Uncharted Territory of Outer Space

Outer space, or simply space, is the expanse that exists beyond Earth and between celestial bodies. Outer space is not completely empty—it is a hard vacuum containing a low density of particles, predominantly a plasma of hydrogen and helium, as well as electromagnetic radiation, magnetic fields, neutrinos, dust, and cosmic rays. The baseline temperature of outer space, as set by the background radiation from the Big Bang, is 2.7 kelvins (−270.45 °C; −454.81 °F).The plasma between galaxies accounts for about half of the baryonic (ordinary) matter in the universe; it has a number density of less than one hydrogen atom per cubic metre and a temperature of millions of kelvins. Local concentrations of matter have condensed into stars and galaxies. Studies indicate that 90% of the mass in most galaxies is in an unknown form, called dark matter, which interacts with other matter through gravitational but not electromagnetic forces. Observations suggest that the majority of the mass-energy in the observable universe is dark energy, a type of vacuum energy that is poorly understood. Intergalactic space takes up most of the volume of the universe, but even galaxies and star systems consist almost entirely of empty space.

Outer space has been the arena of some of the most memorable technology demonstrations. Russia’s Sputnik and the U.S.’s Apollo 11 were metaphors of geopolitical competition. For India, Chandrayaan and Mangalyaan were symbols of national pride. Today, outer space no longer captures our mind space in the way cyberspace does.

Several space events planned well in advance have proceeded amidst the COVID-19 pandemic without much attention. The launch of missions to Mars by China and the U.S. along with the UAE’s Mars orbiter; the first astronaut trip to orbit on a commercial enterprise built by Space X; the completion of the Chinese ‘BeiDou’ satellite navigation system; and the U.S. Space Command statement that Russia conducted a “non-destructive test of a space-based anti-satellite weapon” all portray a trend that outer space is witnessing a welter of new activity.

India has invested enormous resources in its space programme through the Indian Space Research Organization. More importantly, our space assets are crucial for India’s development. India’s future plans are ambitious. These include a landing on

?okhkjkonnnnthe Moon; the first Indian solar observatory; the first crewed orbital spaceflight mission; and installation of a modular space station in 2030. This calendar is designed to establish India as a major space-faring nation by the end of the decade.

The proposed involvement of private players and the creation of an autonomous body IN-SPACE (Indian National Space Promotion and Authorization Centre) under the Department of Space for permitting and regulating activities of the private sector are welcome efforts. However, the space environment that India faces requires us to go beyond meeting technical milestones. We need a space legislation enabling coherence across technical, legal, commercial, diplomatic and defence goals. Our space vision also needs to address global governance, regulatory and arms control issues. As space opens up our space vision needs broadening too.

Growth of the Space Industry:

It’s been nearly half a century since humans left footprints on the moon and during that time, human space exploration has largely centered on manned low-Earth orbit missions and unmanned scientific exploration. But now, high levels of private funding, advances in technology and growing public-sector interest is renewing the call to look toward the stars.The investment implications for a more accessible, less expensive reach into outer space could be significant, with potential opportunities in fields such as satellite broadband, high-speed product delivery and perhaps even human space travel. While the most recent space exploration efforts have been driven by handful of private companies, the establishment of a sixth branch of the U.S. military in 2019—the “Space Force”—along with growing interest from Russia and China, means public-sector investment may also increase in the coming years.

To outline progress in space from both public and private companies, as well as government efforts, the Space team at Morgan Stanley Research has been examining these developments to detail the constellation of potential opportunities for investors.

Technological changes augur well for the peaceful use of outer space. The price tag for reaching low Earth orbit has declined by a factor of 20 in a decade. NASA’s space shuttle cost about $54,500 per kg; now, SpaceX’s Falcon 9 advertises a cost of $2,720 per kg. In a decade, the cost could be less than $100 per kg. It not only enhances human space travel possibilities by leveraging new commercial capabilities but will usher in applications dismissed earlier as science fiction.

According to a Bank of America Report, the $350 billion space market today will touch $2.7 trillion by 2050. Space industries are likely to follow a path akin to the software industry. When Apple allowed developers to design apps for the iPhone, it unleashed innovations that put more technology in the hands of common people and transformed lives. Starlink, the constellation being constructed by SpaceX to provide global Internet access, plans more than 10,000 massproduced small satellites in low Earth orbit. It hopes to transcend the digital divide and provide everyone, everywhere access to services such as distance education and telemedicine. Amazon’s Project Kuiper received U.S. Federal Communications Commission approvals for more than 3,000 micro-satellites. In a decade, 80,000 such satellites could be in space compared to less than 3,000 at present. Companies such as Planet, Spire Global and Iceye are using orbital vantage points to collect and analyse data to deliver fresh insights in weather forecasting, global logistics, crop harvesting and disaster response.

Space could prove attractive for high-tech manufacturing too. In short, an exciting new platform is opening up for entrepreneurs. However, what is technologically feasible is not easily achievable. The challenges to fulfilling the potential of space are many.

