	Introduction

The space industry refers to economic activities related to the manufacture and delivery of components that go into Earth's orbit or beyond. The space industry is a subset of the U.S. aerospace industry and U.S. strength in aerospace has helped to provide U.S. strength in space. The focus of this report is the global commercial space manufacturing sector (launch vehicles, spacecraft, satellites, and parts and equipment). Together, the space and ground infrastructure enables a much larger space services sector that includes satellite telecommunications and broadcasting services and satellite remote sensing, among many other services. The space industry, broadly defined, is an important part of the U.S. industrial and technology base. The U.S. commercial space manufacturing sector is small, but the companies that manufacture commercial satellites also manufacture satellites for the U.S. government. The U.S. government is by far the largest consumer of space products and services, accounting for 23% of global spending. The major policy issues discussed in this report are limited to those that appear to have large effects on the competitiveness of the U.S. space manufacturing sector: classification of commercial satellites as munitions subject to stringent U.S. export controls laws and regulations; domestic and international spectrum regulations that may not have kept pace with the emergence of new technologies that appear to require much greater flexibility in terms of spectrum use; and the dramatically increased use of commercial satellites for Department of Defense communications needs. Spacecraft and space systems are manned or unmanned vehicles that transport passengers or cargo. Orbital is an established commercial space company that manufactures launch vehicles, spacecraft, and satellites. 111-84 , Section 1248) provides that the Secretary of Defense and the Secretary of State shall carry out an assessment of the national security risks of removing satellites and related components from the United States Munitions List (USML). 331 , H.R. Legislation ( H.R. However, both spectrum and satellite orbital position are scarce resources and governments regulate and allocate the use of radio spectrum on earth and in space. One of the issues of concern to the military and to commercial satellite operators has been the shift from a need for surge capacity to increased reliance on commercial satellites for core communications capabilities that meet military requirements. The Department of Defense is a large user of geosynchronous satellites, and it could potentially play a significant role in encouraging more competition in the commercial satellite sector—especially if it is successful in deploying hosted payloads on commercial satellites. U.S. manufacturers of launch vehicles, spacecraft, and satellites have a number of distinct advantages over many foreign competitors, including a very large aerospace industrial base capable of supporting commercial and government demand for space technologies and equipment. As the U.S. government's role in promoting human spaceflight has transitioned from the Space Shuttle to a strategy that relies on the private sector to develop products that are competitive and serve the broad U.S. goals and activities that were identified in the National Space Policy of June 2010, the U.S. launch industry has become dependent on government payloads and has continued to face stiff competition from Russia and Europe.
The space industry refers to economic activities related to the manufacture and delivery of components that go into Earth's orbit or beyond. The space industry is a subset of the U.S. aerospace industry and U.S. strength in aerospace has helped to provide U.S. strength in space. The space industry was originally developed by government entities, and government policies and spending continue to exercise a strong influence on commercial space activities in the United States and elsewhere. Space-oriented manufacturing, which includes launch vehicles, spacecraft, satellites, and parts and equipment, has created a large space-industrial infrastructure that enables a much larger space services sector that includes satellite telecommunications and broadcasting services, and satellite remote sensing, among others. Together, these are an important part of the U.S. industrial and technology base. The focus of this report is the global commercial space manufacturing sector (launch vehicles, spacecraft, and satellites). Although relatively small, accounting for less than $6 billion of expenditures in 2010, it enables an estimated $276 billion in spending for ground equipment and satellite services.
The United States manufactures more launch vehicles, spacecraft, and satellites than any other country, but the relative U.S. competitive position has eroded as other countries have made large investments in commercial and government space activities. The U.S. government remains the world's largest customer for space equipment and services. With the end of the Space Shuttle era, the government will increasingly depend on the U.S. commercial space industry for transport of humans and cargo, and on commercial satellites for communications and data. The extent and nature of government demand are likely to be significant factors shaping the U.S. commercial space industry. U.S. policy has gradually shifted toward encouraging more competition among firms that manufacture launch equipment, spacecraft, and satellites, encouraging the participation of smaller, entrepreneurial firms in an industry segment traditionally dominated by large aerospace firms.
Several policy issues appear to have significant effects on the growth and competitiveness of the U.S. space manufacturing industry:
In 1998, Congress passed legislation that reclassified all satellites and satellite parts and equipment as weapons under the International Traffic in Arms Regulations, limiting the ability of U.S. manufacturers of commercial space equipment to sell abroad and encouraging foreign rivals to increase their global market share at the expense of U.S. manufacturers. On April 18, 2012, the Department of Defense (DOD) and Department of State issued a congressionally mandated report that assessed risks associated with removing satellites and related components from the United States Munitions List (USML). Bills have been introduced in the 112th Congress to reauthorize and amend U.S. export control laws (H.R. 2122, H.R. 2004, H.R. 1727, H.R. 3288). The rapid growth in technologies that consume large amounts of bandwidth threatens to destabilize the current system that allocates spectrum and orbital position to specific users. Spectrum is a scarce resource, but increasingly, commercial satellite operators are developing technological solutions to increase capacity. DOD is now a major user of commercial satellites. From a surge related to the wars in Iraq and Afghanistan, it now places greater reliance on commercial satellites. Hosted payloads are also likely to become a more common feature of the commercial satellite industry in the future.