of capital. And we succeed sometimes. When you do something like a tax holiday, all you're really doing is that you're changing that ratio of investment to return by a little bit. So – taking my angel hat off and putting my parochial hat on – I'd say, "Yes – anything I can do to make that investment look a little more attractive, I'm going to be for it, because it may push some investor. "And I think you'll find that in history; a lot of companies get started at a time when some administration passes some rule to lower the capital gains tax, or to give an investment tax credit for R & D investments. More things happen during those windows of opportunity. So, even though I come down against messing with the market, I really come down for messing with the market in a way like that, because it doesn't pick a winner – it just makes the overall environment more attractive. And then you still have to win, except that the level playing field is tilted downhill a little bit, so it makes it a little bit easier to actually get some acceleration and go.
Anselmo: I apologize; I misquoted you. I attributed Bill's remark to you.
Claybaugh: Let me, if I may, address Rick's comments. It's vital, when discussing history, to verify the details. It's correct that there were almost 400 scheduled GAS Cans in backlog, but none of them had built anything. When you actually go out to Goddard and talk to the folks who run the program, what you discover is that every GAS Can that was actually ready to fly has done so – and that is a very small number. The program continues, and they continue to try to gather up payload, but it is almost a case of NASA managers having to beat on the folks who have put down deposits ir order to actually get them to build something to fly. I assert that at least in that particular case – and, let's be clear, there are a lot of constraints on the GAS Can program that make it an unattractive $50/pound payload – the real data does not suggest a surge in demand.
I want to be clear, however, that I do think the market is elastic; and if we had a viewgraph machine, I could even show you one of my favorite charts, which is from the Commercial Space Transportation study and is (so far as I am aware) the best publicly available information on the elasticity of the market for space travel. My colleague Bill Piland down at Langley – who is here today – sponsored that study. And it does suggest that there is elasticity in the market. In fact, it suggests that the market breaks at about $600/pound, that below that level demand takes off in the sort of exponential manner that you are used to in demand curves, and that above that number, demand is pretty flat – it basically crawls along at levels similar to existing business, with a little growth. Our remote-sensing guy, for example, will put up a second satellite if the price halves, and he'll put up another one if the price halves again, but he won't put up any more because once he's got three up he's got the whole planet covered. And so there are limits to how far the demand goes in our business. What I suggest, and what I want to be clear about, is that I believe we are dealing in a failed market, in the specific sense that market forces drive the marketplace to high prices and low volume, and that the incentives in the market are in that direction. That is a conclusion I have reached on the basis of our analyses. There are numerous examples – which I will not embarrass any particular company by going into – but I do believe that at some price the market must be elastic. The question is where that price break is. The one existing study suggests that it's around $600/pound. For a variety of reasons based on my own personal analysis of that study, I think the number is actually higher – closer to $1000/pound. But we'll never know until we get there.
Anselmo: Anyone else want to jump in? . . . Okay, we'll go to the next question, which is actually you again, Bill. It says: U.S. government funding of high-risk R & D is desirable, but a key test of R&D versus product development is who gets the results of that research. The X-33 program is developing a body of research data, mostly at government expense – but Lockheed-Martin is acquiring most of the research data. Do you agree with this characterization, and can you justify it? Claybaugh: The characterization is incorrect. Lockheed Martin has a three-year lock on the data and then must make it public.
Anselmo: Another question here, that's for both Bill and Keith: The government's effort to save commercial ELVs has resulted in basically a standard government contract with the word "commercial" in the contract introduction. Why won't government executives force the NASA bureaucracy to let go and buy rockets like any other commercial product?
Claybaugh: I'm not willing to touch that one at all! I will make the following notation: After five years of very, very serious effort on the part of Administrator Goldin, I think we are only just now at the point of getting part of our community to believe that small planetary spacecraft are, in fact, a good idea. The changing of an organizational culture is a process which takes a very, very long time, with a requirement for constant insistence by the chief executive. The literature on that subject suggests that ten years is a normal number to get an organizational culture changed, and that it takes insistent pounding from the top even then. So I'm not willing to suggest that all NASA does is wise and proper, but I'm willing to suggest that some change has occurred – one sees in the planetary program in particular a dramatic change from the billion-dollar once-per-decade kind of missions that we have been running – and I think in time one is likely to see other changes beginning to surface as the institution evolves.
