Regulation: an Enabler, not an Enemy for Emerging Space Companies

Rather than being classed as red tape, regulation can play an enabling role to support satellite start-up companies in the satellite industry.

Where regulation includes a credible licensing process,it strengthens investor and customer confidence, stimulates innovation, and encourages growth.

By the same token, excessive regulation, which is poorly tailored to the satellite industry and lacking in transparency, can stifle innovation and the growth of new businesses. Cubesats and smallsats have been catalysts for the implementation of new space laws as governments seek to regulate and transfer some of the responsibility down to the satellite operators.

Countries recognizing the potential of the satellite industry to generate economic growth seek to encourage the industry through amended or upgraded legislation, such as in the United Kingdom, Australia and Japan. Appropriate regulation can increase investor confidence, while inappropriate regulation can hinder the development of new technologies. Enabling regulation can also positively contribute to the speed with which companies can bring its innovative products to market. Effective regulation allows a government or national regulator to manage national security implications and facilitates the sustainable use of outer space through space debris and Space Situational Awareness (SSA) measures; ideally those which are adopted internationally.

Many technology startups in Silicon Valley adopt a business strategy of risk first, where regulatory compliance is often not prioritized until they achieve financial stability.

This approach was seen in January when a satellite start-up, Swarm Technologies, launched four cubesats into orbit from India after the domestic regulator, the U.S. Federal Communications Commission (FCC), had denied Swarm’s application for a launch licence.

The FCC has granted temporary authorization allowing Swarm to reactivate its satellites “for the sole purpose of collecting orbital and tracking data” for six months from Aug. 24, 2018. However, the Swarm satellites still face a continuous ban on commercial use, and The FCC is likely to use the case as an example to deter against future breaches of regulations.

Regulating new satellite technology raises several issues for regulators. A reactive approach may not enable a new technology to emerge optimally and could lead to unanticipated commercial outcomes. The design and enforcement of regulation needs be future-proof as technology advances faster than a specific regulation can keep pace with it. We have seen this in the U.K. through the Space Industry Act, which sets out a framework covering several new technologies. The Act leaves some discretion to the U.K. government to allow exceptions and incentives. Ideally, innovation and regulation should be interactive forces, allowing regulation to adapt as technology evolves.

Regulatory forum shopping is more prevalent than ever. Satellite operators may have contingency plans, including alternative jurisdictions for Radio Frequency (RF) approval. By taking too much of a precautionary approach, a regulator may paralyze national growth and force an operator to a country with more relaxed regulations. This may lead to a less sustainable use of space.

So, how can regulators be proactive in addressing regulatory issues? A key solution is continued engagement with industry through supporting industrial innovation. VS