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Date: Fri,  8 Dec 89 01:31:24 -0500 (EST)
Subject: SPACE Digest V10 #320

SPACE Digest                                     Volume 10 : Issue 320

Today's Topics:
		     Hearings on HR2674 (5 of 6)
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Date: 6 Dec 89 19:42:58 GMT
From: cs.utexas.edu!mailrus!sharkey!itivax!vax3!aws@tut.cis.ohio-state.edu  (Allen W. Sherzer)
Subject: Hearings on HR2674 (5 of 6)

Below is testimony fron the hearings on HR2674. The next step is
to pressure Congressperson Nelson of Florida to send the bill to
'mark up' so it can get to the floor.

This information comes from Tihamer Toth-Fjel of the Ann Arbor Space
Society and Catherine Rawlings of Congressperson Packard's office.

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Remarks of C.  J.  Waylan

Before the

U.S.  House of Representatives
Committee on Science, Space, and Technology
Subcommittee on Space Science and Applications

November 9, 1989

Mr.  Chairman and Members of the Subcommittee:

I am C.  J.  Waylan, President of GTE Spacenet Corporation.  I am
pleased to have this opportunity to share my views with you on the
status of U.S.  satellite launch services and to present some
recommended policy initiatives for ensuring that the United States is
positioned at the forefront of space exploration and utilization well
into the next century.

GTE Spacenet Corporation has been a licensee in the domestic
fixed-satellite service since 1980 and has performed turnkey
installations of both domestic and international earth stations since
the early 1970's.  As a commercial satellite operator, GTE Spacenet
provides a comprehensive range of telecommunications services through
the operation of our multi.satellite system, which presently consists
of six in-orbit satellites with an additional satellite scheduled for
launch in 1990.  In addition, on December 7, 1988, we received
authorization from the Federal Communications Commission to construct
four replacement satellites and to launch three of them in the early to
mid-1990's.  Our investment in communications satellites and earth
station facilities attests to our substantial commitment and firm
belief in the future of the commercial satellite industry.

While our commitment to space utilization remains strong, we are
increasingly concerned with the lack of focus and direction of U.S
space policy which we believe may adversely impact the commercial space
industry.  The need to refocus U.S.  policy in the areas of space
access, exploration and utilization is evident when one reviews the
direction that the U.S.  space program has taken in its relatively
brief history.


INTRODUCTION

The United States once had a vision for space and its use to gain
knowledge for beneficial applications.  This vision moved the country
through the triumphant completion of the Gemini and Apollo missions and
on to advanced programs of space exploration and utilization.  That
vision no longer exists.

More than 20 years ago we saw the U.S.  space program focus on
accessing space.  We saw the development of the Space Shuttle and other
launch technologies that appeared to almost routinize access to space.
Then, with the tragic loss of the Challenger in January 1986, followed
by a series of failures of expendable launch vehicles (ELVs), we were
forced to face up to the fact that the act of accessing space is far
from routine.  It is complex, costly and fraught with potential for
failure and injury to human life and property.  It was foolish to ever
pretend that this wasn't the case.  In the absence of vision,
government policy on access to space has grown further away from
private industry's needs.  Whereas government and private industry once
formed an alliance in the pursuit of space application programs, this
is no longer the case.

Just at the time when commercial use of space is displaying so much
promise on a worldwide scale, the U.S.  seems to have lost focus and
direction in this area.  The fruits of all of our investments in space
and our sometimes painfully achieved accomplishments are accruing to
other countries.  An area of particular concern is the ability of the
U.S.  to provide comnercial satellite operators access to space on an
acceptable basis.

OVERVIEW

In the early years of the U.S.  space program, every launch was an
event-.  anything but routine.  launch vehicles were specified and
procured by NASA and the Defense Department for specific missions or
programs.  Since the United States was the only country in the western
world with the technology and capability to successfully construct
and launch spacecraft, the U.S.  space industry enjoyed a monopoly
position.  This circumstance resulted in the United States establishing
itself as a world leader in the development, construction and launch of
spacecraft.

