On January 14, Office of Space Commerce Director Kevin O’Connell delivered a keynote address and moderated a panel on “Business Models of the Space Economy: Where is the Money?” at the GeoBuiz Summit 2020 in Monterey Bay, California. Below are his remarks as prepared for delivery.
Good morning. I’m Kevin O’Connell, Director of the Office of Space Commerce. I’m delighted to kick off this panel this morning on the Business Models of the Space Economy.
Yesterday, my colleague Dr. Scott Pace highlighted the Administration’s top-level interest in space and some of the initiatives designed to encourage space and space commerce. The Office of Space Commerce was established within the U.S. Commerce Department over 30 years ago to help “foster the conditions for the economic growth and technological advancement” of the commercial space industry. There’s even a mandate to promote the advancement of geospatial technologies that are related to space commerce.
My Office is the Executive Branch advocate for the U.S. commercial space industry. We use different levers of advocacy, regulatory reform, industry engagement, and improving our understanding of the space economy both at the industry level, but also in helping individual companies.
Let me make sure to pass on regards from my boss, Secretary Wilbur Ross. The Secretary remains the biggest champion of space and space commerce within the Department of Commerce. Through the Secretary’s leadership, we have been able to leverage the entire Department on behalf of the U.S. space industry.
The space economy is growing. As you may have already heard, in 2019, for the first time, the National Space Foundation reported that the global space economy had crossed the $400 billion mark, reaching an estimated $415 billion. Another study by Bryce Space and Technology assessed a $5 trillion dollar economic impact of space in sectors like entertainment, finance, the internet, and others. And especially for this audience, last Summer, NIST, a sister agency within Commerce released a report by RTI on the $1.4 trillion dollar impact of GPS across ten industry sectors since it was made widely available in the 1980s.
While U.S. and other government space activities are growing, the overwhelming percentage of the global space economy is commercial. At Commerce, we believe that the future of space is overwhelmingly commercial.
Over the next two decades, the space economy is estimated to grow to between $1 and $3 trillion dollars. My colleague yesterday suggested that those numbers could be “lofty”… so, rather than focus on those specific numbers, it is probably more useful to focus on how we get to that size space economy.
We see five key ingredients that are going to be necessary to fueling the trillion dollar space economy. I’ll mention each of them briefly in the interest of time, and maybe we can pick up a few of the threads in the panel discussion.
- The first is continuing innovation and disruption: when we talk with the casual user, discussions about satellite imagery and GPS, for example, center on simple ideas of more precise images or the already widespread timing and navigation applications. Right here, on this stage yesterday, we heard about many newer and highly sophisticated applications of these same space technologies: indoor positioning, the explosion in 3D, data relay designed to crush latency, connecting “silver sneakers” and understanding detailed consumer behavior. Many of these sound compelling in a commercial sense but also in the potential public policy challenges they create.
- This is illustrative of what we see across the entire space sector, in the Office of Space Commerce, on a regular basis. Entrepreneurs are coming forward to disrupt “traditional” commercial space functions like communications, navigation, and remote sensing, even as other innovators bring newer capabilities to market in satellite servicing, space tourism, resource mining, robotics, additive manufacturing and others. We will have three such entrepreneurs join me on the stage here shortly.
- Jack Dangermond told us yesterday that “innovation is in the soul.” That’s possibly the key enabler of the trillion dollar space economy.
- But not the only one. The second is a finance and insurance ecosystem that helps shift risk for entrepreneurs. Some will remember a day not that long ago when entrepreneurs would come to market with a concept, for example, of a 60-ball constellation that “might hit profitability after the 24th launch!” Today, there has to be some concept of profit even in the first few satellites. Finance is much more sophisticated today on space activities than in the past, and helps drive the business efficiencies that we see in the space market: reusability, modular manufacturing, lean business processes, and others. That’s partly the answer to “where is the money?” One of our concerns is the need to attract longer-term private sector financing to underpin some of our more ambitious goals in space exploration.
- The third is a permissive regulatory environment. The regulations developed in a different era are today outstripped by fast-moving technologies and business models. We used to say “that space capability is a decade away; today it might only be two years, or two months.” Many of our collective USG efforts are focused on regulatory reform in remote sensing, export controls, launch and other areas. Our role, as the government, is to ensure that innovators who have come to market are able to pursue their business plans to the best of their ability in a safe, sustainable manner. While space has always occupied an important part of our history and our psyche, in many ways it is becoming a “normal” market. So we should expect to see successes, failures, M&A, trade challenges, and other normal market behaviors.
- The fourth ingredient is talent. This is very important. Good folks often visit us at Commerce to showcase a local or regional engineering school, a potential spaceport site, or other activity clearly related to space. That’s all good, but the trillion dollar space economy is going to demand a much wider slate of talent like artists, business analysts, applications developers, and others. Companies are beginning to teach us what it will be like to live sustainably on the Moon in every day terms.
- Fifth, we’re going to need to understand the economic impact of space in a much more rigorous way. You may have seen the recent announcement by the Bureau of Economic Analysis, a sister agency within Commerce, of the establishment of a Space Economy Satellite Account. This is a collaborative research effort between my office and BEA to measure the relative importance of the space sector to the U.S. economy, with special emphasis on the growing commercial sectors. We will be using input from industry experts, as well as multiple government agencies to determine the space economy’s contribution to our national GDP, as well as looking at output, compensation, and employment within the space sector.
While not everything we’ve talked about here at GeoBuiz is enabled from space, a good deal of it is. There is a potential speed bump on the path to the trillion dollar space economy that we need to take immediate action on: space debris. The problem is challenging today and bound to grow more complex as new, innovative missions go to space.
At the direction of the President, the Vice President, and the National Space Council, we are working to establish a system for civil and commercial notifications about space debris to ensure that commercial companies and others can continue to operate safely and sustainably in space.
Right now, un-trackable debris, imprecise measurements, and an increasingly congested space environment create some level of unpredictability for commercial space firms. Space debris creates economic risk in addition to physical risk. Innovations, especially commercially-driven innovations will allow us to modernize the system currently in place, and improve predictability in space. Improving our understanding of the space environment through improved SSA, and improved communication and coordination, both domestically and international, is the first step toward making space safer for all operators. When you think of it that way, space safety is another key ingredient to not only enabling but sustaining the trillion dollar space economy.
With that, let me thank the organizers for the invitation and invite my fellow panelists to the stage.