Challenges in fulfilling potential:

First, as outer space becomes democratised, commercialised and crowded, the multilateral framework for its governance is becoming obsolescent. Space law is a product of a golden age of two decades — the 1960s and 1970s. The Outer Space Treaty of 1967 enshrines the idea that space should be “the province of all mankind” and “not subject to national appropriation by claims of sovereignty”. The Rescue Agreement, Space Liability Convention, and the Space Registration Convention expanded provisions of the Outer Space Treaty. The Moon Treaty of 1979 was not ratified by major space-faring nations. Space law does not have a dispute settlement mechanism, is silent on collisions and debris, and offers insufficient guidance on interference with others’ space assets. These gaps heighten the potential for conflict in an era of congested orbits and breakneck technological change. Many start-ups have come forward in space sector but no big corporates yet, the legal framework is state-centric, placing responsibility on states alone. However, non-state entities are now in the fray for commercial space exploration and utilisation. Some states are providing frameworks for resource recovery through private enterprises based on the notion that this is not expressly forbidden for non-state actors. U.S. President Donald Trump’s Executive Order on Encouraging International Support for the Recovery and Use of Space Resources of April 2020 falls in this category.

According to NASA, the asteroid named 16 Psyche is so rich in heavy metals that it is worth $10,000 quadrillion. The incentive to proceed is evident. On the other hand, some scholars and governments view this as skirting the principle of national non-appropriation, violating the spirit if not the letter of the existing space law. The lack of alignment of domestic and international normative frameworks risks a damaging free-for-all competition for celestial resources involving actors outside the space framework. Third, strategists extol the virtues of holding the high ground. Space is the highest ground. States are investing in military space systems for communications, navigation, and reconnaissance purposes, so as to ensure operability of a range of capabilities. Reliance of militaries on satellite systems means that space assets become potential targets. So investment in technologies that can disrupt or destroy space-based capabilities is under way. The space arms race is difficult to curb, especially since almost all space technologies have military applications. For example, satellite constellations are commercial but governments could acquire their data to monitor military movements. Despite concerns about military activity in outer space for long, not much progress has been made in addressing them. The UN General Assembly passes a resolution on Prevention of an Arms Race in Outer Space since 1982. Chinese- and Russian-backed Treaty proposals were initiated in 2008 and updated in 2014. For various legal, technical, and political reasons these have not advanced at the Conference on Disarmament. Groups of Governmental Experts have not helped in making progress. The EU’s International Code of Conduct for Outer Space Activities has not gained traction. The current geopolitical situation does not hold hope for addressing concerns of a space arms race.

2020: A Space Odyssey:

A single transformative technology shift often can spark new eras of modernization, followed by a flurry of complimentary innovations. In 1854, when Elisha Otis demonstrated the safety elevator, the public couldn’t foresee its impact on architecture and city design. But roughly 20 years later, every multistory building in New York, Boston, and Chicago was constructed around a central elevator shaft.Today, development of reusable rockets may provide a similar turning point. “We think of reusable rockets as an elevator to Low Earth Orbit (LEO),” says Morgan Stanley Equity Analyst Adam Jonas. “Just as further innovation in elevator construction was required before today's skyscrapers could dot the skyline, so too will opportunities in space mature because of access and falling launch costs.”

Privately held space exploration firms have also been developing space technologies, with ambitions such as manned landings on the moon and airplane-borne rocket launchers that could launch small satellites to LEO at a far lower cost, and with far greater responsiveness, than ground-based systems.

Growing Public-Sector Interest:

While private-equity projects have grabbed most of the headlines in recent years, public-sector interest has also grown. In December of 2019, the Trump Administration established a U.S. Space Command (including a Space Operations Force and a Space Development Agency) with the signing of the National Defense Authorization Act for 2020. This development will likely benefit the U.S. Defense Department—as well as the aerospace and defense industries—and help focus and accelerate investment in innovative technologies and capabilities.

Then in May of 2020, NASA launched a manned flight to the International Space Station (ISS) on a commercially developed U.S. rocket. The launch represented the first time that the U.S. has flown a manned mission to the ISS since the shuttle program was retired in 2011. It also represents an important milestone for the relationship between private enterprise and the U.S. government in the space domain.

The Global Space Economy:

Near term, space as an investment theme is also likely to impact a number of industries beyond Aerospace & Defense, such as IT Hardware and Telecom sectors. Morgan Stanley estimates that the global space industry could generate revenue of more than $1 trillion or more in 2040, up from $350 billion, currently. Yet, the most significant short- and medium-term opportunities may come from satellite broadband Internet access.Morgan Stanley estimates that satellite broadband will represent 50% of the projected growth of the global space economy by 2040—and as much as 70% in the most bullish scenario. Launching satellites that offer broadband Internet service will help to drive down the cost of data, just as demand for that data explodes.In fact, as data demand surges—a trend driven particularly by autonomous vehicles—Morgan Stanley estimates that the per-megabyte cost of wireless data will be less than 1% of today's levels.

While reusable rockets will help drive those costs down, so too will the mass-production of satellites and the maturation of satellite technology. Currently, the cost to launch a satellite has declined to about $60 million, from $200 million, via reusable rockets, with a potential drop to as low as $5 million. And satellite mass production could decrease that cost from $500 million per satellite to $500,000.

To Infinity and Beyond:

Beyond the opportunities generated by satellite broadband Internet, the new frontiers in rocketry offer some tantalizing possibilities. Packages today delivered by airplane or truck could be delivered more quickly by rocket. Perhaps private space travel could become commercially available. Mining equipment could be sent to asteroids to extract minerals—all possible, theoretically, with the recent breakthroughs in rocketry.

Understandably, many investors would rather think about nearer-term themes that are actionable and can impact their portfolios in 2020. However, initiatives by large public and private firms suggest that space is an area where we will see significant development, potentially enhancing U.S. technological leadership and addressing opportunities and vulnerabilities in surveillance, mission deployment, cyber, and artificial intelligence.