From: Wales.Larrison@ofa123.fidonet.org
Newsgroups: sci.space
Subject: Commercial Space News #19
X-Sender: newtout 0.06 Jan  3 1993
Date: 08 Jan 93  01:46:29

COMMERCIAL SPACE NEWS 19 

   This is number nineteen in an irregular series on developments in 
commercial space activities. The commentaries included are my 
thoughts on these developments.  
   This is a short column in number of articles, but still fairly 
long.  I should be able to follow this with another issue fairly 
quickly, since those articles are just about ready to go as well. 
  In contrast to the last column primarily dealing with Russian 
market moves, this one's more of mixed bag.  A lot of restructuring 
news, with two articles on changes in US government organizations 
which may have a large influence on future US commercial space 
market developments ... 
  
Contents -
1- NEC RESTRUCTURES TO ENTER COMMERCIAL SATELLITE MARKET 
2- NASA RESTRUCTURES COMMERCIAL SPACE SUPPORT ORGANIZATION
3- RIMSAT GOES TO RUSSIA FOR TONGAN SATS
4- MEXICAN FIRM PLANS LATIN AMERICAN LEO CONSTELLATION 
5- ECHOSTAR BETS BIG ON DIRECT BROADCAST SATELLITE TV
6- THERE'S GOLD IN 'THAR IMAGES; ESSI ANNOUNCES NEW TECHNIQUE
7- COMMERCIAL LAUNCHES USED AS JUSTIFICATION FOR NEW US LAUNCHER 
FINAL NOTES - 
   
ARTICLES 
 ----------------------------------------------------------------
1- NEC RESTRUCTURES TO ENTER COMMERCIAL SATELLITE MARKET 
   The Japanese corporation NEC (Nippon Electric Company) 
restructured in mid-November to establish itself as a player in the 
commercial satellite market. Two divisions were consolidated into a 
single division that could compete for up-coming commercial 
communications satellite orders and other commercial satellites.  
The NEC Space Laser Division (which is a leading manufacturer of 
communications satellite transponders) and the Space Development 
Division (which manufactures satellite structures and integrates 
total satellite hardware) were  combined into one operational 
division. 
   [Commentary:  For the past decade I've been watching Japanese 
aerospace firms move towards establishing a commercial market 
presence for satellite construction.  This announcement is probably 
the last step needed to establish a competitive player.  While 
Japanese firms are building sophisticated satellites to be launched 
for Japanese government programs, they have not yet entered into 
open commercial competition.  
   Part of this has been from trade pressure brought to bear by the 
US and Europe, who have forced the Japanese government ministries to 
open up Japanese 'commercial' satellite bidding to all entrants, 
without having 'favored son' clauses in the bid releases.  In the 
view of many in the industry, such clauses would have favored 
Japanese satellite manufacturers, and would have forced the 
contracts to "Buy Japanese".  However, even in current competitive 
Japanese commercial bids (virtually all which been won by US firms), 
a large amount of subcontract work and business "offsets" have gone 
back to the Japanese satellite component manufacturers.  
   This is not uncommon in international trade, and it provides a 
basis for Japanese firms to develop and hone their skills for entry 
into the commercial market. Plus the Japanese government contracts 
for Japanese satellites provide a base of work to maintain a trained 
and experienced satellite construction team. 
  The new NEC reorganization sets up a structure which now can bid 
as prime on upcoming communications satellite contracts in close to 
full organizational parity to Loral, Hughes, Alcatel, Aerospatiale, 
Matra, BAe, and GE.  
   Whether or not this will be enough to provide a competitive edge, 
will be a different story.  It still remains to be seen if NEC will 
subsidize the initial bid to gain market entry, or if there will be 
a round of "learning" before winning a prime contract, or even what 
the competitive counter moves from other established players will 
be.  
   Since the area of most rapid growth in satellite communications 
service demand is the East Asia area where Japanese firms might have 
a "home court" advantage, I expect to see some interesting market 
moves in the next communications satellite competition in this 
market sector.]  

