Sree's Stories

How to Make Money Out of Air

Wednesday, May 28, 1997

By SREENATH SREENIVASAN

The final frontier is hardly a frontier anymore. Forty years of launches and galactic treks have strengthened man's grasp of outer space--at least the part near our planet. What has changed is why we're out there.

In the early days, after the launch of the Sputnik satellite by the then-Soviet Union in October 1957, the global space race was all about national security and pride.

Predictably, mankind's thoughts have now turned to "How can we make money off this?"

The business of space includes everything from rocket manufacturing to the satellite launches to the development--believe it or not--of space tourism, space sports and space funerals à: la Timothy Leary.

According to the 1997 Outlook, a report on space business by SpaceVest, a leading industry venture capital fund, revenues for the global space industry exceeded $76 billion in 1996. The study predicts 57 percent growth through the year 2000. The U.S. Space Transportation Association, a nonprofit group of major aerospace companies, estimates that the launch business alone brought in $10 billion last year.

"Right now there is more commercialization than people realize, partly because the progress has happened rather quietly," says Douglas Duncan, a professor of astronomy at the University of Chicago.

"Satellites mean, for example, that the communications revolution is closely tied to developments in space," he says.

Duncan is referring to the ambitious projects that corporate entities from Motorola's global satellite phone service Iridium to the Bill Gates/Craig O. McCaw Teledesic project are hatching: ringing the earth with satellites that will keep us all in touch.

Others can join in the spoils. Among the opportunities: "Smaller companies can add value to the data collected by the space agency and then disseminate it. The technology and the information is available right now," says Steve Maran, an assistant director of space sciences at NASA's Goddard Space Flight Center in Greenbelt, Md.

Maran thinks images from space can be useful in commercial markets such as real estate speculation and farming. Not to mention products like the Avis system that helps lost travelers find their way via navigational information beamed from a satellite to a dashboard box.

If you don't speculate in real estate, do you still need to care about space business? "You need to care right now," says Duncan. "Companies that are ahead of the curve are going to put a lot of companies out of business that do not have access to space and space research."

The cost of payloads, or what is actually being sent into space, determines whether companies find it worth their while to gaze upwards. "Current cost per pound of payload ranges from a minimum of $3,000 for a Delta launch vehicle to $15,000 on the Space Shuttle," says Tim Kyger, a manager of Universal Space Lines, a private company based in Newport Beach, Calif. that specializes in space vehicle operations.

"Add to that the cost [constructing the satellite] itself, and you're looking at $40 million to $60 million," Kyger says. That price tag will come down if competition among rocket manufacturers using new technologies, well, takes off.

There is the issue of fair space use to contend with, too. The United Nations Outer Space Treaty is 30 years old and has been ratified by 120 countries. Its goal is to make sure there is no national appropriation of space and its resources.

However, the Moon Treaty, which protects lunar resources, has been ratified by only nine countries, because nations like the U.S. want to make sure that they are not somehow giving away rights to exploit resources on the moon one day.

Groups like the Paris-based International Institute of Space Law help sort out the legal wrangles that countries and companies are getting into as they explore space: launch liabilities, financing, and "debris mitigation"--getting rid of space junk.

Phoenix-based attorney Patricia Margaret Sterns, secretary of U.S. operations for the Institute, says "Corporate counsel are mostly unfamiliar with legal issues in this arena, but are learning that they suddenly need to catch up, even though they never thought they'd need to or want to."

Don't put on your spacesuits for a personal jaunt yet, either. T.F. Rogers, president of the Space Transportation Association, believes "The information/communication area of space will be even more important than it is now. But cost factors need to come down and safety needs to go up if space tourism is to become a reality."

Others are more optimistic. Says Duncan of the University of Chicago: "I am 45 now and expect that when I am 65, tickets will be available to fly on the shuttle. But, mind you, it won't be cheap. Start saving your money now."

Related Links
Goddard Space Flight Center

The United Nations Outer Space Treaty

Space Transportation Association

Patricia Margaret Sterns

SpaceVest

Copyright 1997 Forbes Inc.