International Space Station Alpha1
is a Building in Space
By James Muncy, Rick Tumlinson and Bob Werb

Since the earliest days of the space age, we have evolved a perception of space that is mythical in proportions: a domain that is so dangerous and different, so "out of this world," that even the basic rules and systems of human civilization cannot be applied to our activities there. We have treated this new frontier as if it were an isolated experiment in human activity, requiring its own special rules and participants. Our approach to space, from the beginning, has been programmatic: a sequence of events and projects managed by an insulated group of specialists, free from the burdens of the economic and social realities that govern the rest of society.

One result of this paradigm has been the acceptance of spectacularly high costs and huge uncertainty in a series of disjointed space activities. But as human spaceflight becomes a continuous reality with the construction of the first permanent settlement in space, a new perspective is urgently needed.

Furthermore, International Space Station (ISS) Alpha is a long-awaited opportunity to pursue untold scientific and economic breakthroughs. So, how do we fully exploit this opportunity? How can we best "run" this space station to deliver the greatest benefit to the taxpayers who funded it, and to humanity as a whole? In particular, who -- in both the public and private sectors -- should make which decisions about doing what with this expensive (but potentially even more valuable) facility?


The ISS as Real Estate

Although its location may be unique, ISS Alpha is essentially just a building. It is real estate. Yes, it is in a remote neighborhood, and yes, it is very expensive and very complex; but just like an oil platform or skyscraper, it is still a building or facility. As such its management should be discussed in terms used to evaluate and manage similar ventures here on Earth. (This is a doubly-useful exercise, as it helps us break free of our mythological perspective of space by bringing us, shall we say, back down to Earth.)

To answer these management questions, we first need to be clear about all the different functional roles that the various participants in a space station can play. Since we're talking about facilities in space -- essentially specialized, unique real estate properties -- we'll use terms that are widely understood in the economic life of our society but are rarely used in the aerospace arena. So, we will use words like owner2, landlord3, tenant3, broker4, contractor5, supplier6 and customer7 in the ways that they are normally used in the real estate industry8.

Managing the Opportunity of ISS

For the last year of its life the former government-funded space station Mir was essentially privatized. Energia, a mostly privately owned firm, joined with American entrepreneurs to create MirCorp, which in turn commercialized Mir by marketing its commercial potential. Although formed in the midst of an immense controversy that resulted in a Russian government decision to de-orbit the facility, the MirCorp firm signed several high paying customers and demonstrated the existence of new markets and potential economic drivers for orbiting space facilities.

But what of ISS Alpha? Can it, too, be privatized (and then commercialized)? Wouldn't market forces be the best way to maximize ISS' return for the partners and all humanity?

The answer to the latter question is undoubtedly 'yes,' but the answer to the former is probably 'not completely.'

We are among many who have long supported the full privatization of the ISS once its assembly was complete. Ideally, this would mean wholly transferring the station to a private entity (almost certainly an international consortium) that would both own and operate the facility. The partner governments' roles (beyond regulation) would be limited to being favored customers and/or tenants.

We recognize, however, that full privatization is not politically or economically realistic today. Unlike Mir, the ISS involves multiple national governments that are still spending huge amounts of money on it, and will be for several more years. After collectively spending over $50 billion of taxpayer money, the partner governments will not be willing to just "auction off" the ISS to the highest bidder, nor would the taxpayers in those nations stand for it.

Furthermore, ISS is still unfinished, with a hopeful but uncertain future. No one knows for sure how much it will cost to complete, let alone operate, or when it will be completed, and how much it will actually be able to deliver for its users. That's an awfully blank check for any investor to sign. In fact, in recent years NASA leaders have suggested they could "turn over the keys" of the ISS to industry once operational, but there hasn't exactly been an overwhelming response.

At the same time, no one seriously believes that the partner governments should, let alone can afford to, manage and conduct every aspect of ISS operations and utilization. In free societies governments' primary role in the economy is to enforce private contracts and regulate businesses (for reasons of public safety and environmental protection). When governments do get directly involved in the marketplace, they try to limit their role to being intelligent customers of goods and services. Historically, when government goes beyond its normal role and assumes absolute control over the kinds of activities envisioned for Alpha the result has been bureaucratic delays and higher costs for all involved. Imagine the headaches for those trying to develop innovative products, new markets or scientific breakthroughs of trying to navigate through the bureaucracies of 16 partner nations, as is currently the case.

Finally, the formation of a single multi-national corporate consortium retaining ownership of the entire facility, backed and perhaps subsidized by the partner governments, poses the danger that it will become an almost insurmountable competitor to other orbital facilities. It would also have the ability to exclude users from the station if it perceived that they posed a threat to either its monopoly or to the interests of any of the consortium members.

So our challenge is to find a market-based alternative to the traditional aerospace command economy approach which stops short of complete privatization. Fortunately, we have an excellent terrestrial model: the quasi-governmental "infrastructure authority"9. Typically granted limited government-like powers to administer transportation-related or scientific infrastructure systems, authorities are especially useful when more than one governmental jurisdiction is involved. Examples include:

- the Port Authority of New York and New Jersey, which oversees airports, bus transit, and shipping in and around New York City,
- CERN, the European nuclear physics research organization, and
- the Great Barrier Reef Marine Park Authority in Queensland, Australia

Although varying in form and function these authorities act as central managers for shared assets. A simple example would be the model of an airport authority. Such a quasi-civic authority is responsible for the complex and potentially dangerous operation of large, high technology fleets of aircraft carrying thousands of delicate passengers, including refueling and technical support. On the legal front, the authority often represents the interests of its tenants to the central government, has jurisdiction over the surrounding area and maybe even the right of eminent domain. Economically, it is responsible for creating a stable and economically nurturing environment for all involved, from passengers, to operators to the person selling snack foods from a cart in the terminal. Given the worldwide scale of such operations today, we know this model works and often works well, providing a safe and relatively user friendly system for billions of passengers and workers around the world.


