The Case for and against Private for Profit Space Exploration

Space: The Final Frontier of Profit?
A debate on the pros and cons of commercializing the cosmos; valuing asteroids at $20 trillion each. Peter Diamandis makes a case for private space.

By PETER DIAMANDIS

Government agencies have dominated space exploration for three decades. But in a new plan unveiled in President Barack Obama's 2011 budget earlier this month, a new player has taken center stage: American capitalism and entrepreneurship. The plan lays the foundation for the future Google, Cisco and Apple of space to be born, drive job creation and open the cosmos for the rest of us.

Two fundamental realities now exist that will drive space exploration forward. First, private capital is seeing space as a good investment, willing to fund individuals who are passionate about exploring space, for adventure as well as profit. What was once affordable only by nations can now be lucrative, public-private partnerships.

Second, companies and investors are realizing that everything we hold of value—metals, minerals, energy and real estate—are in near-infinite quantities in space. As space transportation and operations become more affordable, what was once seen as a wasteland will become the next gold rush. Alaska serves as an excellent analogy. Once thought of as "Seward's Folly" (Secretary of State William Seward was criticized for overpaying the sum of $7.2 million to the Russians for the territory in 1867), Alaska has since become a billion-dollar economy.

The same will hold true for space. For example, there are millions of asteroids of different sizes and composition flying throughout space. One category, known as S-type, is composed of iron, magnesium silicates and a variety of other metals, including cobalt and platinum. An average half-kilometer S-type asteroid is worth more than $20 trillion.

Technology is reaching a critical point. Moore's Law has given us exponential growth in computing technology, which has led to exponential growth in nearly every other technological industry. Breakthroughs in rocket propulsion will allow us to go farther, faster and more safely into space.

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See a timeline of American space exploration.
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Perhaps the most important factor is the empowerment of youth over the graybeards now running the show. The average age of the engineers who built Apollo was 28; the average age in the aerospace workforce is now over 50. Young doers have less to risk when proposing bold solutions.

This is not to say that the government will have no role in the next 50 years in space. Governments will retain the critical work of pure science, and of answering some of the biggest unknowns: Is there life on Mars, or around other stars? Governments will play the important role of big customer as they get out of the operations business. Private industry routinely takes technologies pioneered by the government—like air mail, computers and the Internet—and turns them into affordable, reliable and robust industries.

The challenge faced by all space-related ventures is the high cost of launching into orbit. When the U.S. space shuttle stands down later this year, NASA will need to send American astronauts to launch aboard the Russian Soyuz at a price of more than $50 million per person. The space shuttle, on the other hand, costs between $750 million to $2 billion per flight (for up to seven astronauts) depending on the number of launches each year. Most people don't realize that the major cost of a launch is labor. Fuel is less than 2%, while the standing army of people and infrastructure is well over 80%. The annual expense NASA bears for the shuttle is roughly $4 billion, whatever the number of launches.

The government's new vision will mean the development of multiple operators, providing the U.S. redundancy as well as a competitive market that will drive down the cost of getting you and me to orbit. One of the companies I co-founded, Space Adventures, has already brokered the flight of eight private citizens to orbit, at a cost of roughly $50 million per person. In the next five years we hope to drive the price below $20 million, and eventually below $5 million.

Within the next several decades, privately financed research outposts will be a common sight in the night sky. The first one-way missions to Mars will be launched. Mining operations will spring up on the moon. More opportunities we have yet to even comprehend will come out of the frontier. One thing is certain: The next 50 years will be the period when we establish ourselves as a space-faring civilization.

As the generation that has never known a world without "Star Wars" and "Star Trek" matures, it will not be content to watch only government astronauts walk and work on the moon. A "let's just go do it" mentality is emerging, and it is that attitude that will bring the human race off this planet and open the final frontier.

—Peter Diamandis is chief executive of the X Prize Foundation, a nonprofit that conducts incentivized competitions. He is also CEO of Zero Gravity, which offers weightless flights; and chairman of the Rocket Racing League, an interactive entertainment company.