Over the past twenty-five years, things have changed.  Today, a dozen
or so countries have the technology and facilities to build spacecraft
and more than a half dozen countries can launch spacecraft.  The
satellite industry has been big business to the United States, with 77
U.S.-built communications satellites currently in orbit today; 36
serving North America and another 41 providing international services
throughout the world, representing an investment of more than $6
billion.  U.S.  producers continued to maintain a 90 percent share of
the market through 1987 (1) but the number of non-U.S.  built satellites
is beginning to grow.  Whereas in the past, foreign manufacturers often
teamed with a U.S.  manufacturer who was prime or a major
sub-contractor for significant satellite construction opportunities,
over the past few years these firms have matured their knowledge and
technology base sufficiently to effectively compete against U.S.
companies.

(1) Space Business, August 1988, Space Business Research Center, page 15. 

The satellites which are being built and launched serve many
applications ' including communications, surveillance, remote sensing,
and navigation/position location.  Importantly, a significant and
growing number of the satellites in service and being planned are part
of commercial, for-profit programs.  These commercial applications of
space on an international scale are being integrated into the very
fabric of the private lives of citizens, as well as into t6e businesses
of most developed and developing countries.

Along with this growth in commercial applications of satellites comes a
new generation of satellite operators.  The technical, regulatory and
political elements influencing successful utilization of space must
accommodate the needs of the growing community of commercial satellite
operators if this part of the industry is expected to thrive and grow
to its potential and if the United States is to have a significant role
in this area.

SATELlITE OPERATORS

For the first decade of the space program, all satellite buyers and
operators were government organizations.  These operators were
primarily motivated to meet technical performance goals for serving
military needs in planned-for hostile environments or data collection
and scientific research.  In contrast, today's commercial satellite
operators are motivated by dramatically different priorities.  A
conmercial operator must consider the necessary investment, potential
for return on the investment, market risk and technical risk.

The investment required to start a satellite program is large and
growing.  Although very strongly dependent upon the application and
scope of the program, one-half to one billion dollars is a typical
range of initial investment.  The time over which this investment must
be made generally begins from three to five years before operation
commences, thus delaying recovery of the investment and a return.

As in any commercial venture, a satellite operator always takes the
risk of the marketplace.  The market risks are obvious: failure of
users to accept the technology, excess supply or unexpected
competition, overly optimistic market projections, and an inability to
serve the market in a timely fashion.  Although market risks can be
substantial, they can be assessed and strategies can be formulated to
control the risks, as well as to develop contingency approaches to
mitigate the risks.

Technical risks faced by a commercial satellite operator naturally
include the chance that a satellite will fail after being placed in
orbit.  However, the greatest technical risk in a satellite program is
the launch phase--mainly the risk of successful launch vehicle
performance and, to a lesser degree, the final launch phase systems
integrated into the satellites; e.g., perigee and apogee motors.
Obviously, failure to place a satellite into service or its premature
failure in-orbit has a major adverse effect on the ability of an
operator to execute his business plan, even though insurance may avoid
a loss of some or all of the investment.

Of all the risks an operator faces, the most devastating and least
controllable risk is the inability to place his satellites into
service.  Having a significant investment in facilities which cannot be
placed into service impacts a program in many ways and ultimately can
make it impossible to implement a business plan or recover the
investment.  Access to space is the critical ingredient in a successful
satellite application for any purpose, but most importantly for a
commercial application.

LAUNCH SERVICES

It is important to discuss what a commercial satellite operator would
define as the critical criteria for a launch service.  launch services,
whether provided by commercial or government organizations, in the
U.S.  or any other country, are only a means to place assets into
service to provide useful applications of space.  It must be remembered
that launch systems are fundamentally employed to get mass (a payload)
safely and reliably into orbit.  The mission begins to be fulfilled
when that payload begins to provide a meaningful service to its
intended users.  After a delivery to orbit, the launch system plays no
further role in the use of the satellite.  Therefore, it is a delivery
or taxi service =no more or less.

