Proposed Futures Project on the Commercialisation of Space
Report on the Consultation Process (June 2002)
Over the past year staff of the OECD International Futures Programme have carried out extensive consultations with more than sixty major stakeholders in the space sector in North America, in Europe and in Japan as well as within the OECD. The purpose was twofold; (a) to achieve a better appreciation of the nature of the issues facing the space sector in the next two to three decades, and (b) to ascertain whether an OECD Futures Project conducted in the context of the OECD International Futures Programme could make a contribution to the further development of the sector. The present report provides an overview of the conclusions we have drawn from this consultation, with respect both to the issues at stake and to the role the OECD could play.
The Issues at Stake
On the basis of the comments received, we have come to the conclusion that there are three main reasons for taking particular interest in the space sector today:
?The sector has the potential to generate significant economic, social and environmental benefits in the years ahead, as space technologies are becoming a key enabling factor in a growing range of applications;
?It is not clear how this potential can be realised in the future: Important players in the sector face considerable uncertainties -- for some OECD Governments the formulation of future space policy poses uncomfortable dilemmas, while many firms are still searching for a viable business plan; and
?The policy and regulatory frameworks that currently govern space activities are unlikely to be able to meet the challenges of the future or to provide the necessary support to the further development of the commercial space sector.
Historically, the development of the space sector has been largely driven by military, strategic, sovereignty and prestige considerations. However, over time, civilian applications - and more recently commercial ones - have gradually emerged. World-wide, this latter group of applications (including notably those related to communications, broadcasting, global positioning and imaging) represent today about 15% of all space activities. At the same time, many technologies developed originally for space use are gradually finding applications outside the space sector.
As further progress is made over a broad range of space-related technologies in the coming decades, the range of potential civilian space applications, both public and private, is likely to increase substantially. If properly harnessed, such advances could have a major impact world-wide, in terms both of stimulating economic growth and of responding to social and environmental needs (GPS/Galileo in the field of navigation, combined IT and remote sensing applications in a variety of fields including security, earth observation for environment monitoring and disaster management, agriculture and mining, space tourism, solar energy).
Against this background, the space sector is now reaching a critical stage. Firstly, for strategic as well as commercial reasons, more and more countries are seeking to take advantage of the opportunities that space may offer in the coming decades. This could lead to yet more overcrowding in key segments of the space market (especially the market for launching services). At the same time, while the potential applications of space technology are wide-ranging, the development of financially viable applications has proved very difficult. As a result, both the industry and the financial community are hesitant to embark upon the development of a number of potentially promising applications. This situation is leading a number of countries already active in space to reassess their overall space strategy. Many of them are facing difficult choices, in particular on the overall level of effort that should be devoted to space, on how that effort should be allocated, and on the role that could be expected from the private sector.
Reaping the full benefits of future space innovations for society at large will not be easy. Strategic, military and security considerations will continue to significantly influence the evolution of the sector, not least regarding the structure of the industry, market access and the main thrust of R&D efforts. Moreover, the transition from publicly funded activities to applications relying largely on private resources is fraught with difficulties. Innovative business models - which may involve new forms of partnership between public and private actors as well as greater involvement of potential users - need to be found for the development of new applications. At the same time, as the range of commercial applications increases and as ever more countries become active in the space sector, governments will need to put in place, both at the national and international levels, an institutional and regulatory environment that fully takes into account the growing commercial component of the sector (e.g. by providing for a level playing field) and that fully supports its development.
Comparative advantages of the OECD as a platform
The consultation process has clearly shown that major stakeholders would like the OECD to take a leading role (just as the OECD has done in other areas such as e-commerce or international air transport) as an "honest broker" that could contribute to achieving a better common understanding of the issues at hand among key stakeholders. This common understanding would provide a good basis for the formulation of policy recommendations reflecting broad common ground among participants in the project and effectively contributing to the development of the sector.
Several factors make the OECD a particularly appropriate platform for this project:
?First, many OECD countries devote significant amounts of resources to space-related activities. Moreover, overall, Member countries play a key role in the development of the space sector as most of the key players, public and private, are part of the OECD area. Hence, (a) it is appropriate for the OECD to pay attention to space-related activities; (b) any recommendations resulting from this work which are endorsed by the OECD Council are likely to have an important impact on the future evolution of the sector as a whole.
?Second, space applications will increasingly play a role in a broad range of activities where OECD governments have a major responsibility beyond the traditional military and scientific policy fields (e.g. security, environment, education, health, communications, transportation). Hence, they are likely to welcome any assistance the Organisation can offer in the formulation of space policy.
?Third, many of the issues raised by the future development of the space sector (e.g. regulation of markets, industrial and scientific policy, public and private governance) clearly fall within the field of competence of the Organisation. Moreover, the Organisation has addressed the space sector on several occasions in the past, for example in 1985 as part of a general assessment of issues in the trade of high technology products conducted jointly by the Industry Committee and the Committee for Scientific and Technological Policies.
?Fourth, given the significance of space developments for the future, their assessment requires a multi-disciplinary approach based on consultation with a broader range of stakeholders than the limited group of actors that typically shape space policy.
?Fifth, as its name clearly indicates, the main mandate of the Organisation is to foster economic development and strengthen international co-operation. For this purpose, it offers a neutral forum where issues can be debated in an informal and non-confrontational manner with a view to finding solutions to the problems facing the sector, and to promoting co-operation among the main actors. This process could be extended, if so desired by OECD-area participants in the project, beyond the OECD area, by inviting to the discussion table key stakeholders in selected non-Member countries (e.g. Russian Federation, China, India, Brazil).
?Sixth, given the wide range of policy areas covered by the Organisation, this project would provide a unique opportunity to stress the importance of the space sector to policy experts in other fields, and to raise the awareness of space-related issues, not only within the Organisation, but, more importantly, among senior officials who attend major OECD Committees regularly (e.g. Economic Policy Committee, Committee on Industry and Business Environment, Trade Committee, Competition Committee, Insurance Committee, Committee on Financial Markets, Tourism Committee, to name just a few).
The conclusion we have reached at this juncture is that an OECD Futures Project on the future development of commercial space applications would indeed be useful if it were to concentrate on (a) identifying promising applications for the future; (b) assessing what business models will need to be adopted for this purpose - including new and innovative forms of partnership between the public and the private sector; and (c) identifying significant gaps in the existing institutional, legal and regulatory framework, and exploring the scope for policy initiatives that inter alia would improve framework conditions. These are only provisional conclusions at this time. It will be the purpose of the 23 September meeting to assess whether these proposed broad orientations for the project are appropriate and what areas should receive particular attention.
Finally, we would like to take advantage of this note to extend our sincere thanks to all those experts who agreed to meet with us and spend the time answering our questions.