2- NASA RESTRUCTURES COMMERCIAL SPACE SUPPORT ORGANIZATION 
   During October's shakeup of NASA's organizational structure, NASA 
reorganized its commercial space activities support office.  In the 
reorganization, a new Office of Advanced Concepts and Technology 
(OACT) was created, combining the previous Office of Commercial 
Programs with the technology development activities of the previous 
Office of Aeronautics and Space Technology. The OACT is now 
chartered to specifically develop advanced technologies which have 
commercial as well as governmental uses, and which enhance US 
business competitiveness.  
   In later statements about the new office, NASA Administrator Dan 
Goldin identified the office as specifically addressing 4 areas 
which were not adequately covered in previous NASA organizations:  
  - systems engineering and integration for advanced space systems 
     concepts 
  - providing NASA access for outsiders with innovative technology 
  - establishing technology transfer into the commercial sector; and 
  - commercializing space activities. Goldin stated there was an 
imbalance within NASA between scientific and business needs in 
setting NASA program requirements.  Using the Mission to Planet 
Earth as an example, Goldin said ""We've got to bring American 
industry into NASA's program...NASA must be weaned from being a jobs 
program into being a program that will get America number one in 
competitiveness." 
   In his strategy, Goldin split commercialization activities into 
near-term, mid-term, and long-term.  Near-term commercial 
experiments are those opportunities which might provide 
technological advances which could be quickly translated into near 
term commercial benefits (in specific, the Wake Shield experiments 
were seen as providing some crucial data for the semiconductor 
industry). 
   In the mid-term, development programs like Space Station Freedom 
and Mission to Planet Earth must, in Goldin's strategy, be 
integrally involved with American industry outside the usual cadre 
of NASA contractors. And in the long term, industrial applications 
and concerns would be included in new programs, and potential long-
term industrial benefits must be included in their assessments. 
    Greg Reck, currently director for space technology, becomes 
acting associate administrator to head up the new Advanced Concepts 
and Technology office.  Courtney Stadd, from the National Space 
Council staff, becomes Reck's acting deputy.  Jack Mannix, who was 
Assistant Administrator for the Office of Commercial Programs, will 
become Associate General Counsel for Intellectual Property. 
   [Commentary:  In general, I think this reorganization seems to be 
a step in the right direction.  I normally don't include NASA 
organizational issues in this columns, but in this area NASA 
activities can and do have a large impact on commercial space 
activities.  Over the past several years, NASA has been acting as 
more and more of a facilitator for commercial space ventures, and 
less and less as a competitor. While there is still a long way to 
go, NASA is no longer a competitor in many areas of commercial space 
activities. 
   This NASA reorganization should elevate the synergistic role 
between NASA and industry in developing and using technology outside 
of NASA's limited internal purview.  Over the past two decades, 
commercial and industrial considerations almost always have had a 
lower priority than NASA's internal considerations.  This caused 
problems with technology transfer and serious problems in the 
development and use of technologies desired and needed by the 
commercial space sector.  This organizational restructuring should 
help emphasize the policy that commercial and industrial 
considerations have more weight in NASA decision making. 
   A reorganization should not be seen as a panacea, but this is a 
very visible sign that folks are trying to change the NASA culture. 
I have also seen some actions being taken at lower levels within 
NASA in order to carry out this policy, but there is still much to 
be done.  
   The biggest remaining problems in NASA's decision process to 
bring in industrial and commercial participation are in space 
transportation, infrastructure development, and day-to-day center 
operations.  While NASA activities have been opened up for 
commercial bidding for ELV launch of suitable payloads (as required 
by the Presidential Space Policy and the LSPA), routine operations 
of other NASA space transportation systems still needs to be 
transferred to commercial operations.  These include sounding 
rockets and the Space Shuttle.  I have heard of some efforts 
underway in these areas, but have seen little action to implement a 
transition to commercial operators. 
   Infrastructure development by NASA is also an area in which more 
commercial and industrial considerations need considered.  There 
have been some abortive attempts to encourage commercial development 
of infrastructure to be used by NASA, but these have primarily come 
to naught due to the uncertainty of multi-year government usage and 
cost considerations.  Bills currently proposed in the House and 
Senate would greatly encourage commercial participation in this area 
as they would allow NASA to negotiate multi-year contracts with 
termination liability clauses.  And again, routine operation and 
maintenance of NASA infrastructure elements should be turned over 
commercial operators -- including such facilities as the KC-135 
microgravity aircraft (commercial alternatives have been proposed), 
the WETF weightlessness water tanks training facilities, the deep 
space tracking system, and even Space Station Freedom. 
