This approach is firmly rooted in the current statute and avoids region-by-region a priori constraints on commercial operations. If that approach had been adopted, Mr. Chairman, the industry response would have been clear and unambiguous: we simply cannot operate any global communications or information system on a commercial basis in the face of such an approach to regulation. Thus, while the substantive provisions of the policy that support US industrial competitiveness in this area are clearly important to us, it is fair to say that without the procedure set forth in PDD-23 for addressing certain emergency situations, which is based firmly in current statutory authority, we could and would not have made the substantial corporate financial commitment required to implement a global commercial remote sensing system. I am certain that the same is true of others in US industry.

Space Imaging

Lockheed Martin has a great deal at stake in appropriate implementation of the statute and policy. In April 1994, the Department of Commerce licensed Lockheed Martin's operation of Space Imaging, a commercial remote sensing satellite system providing one-meter panchromatic and four-meter multispectral imagery to government and commercial customers. The Space Imaging system will consist of state-of-the-art space and ground capabilities, including spacecraft, a ground system, launch services and system integration. In addition to Lockheed Martin, the principal investors in Space Imaging are E-Systems, Inc. (a Raytheon subsidiary) and Mitsubishi Corporation. Space Imaging is pursuing other equity investors and regional affiliates throughout the world.

The significant economic benefits accruing to the US generally, and particularly to certain states during these difficult times of defense down-sizing, are significant. The Space Imaging satellites are being built at our Sunnyvale, California facilities, and will be launched from California's Vandenberg Air Force Base. Space Imaging is headquartered in Thornton, Colorado; and the Lockheed Martin Launch Vehicles that will orbit the satellites will be built in our Astronautics production facilities in Denver. Space Imaging plans to install a ground station in Fairbanks, Alaska, and is considering other locations for support facilities.

Conclusion

Mr. Chairman, US industry is uniquely poised to be the global market leader in this important new commercial space business. Working with the Congress and the Executive Branch, the process by which this business can be responsibly pursued, we believe, has already been achieved. Foreign countries that protest US entry in this market do so most often out of self-interest. Virtually all who do protest are building their own systems, many of which are being promoted commercially, if not today, then tomorrow. If US industry is not allowed to be first-to-market, then it is unlikely it can or will justify the investment in the future after foreign governments have subsidized and achieved dominance in the commercial market. Thus, Lockheed Martin believes that any ill-considered deviation from current law, or the principles and procedures of PDD-23, would undermine not only the financial commitment US industry has made to commercial imaging, but also the important economic and national security interests advanced through a strong US presence in the world market for commercial sensing data products and services.

Chairman Sensenbrenner, the US is already the world leader in key commercial space sectors, with all that implies for our technology base and high-quality jobs. We now have the potential for leadership in other important emerging sectors. Lockheed Martin urges this Subcommittee and the full Committee to build upon its laudable record of past achievements in laying a solid foundation for healthy and responsible US commercial space industries.

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4

Mr. SENSENBRENNER. For the record, you were able to say it with one minute and 37 seconds left to go.

Dr. Pace.

STATEMENT OF SCOTT PACE, POLICY ANALYST, RAND

CORPORATION

Mr. PACE. Nothing like having a bench mark metric to work against.

Thank you. Mr. Chairman and Mr. Hall, thank you very much for inviting me to be here today. It's a pleasure, as Dr. Dailey said, to be before a committee that's had such an influential role in commercial space policy and commercial industrialization.

One of the things that I think is very striking about commercial space is that there's a basic fact that as the federal budget is flat and declining, both for the military, I think, as well as for the NASA, that the salient characteristic of space today is that the portion devoted to commercial space activity is continuing to grow.

As that compound growth grows over time, the character of space becomes more and more commercially driven, and therefore the activities of this committee in terms of policy and regulatory apparatus will have a bigger and bigger influence on the character of national space activities in general.

Now, one of the characteristics of the commercial space activities as it's going on today is that it's primarily driven by informationremote sensing, GPS, mobile communications.

