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Regulatory compliance pillar of the space industry

You don’t have to be an orbital mechanics engineer or a space engineer to create a successful company and career in the space industry. There is room for designers, UX/UI designers, copywriters, and legal advisors. And there is a whole niche in the space industry for services or products for negotiating the standard procurement agreements, including launch and obtaining regulatory licenses for specific jurisdictions. 

Every space company sits on four massive pillars: 

  1. Hardware — you have to build a sensor, a bus or a payload, and the actual CubeSat. 
  2. Launch — you have to put your satellite into a rocket and launch it into the right orbit
  3. Ground segment — you have to obtain an antenna to command your spacecraft and download the data from the sensors you put there. 
  4. Regulatory compliance and project management — you have to do much paperwork to execute a space mission. 

Disruption in hardware, launch, and ground segment

For the first three aspects, there has been a significant disruption. We have SpaceX that has been revolutionizing the launch. Mass manufacturing companies are bringing down the cost of the hardware, the payloads, and CubeSats. And they have ground stations as a service business model, basically aggregating antennas. That is bringing the price down for the third pillar.  

What it means is that the margins are going down, many companies are changing their business models. Though they change the way, they think about economics everywhere except the regulatory and the project management pillar. 

Enormous legal and regulatory fees

You could build a 3U CubeSat with a commercial sensor that will provide you revenue from the data you download for less than $500,000. You can launch it to space for $150,000 on a very established launch system. And then again, you can eventually have an annual contract for the ground station for another $200,000 — $250,000, depending on your sensor. But your legal fees on just negotiating the launch contract or getting the license for launch or operations could cost hundreds of thousands of dollars.

Regulatory compliance is a mess. Space enthusiasts are to deal with tons of paperwork. Image by Birgit Böllinger

On average, a space company spends around $150,000 — $250,000 on legal fees alone. Just for obtaining the advice on how to fill in the application forms for NOAA or FAA or FCC, or how to negotiate a launch contract. 

For example, the amount of launch contract is $150,000. The margins that launch provider gets on that launch contract are $40,000. And the legal fees that the launch company pays to negotiate an agreement with the customer are about $40,000. It eats up the entire margin of the launch! 

Lack of standard procedures in space regulatory compliance

On top of that, the satellite customers also pay $25,000 at least to negotiate their part of the launch contract. And we are talking about a standard launch contract. Moreover, because the procedures for preparing such documents are not standardized in the community, it takes forever to negotiate a simple contract. 

There are online services that help you navigate through the regulatory framework of building a company, or fundraising, or managing your paperwork or the shares of your company, with almost no help from expensive lawyers. Try Clerkie, or CTC.com, or Stripe Atlas.

And if someone will do the Clerkie-like tool for space regulatory compliance, that would be a massive success in the aerospace business.

Check out more interesting posts from Precious Payload if you want to learn about more milestones in commercial space exploration:

Three Eras Of Space Launch For Smallsats

How To Build a Business On Hosted Payloads And Space Expertise?

The Future of Secure Encryption: In-Orbit Quantum Key Distribution By SpeQtral

Modular Satellites And Ridesharing Beat Price Of Space Mission

How To Make Satellites Cost Like Cars?