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Commercialization

Commercialization

"Space commercialization" is a general term that distinguishes private activities from those of the government in enabling the use of space from either an Earth-based operation or from space itself. Private-sector use of space involves activities that are expected to return a profit to investors, such as building, launching, and operating communications satellites or taking pictures of Earth from space to monitor crops.

In contrast to the private sector, government activities are performed to carry out specific missions for the public good. Examples range from national defense activities to scientific missions studying the planets, and also include satellites that monitor Earth's environment.

Because space research, development, and exploration are very expensive and risky, governments have funded most activities. During the 1990s, private companies began to expand beyond the already profitable communications satellite services, and develop the use of the space environment for the introduction of new products. The U.S. government requires a license for a U.S. firm to launch spacecraft and do business in space. Often when there is an overlap between a government mission and a private activity, will the government partner with a private company.

"Commercialization of space" is frequently confused with "privatization of space." Sometimes commercialization of space is used by the government to mean that a function previously performed by the government has been shifted to a private company, often with the government as a paying customer. "Privatization of space" involves the government reallocating authority, responsibility, and the risk of operations using government-owned assets and ultimately transferring asset ownership itself to the private sector. Because privatization is a process, there are many intermediate steps possible between total government management, control, and asset ownership and full privatization. And, because this process involves firms that are providing services for a profit, privatization and commercialization sometimes are used as synonyms even when they are not precisely the same.

Examples of Space Commercialization

The largest commercial use of space is by satellite communications and associated services. Long-distance communications are dependent on two major transmission modes: satellites and fiber-optic cables . Satellites are the cheapest and best providers of point to multipoint communications while fiberoptic cables provide efficient high-capacity point-to-point services. In 2000, estimated revenues from satellite communications operations, including direct-broadcast TV services, were greater than $25 billion annually. Commercial revenues are expected to grow very fast as new broadband satellites are developed that will be able to transmit Internet and other services. Global Positioning System (GPS) satellites that broadcast detailed location coordinates to handheld units, as well as to airplanes, ships, and automobiles, have provided many terrestrial commercial opportunities and this area is likely to grow very rapidly. (The GPS satellite system itself is government-owned and operated.)

Other uses of space for commercial purposes generate relatively small revenues but hold growth potential. Remote sensing (taking digital pictures of Earth from satellites) is used to monitor Earth and for mapping and discovering new sources of natural resources.

Launch vehicles that boost payloads into space also provide business opportunities for firms. Since the late 1980s, expendable launch vehicles (ELVs) have been privately manufactured and operated in the United States. Of course, the need for launch vehicles is determined by the need to put payloads in space. Worldwide, commercial ELV companies earned more than $10 billion in revenues in 2001. Several firms are designing and developing commercial reusable launch vehicles (RLVs); eventually some will even be capable of launching people into space. However, commercial versions of a human-rated RLV are many years in the future.

Finally, the International Space Station (ISS) is being built and assembled in space. The ISS is the result of an international partnership between governments, which is promoting a wide variety of commercial opportunities. Companies are being encouraged to perform research and development onboard the ISS. There are proposals to have private firms provide power and other "utilities" for the ISS. One company is building a module that would attach to the ISS. This module could be a broadcast facility, feeding news, entertainment, and educational markets with pictures and happenings from space. There will also be a market for boosting cargo and human beings to and from the ISS, perhaps creating modest business opportunities.

The Value of Technology Spinoffs from Space

When technologies developed for the space program are used for other purposes, they are termed "spinoffs." Since the beginning of the space program, the cutting-edge research and development required for the unique environment of space has generated inventions and innovations. Many of the technologies have their largest applications within the aerospace industry, but many also find their way into industrial applications and retail stores.

Examples of space spinoffs fall into several categories. First are the new products and services that consumers can purchase. Beyond satellite-based voice, television, and paging communication services, there are many other spinoff products. Materials such as lightweight carbon-fiber composites used in tennis racquets, boats, and other products were developed for the doors of the space shuttle. Insulating fabrics and thermal protection equipment used in space suits and onboard space equipment are now available for household uses as well as for firefighters and industrial safety equipment.

Second, the need for precision instruments to remotely monitor astronauts' health and to conduct other space activities has generated a vast new array of scientific and medical applications that permit better research and more accurate and less invasive medical procedures.

Many less obvious procedures and equipment developed for space have resulted in manufacturing improvements. For example, advanced clean room procedures needed for assembling satellites have been used to manufacture high-technology electronics. Research into new lubrication techniques has made industrial equipment last longer. Cheaper and more efficient water purification devices aid people in remote areas.

It is difficult to precisely measure the economic impact of space spinoffs. However, various studies clearly illustrate that the income and jobs created from these space technologies have contributed greatly to the long-run productivity of the economy and to improving the quality of everyday life.

see also International Space Station (volumes 1 and 3); Made with Space Technology (volume 1); Space Shuttle, Private Operations (volume 1).

Henry R. Hertzfeld

Bibliography

Federal Aviation Administration. 1999 Reusable Launch Vehicle Programs & Concepts. Washington, DC: Associate Administrator for Commercial Space Transportation, January 1999.

Hertzfeld, Henry R. "Measuring Returns to Space Research and Development." In Space Economics, eds. Joel Greenberg and Henry R. Hertzfeld. Washington, DC: American Institute of Aeronautics and Astronautics, 1992.

. "Space as an Investment in Economic Growth." In Exploring the Unknown, Vol. 3: Using Space, ed. John M. Logsdon. Washington, DC: National Aeronautics and Space Administration, 1998.

National Aeronautics and Space Administration. Spinoff. Washington, DC: Office of Space Access and Technology, 1999.

. Commercial Development Plan for the International Space Station. Washington, DC: Office of Microgravity and Life Sciences, 16 Nov. 1998.

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commercialize

com·mer·cial·ize / kəˈmərshəˌlīz/ • v. [tr.] (usu. be commercialized) make (an organization or activity) commercial: the museum has been commercialized. ∎  exploit or spoil for the purpose of gaining profit. DERIVATIVES: com·mer·cial·i·za·tion / kəˌmərshələˈzāshən/ n.

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commercialism

com·mer·cial·ism / kəˈmərshəˌlizəm/ • n. emphasis on the maximizing of profit. ∎ derog. practices and attitudes that are concerned with the making of profit at the expense of quality.

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