Thwarting Space Commerce

Keith in all his wisdom said:

"How about shifting the government-only monopoly to transport of crew and cargo to the ISS to one that is open to the private sector where market forces of supply, demand, competition, and innovation can work their magic?"

The problem I see here, and I may just have blinders on, is that I don't think that competitive market forces will have much of a chance to come into play in a market place as small as ISS resupply or LEO launch services.

At this point in time there is really only room for one "provider" and like any company with only one customer, they are going to find themselves massively exposed to the whims of Congress and the White House.

But I'm old and I'm often wrong

Editor's note: Bigelow has two space station modules in orbit and is about to start construction on a full station.

Keith, correct me if I'm wrong, and I'm very good at being wrong, but doesn't Bigelow have already have the launch capability it needs for its project based on surplus Russian R-30M / SS-18 ballistic missiles?

I think that its a bit of a stretch thinking that any company could provide "new" rockets that could beat out Russian surplus vehicles on cost. It's just not a level playing field.

My thoughts: if commercial is going to have a chance to succeed, then it will have to develop the capability to launch humans to LEO.

At this point ATV, HTV and Progress all offer viable station resupply services. But by this time next year only the Soyuz will be able to deliver humans to LEO

(yes, I know that the Chinese have their program, but their flight rate is just not there yet to be considered a player in launch services)

There is no commercial market for manned launches to LEO. There will be 4 manned launches per year to the ISS. How many manned launches will Bigelow need? And over what time period?
No company is willing to risk a couple of billion dollars to develop and fly a vehicle and doesn't stand a reasonable chance of earning a profit in a reasonable amount of time.

It's not that Republicans oppose commercial space flight, they just oppose every single thing Obama puts forward. Even his energy policy supporting nuclear power and off-shore drilling is opposed by Republicans. But it's not just the Republicans, Democrats oppose everything put forward by Republicans. The country is becoming more and more polarized and the right and left are getting more and more extreme.

"Editor's note: Bigelow has two space station modules in orbit and is about to start construction on a full station."

and exactly how many paying customers does Bud have? and how long will he continue to fund a money losing venture, not to mention what happens if he unexpectedly kicks the bucket?

Be reasonable Keith. Commercial access is a dream that will be achievable one day. But for now it's an expense with technology risks that the general public isn't ready to take when contrasted with the demonstrated reliability of a Soyuz.

Until SpaceX can get enough Falcon/Dragon flights under their belt to establish reliability and sell flights to the Bigelow Space Hotel, all this commercial talk is a smokescreen to disguise the fact that Obama and co are looking to fund new contractors to compete with the Boeings and Lockheed but with less oversight.

Editor's note: Bigelow has two space station modules in orbit and is about to start construction on a full station.

So......who lives there? Can you call it a space station if nobody's home?

Genesis I has been there for almost 4 years. Genesis II for almost 3.

Zarya launch +2 years had people on board.

A program that does not invest in technology (CxP) is certain to fail the decades long campaign needed for human space exploration.

A program that does invest in technology may not fail, but its success is not guaranteed. Its success depends on making wise choices and perhaps a little luck.

The new plan proposes to invest in key technologies, but are the choices wise? In some cases yes (propulsion tech, etc). But an area of concern is whether developing crew services ("commercial" or otherwise) on a fixed price basis is a good choice. In my opinion, this is not wise and disproportionately foists risk on potential suppliers. In the end it is the government who ultimately takes the risk--of whether the country will have a crew transportation system to meet its needs.

Luckily, the fix to pursuing fixed price crew services is relatively easy if leaders choose to pursue this as a traditional cost-plus procurement, and transition to fixed price only once operations costs are truly understood. Such an approach balances the risk better and improves the chances of actually delivering a system; and with a little luck it may even be sustainable.

So what about those commercial users? Let them rent/lease the system at marginal cost. This will allow the commercial community test its market hypotheses without risking delivery for government users (meeting ISS obligations).

