Space: The Private Frontier

Op-ed in The Wall Street Journal Europe

January 24, 2005

Outer space delivered a shining success for both trans-Atlantic cooperation and Europe's space aspirations at the start of 2005. After a seven-year journey, the European Huygens probe detached from Cassini, its U.S.-made mother ship, and landed safely in the freezing mud on Saturn's largest moon, Titan. Mankind's first footprint on a body in outer space secured by the joint efforts of European and American technology.

In orbits a little closer to Earth, recent times have also brought exciting new developments for Europe's ambitions in space. In late 2004, Europe's Galileo satellite navigation system was finally set for launch in 2006, marking not only the first official European Union presence in space, but also the beginning of a novel public-private space partnership. After public financing of the entire development cost of 1.1 billion euros for Galileo, private investors will from now on pay two-thirds of deployment costs of an estimated 2.1 billion euros, as well as manage the operations of the system going forward.

Not only is Galileo's private-sector financing and operational management breaking new ground for European space projects, so is the degree of international involvement. China, to the tune of 200 million euros, as well as Israel, is already supporting the project financially. The pair participates fully in the technical side of the project and can expect national companies to receive Galileo contracts in the future.

Considering, in addition, that the new Constitutional Treaty for Europe for the first time defines "space" as an area of competence for the EU, and actually places matters relating to "European space policy" under the jurisdiction of the commissioner for enterprise and industry, Gunter Verheugen, it would seem straightforward to conclude that Europe's private space industry is set for a bright future of access to both public money and international technical cooperation. Alas, such a conclusion would be complacent.

While private project financing and management structures similar to Galileo's represent significant progress in the involvement of private European businesses in an area hitherto completely dominated by governments, no direct attempts to spur private-sector initiatives and innovation are to be found in the "European space policy" outlined in the recent European Commission white paper on the subject.

This is a pity, considering that Galileo's open invitation to all interested countries to participate technically and financially (negotiations are currently ongoing with India, Russia, Brazil, Ukraine, South Korea, Mexico, Australia and Morocco) underlines that private space technology in Europe would be unlikely to face the nagging restrictions on technology diffusion that many advanced U.S. technology companies face for reasons of U.S. national security. Hence in many ways, Europe could offer space entrepreneurs a much more benign business and technology development climate than the U.S. Access to an international technical cooperative effort could also provide entrepreneurs with direct influence on potential new international GSM-like industrial standards emerging in the space area.

It is also a pity, because European space technology companies are unlikely ever to benefit from the levels of indirect government support enjoyed by their American peers-upwards of 80% of turnover in the American space sector originates in government, mostly military related, contracts. For Europe's space sector to continue to thrive in the future, it will therefore be particularly dependent on the development of a private customer base.

And it is particularly a pity, as Europe currently woefully lags behind the U.S. in space entrepreneurship. Of the 26 consortiums that entered proposals into the open $10 million Ansari X competition for the first private relaunchable spaceship, won last year by the American SpaceShipOne, 17 were from the U.S. and only three from the EU-all British. (Romania, Russia, Israel, Canada (2) and Argentina also hosted entrants.) Potentially worse, though, for the prospects of European space entrepreneurs, they will be effectively shut out of the race for the next big prize-$50 million for the first private spacecraft to complete two full orbits with a minimum crew of five passengers twice within 60 days before Jan. 10, 2010--because American billionaire Robert Bigelow, who has put up the prize money, demands that contestants must be domiciled and have their principal place of business in the U.S.

What should European leaders such as Commissioner Verheugen do? First of all, they must consider that businesspeople are more than just sources of project funding. They are generally far superior to bureaucrats at focusing on costs, bringing down the price of goods and services and making their products available to the mass market. More than 40 years after Yuri Gagarin was launched into space, the price of a ticket with a government-developed Russian Soyuz craft today still stands at a hefty monopoly price of $20 million a head, putting spaceflight well beyond the means of the average earthling. However, the success of the private SpaceShipOne has had an immediate impact on prices. Licensing their technology, Richard Branson's Virgin Galactic will from 2007 be offering (admittedly suborbital) spaceflight for just $220,000-a potential spaceflight price decline of nearly 99% in just three years.

Second, European leaders should look at recently passed U.S. legislation, which will regulate the private space-travel industry solely to protect the public interest, and not to ensure spaceship crew and passenger safety. In other words, if you want to risk your life in order to get into space using frontier technology, you may sign a waiver and do so--the law is not going to stop you from putting yourself in danger.

Regulating emerging commercial human spaceflight as a "frontier technology," where accidents may occur, and not as a regular "transportation service" similar to the airline industry, where passengers have a right to be protected from faulty technology, is a very important step. This will lure in prospective investors, who may now receive money from potential space tourists without the fear of subsequent crippling lawsuits if the new cutting edge technology does not work and an accident occurs. For an infant technology such as private human spaceflight, which is potentially dangerous for those who use it but has huge future potential for both businesses and society at large, it is important that it be allowed to mature and pass through "the barnstorming period" without regulation demanding a zero-accident record.

Third, the Ansari X prize, which was modeled after the $25,000 Orteig prize that Charles Lindbergh won in 1927, thereby establishing trans-Atlantic aviation, proved that high technological goals can be achieved in the 21st century by unleashing entrepreneurial energy. Commissioner Verheugen and the EU ought, in the absence of private European money being put forward, to find the money in their nearly 100 billion euro budget to offer a financial prize to European space entrepreneurs of a magnitude to what Mr. Bigelow is offering Americans for putting people into orbit in a private commercial spacecraft. Surely, there can be no better way, as the European space policy also aims at luring more young European scientists and engineers into careers in the space sector, than assisting in bringing down the price of a live glimpse of space.

More From: 

Jacob Funk Kirkegaard Senior Research Staff

More on This Topic

Speeches & Papers

Michele Pezzoni (Université Côte d'Azur, CNRS, GREDEG, France), Reinhilde Veugelers (PIIE) and Fabiana Visentin (UNU-MERIT, Maastricht University, Netherlands)

December 18, 2021
via Research Policy, Volume 51, Issue 3, April 2022
Trade and Investment Policy Watch

Gary Clyde Hufbauer (PIIE) and Megan Hogan (PIIE)

December 15, 2021
RealTime Economic Issues Watch

Gary Clyde Hufbauer (PIIE) and Euijin Jung (formerly PIIE)

November 29, 2021