1. The Orbital Economy
By Terry Drinkard
I’m one of those men of a certain age. As I was growing up, the Great Space Race between the
United States and the USSR was at full throttle.
The Mercury sub-orbital flights, then to orbit, followed by Gemini and then, the peak, Apollo.
This is the era of John Glenn, Neil Armstrong, and The Right Stuff. If you didn’t live through it,
I can’t really explain to you the excitement, the visions that we shared, the sense that we human
beings were ready to break out of the limits of our one planet and move out into the solar
system.
But, that never happened. No long-term infrastructure had been put into place. Werner von
Braun’s vision of an orbital space station was never seriously considered, much less built.
Looking back, it is clear that the Great Space Race was a stunt, not an inflection point in
history. It was two military super-powers flexing their muscles and rattling their scientific and
engineering sabers, posturing to impress the crowd, not visionary business people laying a
foundation for future generations to build upon.
Then came Nixon
When the Nixon administration approved the Space Shuttle, but no orbiting space station (the
logical destination of a space shuttle), I knew that the space program as I had understood it was
doomed. This is nothing against the Space Shuttle. I watched it depart and return in 1981 (that’s
right, it’s been almost thirty years, now, more than a generation ago), as glorious a sight as
anything I had ever seen. But without infrastructure, there is little that can be done, and that
little will always be risky and limited in scope. Imagine trying to operate your business in the
US with no infrastructure; imagine operating your business in the libertarian paradise of
Somalia. It doesn’t work.The importance of having infrastructure
Infrastructure is important. The installation and maintenance of infrastructure is one of the
things that government is supposed to do, and it is one of those things that government does
well. Moreover, infrastructure facilitates the private economy. Without infrastructure (and all
that it implies), we are back in the feudal era.
The Hanseatic League
Remember the Hanseatic League? Of course you do. It was an economic alliance between cities
along the northern coast of Europe that operated during the Middle Ages. Its origins lie within a
lack of infrastructure to facilitate trade in a resource-rich region. One of the reasons that the
Hansa trade was conducted primarily aboard ships instead of wagons was because ships didn’t
need nearly as much infrastructure compared to wagons and were much less expensive to
operate per ton mile. A road network was expensive to build, expensive to maintain, and
impossible to fund, but rivers and oceans already existed.
Essentially, a group of businessmen got together to form a regional trade-based alliance that
created a lot of necessary infrastructure in terms of governing regulations, relationships with

2. other governments—as well as the more usual docks, warehouses and navigational aids—and
business flourished. Trade in the region increased by orders of magnitude, benefiting nearly
everyone. Please note, not all infrastructure is concrete. Some infrastructure is in governance,
regulation, taxation, revenue sharing, methods of organization, investments, commercial ethics,
and enforcement mechanisms, the foundational memes of modern business. Those who would
destroy government to facilitate business are ignorant of history.
What has this got to do with space?
We have very little business infrastructure in space, and what little we have is neither very
broad nor particularly helpful at this point. Moreover, it is incredibly expensive and does not
support itself economically. There is the International Space Station, of course, which has cost a
huge amount of money, so much that no one wants to admit to exactly how much. The ISS is a
marvelous laboratory of orbital space, but the cost to service it is, well, astronomical. Why?
Largely, because we lack reliable, cost-effective commercial infrastructure. One might think
this is obvious, but never ask the military to design commercial infrastructure.
Opening The New World as metaphor
Let me digress for a moment. There are a number of metaphors in common use for this early
stage of human occupation of space. I like the ones that compare it to the discovery and
eventual occupation and exploitation of North America, what I will call the “Opening The New
World” metaphor. It is a very attractive metaphor, filled with visions of massive resources
waiting to be profitably exploited, underlaid with implications of manifest destiny, lebensraum,
and heroic conquest. And, it’s true! What’s not to like, really?
When Basque fishermen first began drying and salting their cod catches on the frozen coasts of
North America, yes, they used ships; yes, they were crewed by hardy souls; yes, they were
guided by the latest navigational tools (the magnetic compass and the mariner’s astrolabe, I
believe). But, they could still breathe the air; they could drink the water, there were plants and
animals to eat, and yes, even people to trade with; most importantly, they could get there and
back again for a reasonable cost; the value of their cargo vastly exceeded their transportation
costs.
This metaphor, as attractive as it is, neglects the huge differences between going to another
place here on earth, where people can sustain themselves indefinitely, and going to space,
where there is nothing at all.
The other, really major problem with the Opening The New World metaphor is the difference
between profitable activities. For the most part, people first went to the New World to make a
profit. They already knew what they wanted and how to get it. Cod, gold, spices, sugar,
whatever. Those early pioneers knew what was needed to dry and salt cod; they knew how to
mine for gold; they knew how to clear land to grow indigo, rice, and sugar cane; they knew
how to build docks and warehouses and could use the local resources to do those things.
Economic support
These pioneering entrepreneurs benefited from an established economic sector that could
provide ships that worked reliably and economically, and could support those vessels through