Senghor: I would second that. I think Bill has put his finger on the basic problem, which is – as I mentioned earlier, I think we're in a period of transition. The problem is that we are moving from an era in which we were doing things one way because it made sense in that context, to a period where that doesn't work anymore and so we have to figure out how to get to this other way in which – at least as we look out at the data – we can see the outlines, we think, of how things are moving (inevitably, I think) towards a much more commercially dominated era. And so, in any transition era where you're moving from one to another, there is the resistance to change; there are institutional culture issues, as Bill said; there are turf issues. There are education issues (letting people know what's out there); there are public education issues; there are policy education issues. There is coming up with realistic solutions. There is, overlaying on top of all that, the fact that the external world around you is changing and affecting the decisions.
Churchill is getting quoted a lot at this conference, at least on this panel – but going back to Churchill, I think we have to keep talking about it. Let me quote someone else for a second: This is a story I like to tell about Secretary Brown. He used to make this quote about someone who was once a journalist. A member of the press corps once asked Wayne Gretzsky what made him such a great hockey player. He thought for a second, and then he said, "I skate to where the puck is going to be." The ability to move organizations from where they are now to where they're going to be is the defining criterion for what makes great nations, great leaders, great organizations. It is not an easy thing to do – and therefore, to the extent that you do that, I think that is a good thing. That is why, to the gentleman's question about what this Administration has done that is useful, I think there's a lot to say on that – and that's not from any political sense, but I think a lot of people spent a lot of time trying to move this ball from here to there. And, as Bill said, it's not something that's going to happen overnight, but I think there is a lot of pressure on the back end to keep moving it that way. And I think what you do is, you keep knocking at that door – you keep pushing the envelope on that – and I think at some point you get through.
Anselmo: We have another press question.
Q: It strikes me that if Israel is allowed to use U.S. launch facilities, the U.S. is going to lose its moral claim – say, if the Iranians or Syrians or Egyptians approach Russia or China or Kazakhstan for the use of their launch facilities. And I was wondering if the State Department has given you any guidance on that at all.
Senghor: Let me just make sure I understand. The question is: If we allow the Israelis to use U.S. launch facilities, we lose the moral basis for arguing that other countries cannot do the same. I've not discussed this particular question with the State Department, and so therefore I can't speak for them. The question of U.S. launch facilities and who uses them is an interesting one, because, again, it's in the larger context of the transition away from government-owned facilities to commercial spaceports. So the question becomes: If space travel and access to space becomes a commercial venture, what is the basis for treating them as if it were a national security issue versus an airport? So if the Russians – when they launch commercial launch competition – want to launch from the Florida commercial spaceport or the California spaceport or the proposed Alaska spaceport or New Mexico or Wallops, what is the problem with that?
Q: That's not the question. The question is: What happens when, say, Syria or Iran or Egypt approaches Russia or China or Kazakhstan about using their launch facilities? What happens to the US position as far as preventing that from happening?
Senghor: I'm sorry I misunderstood your question. What happens if we allow the Israelis to use a U.S. launch facility? How do we prevent. . .
Q: Right now they aren't using it.
Senghor: I think I understand you. The idea is: However you define bad actors, how do you prevent their access to third party launch facilities? I would defer on that; I need to consult. How we deal with other countries' access to third country launch facilities is in the context of a much larger MTCR and proliferation issue. There may actually be regulations on that; I'm just not familiar with them. So that's a question I'm really not qualified to address.