   However, the biggest problem remaining is within the day-to-day 
NASA field center operations.  Day-to-day NASA operations are still 
very much focused inwards and commercial or industrial entities are 
seen as "competitors" and not as "partners" or "customers".  The 
NASA culture still needs to take a giant step to open up day-to-day 
center considerations to include commercial and industrial concerns.  
This will be the hardest step of all.] 

3- RIMSAT GOES TO RUSSIA FOR TONGAN SATS 
   It was recently announced a new firm, Rimsat Ltd. of Fort Wayne, 
Indiana, will operate up to 7 new communications satellites over the 
Pacific.  At a 17 Nov press conference in Washington DC, the firm 
revealed it had received formal approval from the Russian Space 
Agency for a $ 150 M deal to use 7 Russian satellites to provide 
communications services across the Pacific, and has also negotiated 
terms with the Kingdom of Tonga to use at least 2 GEO slots already 
set aside for Tonga. 
   According to Michael A. Sternber, Rimsat's Chief Operating 
Officer, Pacific region telecommunications service could begin as 
early as Jan 1993, since 2 of the Russian satellites are already in 
orbit. Under an agreement with Tonga, 2 GEO slots at 130 and 134 deg 
East have been leased, and they will be filled as soon as final 
negotiations are completed and a Russian satellite can be drifted 
into at one slot.  Options to use two more Tongan slots have been 
exercised, and Rimsat has placed a further option to use any other 
unused, abandoned, or yet-to-be-acquired Tongan GEO positions. 
   Satellite services to and from Tonga could begin as early as 
January, and Rimsat expects additional satellites to be launched 
between Sep 1993 and Mar 1996.  Current agreements provide for the 
lease to Rimsat for 3 'Gorizont' satellites (each with 6 C-band and 
1 K-band transponders) and 4 'Express' satellites (10 C-band and 2 
K-band transponders, each).  Rimsat also holds a long-term option 
for Rimsat to buy 10 more 'Express' satellites or any other 
'Express' satellites not planned for use by the Russian government.  
   [Commentary: This is an interesting deal from several angles.  
First, the use existing older satellites for fast entry into a fast 
developing, dynamic market area.  The two satellites that can be 
used by Rimsat only have a couple of years worth of expected life 
left, but allow a quick and cheap market entry. 
   Secondly, the use of Tongan slots to provide regional 
communications services, exploits existing regulatory structures.  
The Republic of Tonga, through their communications agency Tongasat, 
has been very proactive in requesting and reserving GEO slot 
allocations.  At one time, Tongasat had requested over a dozen 
slots.  Tonga currently has several slots already allocated through 
the International Telecommunications Union.  It was highly unlikely 
the small island nation of Tonga could have used all of the slots 
they requested for domestic or even international telecommunications 
links, but through this deal they will gain lease fees for an 
international regional telecommunications provider to use their 
unused allocation.  Furthermore, by 'doubling up' 2 satellites into 
each slot, Rimsat can get a higher capacity when needed, without 
having to buy more expensive higher capacity satellites up front. 
    Lastly, this is the one of the first real deals to specifically 
call out use of Russian satellites and launchers on the basis of 
cost.  According to Rimsat, building and launching the 7 planned 
satellites is about 40% cheaper than Western alternative systems.  
And while the cost or putting the system in place is less, Rimsat 
will be serving a region including Australia, China, Hong Kong, 
Korea, Malaysia, the Philippines, Indonesia, Singapore, and Thailand 
where communications demand is very high with a high growth rate, 
and can charge market rates for their services. 
   The two sticky points which have yet to be resolved are the 
completion of financing for the deal and signing up the first set of 
customers.  Customers are not expected to be a problem due to the 
current market demand, but Rimsat is still in the process of looking 
for financing.  They have a commitment letter from Triquest Group in 
Stanford, Connecticut but have not yet lined up full financing for 
the deal. I don't expect this to be a problem, other than perhaps 
some schedule slippage.] 

