Saturday, April 30, 2005
Reality-Check Day at Space Access Conference: April 29 Notes
The dominant message of today's talks was that rocket scientists need to think about how they can succeed in the real world. Whereas yesterday's talks were dominated by engineering and rocket science with the occasional business model thrown in today's ratio was reversed. Most talks today focused on politics or business models.
Parts of the message were optimistic. The political presentations by the majority counsel for the House Science Committee and by representatives of the FAA were overwhelmingly positive. The Congress is on board with creating a friendly legislative environment for the development of a commercial suborbital space industry. The FAA is developing regulations that serve that Congressional intent. In the language of the business model, the "regulatory risk" is being reduced or eliminated.
The panel of venture capitalists who spoke were positive as well that investment money will flow to the commercial suborbital industry.
Yet part of today's message was not encouraging. It was a message the audience did not want to hear and tempers flared hot.
The delivery system for the harshest reality check of the day was a presentation by Drs. John Jurist, David Livingston, and Sam Dinkin of their paper "When Physics, Economics, and Reality Collide: The Challenge of Cheap Orbital Access." (The paper is copyrighted and so I cannot provide a link to it but click here to listen to an in depth discussion by the authors on The Space Show.)
The paper describes the high economic costs associated with developing a profitable business in orbital launch vehicles due in no small part to range costs and insurance costs and shows how difficult it will be to bring launch costs down to $1,000 per pound by focusing on engineering alone. Here's what they say in the introduction:
The paper comes to the noncontroversial conclusion that nontechnical issues, like range costs and insurance, have to be addressed for an orbital commercial launch industry to grow and mature.
The paper’s final paragraph quotes G. Henry (italics omitted),
However, the paper then concludes optimistically,
It seems to be a noncontroversial point to make that the conditions do not yet exist for a profitable commercial orbital launch industry but that one could develop incrementally on top of a successful suborbital industry. Yet the audience reacted to the point angrily.
One common accusation leveled at the speakers was that their analysis did not include physics. This is a strange attack to make on a paper that was written to address economic not technical barriers to a commercial launch industry. It’s especially strange considering so many of the engineering and rocket science presentations this weekend either included little or no economic analysis, and the economics that was included was often based on unprovable assumptions. To strain and mangle a metaphor, this is not like the pot calling the kettle black, this is the pot complaining because the white casserole dish is not black.
Another accusation leveled at the paper was that it was all smoke and mirrors. This is closer to the pot calling the kettle black.
The charge against the three doctors was led by another doctor: Jerry Pournelle. He had two main complaints about the paper. His first complaint was that the numbers were not realistic. For instance, the range fees cost could be eliminated by the use of the inexpensive GPS system. His second complaint was that the nontechnical costs could be eliminated with the “stroke of a pen.” In other words, government action.
With respect to his first point, one of the rocket builders in the audience told of his experience trying to fly a test sounding rocket. The range fee included a $70,000 cost for tracking despite the fact that the tracking system would never be turned on because the rocket would be tracked with a GPS device. The flight never occurred.
Jurist made the point that taking a launch off-range to avoid range fees involved other costs associated with environmental impact. Livingston told how SeaLaunch decided to rely on off-shore launches expressly to avoid the prohibitive range costs charged for land based launches from the United States.
Pournelle’s second point that the nontechnical costs would disappear with Congressional action actually flows from the paper’s conclusions. Government subsidy of the industry doesn’t mean the nontechnical costs don’t exist. It just means the taxpayers pay them not the user. Subsidizing the costs concedes the point that the industry is presently unable to pay the costs and run a profitable commercial orbital launch business.
Emotions ran higher during this talk than during all the other talks combined. Perhaps the punchiness came from the lateness of the evening. The oddity of the rancor was pointed out by Henry Vanderbilt, Executive Director of the Space Access Society. Both the speakers and the audience were in agreement that trying to build a commercial orbital space industry would be “insane” (as Vanderbilt put it) following business as usual practices.
Vanderbilt was correct as far his conclusion went. However, there appeared to be a definite difference in focus between the two camps. The speakers were pointing out the nontechnical problems and the difficulties associated with solving them. The audience believed those problems could be solved and didn’t want to hear how hard it would be to solve them.
It reminded me of that South Park episode with the “underpants gnomes.” In that episode the boys’ underwear keeps disappearing from their dressers and it turns out gnomes are coming into their rooms late at night and stealing their underpants. When the boys ask them to explain why they do this, the chief gnome explains it’s part of their business plan and he shows the boys some cards. For this discussion, let’s call them “viewgraphs.” The first viewgraph says “collect underpants.” The second is blank. And the third says “profit.” The gnomes didn’t know what to put into the blank viewgraph they just knew they needed to collect underpants and make a profit doing it. But filling in the blank is the trick to succeeding. Until you acknowledge there is a blank to be filled, you’ll never get from the first viewgraph to the third.
-tdr
PS: I’ll post my notes on all the talks another time.
Parts of the message were optimistic. The political presentations by the majority counsel for the House Science Committee and by representatives of the FAA were overwhelmingly positive. The Congress is on board with creating a friendly legislative environment for the development of a commercial suborbital space industry. The FAA is developing regulations that serve that Congressional intent. In the language of the business model, the "regulatory risk" is being reduced or eliminated.
The panel of venture capitalists who spoke were positive as well that investment money will flow to the commercial suborbital industry.
