In my previous post on SpaceX and its rocket ambitions, I argued that low-cost access to space would be revolutionary in the same manner that ocean navigation or rail roads were revolutionary, giving the global economy a broader scope of activity and greater access to resources. I intended to leave it at that, but recent new is just too topical to pass up.

A few days ago Elon Musk announced that SpaceX will start building satellites in house, and their first project is to build a constellation of satellites orbiting at 750 miles altitude (which is fairly low, for a satellite) to provide broadband internet access to the entire globe, and also serve as an internet backbone. Many satellites just communicate with ground stations, bouncing messages back and forth between the Earth. If I understand Musk’s comments correctly, it seems like these satellites will communicate with each other in orbit too, passing signals among themselves as an internet relay competing with the undersea fiber optic network. The benefits of such a system over the current fiber networks are: global coverage, that signals travel faster through space than through fiber, and satellites are less likely to get hit by fishing trawlers or attacked by sharks.

A reasonable skeptic would ask at this juncture though whether anyone has tried this before, and what their success was like. The answers to those questions are “Quite a few”, and “Total failure”. The Iridium constellation cost over $5 billion and went through bankruptcy. Today the satellites are still in orbit but provide mostly just expensive cellular phone and paging services. The Teledisc constellation (which sounds very similar to the proposed SpaceX plan) failed before even getting off the ground, despite funding from Bill Gates and a Saudi prince. Globalstar went bankrupt shortly after launching its constellation, and the successor entity continues to downsize and cut costs. SkyBridge LLC failed so completely it doesn’t even warrant a Wikipedia entry, and its spectrum allocation was sold to WorldVu which hopes to launch satellites in 2019. (Hope springs eternal)

So given that every previous attempt has gone bankrupt, why should we get excited about this one? Well, the answer returns to the economics. The physics of bouncing signals between satellites is well understood – everyone loves their GPS network and DISH Television has may fans. It’s the economics of providing the very large constellation necessary to power high-bandwidth, low-latency data coverage to the entire globe that’s been the problem to date. Specifically, the launch costs of reaching orbit are ridiculous. As I mentioned previously, the Space Shuttle cost between $1-2 billion per launch, and the expendable rockets offered by Boeing, Lockheed Martin, and Arianespace cost hundreds of millions per launch too. Each of the above failed ventures represents billions of dollars in launch costs.

SpaceX meanwhile has brought launch costs down significantly, even before achieving reusability. The Falcon 9 costs $61 million per launch, and the Falcon Heavy when it goes operational later this year will be only (“only” is a relative term in space flight) $85 million per flight for the most capable rocket launched from the United States since the Saturn V was retired. The next biggest rocket, the Delta IV Heavy from Boeing, costs 900% more per pound – $375 million for half the cargo. If SpaceX does achieve reusability later this year, costs should drop by another 50% immediately, and eventually as much as 90%. Furthermore, it’s very likely that conservative commercial and military satellite customers will not want to take a chance on a “used” rocket immediately, and will continue to pay full price for a couple years to get new ones, letting SpaceX fully pay off their rocket on the first launch and then launch their own satellites on the following flights for just the cost of fuel and operations. Combined with the constantly falling costs of electronics (Thanks Moore’s Law!), SpaceX’s venture should have a much lower cost basis than any previous attempt.

This new satellite venture is just the first taste of what low-cost access to space will bring. In the years to come, especially as SpaceX solidifies what its pricing will be post-reusability, you should expect more announcements of companies and projects that finally deliver the thriving space economy that in the 50s and 60s was expected to be just around the corner. Now I think it finally is.