The new plan has many of the key ingredients for success, whereas the old plan could not succeed over the long haul.

I am a huge believer of free markets. The problem is it is very difficult for a government to harness the power of a free market for things that don't exist. The reason the free market works is because millions of consumers vote billions of times with their dollars on what they want and don't want. The government is able to tap into that when they are looking to buy something that consumers already have demanded. It is quite another to pretend that a few politicians or bureaucrat can emulate the power of millions of people. The best the government can hope to do is to acknowledge this fact and stop the pretense that the free market can provide what the government wants cheaper and better. In those few cases where the market doesn't provide a product or service the government needs than the government needs to direct the project. Ever once in a while it should step back and see if the market has managed to provide a service or product that the government provides as well. Then the government can eliminate it.

But there is no logic in stopping the government before the market is ready. Fed Ex and UPS have been built up to the point now where they compete with the USPS in package delivery. So it would be time to eliminate USPS delivery. But it would have been foolish to do so before UPS and Fed Ex hoping that someone in the market would step in.

"How about shifting the government-only monopoly to transport of crew and cargo to the ISS to one that is open to the private sector where market forces of supply, demand, competition, and innovation can work their magic?"

That statement presupposes so much it is difficult to know where to begin!

1) It presupposes that the private sector has firms available with the required capability. In particular a proven capability of transporting people (as distinct from cargo) into LEO.

Do such firms exist?

Note I am not talking about those working towards such a capability! If Obama were to open ISS resupply to the private sector tomorrow, a firm which wants to apply would surely need to have such capability TODAY. Giving the tender to a firm which does not yet have the capability of fulfilling it (it merely promises that it will at some point in the future) would inevitably mean either keeping the Russians on until such time as the firm acquired that capability itself--or shutting down the ISS till the firm was ready.

2) It presupposes that market forces are in a position to "work their magic" (should the opportunity to resupply the ISS arise).

That in turn presupposes two other things:

a) That multiple vendors/suppliers of the product/service exist; and

b) That multiple customers for that product/service exist.

Unless both these conditions exist, how are market forces supposed to work their magic?

For example, if only one firm exists with the capability of resupplying the ISS, then shifting ISS resupply to the private sector would merely replace the existing government-only monopoly with a brand-new private sector monopoly.

Do the market forces of competition work their magic when a firm has no competitors?

(And please don't tell us that market forces produce competition. We're all still waiting for the firm that can produce the workstation computer operating system that can (successfully) compete with Microsoft's de facto monopoly on that particular market! True, there's Apple, but it has a miniscule marketshare.)

As for the situation where a product or service only has one customer, what happens to those firms which do not win the ISS contract? Do they:

a) put their rockets in mothballs, lay off staff, and wait for the ISS contract to become available again, or for another customer to magically surface? or
b) go into some other line of business? or
c) go out of business altogether?

Granted, there's Bigelow (or more correctly there COULD be Bigelow); but, realistically, having two prospective customers is not that much of an improvement on having only one. You still have the musical chair issue. Having three vendors and only two customers, for example, would mean that least one of the three will lose out; and it may be that two of the three will lose out--should both available customers choose the SAME vendor! (If the latter situation did happen, that in turn would increase the likelihood that if and when a third and a fourth customer did finally come along they would find themselves facing a de facto monopoly situation.)

3) Or maybe you're presupposing there be no ISS private sector contract at all, with its potential for monopolising, anticompetitive (and thus anti-market force) consequences. Instead the competing suppliers would simply gas up their rockets, shoot on up the ISS, and set up stalls inside (or outside) the ISS and compete to sell their wares to the three-man staff. :-)

That is, after all, how market forces generally work in most cases on Earth, but obviously there are certain practical difficulties to overcome before they can happen that way in space.