4- MEXICAN FIRM PLANS LATIN AMERICAN LEO CONSTELLATION 
   Mexico City-based Leo One Panamericana has announced plans to 
build and launch a LEO satellite constellation to provide 
communications services to Latin America.  Leo One is a subsidiary 
of Tecelmex, a cellular phone service provider in Mexico, and will 
initially concentrate upon the markets they know best - Mexico and 
Latin America.  The planned satellite system will not provide real 
time services (such as voice telephony), but will provide 
monitoring, tracking, paging, messaging, electronic mail, faxing, 
security, emergency notification, and positioning information. 
   Leo One's system is initially planned to be 12 satellites in an 
80 degree circular orbits at 1,400 km altitude, with each satellite 
covering users in a 2,500 km radius.  As demand grows, up to 36 
satellites may eventually be launched into the constellation. 
Current plans are to use US satellite technology launched using a 
CIS rocket. 
   James Stuart, Chief Technical Officer for the venture, recognizes 
several significant milestones the team must meet before the venture 
can be a success: 1) If Western technology power will allow such 
advanced satellite technology to be launched using CIS rockets, 2) 
if Mexico's Secretaria de Comunicaciones y Transportes will grant 
permission to to operate experimental ground terminals and 
eventually an independent satellite system, and 3) if other LEO 
ventures don't saturate the market. 
   An experimental program to prove out the technology is underway 
using high altitude balloons from Utah State University and using 
technology expertise from JPL through JPL's technology affiliates 
program.  If the program is executed, Leo One estimates the 150 Kg 
satellites will cost $2-4 M each, with another $1.5-2 M to launch 
each satellite.  User communicators are expected to cost $300-500 
each.  The earliest estimated date for launch is in 1994, with 
commercial operations beginning in 1995. 
   [Commentary:  Another LEO satellite constellation tip-toes into 
the market.  The most interesting thing about this venture is it is 
specifically ignoring the primary telecommunications markets of 
Europe, East Asia, and the US/Canada. I believe part of this is due 
to the experience the their parent company has had in the Mexican 
telecommunications market. 
   From some limited examination I've done of the telecommunications 
market in Mexico, it has "leap frogged" the usual ground based 
infrastructure to a rapidly growing cellular-technology based 
market.  Part of this has been due to the slow response to 
installing line-based infrastructure by the Mexican PT&T which has 
encouraged firms to look to wireless solutions, but this evolution 
has also been driven by the availability of relatively inexpensive 
cellular technology, a boom in demand for telecommunications as 
Mexico's economy grows, and he ability of capitalistic vendors to 
quickly supply cellular solutions to meet user's needs. 
   From Leo One's perspective, providing the capability to allow a 
user in Argentina to quickly and reliability send faxes to Brazil 
for $1 a page, seems very attractive.  Most of their strategy seems 
to be to provide quick, basic and reasonably priced data 
communications capability on a large-scale regional basis rather 
than accept the higher costs of providing full, real-time, seamless 
telecommunications through a more expensive and sophisticated 
constellation.  Essentially, they are bi-passing the national PT&T 
nets which provide phone links and other real-time communications 
and going to after the market provide data transfer and other more 
business-related services.  
    I think this is a good niche approach to the market, and I wish 
the Leo One folks good luck in their venture.  But they are very 
vulnerable to lose their markets from the more expensive and 
sophisticated LEO constellations proposed in the US and Europe.  
Those systems can provide data communications like Leo One's merely 
as a sideline business to their very sophisticated global 
telecommunications constellations, and might be able to beat Leo 
One's user price.  However, due to the higher level of 
sophistication such constellations will also be much more expensive 
and difficult to finance and get into the operational stage.  That 
has been the most serious hurdle for "big LEO"  constellations.] 

5- ECHOSTAR BETS BIG ON DIRECT BROADCAST SATELLITE TV 
  There are now three serious competitors lining up for the US 
direct broadcast satellite TV market -- Direct TV, US Satellite 
Broadcasting, and Echostar.  The latest, Echostar Satellite Company, 
a subsidiary of Echosphere Corp, was announced last month.  Echostar 
is very bullish on the direct broadcast satellite market -- they 
announced they had signed a firm contract for 7 high-powered 
broadcast satellites from General Electric.  
   This contract is a big gamble and while the terms of the contract 
are firm, and there is some flexibility reported in the contractual 
delivery schedules, the contracts requires that the WILL be produced 
and paid for by Echostar in a firm money deal.  As described as by 
the company's CEO, Charles Ergen as "If they [the satellites] don't 
happen, then we're chapter 11."  