3. manufacturing, repair, and crew training as well as continued refinement of existing types and
design of new types. They also had an economy that could readily absorb the products of their
efforts, and paid handsomely for the opportunity because those products had real economic
value to people at home.
Those primary economic activities—resource extraction and agriculture—and all of their
supporting activities created robust new economy in that New World. Fishermen need boats,
nets, ropes, salt, preserved food, and a host of other supplies; farmers and miners also needed
their specialized supplies, everything from picks to plows. At first, everything was imported.
Then some things had to be repaired on-site, which led to minor resource extraction and
materials processing, and on to limited, low-level manufacturing, which led, in turn, to higher
local demands for materials, creating a virtuous bootstrapping cycle of local economic
development leading to eventual economic independence.
We don’t really have that for space
We have no established profitable commercial activities in space. Other than weather and
communications satellites, what do we do there, really? Maybe a little research, some
astronomy, that’s about it for the commercial folks. Even our space-based navigation systems
are military, not commercial. Worst of all, access to orbit is currently through the military.
While a few firms have grown rich catering to military desires, there can be no general
blossoming of the orbital economy if we are confined by those same military desires. They
don’t care about us. I freely stipulate that research is an important activity, essential, really, but
it doesn’t turn a profit itself; research is an enabler of economic development, not a driver. So,
research by itself will never create an orbital economy.
Space heretic?
That all sounds very glum, doesn’t it? Clearly, I’m not a True Believer, right? Actually, I am. I
think that humanity will benefit immensely if we can ever develop a significant presence in
space, even if it is only in earth orbit. That said, I’m an engineer with an MBA. I am a data-
driven kind of guy. The data I see say that we cannot get there from here. We don’t have the
infrastructure necessary to develop an orbital economy, much less a true space-based economy,
a solar system economy.
So, how do we get the infrastructure?
First, we have to make a business case. What can we do that is value-added to a customer and
helps build out the infrastructure necessary for low-cost, reliable commercial access to low
earth orbit and what will we do once we get there? That’s kind of it in a nutshell.
My background is in heavy jet transports, so my filter is automatically set for air transportation.
What I am going to outline here is simply one way of looking at the problem, not the only way,
by any means, and possibly not even the exact pinnacle of best. Onward.
What is the current situation?

4. Assessing where we are currently, leads me to think about the new crop of space vehicle
developers: Burt Rutan of SCALED Composites and Jeff Greason of XCOR, and it’s not just
Americans; there are Brits, Danes, Canadians, Romanians, and others from around the world
involved in this dawn of commercial suborbital flight. This isn’t just an area for the little guys,
either. Both Boeing and Kawasaki have thrown their giant corporate hats into the ring. The first
product for these suborbital folks is space tourism. That is, buy a ticket and fly 60 miles or more
above the earth. Something resembling a rocket-powered Ferris Wheel, really.
Interestingly, the Ferris Wheel debuted at the Chicago World’s Fair in 1893. It, too, was
originally designed to carry tourists to a great height and back down safely. Moreover, the
original Ferris Wheel design has been improved and enlarged upon many times, as well as
reduced and made more mobile. Even the smallest of fairs and carnivals can profitably provide
Ferris Wheel rides. George Washington Gale Ferris’ basic design has replicated and proliferated
through the economic system because it provided a service at a profit. But, I digress.
Tourism as the economic base
Tourism may not seem to be much of an economic foundation for those who are interested in
creating a complex, stable orbital economy; however, it is what we have available. Moreover,
the same (or very similar) equipment that provides a straight up and down ride for those who
wish to personally experience the edge of space can be used for rapid transport to anywhere on
the planet. Literally, no destination is more than 90 minutes away (actually, probably closer to
45 minutes). What a tremendous opportunity for business aviation!
A new business aviation sector
I know. Spaceships as business aviation? Really? Yes, really. Think about it. We are renting a
craft with crew to take people on a trip, whether returning to the same place or going elsewhere,
it’s a commercial charter. We aren’t military. It isn’t an airline, at least not yet, and so far, no
one has their own spaceship that they fly personally, so it’s not general aviation in the broader
sense. To my way of thinking, this is a business aviation operation and we should be thinking
about how to profitably incorporate suborbital spacecraft into our system.
Truly rapid transportation
How about a New York or Chicago to London flight? Or Los Angeles to Tokyo Or LA to Paris..
Even LA to New York might be worthwhile to the right people. Imagine leaving LA around
nine in the morning, arriving in New York for a lunchtime meeting with your financial people,
then rocketing back to LA, where you can be back at the studio before one in the afternoon,
even taking crappy LA traffic into account. Imagine that same timetable for an LA to Mumbai
trip. Imagine being able to send people and hardware (I know what you’re thinking: how about
transplantable organs?) around the world and back in a morning. What’s the value of that in a
fast-paced global economy? Quite a lot, I should think.
Bootstrapping infrastructure

