O’Connell Remarks to U.S. Chamber of Commerce

Kevin O'Connell at podium with "LAUNCH" event backdrop
On December 3, Office of Space Commerce Director Kevin O’Connell delivered a keynote address at the U.S. Chamber of Commerce’s 2nd Annual Space Summit, LAUNCH: The Space Economy. Below are his remarks as prepared for delivery.

Remarks of Kevin M. O’Connell
Director, Office of Space Commerce

U.S. Chamber of Commerce 2nd Annual Space Summit
Tuesday, December 3, 2019, 1:08 p.m.
U.S. Chamber of Commerce
Washington, D.C.

Introduced by Caroline Harris, VP, Economic Development, USCOC

Thank you, Caroline, for the kind introduction, and thanks to the Chamber for making this space summit an annual event.

I am delighted to be here. As I begin, let me pass on warmest greetings from Secretary Ross, who is unable to join us today. The Secretary remains our top enthusiast on space and space commerce issues at the Department.

The Secretary asked me to mention, of course, that launching the space economy is one of the highest priorities of the Department of Commerce and a top priority of the Administration.

The space economy continues to grow. In July, the Space Foundation reported that the global space economy grew 8.1 percent in 2018 to $415 billion, exceeding $400 billion for the first time.

Our major financial institutions project that the global space industry could be worth between $1 and $3 trillion dollars by 2040. Part of that value will come from improving on or creating new services to enhance our lives on earth, while another part will come from the establishment of a cislunar economy.

Developments in areas like satellite servicing, resource mining, and space-based manufacturing could increase those numbers dramatically.

My remarks today are about how to ensure that the U.S. remains the center of the future space economy.

Let’s look at some of the factors that make us the center of the space economy today. This will point us to the key building blocks for the future.

Today, the United States has a bold and renewed vision of space exploration, and space commerce, and a vision for how to protect freedom of action for ourselves and our allies.

We also have an extraordinary culture of innovation and strong capital markets to back that vision. We see examples of space entrepreneurship all the time in the Office of Space Commerce.

At a “space startup” meeting we held at the Commerce Department in October, Chad Anderson, CEO of Space Angels, reported that the amount of non-government equity investment in commercial space companies reached $5 billion during the first nine months of 2019.

That’s an increase of 49 percent of the same period in 2018, and we are on track to surpass 2017 as the largest year on record for private sector investment.

Even as private sector activities grow, we see an important shift in U.S. government investment. Government agencies are becoming more sophisticated in harnessing commercial space developments. NASA Administrator Bridenstine routinely talks about the Agency’s changing role as a customer of the commercial space sector. Last week in Houston, I had an excellent conversation with the outreach directors of all of the NASA centers about trends in space commerce. The U.S. Air Force awarded over $22 million dollars to 30 companies during a November “Pitch Day” in San Francisco. Etcetera, etcetera. These are just a few examples.

Today, government agencies can invest relatively small amounts of money in space companies, for capabilities that the government needs. That investment provides critical operating funds, but also allows firms to turn to the capital markets for additional investment based on the potential commercial value of a given service or capability.

We see companies trying to innovate on existing commercial space business models or create entirely new ones. The rate of innovation is blisteringly fast. And the future space economy will draw upon as wide a range of talent than ever: teachers, applications developers, artists, business specialists and others will bolster the deep technical talent required to get to and live sustainably in space.

America is a hub of technological and business innovation. This is one of our nation’s greatest strengths.

Our challenge is to ensure that U.S. companies remain on the cutting edge of the global space industry.

It is crucial to our security, our prosperity, and our quality of life.

To do this, the U.S. government needs to provide the support and advocacy that the commercial space industry needs.

Foreign commercial competition is increasing.

Countries, like China, are working to gain the political, economic, and security edge that space provides.

Foreign governments are promising tax incentives and limited regulation to entice U.S. space companies to establish headquarters overseas.

They also are providing significant financial support to their domestic commercial space industries.

In the U.S., our strength lies in the ability of our commercial sector, which operates independently.

However, government is responsible for the economic environment that is conducive to innovation and expansion.

As you addressed earlier today, one of those ingredients is effective, light-touch regulation.

