During a recent email discussion between myself, other Cynics, and those involved in putting together the Space Investment Summit (SIS-3), the topic of Old Space and NewSpace was raised in the context of the Space Assets Protocol – specifically, that the Protocol would create a new international legal regime for the secured finance of satellites and other space assets that had the potential to in some way would boost investment in space projects.
Such a protocol already exists in the aviation environment, allowing for the financing of assets across nations by securing the rights of creditors to reclaim unpaid for items from borrowers, thus providing a level of comfort for the ultimate lenders and insurers that provide the capital and risk coverage. Without this, it would be difficult for an aircraft leasing company, for example, to provide an affordable aircraft to, say, Air Zimbabwe, because the act of repoing an airplane is a bit harder than going to get a car back from a deadbeat in, say, Los Angeles. (You’re less likely to find a pine-tree air freshener in the cockpit, too…)
Such a protocol in the space context, it is reasoned, would do wonders for investment in NewSpace companies, by providing the added security for lenders that they could take claim on an asset – even in space – if the borrower were to default. There are a few problems with this theory, though:
- For NewSpace companies working on unique technology platforms, such as a new launch vehicle, they lack the basic concept of fungibility of the product, which makes the assets being financed much less attractive as an inherent guarantee for the lenders, because they can’t simply resell the unfinished rocket, for example, to another company, except maybe for a few components that might be transferable.
- Even worse, unlike airplanes (which have a well-established market globally and thus can easily be re-leased to another carrier or user) many launch vehicles that are being marketed as reusable are not yet proven to be – especially in the case of early flight test articles, there may be nothing left (such as in the case of an accident) which again makes this an unattractive candidate for traditional financing. And while airplanes, too, can have accidents, the failure rate in the much more experimental rocket business is orders of magnitude greater than in commercial aircraft, as the insurers and bankers will no doubt point out.
Which leads me to the term RealSpace (not actually trademarked, but you did hear it here first, folks!). Despite the hype of the alt.space community and their painting of space as some sort of David and Goliath endeavor where it’s either the big bad national space agencies and their bureaucratic wasting of billions of tax dollars or the scrappy little startups that are just about to break space wide open…. if only they had a few more dollars…. the truth is that there is a VERY successful, multibillion dollar COMMERCIAL space industry that quietly makes money, day in and day out, operating hundreds of satellites and piping fresh hot content to your computers, TVs, and even car navigation devices (oh, and power grids and timing networks and construction equipment and agriculture and… you get the idea). These are companies operating in the RealSpace economy – and, quite frankly, they are doing just fine thank you very much.
Would they benefit from a more streamlined regulatory environment (ITU anyone?) or a more friendly tax structure (Zero-G/Zero-Tax, for instance)? Of course they would. But, as with the expensive expendable launch vehicles that commercial satellite operators use today, these are costs they have factored into their businesses – businesses which are built and survive upon customer/consumer demand for the services that these RealSpace companies provide, and many (most?) of the customers don’t know or care that somewhere in the value chain of the product getting to them “space” was somehow involved
Just as I don’t really give a damn that the flash memory chips in my iPhone may have been manufactured in Taiwan.