Increased Wall Street Attention on Space May Have Downsides

The growing volume of smallsat traffic -- 126 deployed in 2016, more than 1,700 last year -- shows the business case is getting clearer, said BryceTech CEO Carissa Christensen. Most of that traffic is due to SpaceX and OneWeb, she said. Commercial satcom naturally will drive most smallsat deployments because of the telecom industry's size, said Salamander Space CEO Fred Kennedy. Other applications, such as remote sensing and positioning, navigation and timing "are still taking small steps," he said. Kennedy said the smallsat business case will close once there's integration of these applications, but for now they remain siloed. Quilty Analytics analyst Caleb Henry said more diversification in the smallsat universe was expected by now, but a few players still dominate. "The big constellations are still the same names" as a handful of years ago, he said.

Special purpose acquisition company transactions helped the space sector, but SPAC failures could affect future early stage funding, said In-Q-Tel Managing Partner Tom Gillespie. He said some SPAC mergers or delistings from stock exchanges in the next year or so are possible. Christensen said space SPACs are often being treated as a basket of space companies, despite being in different business areas tied to space, so performance of one affects another in an unrelated area and their stock prices tend to move in concert. A couple of companies doing poorly could get all space investments labeled as poor investments, she said. The business failure of a mega constellation would be particularly troublesome, Henry said.

Regulatory agencies increasingly recognize some rules need consolidation or streamlining and the value of setting timelines for response or action, said Johns. He said streamlined FAA rules meant Astra received a license in three months. He said FAA requirements have become less prescriptive and more performance based. He and Hogan Lovells satellite lawyer Randy Segal said there are questions about how FAA payload reviews will handle increasingly novel commercial activities. John said the smallsat licensing process at the FCC has meant licenses granted in as soon as four or five months, which for the agency "is unheard of."

Ride-sharing costs have been as low $5,000 a kilogram, which was once unthinkably cheap for launch, SpaceLink CEO David Bettinger said. That plus the growing ecosystem of smallsat manufacturers is making entry into commercial space far easier, but there's still a problem of smallsats often getting eight to 10 minutes of connectivity per 90-minute orbit, said Bettinger. His Spacelink is putting up four medium earth orbit satellites to be a data relay service to Earth.

Orbital debris is two problems: a "classic pollution problem" from stuff already in space, and managing or preventing future debris, said Christensen. Prevention/management is easier in some ways, despite the sizable growth in the number of satellites to be launched, due to the tools available to manage and shape how government and commercial operators act, she said. The U.S. or a consortium of nations will likely have to step in and lead to tackle the past debris, she said. Momentus Chief Technology Officer Rob Schwarz said there could be a market for mega constellations looking to remove their own failed satellites rather than work around them, if that removal can be done cheaply and quickly enough.

The emerging commercial space industry has a nascent but growing customer base, and in three to five years won't need government customers, Kennedy said. But given what can be Byzantine regulatory regimes, having a government customer "doesn't hurt" when trying to deal with regulators, he said. Schwarz said government wants to stimulate commercial activities and then be a buyer of those commercial services, but too often it drives up prices with 'too much help." For commercial space services, government has "got to act like a commercial buyer" and let some startups die, he said.

Chinese low earth orbit broadband constellations are likely to face the same challenges in getting market access in the West that terrestrial telecom operators like Huawei are now, said Henry.