An International Space Station Authority

Using this model, we are proposing the creation of an international authority that would function as an asset manager, or landlord, for the entire space station. The partner nations would retain ownership (and therefore ultimate control) over their own modules and facilities, and manage them using any one of a variety of models. These could range from handing their management over to one of their contractors or universities, to setting up scientific organizations such as the Hubble Space Telescope Science Institute to manage the scientific activity of a lab or even a single instrument10. Governments would then be free to purchase whatever goods and services they want from any number of tenants operating under lease agreements with the authority, or if they wish to they could lease back the rights to exclusively use some element of the facility itself. The ISS Authority would be responsible for hiring suppliers and contractors to help operate and support the entire facility. It would sign leases with as many tenants as it wanted, rent the various parts and parcels of the facility, and any expansions thereto.

An ISS Authority would therefore create a stable management framework within which competitive market forces would both allocate ISS utilization rights to the most productive uses (either in terms of private profit or public good) and reward the most innovative and cost-effective ISS contractors and suppliers. Simply put, an ISS Authority would rapidly increase the station's beneficial returns while lowering its operating costs. Beyond this well-understood market behavior, however, are several more subtle -- but perhaps more important -- benefits of this arrangement:


- Once assembly of Alpha is complete, partner governments will be able to limit their expenditures to paying the Authority for their use of the station, rather than some arbitrary share of indeterminate operations costs. This echoes the recent public policy trend towards funding outcomes rather than inputs.

- The ISS partners' current plans for operations and commercialization are disjointed and unrefined, and therefore dysfunctional. (This is understandable, given the necessary focus on actually building, launching, and assembling the hardware.) Forming an ISS authority as soon as possible would produce much-needed stability and predictability -- vital for prospective ISS tenants, customers, suppliers, and contractors -- faster and more comprehensively than waiting for a solution to evolve from today's chaos.

- Because it is politically possible to create an ISS Authority, the partner governments can get started on this now, rather than waiting several years to (hopefully) embrace full privatization. At that point government-conducted ISS operations will be well established, and the incumbent interests may not yield to a market-based approach.

- Since an ISS Authority is a better and cheaper way to manage the resources and operation of the ISS, it will free up significant time and funding for the partner governments to focus on more visionary research and development projects further out on the space frontier.

So, the Authority would have several advantages over the space agencies in its effort to efficiently and effectively manage operations of the International Space Station. First, it would be a single purpose organization and could concentrate all its effort on the one activity. Second, it would embrace all the various elements of the ISS allowing for significant economies of scale. Third, it would be very motivated to purchase needed products and services in a manner that gets the most value for the authority. Finally, it would be somewhat isolated from day to day political concerns in the various countries involved.


The Urgency of Starting Today

Creating an ISS Authority will not happen overnight, but it can happen sooner than any other serious mechanism for privatization and commercialization of the ISS. In part this is because the Authority concept is generally well understood among most of the partner governments. It is also true because an ISS authority is not as dramatic a change from the current Intergovernmental Agreement for the ISS as would be pure privatization. (For example, an authority could initially maintain some degree of "proportional work allocation" among contractors and suppliers from the various partners.)

But the greatest "political practicability" advantage of the Authority is that it would be a truly international entity that all partners could equally trust (or distrust) to serve as an impartial manager of the ISS facility on their behalf. For example, because an Authority would be required to contract out for goods and services, it would have fewer tendencies towards bureaucratic empire building (and therefore threatening space agencies). The Authority would have only one focus, the well being of Alpha. It would have no interest in creating complex non-ISS barters or manipulating dealings on the station as part of any other schemes or projects beyond the facility. Additionally, because it would not be allowed to become financially involved in any specific business deals on the ISS, the Authority would also be fairly well insulated from the conflicts of interest that are sometimes a concern in privatization deals.

The benefits of a somewhat "analog" transition and political doability both argue, however, for initiating the ISS Authority creation process just as soon as possible. Because that will involve considerable debate within and among the partner nations we are proposing an inclusive mechanism for creating this entity.

But there is another reason for urgency in refining the ISS Authority concept and beginning its establishment. All of us know that there are other things that the free nations of the world should be doing in space, both individually and in partnership. There are planets and other objects to explore. There are grand new industries to enable. There are discoveries to be made. Most importantly, there are inspiring dreams and challenges to be passed on to our children and their children.

Little or no progress towards these possibilities will happen if spacefaring nations' governments become bogged down operating just one outpost in the shallow waters of the new ocean of space. And failing to pursue these exciting achievements now, when we have the chance, will have incalculably harmful effects on our peoples and our planet for generations to come.

Now is the time to help our space agencies avoid a creeping drift towards becoming landlords and managers and back to their real role as explorers and innovators. Now is the time to create an environment in the near frontier that fosters the lowest cost and highest rewards for the people of earth. Now is the time to prevent Alpha from becoming a political and bureaucratic anchor weighing down innovation and aspirations, rather than an incubator for new ideas, and a port from which new ships of exploration can launch themselves outwards to open the space frontier for, and to, all of humanity.

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Contents copyright © 2001 James Muncy, Rick Tumlinson, Bob Werb