Taking stock of space
Posted: Tuesday, November 14, 2006 9:48 PM by Alan Boyle
'Tis the season for annual reports, and now the global space industry has a doozy: a full-color, 176-page book put out by the Colorado-based Space Foundation, simply titled "The Space Report." The inaugural report estimates the total size of the space economy at $180 billion in 2005, based on the foundation's reading of government budgets and industry revenues worldwide. And although space tourism accounts for less than 1 percent of that total, the foundation's president and chief executive officer says that little wedge of entrepreneurship will be "exceedingly important" in the years to come.
The "entrepreneurial effect" is one of the top trends highlighted in this first of what the foundation hopes will be an authoritative series of annual reports, said Elliot Pulham, the president and CEO. Pulham told me the space tourism factor plays an outsized role because it's bringing "outside-the-box" thinking to the industry, and because it's sparking a fresh wave of public interest in the final frontier.
"Creating public interest, both through what NASA's doing with human exploration of the solar system and through what these entrepreneurs are doing, trying to make space accessible to everyone, has a huge upside," he said. That could fire up the next generation of students about career opportunities in aerospace - which is of increasing concern to industry leaders.
"It's hard to quantify that in terms of dollars," Pulham said.
But the Space Foundation has put a lot of work into quantifying other aspects of the space business, blending estimates from governments as well as private industry to arrive at the big $180 billion picture. That bottom line includes:
- $80 billion in revenue for commercial satellite services.
- $57 billion in budget allocations for U.S. government space budgets, both civilian and military.
- $12 billion for other governments' space budgets.
- $29 billion in revenue for commercial infrastructure, such as satellite manufacturing and launch services.
- $1 billion for commercial institutional infrastructure, such as insurance and industrial research and development.
- Less than $1 billion for commercial space transportation services, such as space tourism.
Of course, these figures are based on 2005 activities, so they don't include the $500 million NASA has set aside over the next four years for its Commercial Orbital Transportation Services program, or COTS, which many see as a relatively small but vital sparkplug for private-sector space travel.
Pulham said COTS has inspired even the established satellite operators to start thinking outside the box. For example, he recalled a recent conversation with one satellite executive who described a scheme under which antennas could be mounted on the backsides of a fleet's worth of telecommunications satellites - providing a low-cost, commercial successor to NASA's maxed-out Deep Space Network.
Pulham likes the fact that "Old Space" companies such as Lockheed Martin and ATK are partnering with "New Space" companies such as Bigelow Aerospace and Rocketplane Kistler. "The more fuzzing of the lines, the better," he told me.
Lines are also being fuzzed between satellite data and terrestrial databases: The mashups of satellite imagery and locational tags serve as one set of examples; new types of GPS-based applications such as Caffeine Finder and RFID trackers provide yet more signposts toward the future.
"Space is becoming the background architecture that everything runs on, and we don't even realize it," Pulham said.
The Space Foundation wants to help people realize it, through the annual "Space Report" as well as through a new index of space equities that will be updated quarterly.
The Space Foundation Space Index follows 30 companies that derive a significant portion of their revenue from space activities, ranging from Boeing and Lockheed Martin to the XM and Sirius satellite radio services. Pulham noted that the index increased by more than 8 percent between June 2005 and June 2006 - outperforming the NASDAQ and S&P 500 indices.
The point isn't so much to provide a new financial instrument for investors as it is to provide a yardstick for tracking the ups and downs of outer-space commerce from quarter to quarter, and year to year. "I think this model, as a new way of understanding that this is a no-kidding industry, is a real contribution," Pulham said.
Correction for 12:30 p.m. Nov 15: When referring to COTS, I initially wrote "billion" instead of "million" - thanks to Clark Lindsey for alerting me to the error.