   As currently planned, EchoStar will broadcast several hundred 
channels of TV (including High Definition TV Broadcasts), high 
quality  audio, and data services to households, businesses, and 
commercial companies.  18-inch receiving dishes will be used.  
   [Commentary:  I've been watching the DBS market for some years 
now.  The last swell of interest in DBS died out, leaving several 
half-built satellites, and several business failures, but no DBS 
services over the US.  Astra, in the European DBS market, has 
provided a good market model, as a profitable DBS venture which 
started small, proved out the technology and market, and has 
profitably expanded as their market grew.  This second swell of 
ventures for direct to home satellite broadcasting in the US seems 
to be real.  
   Several firms now think the time is ripe for a US market venture.  
Of these, the Echostar venture seems the most gutsy.  If the market 
doesn't develop, or if they can't capture enough customers, they 
will have serious financial problems -- if the terms on the 
contracts are such as they have announced. 
    Some reports claim Echostar has lined up about $200 M in capital 
to support the first phase of their venture.  My estimates are this 
is not enough for them to complete their entire venture, but that 
amount of funding could provide them the financial muscle to enter 
the market in a big way.  
   Evidently, Echostar thinks the gamble is good bet.  In support of 
their logic, they offer some analyses which show they provide per-
home information access for about $500 compared to $1200 for fiber 
optic cabling -- giving satellites a low-cost advantage in providing 
point-to-multipoint regional information distribution.  But, while 
Echosphere has some experience in satellite dish installation and 
services, they still will be competing with the installed base of 
cable systems.  
   By being second into the DBS market, Echostar may also have an 
advantage in they can learn from the market pioneer's expensive 
lessons learned. If the market pioneer demonstrates a viable market 
approach, Echostar can quickly move to tailor their product to the 
most profitable and cost-effective approach without having to spend 
millions in testing products and markets.  For example, DirecTV has 
to pick a signal compression technique now and make it work -- while 
Echostar can wait a little while until the technology is more 
proven.  Similarly, the market leader must go through the expense of 
educating the public about direct satellite broadcasts, but Echostar 
can build upon that base of public awareness.  
   There is still big market risk here -- being first into a market 
can be a substantial advantage, particularly if the market doesn't 
turn out to be as large as expected, or if the first firm entering 
can lock up the market base.   Echostar's gamble of accepting the 
challenge of being second into the DBS market is pretty gutsy. 
   And I still haven't hear how Echostar will attack the achilles 
heel of DBS systems - programming.  Offering several hundred 
channels of service also means there must be several hundred 
different sets of programming.  There are only so many times one can 
send reruns of Gilligan's Island or Wheel of Fortune, without having 
customers turn away.  Quality and quantity of programming will be 
critical to making any DBS system marketable. 
   DirecTV is teamed with Sony, which has access through a major 
motion picture studio for video, and through a record firm for music 
and other forms of entertainment.  I believe Echostar must establish 
a strategic partnership to provide programming to make their venture 
a complete success.] 

6- THERE'S GOLD IN 'THAR IMAGES; ESSI ANNOUNCES NEW TECHNIQUE 
  A small remote sensing firm, Earth Search Sciences, Inc. announced 
in late November it had development a new technique to use space 
technology to find precious metal deposits.  Working with NASA and 
Sverdrup scientists through the NASA CCDS at Stennis Space Center in 
Mississippi, ESSI has developed a mineral exploration technique that 
integrates satellite remote sensing data with a new Australian 
portable spectrometer that identifies minerals associated with 
precious metal deposits at rock exposures. 
   ESSI's technique uses survey data from the Landsat satellite 
Thematic Mapper instrument to locate and classify potential targets 
over a large area.  When a target is identified, it is overflown 
with the NASA Airborne Visible/ Infrared Imaging Spectrometer for 
greater detail, and maps showing areas with highest probability for 
valuable mineral deposits are constructed from the merged sensor 
data.  Ground verification of the data is using a PIMA-II 
spectrometer, manufactured by Integrated Spectronics Party Ltd., of 
Sydney, Australia.  This instrument  can instantly identify many of 
the minerals associated with precious metal deposits, shortcutting a 
process which previously took weeks of analytical laboratory time. 