Sorry Keith, I've got to agree with Eric Stermer on this one. "There is no truly free commercial market for human spaceflight to low-Earth orbit"

I still don't buy the space tourism argument. I think we'll see costs per seat comparable to Soyuz, somewhere in the tens of millions of dollars. Who has that kind of money to throw around other than a few wealthy elites? On top of that, suborbital tourism, like Virgin Galactic, will eat orbital tourism's lunch. Unless you're an absolute stickler for orbit, why pay tens of millions of dollars to see space when Virgin Galactic will let you see space for one one-hundredth of the cost and without space adaptation syndrome, muscle and bone loss, radiation exposure, violent reentry, and all the other unpleasantries that come along with orbital spaceflight?

You've mentioned Bigelow's inflatable habs. If I recall correctly, they're marketing those as space hotels and commercial labs. Hotels are tourism, and I've already talked about that. A lab is fundamentally different from other forms of commercial spacecraft, such as a communications satellite. A comsat, like something DirecTV or XM Satellite Radio puts into orbit, provides a product to folks on Earth and, therefore, an immediate return on investment. A laboratory does not produce a product, it only produces research. A lab does not provide any immediate return on investment, and it's not even guaranteed that the research performed in an orbital lab will allow for return on investment in the future. A lab is a much bigger financial risk than a comsat, and will likely be more expensive than a comsat as well, so less companies will be willing to risk investing in a lab. And, as we know, commercial satellite launch is an industry that already rides on razor-thin margins (Boeing and Lockheed had to form ULA because the market just couldn't support two separate launch services in the weight classes they were offering).

Ultimately, I just don't see a commercial crewed market that can support more than one or maybe two launch services, if that, right now. Talking about classical economic topics like supply, demand, competition, and innovation makes sense when you have lots of equally-sized suppliers. However, these classical free-market concepts break down in the face of monopoly or oligopoly, and government intervention and regulation is required to maintain the balance (the "evil empire" of Microsoft and the Windows operating system in the late 90's and early 00's is a perfect example).

The problem is Republicans are not republicans anymore. They don't believe in a republican form of government rather they are socialists for the rich. While the Democrats are socialists for the poor so long as they remain poor. All we proved in the cold war was that we were about 20 to 30 years behind the Soviet Union, and that in space, we were better Soviets than they were.

With regard to developing commercial human space access, I suspect that this won't really happen until there is something to actually do up there. Although space tourism is a publically visible niche, I'm not sure how many prospective customers there really are.

However, there are other possibilities, although they would require start-up investment from the government.

Firstly - GEO maintenance. Right now, there is no capability to either repair or decommission satellites in GEO. However, such a vehicle is possible using either Bigelow, ISS heritage or Mir heritage technology. LEO hypergolic refuelling is a proven, so maintaining the work vehicle in LEO in between missions shouldn't be too hard. At the very least, fitting PAMs to de-orbit old LEO and GEO vehicles to open up orbital slots might ultimately turn into a money-spinner. This could also eventually expand to include the maintenance of propellent transfer satellites both in LEO and at the EML points, but that is a long-term development.

Secondly - Microgravity research. Right now, this is limited by the number of experiment slots on the ISS and the costs involved with developing experimental equipment to NASA standards. A commercial space laboratory could lead to lots of interest from industries who would like to experiment with microgravity but cannot afford to do so.

Now, neither of these options are going to be instant money-machines. Like commercial HSF as a whole, it will need considerable government investment to start the ball rolling. However, it is possible that, just as government investment in airmail led to the airlines, so government investment in wider LEO utilisation could ultimately lead to commercial human space flight (not exploration but the nuts and bolts of maintenance, both of comsats and orbital mini-factories for pharmaceuticals and other products) in as little as a half-century.

Nonetheless, I cannot see commercial space making a breakthrough in less time than that. Until then, the most we can hope for is companies competing for government contracts. That is why I hope that the President will build on his intention that the new HLV will be selected in 2015 by confirming that NASA will issue the RFQ for the new NASA crew transfer vehicle, with an option for upgrade to BEO standards, by the end of FY2010.