Number one in a satellite operator's list of requirements for launch
services is reliability.  A failure to successfully attain orbit with a
$lOO million-plus payload is not just a loss of the portion of the
investment which is not insured.  The lost opportunity to serve a
marketplace may be a much greater loss.  Also, the space segment is
only a part of the investment in a system, albeit an essential
element.  The remainder of a total system which cannot fulfill its
intended application if the launch fails may represe9t an even larger
investment than the lost satellite.  Failure of a satellite to
successfully achieve orbit means that the investment in the total
system may lie fallow until a replacement satellite can be orbited.

The loss of marketplace confidence which results from launch failures
is of - growing importance as the number of large businesses placing
life-blood communications services onto satellite-based systems becomes
greater.  Even the loss of an experimental or entrepreneurial venture's
launch vehicle, which may not even have a satellite aboard, receives
adverse press and potentially sends a negative signal to the commercial
operators' marketplace.  The space industry cannot withstand the impact
of unreliable launch systems and achieve anywhere near the tremendous
potential for commercial applications of space which exists today.

A second requirement satellite operators insist upon from launch
service providers is schedule confidence.  Delays in service date for
assets with this level of investment can be extraordinarily expensive.
But, perhaps most importantly, the ripple effect of delaying the
availability of a satellite's service to the marketplace can cost an
operator a competitive advantage or, worse yet, the loss of his
customers.

The third requirement of satellite operators for launch services is
competitive cOst.  Political, regulatory, and governmental
interventions strongly influence launch services available today and
their related costs.  Parity in these costs is critical to a satellite
operator having a fair opportunity to successfully implement and
operate a commercial satellite program.  If an operator has a
fundamental disadvantage built into the cost structure for his service,
he is at a competitive disadvantage from the start.  If tAis is not
corrected through other cost efficiencies in his total offering, he
ultimately will not be able to compete.

Is the U.S.  on a course to effectively compete in the world market for
commercial satellite launch services?  Sadly, I believe not--but we can
remedy this situation if we change our outlook and begin to correct and
redirect our course of action.  The United States is confronted with a
situation in which our available ELVs are derived significantly from
ballistic missile applications employing technology of the 1960's,
whose capabilities and costs are driven by military considerations.  It
is disconcerting, as a satellite operator, to read of the expected
preemption of commercial and international flights for military
missions.  The Commercial Space launch Act, as amended, states that the
determination of a military preemption of a commercial launch must be
made by the Secretary of Defense or the NASA Administrator "in cases of
imperative national need." Former Air Force Secretary Edward C.
Aldridge said, "If there's any crunch, it's certainly going to hit the
commercial guys." (2) This does not mean simply a delay of a week, or a
month, while the military steps to the front of the line.  With the
current launch facilities, operations and launch teams, launch vehicle
configurations and launch pad capabilities, substantial delays could
occur.  This seems to be just one more example supporting the need for
a comprehensive national space policy and the necessary plans and
organizations to achieve its goals and objectives.

(2)  The Washington Post, Air Force Braces as pace of unmanned space
Launches Soars, November 28, 1988, page A4.

MEETING THE REOUIREMENTS

A satellite operator can best assure his requirements are met by
carefully selecting his launch services provider.  The optimum launch
services organization will have a full commitment to being a
continuing, long-term participant and will be able to withstand
failures--even major failures--leading to costly redesign and delay.
Although careful design, construction and repeated testing can reduce
the chances of failure, we will always have failures in launch systems
whether manned or unmanned, new or old.  An acceptably committed launch
services provider will pay the cost to recover from a setback and meet
the requirements of the satellite operator with the least possible
adverse impact on the operator's business.  The cost to the launch
provider to recover from a failure may be high.  It may be up to
hundreds of millions of dollars in hardware and expenses, not to
mention the loss of market share in a competitive environment.  It may
be almost a restart, but a committed provider will have the wherewithal
to incur this cost and the commitment to do it.