   To prove out this technique, ESSI recently completed a test 
series at Cuprite, Nevada in an area which has been extensively 
studied by remote sensing techniques, and which is located just 
south of the famous Goldfield mining district in southern Nevada.  
During the tests, ESSI geologists were able to detect a previously 
unknown major detachment fault associated with the mineralization at 
Cuprite and quickly and accurately identified minerals associated 
with potential economic mineral deposits, finding a previously 
unknown outcropping of gold ore.  
   According to ESSI, the technique has numerous other applications 
including petroleum exploration, environmental assessment, mineral 
exploration, pollution and water quality monitoring, wild life and 
forest management and agriculture administration.  Larry Vance, ESSI 
company chief executive officer, was reported as stating: "This 
technology allows our exploration company to identify and evaluate 
economic targets more rapidly and reliably than conventional 
methods, thus giving us a definite edge in the marketplace." 
   [Commentary:  This is an example of some of the new remote 
sensing techniques coming onto the market.  ESSI has apparently 
developed a very fast technique -- capable of getting ground 
verification of space-derived data apparently within a few days of 
gathering the remote sensing data (and those few days are primarily 
in data crank and travel time).  IF it can be proved out, then ESSI 
might have developed a good, valuable commercial product.  
   It is also interesting to note that as better and better remote 
sensing data satellite data is available with the new generation of 
satellites, and as GIS data bases are built up from this data, the 
ability to rapidly survey and evaluate data for marketable products 
should also greatly improve.  
   But remember, this data came from ESSI... 
   Since this column is to focus on commercial space opportunities 
for investors, it should be noted that Earth Search Sciences Inc. is 
a publicly traded company, and is listed as '3EDII' in the Pink 
Sheets which cover small, thinly traded companies.  I should also 
note, that coverage in this column is neither a solicitation or 
advice to buy this stock.  It is only provided as information for 
interested parties.  Before making any investment, research the 
investment and be aware of the risks associated with it.  If you are 
interested in ESSI, call or write for their prospectus and their 
annual report and read them, crank the financials, and look at the 
company and its market before investing your money.  Be aware of the 
risks involved with any investment.] 

7- COMMERCIAL LAUNCHES USED AS JUSTIFICATION FOR NEW US LAUNCHER 
   [Regardless of political philosophy, current government space 
activities must be recognized as potentially having great effect on 
commercial space ventures.  This article is included as some of the 
policies being discussed may have substantial impact on commercial 
launch systems.] 
   There have been two recent reports produced by advisory groups to 
the US National Space Council.  For the last several months, there 
has been an activity to reexamine the US government's space 
transportation policies and attempt to lay out a roadmap for future 
space transportation developments.  Groups focusing on the 
industrial base for space activities and on US government space 
transportation needs have recently released their reports. 
   The group examining the US industrial base required to support 
future space activities made several recommendations of importance 
for commercial space activities.  Their fundamental finding was the 
US space industrial base is adequate to fulfill US government 
requirements, but caveated that conclusion for the future as 
assuming NASA and DoD adequately support space technology 
development, and upon the on-going industry restructuring being done 
efficiently in order to continue to provide core industrial 
capabilities.  They identified that US commercial launch firms could 
see trouble in the next several years.  As the report states: 
  "If it was a poor idea for U.S. firms to have to compete against 
   the U.S. government in the case of the space shuttle, it is a 
   poor idea for those same firms to have to compete against the 
   Russian and Chinese governments..." Specific recommendations for 
the US government to maintain the commercial space industry 
included: 
   - complete a "rules-of-the-road" pact with Europe on acceptable 
business practices for launch contracts.  These would serve as an 
international standard for firms from non-market economies.  
   - reduce export restrictions on space items with non-critical 
defense technologies like communications satellites 
   - encourage multiple small government programs rather than a 
single large one 
   - continue government procurement reform to encourage commercial 
bidding for space-related contracts by emphasizing performance 
requirements rather than design specs, funding risk-shared 
technology demonstration programs, and increasing the use of 
commercial business practices and components. 