5. To make that happen, a great deal of design refinement and some additional ground-based
infrastructure will have to happen. What makes this work is that while we are refining vehicles
and upgrading infrastructure, we are providing a very valuable service for which we can charge,
and that income can be used to pay for the design improvements and necessary ground-side
services enhancements. This part of the orbital economy can bootstrap itself once it is set into
motion, just as heavy jet design and airport infrastructure improvements were paid for by
selling flights to passengers.
The next step
Here’s where it gets fun. With a critical mass of commercial business spacecraft and assuming
very modest performance improvements, it becomes technically and economically feasible for
the next step, an on-orbit conference center. I know; it sounds a bit out there, but bear with me
and follow the line of thought.
Business aircraft take business people to different places to do business. This is the core of what
we as an industry are all about. Vacationers take the airlines. Often we take a number of people
from around the world to luxurious, high-status places where a lot of business is discussed:
spas, resorts, world-class beaches, and golf courses. That’s all very nice. What about a meeting
at a resort that is eighty miles above the earth? Or a hundred? Imagine the incredible view from
the conference room! Now, this place would be, pretty much by definition, about the highest
possible status location you could get for a meeting. If you can hold your meetings here, you
will have arrived in a way that no Gucci handbag could ever convey.
Then another step
That is fine so far as it goes. But, think on this a bit more. If you are the company that is
providing that high status meeting space, clearly, you will be able to charge pretty much
whatever the traffic will bear. And you will need to, at first. It won’t be cheap putting a habitat
in orbit, or maintaining one, for that matter. Fortunately, you will be providing your customers
with a service that they cannot get anywhere else and it will be a premium service, worth every
penny you charge. Over time costs will come down, of course, and with additional on-orbit
habitats competing for those same customers, prices will have to adjust, just as we see in every
other industry. But until then, the first movers will have huge pricing power.
With the kind of revenues that first mover pricing power implies, and given the history of the
convention-center industry, what do you suppose will be next? A restaurant, at the very least.
Probably a hotel and spa shortly afterward, possibly even an orbital casino. Maybe several
different companies look at this kind of business and begin a constellation of these on-orbit
habitats as a risk-reducing joint venture. Whichever consortium does this first will define the
primary commercial orbital plane for at least the next century.
With a number of habitats in orbit (hopefully all in the same plane or very close—plane
changes are expensive in terms of energy), we can have trade—business—between habitats.
Some habitats will become specialized in terms of products and services to service the needs of
the orbital economy, with on-orbit habitat construction and maintenance likely to be one of the
very first, then maybe a zero-gee garden and farm for those orbital restaurants. Perhaps

6. someone will specialize in on-orbit repair and modification of existing communications and
weather satellites, or the design construction of orbit-only spacecraft, leading eventually to
spacecraft that are capable of taking humans all around our solar system. Other habitats will
specialize in manufacturing of goods and services for the groundside economies. Personally, I
would like to teach at the Orbital University. Zero-g college sports. Think about it.
Ever onward
With all of these different habitats in nearby orbits, clearly, there will be a need for services
both public and private: traffic management, rescue, navigational aids, dispute resolution,
health care, continuing education, orbital sightseeing, taxi services, cargo haulage, satellite
servicing, habitat maintenance, vehicle maintenance, and eventually, on-orbit manufacturing of
just about everything. Somewhere in all this economic development, we are likely to see the
genesis of some kind of orbital political identity, just as we saw here in the New World, with the
certain result of an orbital government designed to service the needs of an orbital society, an
innovation that will benefit everyone.
At that point, with a robust orbital economy in full exchange of goods and services with the
ground economies and an orbital government working with their ground-side counterparts, we
will have enough infrastructure in place to begin looking farther out, a stable platform from
which we can go to the moon, to the Lagrange points, and to the asteroids, where there really
are enormous amounts of natural resources, ready to exploit at a reasonable cost. At that point,
we will have a new, complex and stable orbital society. At that point, we will have arrived in
space, poised for massive growth.

7. someone will specialize in on-orbit repair and modification of existing communications and
weather satellites, or the design construction of orbit-only spacecraft, leading eventually to
spacecraft that are capable of taking humans all around our solar system. Other habitats will
specialize in manufacturing of goods and services for the groundside economies. Personally, I
would like to teach at the Orbital University. Zero-g college sports. Think about it.
Ever onward
With all of these different habitats in nearby orbits, clearly, there will be a need for services
both public and private: traffic management, rescue, navigational aids, dispute resolution,
health care, continuing education, orbital sightseeing, taxi services, cargo haulage, satellite
servicing, habitat maintenance, vehicle maintenance, and eventually, on-orbit manufacturing of
just about everything. Somewhere in all this economic development, we are likely to see the
genesis of some kind of orbital political identity, just as we saw here in the New World, with the
certain result of an orbital government designed to service the needs of an orbital society, an
innovation that will benefit everyone.
At that point, with a robust orbital economy in full exchange of goods and services with the
ground economies and an orbital government working with their ground-side counterparts, we
will have enough infrastructure in place to begin looking farther out, a stable platform from
which we can go to the moon, to the Lagrange points, and to the asteroids, where there really
are enormous amounts of natural resources, ready to exploit at a reasonable cost. At that point,
we will have a new, complex and stable orbital society. At that point, we will have arrived in
space, poised for massive growth.