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Companies are commercializing outer space. Do government programs still matter?

For now, national governments control the rules — and much of the funding

Virgin Orbit's LauncherOne rocket after the ringing of the Nasdaq opening bell in New York on Jan. 7. (Carlo Allegri/Reuters)

2021 was a big year for private companies and space travel, and 2022 will probably be just as busy. Last year, three companies — SpaceX, Blue Origin and Virgin Galactic — achieved key feats in space travel previously reserved to countries. They transported astronauts to the International Space Station, flew space enthusiasts into space, delivered cargo to low Earth orbit and developed reusable booster rockets.

In November, Elon Musk announced that his company’s Starship project may launch as early as this month. Developed by SpaceX, the Starship system is seen by many as a game-changer for space travel and exploration. When operational, the fully reusable transport system will be capable of carrying up to 100 people to Mars, marking the next step in the commercialization of outer space.

Will commercial ventures replace national governments in space travel and exploration? My research suggests it is not very likely. While private companies have made considerable strides in popularizing space, national governments dictate the rules and provide much of the funding, securing their central role in space endeavors.

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How important is the commercial space sector?

Over the last 15 years, commercial activity in space more than tripled, growing from $110 billion in 2005 to nearly $357 billion in 2020. Commercial activity in 2020 accounted for about 80 percent of the estimated $447 billion global space economy that year. Morgan Stanley projects that the sector will rocket to more than $1 trillion by 2040, with growth concentrated in the commercial space sector.

The modern idea of space travel is rooted in private aspirations, dating back to scientists and engineers such as Robert Goddard, Herman Oberth, Konstantin Tsiolkovsky and Robert Esnault-Pelterie, all considered among the founding fathers of modern rocketry and astronautics. When space exploration proved possible, governments monopolized space activities throughout the 1950s to 1970s.

Commercial space operations kicked off in 1962 with the launch of the first transatlantic communication satellite, Telstar 1. In the United States, the Communications Satellite Act of 1962 affirmed the right of private companies to own and operate commercial satellites. Other major milestones include the Commercial Space Launch Act in 1984, a more independent U.S. Office of Commercial Space Transportation and the 2015 US SPACE Act aimed at encouraging the commercial exploration and exploitation of space.

This gradual deregulation in the United States resulted in tremendous growth of commercial space initiatives. The first privately funded rocket, the Conestoga, was launched in 1982 by Space Services. In 2004, the first private, suborbital human spaceflight took place on board SpaceShipOne. In 2012, SpaceX, a private company, began transporting cargo to and from the International Space Station. And in 2020, SpaceX flew American astronauts from U.S. soil for the first time since 2011, when NASA’s space shuttle missions ended.

Commercial space ventures picked up in 2021

Commercial ventures in space made global headlines last year when SpaceX flew two additional space station missions: Crew-2 and Crew-3, and launched Inspiration4, the first all-civilian mission to orbit Earth. Virgin Galactic launched two suborbital human spaceflights from Spaceport America, and Blue Origin conducted two spaceflights close to the 62-mile Kármán line, demarcating the beginning of outer space (Jeff Bezos, Blue Origin’s founder, owns The Washington Post).

Virgin Galactic and Blue Origin announced additional spaceflights, while SpaceX is preparing to go to the moon, Mars and beyond. NASA partnered with Blue Origin, Nanoracks and Northrop Grumman to develop commercial destinations in low-earth orbit. Bigelow, Nanoracks and Axiom Space are designing human habitats in space; Maxar and Northrop Grumman are working on the future Gateway lunar space station, Orbital Assembly plans to open the first space hotel in 2027, and Japan’s Obayashi Corp. aims to create a space elevator by 2050.

Why the commercial space sector won’t replace governments’ role

Three factors help explain why the role of national space initiatives will continue. First, countries dictate the rules in space. The 1967 Outer Space Treaty, which provides the basic legal framework of international space law, gives countries full responsibility (Article 6), liability (Article 7) and ownership (Article 8) of any commercial entity and object in space. Governments have written and signed into effect current space laws, and this means governments will continue to have primacy in space affairs. While companies may operate in space, the current system remains centered around national governments.

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Second, national governments continue to play a major role in commercial space activities, often by providing substantial funding. Under NASA’s 2008 Commercial Resupply Services, for example, the U.S. agency awarded $5.9 billion in the first round of commercial resupply contracts, and up to $14 billion in the second. And under its 2011 Commercial Crew Program, NASA invested billions of dollars in a number of companies, with the goal of developing a safe and reliable U.S. commercial crew space transportation capability.

NASA also funds a wide range of other commercial space initiatives, but there is little public information detailing exactly how much commercial partners invest in these joint ventures. In 2012, NASA Associate Administrator Bill Gerstenmaier acknowledged that “80-90 percent of the funding for ‘commercial’ crew is from the government, not the companies.” More recent reports suggest that the government’s investment share in commercial launches has changed little, at 77.6 percent.

A third factor is federal deregulation, which helped U.S. commercial space activities to flourish and to dominate. For instance, in 2020, out of 114 total launch attempts, 38 were purely commercial; U.S. companies conducted 23 of these launch attempts, or 61 percent. In addition to launch services, the U.S. commercial space sector similarly leads in other areas, including satellite and spacecraft manufacturing, on-orbit servicing missions and human spaceflight.

In the absence of deregulation in other countries, commercial space ventures are unlikely to develop along similar lines. While commercial space sectors in countries like Russia and China have expanded, growth has been limited and often contingent upon substantial government investments.

Space will remain a national prerogative

Commercial space companies appear well-positioned to continue to make groundbreaking contributions to space travel and exploration. However, despite the impressive growth of the commercial space sector, governments will continue to play a large role in commercial space enterprises, and in space travel and exploration — unless their ability to shape the dynamics of relations in space declines radically.

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Svetla Ben-Itzhak (@SvetlaBI) is assistant professor of space and international relations at the U.S. Air and Space Forces’ Air University. The views expressed are those of the author and do not reflect the official position of the U.S. Department of Defense, or of any organization the author is affiliated with, including the Air University, the U.S. Air Force and the U.S. Space Force.