NewSpace is characterised by entrepreneurial ventures that break the barriers of entry into the space by adopting new business models, focusing on innovation, cost reductions and standardizations, to bring new or revised space products to more consumers. Inherently, this brings up challenges to laws developed some decades ago. Is it a movement? Is it a market? Is it a way of working? The answer is YES to all the above. A universally accepted definition of NewSpace doesn’t exist, yet. In early 2000s it was a moniker associated with spaceflight ventures such as Space X, XCOR etc. Since then it has assumed a wider meaning as more new, non-governmental actors ventured into the space eco-system.
The term “New Space” signifies the innovation of space tourism and efforts to privatize space launch and space flight as a commercial industry. But it is far broader than just launch. New Space includes commercial communication satellites, satellite television, sub-orbital operations, large constellations of small satellites and many other commercial space ventures. New Space is not old space. New Space is old space on steroids. It is transformative. It is synergistic. It is taking us from slow moving government space programs to warp speed commercialization of everything from launch to space applications. From the beginning, space activities were conducted largely by nation states. Later, defense contractors began to develop and operate launch systems largely based on government rockets. In the 2000s, entrepreneurs started designing and in the 2010s began deploying space systems competitive with government systems. New commercial launch systems fostered competition in space launch services through cost reduction and more launch capacity. Along with more capacity came the opportunity for rideshares and hosted payloads. Advancing technology brought about miniaturization of components, 3D printing, and artificial intelligence to analyze the Big Data received from space assets. With small satellites came large constellations to provide broad band and other services to all areas of the globe so people everywhere could enjoy benefits of commercial space activities. While there were many technical achievements that enabled New Space, the impact of billionaires can’t be ignored. Billionaires have poured money into SpaceX, Blue Origin, Virgin Galactic and other companies. Another factor enabling New Space is the emergence of less government regulation. In the U.S., the cumbersome Federal Acquisition Regulation (FAR) and associated regulations have given way to NASA Space Act Agreements and Department of Defense Other Transactional Authority (OTA) agreements that are commercial contracts which have led to faster and simpler procurement of space assets by the government. The government has become less of a doer and more of an enabler. New Space is full of opportunities for all, including space lawyers. A challenge for lawyers in the New Space era is to adapt the space treaties of the 60s and 70s to the new opportunities available in the commercial space sector. Fortunately for our young space lawyers, New Space has opened doors for many more lawyers to participate in the space industry. Space is a major growth industry thanks to New Space – and lawyers get to share in that growth.
Market and technology developments in the context of “NewSpace” are also disruptive in legal terms. Among many others, NewSpace has a significant impact on how national space legislation is perceived, developed and implemented. Traditionally, the purpose of national space laws was mainly restricted to assuring compliance with the obligation of States under Article VI Outer Space Treaty to authorize and supervise space activities of non-governmental entities, to setting up a national space object register and to establishing liability obligations of commercial operators in view of the State liability under the Outer Space Treaty and the Liability Convention. Around 2000, only few States had enacted national space legislation, and, in many cases, the laws were short and focused on the above key elements. Over the past 10 years or so, there was a visible increase in national space legislations. Many of these national space laws were driven by the rise of small satellite projects of universities or university spin-offs. The legislative and regulatory approaches were specifically designed for that purpose. More recently, national space law is perceived as a tool for supporting the development and growth of a commercial space sector, for attracting companies, stimulating private investments, supporting job creation, and strengthening international competitiveness. Many countries with existing national space legislation have undertaken reforms, or are in the process of preparing them, towards this broader aim and focus. Emerging space nations adopt comprehensive legal and regulatory frameworks in the context of highly ambitious space policies and strategies. Business decisions and regulatory initiatives are closely linked in this respect. In some cases, the establishment of a company planning to conduct space activities may result in corresponding national regulatory initiatives. On the other hand, regulatory initiatives may lead to the establishment of new companies or may provide incentives to foreign companies to move their headquarters to the respective jurisdiction. The increasingly perception of national space law as a tool of economic policy however increases the risk of forum shopping result and may result in a regulatory race to the bottom. Specific national approaches to regulation may undermine the role of international fora in the further development of international space law and overall, they push the global State community even further towards a pure economic perception of the space industry. Where the primary aim of national legislation is economic and competitive advantage, light-weight regulation with minimal burden for industry risks to undermine progress towards the protection and long-term sustainability of the outer space environment.
