Space Economics 101: Why the math doesn’t hold true

Gen. Chance Saltzman, the U.S. Space Force’s chief of space operations, told lawmakers at a recent hearing that the Space Force is working to solve the problem of refueling satellites.

We can’t blame him.

Congress has been repeatedly briefed on the national security imperative of launching constellations into low Earth orbit (LEO) at Space Force speeds amid the growing existential threat from China.

But it doesn’t take a rocket scientist or a Nobel Prize winner in economics to see the obvious: The latest generation of satellites built and launched by dozens of commercial contractors and suppliers for the Space Force are not meant to need refueling. The vast majority of small satellites in orbit are simple solar-powered computers with a design life of five years and a potential lifespan of eight to 10 years before deorbiting.

Thanks to Moore’s Law, the hardware we rely on today will be obsolete in about three years. The rise of edge computing and artificial intelligence applications will only exacerbate this situation. In less than five years, consumers will want to replace their devices with next-generation versions with well over twice the processing power and can deliver the same performance at the same time. The price enables more advanced software.

Building new satellites cheaper

The same is true now for a new generation of low-cost satellites. From a cost and technology perspective, refueling small satellites, the lifeblood of any profitable aerospace company, simply doesn’t make sense. Redesigning these satellites, which have a 15-year design life so that they can be refueled, would force the U.S. Space Force to rely on outdated computers for most of the satellites’ orbital lifetimes while trying to maintain space superiority against the Chinese threat.

On top of that, the cost of these satellites will more than triple due to redundancy and anomalous radiation enhancement. All of this is just to postpone launch costs, which have dropped 80% in the past decade and are expected to fall further with SpaceX’s reusable boosters and fierce competition.

The reality is that until fully reusable rockets become available, it will already be much cheaper to build and launch new satellites than to refuel them.

The answer to Salzman’s truth is simple: Our government must compete, pay for results, and even faster. We need to double down on SDA’s simple winning formula:

• Increasing competition while deliberately rewarding the most economical solutions with more satellites to save money.
• Reduce the risk to taxpayers’ money by continuing to have fixed price contracts, but instead only paying on delivery and keeping silent until the contractor delivers.
• Perhaps most importantly, it accelerates the acquisition process by further shedding more bureaucracy. Tell industry what you want, not how you want them to do it.

Prescribing how to design satellites and rockets is something we did last century when no one but NASA and the Air Force knew how to design. Those days are over. America’s best and brightest engineers now lead the way in private industry rather than government laboratories.

It has become imperative for today’s guardians and their leaders to be equally capable in the business of space technology as they are in ensuring safety in the operational space domain. Because that’s where the Space Force is rapidly acquiring end-to-end space capabilities and directing increasingly autonomous operations.

As China overtakes us in low-Earth orbit and strives for first-mover advantage on the moon, we have no time to fret and complain. Bill Nelson, the current administrator of NASA, has been sounding the alarm for years.

Salzman clearly understands this, and others should soon follow his lead and focus on getting the math right.

Space isn’t really that difficult anymore, but the Space Force must master the business and bureaucracy of space in order to make and execute tough decisions.

If governments insist on proceeding as they have for the last century, space will never be more difficult. Ironically, if we make the right choices in this era of fiscal austerity, humanity will actually have more room to discover and grow than any of us could ever imagine.

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