It appears that the necessary level of commitment may only be available
where a government makes access to space a national imperative.  And,
if there are multiple launch service providers, this national
imperative had better apply to them all--or at least the one we pick!

GTE Spacenet has executed launch services contracts for a total of
seven launches occurring between 1984 and 1988, and we have one launch
scheduled for 1990.  All but one of our launch contracts have been with
the European launch services company, Arianespace.  They employed the
Ariane I, III, and IV; a steady progression of increasingly capable
launch vehicles.  The one non-Ariane contract was for a launch aboard
the Space Shuttle, but this was terminated in the aftermath of the
Challenger disaster and the ensuing Presidential directive in 1986
which barred further launches of commercial satellites aboard the
Shuttle.  The removal of our satellite from the Shuttle manifest was
costly to GTE - Spacenet, not only in terms of the investment in
Shuttle-specific hardware, but in the disruption and delay it caused to
our business.  This satellite eventually was launched by an Ariane
launch vehicle.

The factors which led GTE Spacenet to choose Arianespace included
reliability, schedule confidence, cost-competitiveness and launch-site
location.  The first three factors have been discussed at length.  As
for location, the Ariane launch facility is located near Kourou, French
Guiana, five degrees and a few hundred miles north of the equator--an
ideal location for launching heavy spacecraft into geostationary
orbit.  This location enabled us to take advantage of the natural
rotational velocity of the earth and, combined with the capabilities of
the Ariane launch vehicles, allowed us to place our satellites into
proper orbit carrying a greater proportion of fuel than we could have
from the Kennedy Space Center, which translated into nearly two years
of additional, revenue-generating life for the satellites.

With three replacement satellites scheduled for launch during the
1990's, we will continue to examine the options available in the launch
services sector and will choose a launch services provider based upon
its relative ability to meet all of the above requirements.

SPACE APPLICATIONS

GTE Spacenet has a significant interest in the divelopment of a strong
U.S.  Satellite launch industry which can provide the assurance of
access to space.  Indeed, this access is essential for the achievement
of our primary mission-- the provision of commercial applications of
space which are responsive to the substantial and growing needs of the
global communications marketplace.

We have seen some of the space applications in which we have taken a
leadership position, such as satellite news-gathering and private
networks using very small earth stations, become international in
scope.  We have begun to realize the benefits of a global market for
commercial applications of space.  The market for these new space
applications is burgeoning, particularly in the developing and
newly-developed countries, which lack the resources and the technology
to construct telecommunications infrastructures that are adequate to
meet their needs.  Many of their communications requirements are best
satisfied by satellite technology, which can provide cost-effective
interconnection of users--no matter how remote, expansive or difficult
the terrain of these countries may be.  The international market
potential for new space applications is substantially untapped--and the
prospects are enormous.

The U.S.  has already lost our leadership status in the area of
satellite launching services, and although still unmatched, our
satellite manufacturing advantage is experiencing increased competitive
pressures.  The parochial attitude which contributed to the decline in
these areas can also jeopardize our ability to remain at the forefront
of space applications innovation.  As other countries move to adopt
satellite-based solutions to their telecommunications needs, the U.S.
must remain open to serving their needs in a way which is beneficial to
the developing country, and not just beneficial to us.  We must not
insist that the full solution--satellite, launch services and the broad
range of user software and hardware--come solely from our nation to the
exclusion of sources and capabilities found in other countries.  We
must be able to work to assemble the best solution from among a
global spectrum of choices and emphasize our strength in applications.
If we cannot find the means and wisdom to approach the issue with such a
global perspective, we will lose the chance to expand the reach and
benefits of our world.leading applications expertise and be left to
watch the loss of our preeminence in this sector as well.

