What is the “space industry”?
Redefining the space industry
The biggest problem with Cavossa’s argument, as alluded to at the beginning of this article, is the use of the term “space industry” in general. In an effort to make the industry look as big as possible, people often include as many markets and companies as possible. In this process they include a number of companies that, upon closer inspection, shouldn’t really be considered part of the space industry at all, companies like Intelsat, Space Imaging, and XM Satellite Radio.
That statement isn’t as preposterous as it seems. Yes, these companies use satellites extensively, to the point that they might not exist, at least in any recognizable form, without them. These companies even have “space” or “satellite” in their name. That, however, doesn’t make them part of the space industry. These companies buy satellites, launch vehicles, and ground equipment “off the rack” from other companies, typically with only modest customization. In economic parlance, these companies are enabled by the space industry, but are not part of the industry themselves. In other words, for these companies space is a means to an end, but not an end in and of itself.
How do we classify these space industry impostors? Companies like Eutelsat and Intelsat are in the telecommunications industry: they compete with companies that operate fiber optic networks to deliver voice, video, and data streams to customers around the world. Space Imaging and DigitalGlobe are in the remote sensing industry, competing with companies that offer aerial photography and similar services. EchoStar and XM, as well as DirecTV and Sirius, are in the broadcasting industry, butting heads with Comcast and Clear Channel. These “space” companies not only compete with “terrestrial” companies, they share regulatory and legislative issues with these competitors as much as they do with other “space industry” companies. This helps explain why there are so many “space industry” associations. The companies typically lumped into the industry are a diverse lot, with different interests and requirements, and as such will form smaller groups to advance their own specialized agendas.
The same is true in other industries as well. For example, FedEx owes its existence to the modern jetliner: without it, it would be impossible for the company to provide overnight delivery of packages from one end of the US to the other. Should we consider FedEx to be part of the aerospace industry? Of course not: FedEx buys or leases aircraft from aerospace companies like Boeing or Airbus, and uses them to carry out its package delivery business. FedEx is part of the shipping industry, not the aerospace industry; it simply uses the aerospace industry’s products to compete with other delivery companies. Correspondingly, FedEx is a member of Air Transport Association, but not of the Aerospace Industries Association.
What does that leave for the space industry? It still includes those companies that build or market launch vehicles, spacecraft, and ground equipment, as well as those companies whose principal business is building components for those items. That leaves a fair amount of business: according to the statistics for the worldwide satellite industry prepared by the Futron Corporation for the SIA, the combination of launch services, satellite manufacturing, and ground equipment manufacturing provided $37 billion in revenue in 2002. (Satellite services, excluded from this total, accounted for an additional $49.8 billion.)
When the space industry is defined in this manner, it becomes clear why it lacks influence in Washington: it’s very small. At just $37 billion in worldwide revenues in 2002, the space industry is smaller than many corporations. For example, US automaker General Motors records more revenue in a single quarter—an average of $47.5 billion per quarter in the last year—than the entire space industry made in all of 2002. Even if satellite service revenues are added into the space industry’s total, it still comes to less than half of GM’s total revenues for the year. In Washington, money talks, and the space industry is whispering. No amount of space industry organization consolidation can solve that problem.
An argument may still be made that there are too many space industry organizations, and that consolidation of some kind is in order. However, the abundance of such organizations cannot be blamed on the lack of influence the industry wields in Washington. The real problem is the small size of the industry, a factor that does not become clear until the industry is properly defined. This definition issue may seem trivial, particularly when applied to a minor topic like the number of industry organizations, but unless people both within and outside the industry learn to properly identify its scope, it could lead to bigger problems down the road.