Budget boost for UK space sector | Fieldfisher
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Budget boost for UK space sector

John Worthy


United Kingdom

In its latest budget plans announced on 23 March 2011, the UK government has set out proposals to encourage British space business. Read more on these proposals

In its latest budget plans announced on 23 March 2011, the UK government has set out proposals to encourage British space business, focussed particularly on streamlining some of the major regulatory controls. By creating an increasingly favourable environment for space sector businesses, the UK aims to build on the blueprint from the Space Innovation and Growth Strategy group, which set the target of UK space business reaching 10% of the world market over the next 20 years.

The current proposals cover a range of issues that the UK space sector has long believed left it at a competitive disadvantage.

Reform of the Outer Space Act
The legal framework for launching or operating a satellite or other space object is set out in the Outer Space Act.  This requires any UK-based operators of satellites or space objects to provide the UK Government with an unlimited indemnity against any claims brought against the Government in respect of damage or loss arising out of activities carried on by the operator, regardless of the location of operation. In addition, in order to obtain a licence for the launch, insurance of at least £100m against any third party claims brought against the Government is required covering the launch and in-orbit operation for the life of the satellite.

The latest proposal is to remove the need for an unlimited indemnity and restrict the required insurance to the launch phase only. These changes would recognise the significantly lower risk profile after launch and align the UK with other jurisdictions. As a result, operators should see reduced insurance premiums and have better opportunities for launching micro-satellites, which may not justify such a significant level of insurance.
Bringing the licensing requirements into line with other jurisdictions' regimes will also allow UK satellite operators to benefit from a simplified regulatory procedure.

Making the UK a destination of choice for space tourism and new space vehicles
The growing interest in space tourism and the development of hybrid space vehicles have created challenges for the current UK regulatory framework. As these activities fall between the existing aviation and space regimes, they are currently not permitted to operate in the UK. The Government now intends to resolve these issues by working with the European Aviation Safety Agency to achieve a clear operating and certification environment, thus assuring operators that their craft can be built and operated in the UK. The Government believes that the air base at RAF Lossiemouth near Inverness, has the potential to be a future European centre for space tourism.
Given the recent debates, both in Europe and the US, about the regulatory structures for space tourism and innovative space vehicles (and which organisations should oversee this emerging sector), the Government's recognition of the need for regulatory clarity should help to encourage confidence in manufacturers' and operators' plans for future UK investment in this area.

Clarifying export regulation
Uncertainty about export controls applicable to UK-based suppliers of space products and services has long presented a barrier to growth in exports, particularly to customers in Russia and China. The regime has been seen as unnecessarily complex and opaque; even delays in obtaining clarifications about the export licensing requirements can be a disadvantage in a competitive market. In response, the Government intends to issue new guidance on this complex issue to clarify export positions and processes, especially for earth observation purposes.
This guidance is scheduled to be released this summer and should offer a welcome improvement in transparency for exporters.

Improving access to orbital slots for UK business
The challenge of "paper satellites" has plagued the ITU orbital slot filing processes for many years and, despite attempts to reduce the burdens on legitimate operators, continues to present a barrier to the launch of new satellites.

The Government has announced that it intends to work with Ofcom, the UK representative at the ITU, to push for reform of the current system at the World Radio Conference in 2012. The Government will lobby for a minimum set of conditions for bringing an orbital slot into use, reducing the potential for paper filings to present obstacles. In anticipation of some resistance from certain national governments, the UK aims to avoid dilution or delay of the core reforms, with the intention that this will allow more slots to be made available to viable projects (especially from the UK).
Finally, the Government says that it will respond to industry’s concerns about difficulties in accessing sufficient radio spectrum and proposes to introduce a "market-based approach". No greater detail has been provided at present but this could involve some form of spectrum trading, as currently proposed in the UK consultation on the UK digital dividend auction, due to occur in 2012. A discussion paper is promised shortly - watch this space.

For further information, please email John Worthy or telephone him on +44 (0)20 7861 4392.

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