   The second panel, which looked at US government space 
transportation requirements, called for replacing current US space 
transportation systems with a single new, low-cost expendable core 
launch vehicle.  The primary reason claimed was to integrate a 
completely new technology launch vehicle to be the "most efficient, 
effective, reliable, safe and cost competitive space launch concept 
that our technology is capable of providing".  
   Pete Aldridge, CEO of Aerospace Corp. and chairman of the study, 
said current systems are capable of meeting the basic needs of 
launching government payloads into space, but a new modular launch 
system for use with manned as well as unmanned missions was needed 
to provide "future U.S. competitiveness" and to reduce costs and 
risks for space launch.  2002 was suggested as a reasonable target 
date for initial operational capability for this system. 
   The proposed new launcher, called 'Spacelifter,' could have "a 
cost to launch of a factor of two below comparable existing launch 
vehicles", according to Aldridge, and the new vehicle would be "the 
key to future commercial competitiveness, allowing the U.S. industry 
to undercut the price of most foreign competition." In conjunction 
with a manned personnel launch system and an unmanned cargo transfer 
and return vehicle, Spacelifter was claimed to support the continued 
operation of the Space Station.  
   Aldridge said his panel could not find the requirements to 
justify the development of a heavy lift launch vehicle in the near 
term, but did recognize heavy lift capability will be required 
sometime in the future. 
   To fund Spacelifter, Aldridge's panel identified a number of 
programs to kill and transfer funds from.  Specifically identified 
were: reducing Shuttle operations, slowing Titan production, 
terminating the (ASRM) program, killing the MLV-3 competition and 
killing Shuttle production capability. 
   To run the new effort, Aldridge's group recommended establishing 
a new single space launch authority within the government to be 
responsible for the planning, integration and coordination of space 
launch programs across all government agencies.  Aldridge stated 
this organization would then delegate the management of the space 
launch program to selected government agencies. 
   Shortly thereafter,  USAF Maj. Gen. Donald G. Hard, director of 
space and Strategic Defense Initiative programs, was reported in the 
industry literature to be pushing for a USAF FY 94 new start for 
Spacelifter in the DoD budget, if the 2002 target availability goal 
is to be met.  As reported in the trade press, if the Air Force 
become the single space launch authority and takes over Spacelifter 
development, Gen. Hard would request clean-sheet, fully competitive 
proposals from industry, going through the normal DoD procurement 
cycle starting with competitive Phase 1 concept exploration studies.  
All technical approaches for 'Spacelifter' would be considered -- 
including rejecting the USAF/NASA STME engine which was the core of 
the NLS development effort. 
   Gen. Hard said preliminary USAF estimates put the Spacelifter 
development program at about $10 billion, down from NLS's $14 
billion estimate.  These cost reductions are primarily due to not 
man-rating the vehicle, and not building manned launch facilities.  
The Spacelifter concept used for the preliminary estimates was a 
single cryogenically fueled core, with solid- propellant strap-on 
rockets added as needed to increase launch performance. 
   If a man-rated version was desired, Hard stated, NASA would be 
responsible for funding and developing it. 
   Gen. Hard was reported as saying the commercial potential of a 
20,000-pound class space launcher would be a big selling point on 
Capitol Hill, and eventually he could see the companies that build 
the rocket launching Air Force payloads on it as a commercial launch 
service provider. 
   [Commentary: The National Space Council has been pursuing a space 
transportation systems strategy study for several months now.  
Exactly how this strategy will play in the new Space Council under a 
Clinton/Gore administration is unknown.  But these two reports 
provide some key recommendations which will be used in formulating 
any new government space launch strategy. 
   The first report, on the industrial base for commercial space 
launch operations, reiterates several strategies which have been 
pursued by US commercial space supporters.  The report provides a 
good packaging of strategies and ties them into providing the base 
for future commercial launch firm viability.  In my opinion, it is 
was an excellent overview report, and the strategies here should be 
pursued. 
   The second report, which calls for development of 'Spacelifter', 
also really doesn't present a fundamentally new strategy.  The US 
DoD and other organizations have been pushing for a new vehicle to 
replace the expensive Titan-IV for some years.  However, supportable 
technical requirements for such a system have been elusive, and the 
best argument seems to be as a "generational change" to embody a 
full portfolio of new technology to reduce DoD operating costs.  But 
such a generational change comes with a hefty price tag ($ 10 B or 
so), and is very vulnerable from a cost-effectiveness argument to a 
lower-cost incremental improvement strategy for current ELVs. 