Bitterman: If I can comment on that briefly: I think as long as the missile proliferation problem remains, there is going to be very close scrutiny of any proposal such as the one the Israelis submitted to use U.S. facilities. Having observed that process pretty closely – Orbital Sciences was obviously interested in what was happening in that policy deliberation process – we're convinced that the national security evaluation and missile proliferation questions were raised very significantly during that process.
I think you raise a very good point: the U.S. can't be seen as being a sponsor of that kind of proliferation, so it's very important to make the tests as stringent as possible, from both the national security and foreign relations context, and also from a commercial context as well.
Anselmo: Do we have another press question?
Q: I'm Sam Silverstein with Satellite News. I have a general question to address to the panel at large. Can you give me a sense of where you see public support in this country for access to space? Clearly the Mars Pathfinder mission shows that the public is there and supports – or, certainly, enjoys – certain activities related to space. But is there the public support that we need for the continued development of the RLV and other initiatives?
Claybaugh: I'm not clear on how one measures public support. If press coverage is a measure of public support, then is the press the public? For who decides what gets covered? I think the issues are narrower than that. The issue is the cost of space travel. The U.S. government spends, in toto, something on the order of 6 to 7 billion dollars per year buying space travel – NASA and DoD. If one could meet a goal of $1000/lb., then that number would go down by a factor of ten, and 600 to 700 million dollars per year is a vastly smaller number than 6 or 7 billion. And that alone justifies a pretty significant investment, just on direct payback. I don't know that those are issues that are directly related to some vast public outcry for lower costs; they're simply efficient use of national resources.
Fleeter: I'll give you an answer that's not really in my department. I think Goldin has done a good job of promoting space to the public, and I think that's been one of the great things he has really done as the Administrator – to realize that NASA lives because of the public largesse, so to speak. I think that's a good thing. I mean, if we don't get out there and popularize our field to the public, then we deserve to be ignored – and if you're ignored, people won't vote for money for you to do those things.
But I think that what people really want is access to space – cheap is better, of course – and in a way I think that I what I sense is that a lot of people really want to go into space themselves. Space tourism is something that people don't like to talk about because it's considered so fringe and so flaky; but hey, if you could go you'd probably go, and so would most of the people I know. And so I think a lot of undercurrent – you know, if you can't go yourself, then you have an astronaut who goes; and when the astronaut goes, a lot of people live vicariously through that experience just because they can't afford to go themselves. And kids really live vicariously through that experience. That's part of the reason we do it: Astronauts go into space; kids love it; kids are the greatest brainwashers of their parents; and if the kids love it and it stimulates the kid to be interested in anything other than trash TV, the parents are going to be for it. And if you can't send an astronaut to Mars, then you send a robot to Mars. That, at least, is still in a sense some kind of human access to space. But I trace a lot of the interest back – the interest in Mars, the interest in the Shuttle and the Shuttle astronauts – to a strong desire on the part of many people to themselves be in space. And cheap access to space, if it resulted in space tourism, would just be a fantastic driver to what's going on in space.
And the reason I say that it's not really my field is that it's so far away from what we do – and also I'm not in this business so that I personally can go into space; I'm in this business because I like giving people things that they want. And what I see that almost everyone that I meet wants is that they themselves could go into space. So I think the public is very interested in access to space, and they're only a little bit less interested in seeing somebody else get access to space that they don't get, and a little bit less interested in seeing nobody get access to space except for robots with color TV cameras. And as you step down the food chain, the excitement on the part of the public – you know, once it gets down to "1"s and "0"s coming back from space like we used to do in the Seventies, pretty interesting scientifically but not very grabbing on network news – the interest level gets proportionately lower.
Senghor: I just want to make a couple of comments.
I take a little different cut at the same problem, but I think it's essentially the same. I think we must make a distinction between how we want to sell this – the public perception in terms of space exploration, which is what NASA does, and I think that's extremely exciting; that helps – versus what's interesting and exciting from a commercial point of view. Because I'm back to my same point: I think that there really is enough critical mass so that you can talk about two separate views on this. So that's the first thing.
