February 7, 2018 / 4:58 AM / 9 months ago

Commentary: SpaceX launch opens new frontier in space commerce

The successful launch of entrepreneur Elon Musk’s SpaceX Falcon Heavy on Tuesday marks a major turning point in humanity’s approach to space exploration. For the first time since the United States and Soviet Union began their race into orbit, the world’s most powerful rocket was designed and built by a private corporation.

The SpaceX Falcon Heavy rocket lifts off from the Kennedy Space Center in Cape Canaveral, Florida, February 6, 2018. REUTERS/Thom Baur

It’s a sign of what increasingly looks to be a massive shift in the dynamics of human activity in space. Up until recently, such rockets were very much a government business. The Saturn Five rockets that took Neil Armstrong and his colleagues to the moon were produced by one of the largest and most expensive government projects of all time.

Private companies have long seen potential business opportunities in space. Commercial launches began in the 1980s with French firm Arianespace, but until a decade ago corporations, particularly in the United States, were more likely to use U.S. or Russian government rockets to get their payloads into space than the other way around.

The implications of the change are enormous. Indeed, it now seems likely that if and when humans do eventually reach Mars, it may well be under the flag of private enterprise.

That’s a goal electric car tycoon turned space entrepreneur Musk in particular is entirely open about. Tuesday’s Falcon Heavy launch carried with it his own cherry-red Tesla electric roadster, flung towards the red planet to the strains of David Bowie’s “Life on Mars.” It’s a shrewd marketing gimmick – but also an unmistakable statement of ambition.

While private companies once primarily relied on existing government technology, they are now striking out on their own. Boosters like the Falcon may often launch from NASA facilities such as Cape Canaveral, but they contain their own bespoke technology, including re-usable boosters that either conduct their own controlled landings or are retrieved by drone ships in the air.

A failure for the Falcon Heavy would have been a major setback for SpaceX, but would still have opened opportunities for other rivals. Amazon founder Jeff Bezos has his own private spaceflight company, Blue Origin, with its prototype reusable New Glenn rocket – another major innovation.

Governments, of course, remain major players in space. Indeed, the United States, Russia and China retain a monopoly when it comes to putting people in orbit. U.S. President Donald Trump last year declared his intent to have NASA put Americans back on the moon, while Barack Obama talked the previous year of getting humans to Mars by the 2030s.

Obama made it clear he saw private sector involvement as an essential part of such a project. The truth, though, is that it may be firms – and Musk in particular – that are now really driving the agenda. The entrepreneur has made it clear he may seek U.S. federal and other earthbound government funding as part of that mission, but it increasingly looks as though the taxpayer might be a supporting element rather than – as would previously have been expected – in the driving seat.

None of this is necessarily a foregone conclusion, of course. Speculation about private space ventures is hardly new. Entrepreneur Richard Branson’s Virgin Galactic in particular has been touting its reusable passenger space plane for years, but a series of high-profile disasters have raised doubts about whether the flights will ever happen.

Whereas government-backed projects such as the moon landings are essentially a test of political will to use the requisite government cash, commercial ventures have other objectives. Ultimately, they need to deliver some prospect of profit to survive.

It’s still unclear where the lines of the possible and profitable truly converge. Putting already-lucrative data-gathering satellites into orbit is one thing. Pushing out deeper into space – and keeping astronauts alive in the process – is entirely another; the return on investment would be speculative at best.

In spite of the risk, there is growing enthusiasm for the industry. In 2016, U.S. investors plowed $2.8 billion into space-related startups, $400 million more than the previous year. (Figures for 2017 are not yet available.) While that’s only a fraction of the $19.5 billion government allocation to NASA – which receives just under 0.5 percent of the overall U.S. government budget – the SpaceX launch is a potent symbol of the private sector’s appetite for space.

Having initially proved its concept with smaller rockets, SpaceX only launched its first satellite into geostationary orbit in December 2013. Its Falcon rockets offer the cheapest prices worldwide to put objects in low-Earth orbit, putting considerable pressure on other competitors in the field. That includes the majority Airbus and Safran-owned Arianespace, which says it is fielding record orders but has seen its profit margins narrow.

Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the SpaceX Hyperloop Pod Competition II in Hawthorne, California, August 27, 2017. REUTERS/Mike Blake

If the costs can be controlled, it’s easy to imagine firms going further in the decades to come, perhaps mining asteroids or being allocated rights to explore different planets in return for taking a much greater share of the financial risk. (That might require formal agreements, however, given international treaties on the status of the moon and other planets.)

There is a precedent for this. During Europe’s great age of exploration in the 16th and 17th centuries, many monarchies set up private companies to take on the risk of venturing into unknown territories. Several, such as the Dutch and British East India Companies or Canada’s Hudson’s Bay Company, ended up the de facto masters of vast areas of land, operating as virtual monopolies for decades, sometimes centuries.

It’s possible to imagine the same thing happening now. Having initially helped invent the internet, the U.S. government awoke late to the fact that huge swathes of cyberspace are now dominated by private firms like Google. It may not be that many years away before they make a similar realization about space itself.

About the Author

Peter Apps is Reuters global affairs columnist, writing on international affairs, globalization, conflict and other issues. He is founder and executive director of the Project for Study of the 21st Century; PS21, a non-national, non-partisan, non-ideological think tank in London, New York and Washington. Before that, he spent 12 years as a reporter for Reuters covering defense, political risk and emerging markets. Since 2016, he has been a member of the British Army Reserve and the UK Labour Party. @pete_apps

The views expressed in this article are not those of Reuters News.

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