   Furthermore, the costs of "man-rating" the system are 
specifically excluded from the program, and it is assumed that NASA 
will pick up those development costs and the costs of any new 
manned-operations related facilities, as well as the costs of a new 
manned personnel launch system and a new cargo return system needed 
to fully replace the shuttle system.  This is another cost which has 
to be factored in is such a new development is to be pursed. 
   To increase the justification for the Titan-IV replacement 
'Spacelifter', the argument is being made that such a system would 
allow US firms to compete more effectively for commercial launch 
contracts in the international market.  This assumes the development 
costs for such a launcher would be sunk (absorbed) by the US 
government, and only the operational system turned over to a US 
commercial launch firm to compete with.   While this government sunk 
development cost approach is being used in Europe (Ariane), and in 
Japan (H-2), I expect it will encounter great resistance in the US. 
   There are several competitive US space launch firms. If a single 
firm is given a $10 B sunk cost advantage to get a "factor of two" 
reduction in recurring costs, other commercial firms will operate at 
a market disadvantage.  With such a large differential in costs, 
other US firms will probably be driven out of business, whereas 
government subsidized international competition will match prices. 
   At a minimum, other US firms will strenuously object to the 
selection of a government-subsidized domestic competitor.  At a 
minimum, turning Spacelifter over to a single commercial operator 
will be challenged as 'restraint' of trade.  To paraphrase the 
industrial base study:  "If it was a poor idea for U.S. firms to 
have to compete against the U.S. government in the case of the space 
shuttle, it is a poor idea for those same firms to have to compete 
against U.S. government in the case of 'Spacelifter'." 
   I believe this issue has not yet been completely addressed in the 
National Space Council launch strategy review, and should be 
addressed under the new administration before any strategy is 
implemented.  And the impact of new technologies looming on the 
2000-2010 horizon such as NASP or SSTO can't just be ignored in any 
future national space launch strategy. 
   If commercial launch benefits are the key "selling point" for 
Spacelifter, I believe a FY94 new start for Spacelifter is 
premature, and should be delayed until commercialization issues are 
resolved.  Other national security and budgetary issues may force 
the Spacelifter program forwards, but a government investment of $10 
B should be well thought out before committing to to single approach 
including laying out a path to effective commercialization. 
   There are several strategies which can be taken to commercialize 
such a system -- including a consortium approach for development and 
operation, a very serious technology development and tech transfer 
program to existing systems to level the playing fields, and a 
purely commercial launch services approach in which equivalent 
government development funds are made available to competing systems 
with a "fly off" to select an annual winner of government launch 
services contracts. 
   The commercialization issue for 'Spacelifter' will continue for 
some time...  And since it will set the framework for future 
commercial US launch competitiveness, I will continue to follow it.  
Stay tuned ... 
   As a side note, I find this 'Spacelifter" discussion rather 
amusing, in sort of a morbid way.  Some years ago I worked on a 
USAF/NASA funded contract to define the next generation, low cost 
launch vehicle.  Our team came up with a single cryogenic core, with 
strap on solids to get minimum cost. (Sound familiar?)  We also said 
we didn't need the STME, and that reopening production lines of 
Saturn-era engines would be the most cost-effective approach, and we 
didn't need a lot of fancy technology development rather than 
application of manufacturing technologies.  Our team lost the next 
round to fully-modular, all cryogenically fueled systems as we 
weren't "high tech enough" to justify the new development programs 
which were the real reason for the program.  Oh well, now the USAF 
is now pushing something very similar to our proposal from several 
years ago... Whatever goes around comes around... <sigh>] 

FINAL NOTES - 
   There should be a couple of quick columns following this one.  I 
still have enough semi-processed information to produce another 
column at the end of this one.  And finally, I have put together the 
data to generate a generic commercial space market index, which will 
be the topic of a subsequent issue.                     
   As always, I hope you folks find this stuff useful and 
interesting -- Any and all comments are welcome. 
 ------------------------------------------------------------------ 
 Wales Larrison                         Space Technology Investor
 "Ex abusu non arguitur ad usum"              P.O. Box 2452
                                        Seal Beach, CA 90740-1452