From a commercial angle, I think it's chicken-and-egg. It's the Churchill quote again: You generate public support by talking about it in ways that the public understands and gets excited about. I think that, for two reasons, this is a very exciting area – and under-reported, I guess, is the best way to say it. The fact is that there are two things that make this a very, very interesting area. The first is that the future of information technologies into the 21st century as far as I can see right now – the early part of the 21st century – is going to be based on a space-based infrastructure. It's not happening unless you have the reality of the commercial satellites that people are talking about. And that's the diffusion of telecommunications with GPS and with imagery. It's going to create a whole new way that we look at the world. We won't think about it in terms of space, but it is a reality in terms of what we do with information technologies. It's already true – I mean, we get our television information from that. So what you're talking about is a "quality of life" issue that is dependent on that.
The second aspect of this is that what you're talking about is the ability for profits – big profits. It's the – well, this could be a hot area in the way that computers were hot areas; and in the way that now telecommunications, as a narrow slice of that information spectrum, is a hot area (not looking at the other downstream pieces of that). So I think that that particular story – that slant on it – can coexist very well with the space exploration part of it. But I think people have to understand that now it's a separate and independent dynamic that will affect our lives far more. And that's something that will touch people's lives – that is something that people can do now in a way that you can get excited about how you sell this kind of thing.
Anselmo: I'm going to try to sneak one more question in here. I'm not going to get to every question, unfortunately – there's a lot of really good questions, and I apologize to those people whose questions we did not get to. The question here is: How can grants be provided to spur the development efforts of small companies with high-risk, high-return concepts? Should these grants come from the government – or should they be from the legislative sector, such as tax benefits – to sort of attract private financing? Bill?
Claybaugh: As you might imagine, the whole question of what the government can do is one that I've had to spend a good deal of time looking at. At one level: If it's research or technology, those are called NASA Research Announcements, and they come out regularly. Those associated with the Reusable Launch Vehicle program come out of the Marshall Space Flight Center, and can be found on their home page on the Web. And there's a lot of technology to be bought. Within our office, we are looking at the generation after the next technology level – at technologies that will even more dramatically change the potential cost of getting into orbit than the X-33 class of technology will.
In the broader question of what the government can do to encourage private investment: I used to be a venture capitalist. A venture capital firm typically gets 40 to 50 percent per annum compounded. If you've got a minimum investment and invest in a venture capital fund today, you personally can get those kinds of returns: 50 percent per year, compounded year after year for a decade. That's what the American economy provides as a return to people who are willing to take venture-capital kinds of risks. To my knowledge, no investment in space transportation assets – no commercial investment in them – has turned a profit, period. Our economy is a rich one; biotechnology and software – those are places where enormous amounts of money can be made, and professional investors make that kind of money day in and day out. This is not a business opportunity for that sort of investor. The returns are not there. To date, no one – Orbital Sciences has invested in two commercial launch vehicles; Lockheed has two; there are the PAMs developed by McDonald-Douglas – go down the line and you cannot find any example of a commercial investment in space transportation which returned an economic profit. It is almost literally the case that national economy would have been better off if those investments had been put into Treasury bonds. More money would have been returned to the nation's economy. Thatis just a fact, and it's a fact that is known to all the professional investors that I work with. And this is therefore not an area that is of great excitement to them.
Now, there are ways – finance being finance – to get leverage and create high financial returns even though there is little or no economic return. And those sorts of deals can be done. Orbital Sciences, frankly, did a very good job of creating just that sort of environment with the original TOS funding. So one can create opportunities where a venture capitalist can make a financial return even in the absence of an economic return. That sort of thing can and has been done. But it's crucial that we realize, in terms of investment opportunity, that our economy generates fabulous investment opportunities – and in that context, ours has not to date proven itself to be a business which is competitive against those kinds of terms.
Anselmo: Okay, thank you. Charles is ready here; lunch is coming up. I want to thank all our panelists for providing all their valuable insight.
Miller: Thank you, Joe and everybody. We're going to break for lunch here.
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