=== CON ===
The Other Argument
The Case Against Private Space
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.By TAYLOR DINERMAN
President Barack Obama's proposed plan for NASA bets that the private sector—small, entrepreneurial firms as well as traditional aerospace companies—can safely carry the burden of flying U.S. astronauts into space at a fraction of the former price. The main idea: to spend $6 billion over the next five years to help develop new commercial spacecraft capable of carrying humans.

The private sector simply is not up for the job. For one, NASA will have to establish a system to certify commercial orbital vehicles as safe for human transport, and with government bureaucracy, that will take years. Never mind the challenges of obtaining insurance.

Entrepreneurial companies have consistently overpromised and under-delivered. Over the past 30 years, over a dozen start-ups have tried to break into the launch business. The only one to make the transition into a respectably sized space company is Orbital Sciences of Dulles, Va. Building vehicles capable of going into orbit is not for the fainthearted or the undercapitalized.

The companies that have survived have done so mostly by relying on U.S. government Small Business Innovation Research contracts, one or more angel investors, or both. Big aerospace firms tempted to join NASA's new projects will remember the public-private partnership fiasco when Lockheed Martin's X-33 design was chosen to replace the space shuttle in 1996. Before it was canceled in 2001 this program cost the government $912 million and Lockheed Martin $357 million.

Of the smaller failures, there was Rotary Rocket in California, which promised to revolutionize space travel with a combination helicopter and rocket and closed down in 2001. In 1997, Texas banker Andrew Beal announced that his firm, Beal Aerospace, was going to build a new large rocket. He shut it down in 2000.

In the 1990s, Kistler Aerospace designed a reusable launcher using reconditioned Russian engines. In 2006, reorganized as Rocketplane Kistler, it won a share in a NASA program designed to deliver cargo to the International Space Station. When the company did not meet a financial milestone the following year, NASA withdrew financing.

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See a timeline of American space exploration.
.Blue Origin, a secretive spacecraft development firm owned by Amazon.com Chief Executive Jeff Bezos, is interesting because it uses concepts and technology for reusable vehicles originally developed by the Reagan-era Strategic Defense Initiative Organization. In the early 1990s, the organization set up the DC-X program, and its suborbital test vehicle flew 12 times before it was destroyed in a landing accident.

The Clinton administration saw the DC-X as a Reagan/Bush legacy program, and was happy to cancel it after the accident. The sad lesson of the DC-X is that some politicians won't keep their predecessors' programs going, no matter how promising. To turn the DC-X into a space launch vehicle would have taken at least a couple of decades and a few billion in investments. Yet the total cost might not have been much more than the amount the government has spent on other failed launch vehicle development programs over the past 20 years.

Recent history shows that development programs take a long time to mature, but when they do they can produce excellent results. Since it was given the go-ahead in 1984, the space station has faced delays, cost overruns and an unceasing barrage of criticism. Yet NASA kept at it. With the full-time six-person crew now operational, the range of technological and scientific work being done has increased dramatically, from fluid physics experiments to tests on the effects of microgravity on human physiology.

George W. Bush's promising Constellation human spaceflight program—which would be killed under Mr. Obama's plan—has already cost $9 billion since 2004. It is hard to imagine how the private sector can build a replacement for the spacecraft and booster rockets of Constellation, let alone a program to get America back to the moon, with the relatively paltry sum of $6 billion and the scattershot funding approach that NASA's leaders are proposing.

The Augustine Commission's recent report to the White House was entitled "Seeking a Human Spaceflight Program Worthy of a Great Nation." The space entrepreneurs may claim that they can send people into space for a fraction of the previous cost, but they have not yet proved it. NASA's policy is neither bold nor new; it is yet another exercise in budget-driven program cancellation. Until the American government can bring itself to choose a path and stick to it for more than a single administration, its claim to be worthy of a great nation will be in doubt.

—Taylor Dinerman writes a regular column for thespacereview.com and is a member of the board of advisers of Space Energy, a company working on space-solar-power concepts

Printed in The Wall Street Journal, page W3