Yet part of today's message was not encouraging. It was a message the audience did not want to hear and tempers flared hot.
The delivery system for the harshest reality check of the day was a presentation by Drs. John Jurist, David Livingston, and Sam Dinkin of their paper "When Physics, Economics, and Reality Collide: The Challenge of Cheap Orbital Access." (The paper is copyrighted and so I cannot provide a link to it but click here to listen to an in depth discussion by the authors on The Space Show.)
The paper describes the high economic costs associated with developing a profitable business in orbital launch vehicles due in no small part to range costs and insurance costs and shows how difficult it will be to bring launch costs down to $1,000 per pound by focusing on engineering alone. Here's what they say in the introduction:
"Present technology might permit large, reusable vehicles, but there are many critical missing factors. Nobody has demonstrated the ability to design, fabricate, and fly such vehicles. Nobody has documented a convincing mechanism for financing and then amortizing the necessary research and development to create such vehicles. Nobody has determined a clear, solid business plan to implement the program required to do so. Nobody has demonstrated the market that would support the costs of creating such vehicles. Finally, nobody has proposed a viable strategy to go from our present flight rate of expendables to the extremely high flight rates of RLV’s projected for the mature industry which would permit achieving the low cost flights to LEO. The nontechnical factors of insurance and range costs alone are major obstacles to attaining this goal."
The paper comes to the noncontroversial conclusion that nontechnical issues, like range costs and insurance, have to be addressed for an orbital commercial launch industry to grow and mature.
The paper’s final paragraph quotes G. Henry (italics omitted),
"‘Any governmental policy maker, corporate CEO, or entrepreneur who believes that the current economic state of affairs in space transportation is amenable to profitable commercial enterprise (outside of very limited niche markets) is sorely mistaken.’"
However, the paper then concludes optimistically,
"Nevertheless, we believe that an evolutionary process from commercial suborbital vehicles to commercial orbital vehicle with capability of carrying passengers is feasible given realistic planning and financial goals and careful definition of the market. Ultimately, this evolutionary process will convert us into a space-faring society."
It seems to be a noncontroversial point to make that the conditions do not yet exist for a profitable commercial orbital launch industry but that one could develop incrementally on top of a successful suborbital industry. Yet the audience reacted to the point angrily.
One common accusation leveled at the speakers was that their analysis did not include physics. This is a strange attack to make on a paper that was written to address economic not technical barriers to a commercial launch industry. It’s especially strange considering so many of the engineering and rocket science presentations this weekend either included little or no economic analysis, and the economics that was included was often based on unprovable assumptions. To strain and mangle a metaphor, this is not like the pot calling the kettle black, this is the pot complaining because the white casserole dish is not black.
Another accusation leveled at the paper was that it was all smoke and mirrors. This is closer to the pot calling the kettle black.
The charge against the three doctors was led by another doctor: Jerry Pournelle. He had two main complaints about the paper. His first complaint was that the numbers were not realistic. For instance, the range fees cost could be eliminated by the use of the inexpensive GPS system. His second complaint was that the nontechnical costs could be eliminated with the “stroke of a pen.” In other words, government action.
With respect to his first point, one of the rocket builders in the audience told of his experience trying to fly a test sounding rocket. The range fee included a $70,000 cost for tracking despite the fact that the tracking system would never be turned on because the rocket would be tracked with a GPS device. The flight never occurred.
Jurist made the point that taking a launch off-range to avoid range fees involved other costs associated with environmental impact. Livingston told how SeaLaunch decided to rely on off-shore launches expressly to avoid the prohibitive range costs charged for land based launches from the United States.
Pournelle’s second point that the nontechnical costs would disappear with Congressional action actually flows from the paper’s conclusions. Government subsidy of the industry doesn’t mean the nontechnical costs don’t exist. It just means the taxpayers pay them not the user. Subsidizing the costs concedes the point that the industry is presently unable to pay the costs and run a profitable commercial orbital launch business.
Emotions ran higher during this talk than during all the other talks combined. Perhaps the punchiness came from the lateness of the evening. The oddity of the rancor was pointed out by Henry Vanderbilt, Executive Director of the Space Access Society. Both the speakers and the audience were in agreement that trying to build a commercial orbital space industry would be “insane” (as Vanderbilt put it) following business as usual practices.
Vanderbilt was correct as far his conclusion went. However, there appeared to be a definite difference in focus between the two camps. The speakers were pointing out the nontechnical problems and the difficulties associated with solving them. The audience believed those problems could be solved and didn’t want to hear how hard it would be to solve them.
It reminded me of that South Park episode with the “underpants gnomes.” In that episode the boys’ underwear keeps disappearing from their dressers and it turns out gnomes are coming into their rooms late at night and stealing their underpants. When the boys ask them to explain why they do this, the chief gnome explains it’s part of their business plan and he shows the boys some cards. For this discussion, let’s call them “viewgraphs.” The first viewgraph says “collect underpants.” The second is blank. And the third says “profit.” The gnomes didn’t know what to put into the blank viewgraph they just knew they needed to collect underpants and make a profit doing it. But filling in the blank is the trick to succeeding. Until you acknowledge there is a blank to be filled, you’ll never get from the first viewgraph to the third.
-tdr
PS: I’ll post my notes on all the talks another time.
Labels: Space Access Society 2005, Space Captains Of Industry