The concept of NewSpace is a ‘new’ phenomena wherein a series of technological, legal, commercial and social model innovations have culminated in a significant decrease in the expenses related to the provision of new space products and services, and this in turn has served to widen the market. Some market expansion is can be seen in sub-sectors such as space mining, space tourism, on-orbit servicing and human and robotic spaceflight. Satellite mega-constellations also represent a rapidly growing niche within this market. The changed context of satellite mega-constellations in particular provides the right opportunity to shift from competition to cooperation, being a capital intensive, lucrative and highly tenuous market segment. In order for outer space benefits to accrue, then, states and entities will require assurance of returns on their investments. This assuredness can only be brought about by legal provisions that protect property interests in outer space and create mechanisms for beneficiation. To achieve this we need to investigate the growing demands in the underwriting space and the lack of adequate investment protection in the applicable space treaties. While Earth is governed by property rights, there is no parallel system in outer space. To secure investments made in satellite mega-constellations necessitates robust security rights pivotal for financing large infrastructure projects. These will include a variety of policy endeavors such as mandatory insurance policies. Indeed, long gone are the days when outer space was accessible to all but financial behemoths. Space operations in past times took on a decidedly militaristic appeal and activities were often shrouded in secrecy. Thus, as commercialization of space products and services expands, we need to consider how to secure the use and revenue-generation potential of space hardware and software. With the rising concerns in space traffic management, space debris, cybersecurity and the threats of geopolitics tensions here on Earth, outer space should be treated as another ecosystem requiring a careful balancing of stakeholder’s rights, particularly economic rights and responsibilities. We are essentially at the cusp of a revolution where actions, players and innovations are becoming increasingly diverse, and with this, the need for adaptation to the new competition, capabilities and interests. We do so because outer space is a valuable resource, and as such, it is bound to derive curiosity from all sectors of society, mostly governmental and private sector, but also educational institutions and even private individuals.
The past two decades have seen the global landscape of space activities undergo profound changes. Whereas most space activities were (and still mainly are) led by governments, a disruptive, commercially driven ecosystem emerged. ESPI assessed New Space as being a combination of 6 underlying dynamics: New public schemes, new entrants, new industrial set-up, new solutions, new markers, and new private investments. This wide range of interrelated trends have led the space sector towards a more business and service-oriented set-up. One of the key underlying dynamics that made the New Space dynamic break from previous historical commercial phases of space sector development is the sheer volume of private investments. Private investments have exploded over the past decade reaching a staggering €12 billion globally in 2021. Even while fundamentally different in purpose, private investments now not only supplement public space budgets but truly complement them. As a result, much of the global New Space sector has relied or is expected to rely on private investments in the future. Recent market conditions have taken a turn for the worse. Worldwide inflation, supply chain shortages, geopolitical tensions and a rise in interest rates are combining to make even the most bullish of investors fear a recession. Public markets are generally first in line when it comes to being affected by macroeconomic conditions; however, private markets and investment are never far behind. It appears increasingly likely that a slowdown of private investments is on the horizon, with investors moving away from risky investments and businesses that remain far from revenue. The New Space ecosystem will be increasingly put under stress should a protracted economic downturn occur. In the case of Europe, the lack of large-scale anchor tenancy contracts by public institutions such as seen in the United-States is a key risk factor for European space start-ups. The “dependency” on private investments at all development stages, may force many companies to make tough decisions in the months and years to come depending on their runway. In an actively changing funding landscape, the New Space ecosystem may likely mutate into a new phase, where only the companies with the most efficient business models and credible paths to revenue survive. With a concentration of talent and capital into the most capable companies, this new phase, while initially destructive, may also witness the emergence of the leading space companies of tomorrow.