CONClUSIONS AND RECOMMENDATIONS

We in the United States must not remain so aloof or arrogant concerning
space.  We are no longer a clear leader across the board.  The tragic
loss of the Challenger and the decisions which led to total reliance on
the Shuttle for access to space have contributed to the U.S.  no longer
being dominant in space.  A simple analogy to the launch vehicle
program and the positioning we are seeing i from foreign entities could
be likened to the late 1970's and the automobile.  In that industry
too, a crisis was required to bring us to realize that our market
concepts and technology were not meeting market demands.  It took years
for U.S.  companies to turn their directions and respond with the
quality and economics that users were requiring.

This was a painful process and a humbling experience.  Perhaps we are
better off for the experience, but couldn't we have met productivity,
quality and other objectives in a much more optimum fashion?  Can we
avoid a similar experience in space?  Right now, we are just becoming
aware of the tremendous amount of worldwide commitment there is to the
application of space and that we are no longer the leader.  The U.S.
commitment is now being tested.

We must act--and we must act quickly-- to reassert our commitment to
space.  As an initial step, I believe that we should revisit our
approach to access to $pace.  In 1986 and 1987, several prominent
individuals in the space industry, including former NASA Administrator
James Beggs, suggested the establishment of a quasi-governmental launch
services corporation possibly patterned after COMSAT to be established
to help U.S.  ELVs better compete in the world market.  The corporation
could make block buys of hardware from ELV manufacturers and provide
launch services, insurance and other associated services required by
satellite operators.  Such a concept would allow a single entity to
manage many of the fixed-cost items which are currently duplicated by
each U.S.  ELV provider, leading to more competitive launch prices.
Perhaps most importantly, such an entity could make the necessary
commitments to satellite operators and have the level of national
commitment to make it credible.

Additionally, the development of advanced launch capabilities to meet
the future needs of the substantial and rapidly growing worldwide
market for launch services could be achieved much more practically in
this manner than under the current approach.  Rather than expecting
U.S.  launch service providers to adapt military mission launch
vehicles to commercial applications, a comprehensive, strategic plan
for a commercially competitive launch service to serve a worldwide
market could be implemented and executed..reestablishing the critically
important objective of maintaining U.S.  leadership in the area of
access to space.  A program of this type in the United States would
reQuire investment, by both government and industry, in launch
facilities and in developing the technology of launch services and
launch vehicles to match progress in satellite designs.  Arianespace
has developed a series of launch vehicles and the support facilities 
to meet virtually any commercial launch need.  Additionally, they seem
to have understood the importance of providing a predictable, but
flexible, schedule to their customers.

The participating European countries in the Ariane program are funding
a continuing product development.  The Soviet Union, the People's
Republic of China, and other nations have either begun to offer or have
the capability to begin offering to launch commercial satellites.  It
is obvious that without a viable launch services organization with the
characteristics commercial satell ite operators require, the United
States cannot maintain its share of the satellite launch market, or
indeed, project the image of a credible leader in space.

The provision of capable, flexible and reliable launch vehicles and
services to meet the needs of government and commercial operators on a
worldwide scope into the 2lst Century must be assured.  Attention to
the development of new technologies and capabilities should be an
integral part of such a program.

Enlightened initiatives, taken now, can permit the United States to
recover and regain a leadership role.  But, to accomplish this, I
firmly believe that we must have a national imperative consisting of a
comprehensive space policy and plan which realistically recognizes the
worldwide statNs of applications of space and provides us with the
means--and the road map--to reach that destination.

In summary, I believe that the U.S.  government is taking a positive
step forward through its efforts to critically assess the status of
existing U.S.  space - policy.  Hopefully, this and other similar
government inquiries will provide the necessary emphasis to assist in
formulating a comprehensive space policy and plan.  I commend the
Subcommittee for its continuing interest, and I thank you for this
opportunity to participate.
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| Allen W. Sherzer                    |  Is the local cluster the result   |
|  aws@iti.org                        |  of gerrymandering?                |
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End of SPACE Digest V10 #320
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