This is not surprising when you consider the high cost of access to space, that sending things up and down is quite expensive. That's why the RLV program is so important. But if you look at what's happening today and where the commercial drivers are, they're in information. So a lot of the problems that you hear in commercial space have analogs in other areas of the information industry-intellectual property rights, stable investment environment, and so on.

I want to talk about three areas of the bill where I may have some expertise. One of course is GPS. The other is remote sensing. The third is excess ballistic missiles.

The area of GPS is a very exciting area. This came to my attention when I was at the Commerce Department when I was shown some statistics on the rapidly growing rate of GPS equipment sales. Although it was small at the time, the rate was certainly impressive. In the year since that time, what we're currently looking at now is about a $2 billion market, as of last year. We're looking at growth to somewhere between an $8 and $11 billion market, depending on what analyst you believe, in the next four to five years. Now, the President's policy on GPS, which came out on March 29th, and I think was a very helpful statement, provided the kind of policy framework and clarity that the industry had been arguing for for a long time.

But I think it's important to look forward to the next step, which is the creation of really a supportive international framework for the use of GPS. I'm pleased to hear that the State Department is currently preparing to lead an interagency team in GPS in discussions with Japan, to be later followed by other countries.

Japan is important because of its technical leadership in GPS after the United States, and also because, frankly, there are security issues in the Far East where GPS may play a role. It's important, I think, for the United States to be speaking with its key ally in the Far East about the use of this dual use technology.

It's my understanding that these discussions will be encouraging commercial use of GPS, talk about potential trade barriers, as well as address some of the security issues.

In this context, I think it's important, as the bill does, to point out that the United States speak with a single voice that integrates both these security and economic interests that the United States has in wider international acceptance of GPS.

With regard to commercial remote sensing, this committee obviously played a leadership role in the 1992 Land Remote Sensing Act. But with the perspective of the last four years, there are some things that I think need some improvement.

The National Oceanic and Atmospheric Administration has run what is generally considered a pretty good regulatory process. But there are some obvious problems.

One of those problems has been in understanding what's necessary for the licensees to have. There's been a back and forth process of multiple rounds of questions and answers. So something on the order of saying, what all information is going to be required, up front in a clear way, I think would help streamline that process. Secondly, the primary cause of delays in processing license applications seems to be the interagency process, particularly with respect to foreign policy concerns. There have been a variety of protracted debates over the role of foreign investment in commercial remote sensing systems.

I think this is a problem for the investment community, which needs to have a more stable idea about what kind of foreign investments are going to be allowable and acceptable, and what kinds

aren't.

So the interagency process, where people of goodwill are trying to do the right thing, I think inadvertently led to a situation which has introduced some instability into the license process, to the detriment of U.S. firms.

Related to commercial remote sensing is of course the important issue of Mission to Planet Earth. NASĂ recently held a workshop out at the Goddard Space Flight Center, talking about its commercial strategy for Mission to Planet Earth, and inviting industry input.

I think it's no surprise that it's imperative the NASA be able to leverage every dollar it possibly can, and utilize as many commercial resources as it possibly can to accomplish Mission to Planet Earth objectives.

One of the key things missing, however, at this point really is a common basis for discussion between industry and NASA as to how they're going to be going about making the various procurement decisions and acquisition decisions.

A common dialogue was created-I'll wrap up-in the case, I think, of the RLV program, where people started to really understand each other when they talked about business decisions and government procurement decisions.

Some similar building of common ground is going to be necessary between government and industry if they're to be successful in the future.

Finally, I would just point out that I thought that the sections dealing with excess ballistic missiles certainly reflect current national policy.

Although I am skeptical of the effectiveness of converting ICBMs to space launch vehicles, I understand certain educational institutions would like to take a crack at it. And the kinds of conditions that are placed in the legislation, I think would have a good chance of making sure that they really did enable an educational use, and did not compete unfairly with the private sector.

With that, my apologies for running over.

[The prepared statement of Mr. Pace follows:]