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16 July 2010, Gateway House

Rocket economics, not science

Rocket science hasn’t gone very far, but rocket economics just made the leap. India needs to get into that game fast or risk losing a unique opportunity


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On 12 July, the Indian Space Research Organization (ISRO) had yet another successful launch of the Polar Satellite Launch Vehicle (PSLV) from Sriharikota which carried an Indian and Algerian satellite as the primary payloads and three nano-satellites as secondary (piggy-back) payloads, one each from Norway, Switzerland and India. The PSLV is emerging as a market favorite for small satellite launches, a distinction that was not so long ago enjoyed by Russian launchers.

If India indulged in a little bit of triumphalism, it is justified – but not for too long. On 16 June, Space Exploration Technologies (SpaceX), a young company in California, founded by technology entrepreneur Elon Musk, announced that it had entered into a $492 million contract with mobile satellite services operator Iridium Communications to launch Iridium’s second-generation constellation of 72 satellites. According to Space News, the implied price of $6.8 million for each 800-kilogram Iridium satellite launched into a 780-kilometer orbit is at a level not seen in the launch industry since Russian and Ukrainian rockets were first introduced into the commercial market in the mid-1990s. Space News also quoted an official with a non-US company seeking to launch a telecommunications satellite saying he recently sought price quotes from SpaceX, ISRO and the China Great Wall Industry Corporation. SpaceX, he said, was the least expensive of the three.

How was SpaceX able to massively undercut competition to clinch the Iridium deal? Partly because of the drive and ingenuity of a young entrepreneur like Musk, the fact that the company makes and assembles most rocket parts in-house, the motivation of a young company – unlike large aerospace corporations – to keep overheads low, innovate and go the extra mile.


SpaceX has also benefited immensely by the US’ new space policy, unveiled 28 June and crafted by Obama’s NASA team led by former astronaut Charles Bolden. The new policy seeks to spur a burgeoning commercial space industry, to rapidly increase the country’s space capabilities, and to bolster US’ competitive edge in the global economy. It is a huge boost for the nascent American commercial spaceflight industry. Under this new policy, the American government will patronize private, entrepreneurial companies like SpaceX with multibillion dollar contracts to develop commercial options for space transportation, while NASA focuses on developing new technology.

SpaceX has been busy. It is developing the Falcon launch vehicle fleet that includes Falcon-1 and Falcon-9. Falcon-9 is the heavy lifter meant to launch large satellites weighing several tons into Geostationary Transfer Orbit (GTO). It will also launch future crew and cargo spacecraft for NASA into Low Earth Orbit (LEO). Falcon-1 is their bantam weight offering meant for launching small spacecraft weighing up to a ton, that need to be placed in Sun Synchronous Orbits (SSO) or LEO.

Falcon-1 has so far made five launches. The first three failed, the subsequent two flights were successful. Falcon-9 was successfully launched for the first time on 4 June. SpaceX is also developing the Dragon series of spacecraft that will launch on the Falcon 9 and ferry people and cargo to and from Low Earth Orbit (LEO). Dragon flights were contracted through NASA’s Commercial Orbital Transportation Services (COTS) program for commercial delivery of cargo and crew to the International Space Station (ISS). The COTS is designed to help American industry develop privately operated space transportation systems. In COTS, NASA has the roles of lead investor, technical consultant, and potential customer. Of the more than two-dozen upcoming flights on SpaceX’s launch manifest, almost 60% are NASA contracts.

In addition to NASA, SpaceX enjoys the support of US Department of Defence (DoD). DoD purchased the first two flights of Falcon-1 under a program that evaluates new US launch vehicles suitable for use by the Defence Advanced Research Projects Agency (DARPA). For Falcon-9, SpaceX will be using former Titan 4 launch complexes at Cape Canaveral Air Force Station in Florida and Vandenberg Air Force Base in California.

SpaceX is NASA and DoD’s new baby.


For us the big question is, if SpaceX can make rockets cheaper, better, faster, and get unstinting support from the US government, how can Indian rockets (e.g. Falcon-1’s direct peer, the PSLV) compete? The PSLV could exploit the same markets as the Falcon-1, except for a wrinkle. US International Traffic in Arms Regulations (ITAR) and export control regulations prohibit satellites built using American components from launching on Indian rockets. However, this state of affairs may be short lived.

US attitude towards an increasingly relevant India is changing. Clearly, the US has as much to gain as India, if not more, from this change, as American companies clamour for access to one of the world’s most attractive nuclear, space and defence markets. Underscoring this change is a series of bilateral agreements between the two countries increasing cooperation and exchange in areas hitherto “off-limits”. Among these agreements one stands out – US is negotiating a landmark agreement with India, the Commercial Launch Services Agreement (CLSA),that will allow commercial US satellites to launch on Indian rockets.

Not surprisingly, rumour has it that SpaceX will lobby hard against any measure that takes American payloads abroad. It should not come as a shock if after signing the CLSA and accounting for all the “ifs” and “buts”, it turns out that all that is available for international launches are the non-profit, university-type small payloads leaving the lucrative ones substantively to American companies.

India’s charter is clear. Have the CLSA signed. Watch out for limiting provisos. Lobby hard to bring business to India. And meanwhile, get busy building the ability to do business at home.

Susmita Mohanty is co-founder and CEO of Earth2Orbit. 

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