We are trying to make it easier for legitimate space activities to be conducted and for entrepreneurs to be given the best possible chance at creating new space capabilities without sacrificing safety or security.

We should not forget that Space Policy Directive -2 contains a “presumption of approval” for commercial space activities. Where approval cannot be granted, the burden of proof is on U.S. government agencies to explain why.

Today, I am delighted to report that the Department’s rule on commercial remote sensing has been sent to OMB for interagency consideration. In redrafting the rule, NOAA took into account many industry comments.

The proposed new rule recognizes the speed at which new technologies are entering the market, including overseas. It also recognizes the ever changing business models and where value is created in the volumes of diverse imagery data sets flowing back to earth.

Our goal is to ensure that U.S. industry continues to lead the global commercial remote sensing market.

At the Department of Commerce, we are firm believers that the rate of regulatory change must accelerate until it can match the rate of technological change. We are working to identify other industries where regulation keeps pace with fast-moving technologies and business models.

Another way to ensure U.S. leadership in the future space economy is through improving space situational awareness and other efforts designed to ensure space safety and sustainability.

The space debris challenge can seem daunting even as our understanding of the space environment improves. But the “whole of government” approach and the ability to harness commercial innovation, as directed by Space Policy Directive -3, offer the best chance to quickly mitigate the space debris challenge, even as new commercial space missions come to market.

Already, the strong partnership between Commerce and the Department of Defense is paving the way to transition civil and commercial notifications. We are already engaged in a wide range of activities with DoD, NASA, and other federal agencies, as well as industry, to explore how government and commercial assets can work synergistically to modernize and enrich the current SSA system.

American leadership in this area is also strengthened by cooperation with our allies. In October, Secretary Ross signed a memorandum of understanding with the French space agency, CNES, to explore collaboration in the area of SSA.

New commercial remote sensing regulations and improved commercial SSA are just the first steps towards ensuring U.S. industry leadership.

At Commerce, we see the future of space as overwhelmingly commercial. So we have to enable that. Broad authorities are needed for new and innovative space capabilities that do not fall into traditional regulatory regimes.

Regulations must be kept light touch, of course!

As a government, we need to anticipate commercial space innovation to ensure that companies can bring their services to market in a timely manner.

My office, the Office of Space Commerce, helps leverage and shape the capabilities of the entire Department of Commerce on behalf of the U.S. space industry. Here are just a few examples of the Department’s many activities:

Since January 2017, Commerce’s Economic Development Administration has invested over $26 million in 21 projects across the U.S. that support space and aerospace industries and promote regional growth and jobs.

Our Minority Business Development Agency has also worked diligently to expand minority participation in space commerce.

Our International Trade Administration’s Advocacy Center currently has 33 cases covering the space industry sector, including launch services, satellites, ground stations and support equipment. These cases have an approximate value of $3.85 billion, with $3.23 billion in export content. Ensuring space market access abroad for U.S. companies is one of the Secretary’s top space priorities.

The Bureau of Economic Analysis is working with us in the Office of Space Commerce to define the size and breath of the commercial space industry and then more accurately measure it.

Recent research efforts focus on the more complex issue of economic impact: as everyone in this audience knows, space affects our daily lives in so many ways. We must continue to explain that impact to others.

Bryce and SIA assess a $5 trillion dollar impact of space across a wide range of services, including finance, weather, and the internet. A NIST-sponsored study by RTI released earlier this year projected GPS’s economic impact across ten economic sectors as over $1.4 trillion.

Our ability to measure these impacts more rigorously will provide important signals to investors and entrepreneurs in every state across the nation. Every one of our fifty states can and should have a role in the trillion dollar space economy!

America remains the global leader in commercial space technology and activities.

We are taking steps now to ensure our space industry continues to have the tools and the environment that it needs to succeed and grow.

There’s a lot of work ahead for all of us.

This is an exciting time for commercial space, and, like all of you, I look forward to seeing how far and how fast U.S. industry can grow, with tremendous impacts on our lives. Thank you.

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Posted in Business with the Government, Commercial Remote Sensing, Regulatory Reform, Space Economy, SSA/STM