Hopefully, such a vehicle will be in service before 2015. However, uncertainties on that may be what is driving the Orion/EELV proejct behind the scenes: It is a fall-back (although it cannot be publically acknowledged as such for political reasons) in case the commercial aquisition goes the way of DoD procurement and ends up five years late and tens of billions of dollars over budget.

One last thought on this issue; This is not my idea so I can't accept credit: Someone over on NASASpaceflight.com suggested a 'space lottery'. Simply put, every six months a ticket is selected and the winner flies to the ISS to gawp out of the Cupola for a week whilst a mid-expedition crew transfer takes place. The number of sales ($1 per ticket x how many hopefuls?) might even cover the cost of seat, training and more!

@ Keith,

Bigelow's two Genesis spacecraft are only fairly simple technology demonstrators. Time will tell if Bigelow can actually launch and operate a workable crew-ready vehicle. I strongly suspect that this is another thing that will require a degree of government subsidy as it will take several flights to prepare an inflatable module for paying customers. That is probably why NASA have been talking about having a module, probably the second Sundancer, attached to the ISS for tests.

"There is no commercial market for manned launches to LEO."

That's the rub that seems to go past everybody. Even if Bigelow get's paying customers, how much are they gonna pay per trip, 20,0000? How many customers is that?
Unmanned to LEO and beyond is already a market.
There may be a market for suborbital tourism....
There is probably a tiny market for manned to LEO, but its not providers that are to blame , it's the investors. I know I would not invest a penny in manned LEO , right now.
In 50 years probably so!
(Clarke and Kubrick have shamed us by nearly 10 years with the film 2001. The commercial technology in that movie was neither a failure of nerve or prophecy we don't have that yesterday's future because of economic reality.)

It's fun to watch the people that always want to privatize everything suddenly talk like socialists.

There have been many excellent replies in this thread to question Keith's assertion of hypocrisy. But I think the best was by trout007:

But there is no logic in stopping the government before the market is ready. Fed Ex and UPS have been built up to the point now where they compete with the USPS in package delivery. So it would be time to eliminate USPS delivery. But it would have been foolish to do so before UPS and Fed Ex hoping that someone in the market would step in.

Disclaimer: Many politicians from both parties are certainly hypocrites. And I will agree there are some Republicans who are merely being hypocritical, mostly because they are a bit too vapid to understand the argument made above. They are just being politicians and opposing the party in power when it is not their party.

That said, there is a difference between "Republican" (a political party) and conservative principles. The above from trout clearly expressed conservative principles with respect to when a market is mature enough that a government customer can let go. Space, especially launch services, is not there yet. Until it is, the government must act like any normal customer would: Set a clear goal, define requirements and measures of effectiveness for meeting that clear goal, and properly manage the suppliers you pay to achieve that goal. It was Reagan, a conservative, who said "trust but verify". It applies to this situation.

The more astute conservatives, who are not merely acting as Republican puppets, understand that the failure of Obama's plan is not in the "let the commecial market do the whole thing", it is in both the timing, and in the negligence of the plan's basis to act like a customer, which the government clearly is and will be for awhile still. A savvy customer who needs a critical service (i.e. launch to LEO) would be stupid to say "here is a bunch of money. I have no goals, I just need technology. Give me your best that you can for the money I gave you." Such a fool, and his money, would very quickly find them parted from each other. Likewise, any company loves free money especially if there are little-to-no real expectations for delivering a viable service to the customer.

The whole commercial viability question will become moot the first time someone brings back an asteroid full of water. Until then (or some similar paradigm shift) this is all just trying to fit a square peg in a round hole. When the money is proven to be out there by someone either taking a massive private sector risk or from using government funds, then the corporations will be in a mad scramble for a piece of the pie.