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Lf) CO O 5 < c o z CO Ol CO c <0 £ E c E o E o 5 1- to "co c O "(O 01 "C 01 Ol DC o en CO o in I °° d CO to 2 a o CO 01 -Q o cr 00 <— *— 1 CO CO CO CJ 2 EC 0. 1 ~_ Tl a a c c c c c Ol c Ol D Ol 01 1' E c E E CO 01 E D Ol 01 Ol Ol > 01 Ol o ± b CO .h y 3 3 s to 01 c 3 3 C7 cr 3 cr 3 2 CT Oi 01 Ol o 01 o 0) CC cc cr 3 QC Ol E CC H_ u Oi E 01 cc _Oj o CO d o o o o b i 3 Si oil 5? 3? cn c >. ■£ to o CD 00 Q_ o> oi" CN O 3 Ol c 0) cr en CD o id £ 0? E o CO 0) Ol E 0) '01 E E 5 Ol E E a; Ol E E 01 Q. > 1 > to is) co I 1 >■ > to to 3 a 1 to "rtj 3 to a to U CM O "O 01 ■O Oi 01 OJ E o o CO o 00 o 00 h- Q O CO Q c "to J3 O O 10 CO O uO d CO 2 r>. co r-» CO 01 O csT cc CM CO CN cn r~» ih CO O CM Ol "vT E — •5 > _3 O 01 oi > to Q > ^ S 0J a _cu to o> E 5 w - u to c •a IB c 01 q c O > CJ co 0. 01 a c <0 g a o ■a c (0 01 cn to 01 > Ol Ol to 01 cn to 01 "to 3 C C < 01 to 3 CT E 0> 00 «? O 01 O T3 CO o3 Q. QC To d CO lo o Ol a U1 01 "oS E K CO £ Ol O O CO 01 a 01 cr > O CJ to 01 < CJ Oi 01 i!o Ol to E cu 5 in CO -I fl - 43- 1. Renewable Resource Applications The feasibility of using remotely sensed data as a component of a global agriculture monitoring system was indicated in the Large Area Crop Inventory Experiment (LACIE) from 1974 to 1977. This program drew upon Landsat data and upon weather information to provide timely, objective estimates of wheat production in several areas of the world. It substantially transformed the state of the art in machine- processing of Landsat data. The LACIE results led to the initiation of the Agricultural and Resources Inventory Surveys Through Aerospace Remote Sensing (AgRISTARS), a six-year research and demonstra- tion program involving NOAA, USDA, NASA, DOI and AID. Its goals are to develop and evaluate procedures and methods to provide routine early warnings of changes in crop conditions; more objective and reliable production forecasts of wheat, barley, corn, soybeans and rice; and better inventories of U.S. land cover, water, forests, rangeland, and other renewable resources. Landsat data also appear useful in inventorying and managing rangelands and in forest management, helping reduce forest management costs through improved sampling procedures for estimating volumes of timber, monitoring the progress of "clear-cutting" operations, and mapping forest fire burn areas to guide replanting efforts. Cooperative demonstration programs with a major wood products company with large holdings of forest areas, with an industry association concerned with global trading in cotton, and other commercial organizations have encouraged these industrial participants to plan for or implement operational programs using Landsat data. Value added service companies have created a small but growing service to supply information to commercial users concerned with commodity trading. 2. Nonrenewable Resource Applications Landsat data, combined with other data sources such as aircraft magnetic and gravity surveys, are widely used by the minerals industry in its search for and exploitation of new sources of oil, gas, and other minerals. - 44 - Landsat data are being used to create geological maps for the siting of major construction projects, including railroads, highways, dams, and power plants. Landsat images have shown many fault lines not detected using conventional aircraft or ground data, which are important in assessing nuclear power plant sites and for earthquake prediction research. Landsat data are particularly useful in detecting features that change over a short period of time, such as a stream course following a major flood, or a coastline after a major storm. Landsat images were used, for example, by scientists in Bangladesh to measure the accretion of new lands to islands in the Bay of Bengal, opening the way for a tree-planting program to stabilize the land and expand agricultural capacity. 3. Planning and Environmental Management Applications Landsat imagery has proven useful for a variety of applications related to regional planning, such as monitoring the conversion of agricultural land to housing or the pace at which forest land is being depleted. Because of its limited resolution, MSS data have served only to pinpoint areas of rapid change on which planners can focus more intensive study. Higher resolution space-derived data would reduce the need for more expensive follow-up data collection programs. The ability to recognize discontinuities in the color of inland or coastal waters using Landsat data has proven of value in identifying erosion, river sediment loads, oil slicks and oil seepage in coastal areas, effluents carrying industrial or municipal wastes, siltation and wetlands conditions. Navigation channels and inlets can be watched to detect changes in depth which may endanger shipping and boating. Landsat data already have proven to be a useful tool for acquiring valuable hydrologic information for water resource management, such as identifying water bodies larger than 10 acres, locating likely ground water supplies, estimating snow cover and monitoring stream networks, all of which contribute to water supply management and flood avoidance studies. Landsat data have been used for cartography, greatly exceeding original expectations for the many areas of the world where adequate topographic maps do not - 45 - exist, as well as for small-scale mapping in the United States. The satellite information can be turned into a finished map product very promptly at a much lower processing cost than aircraft data. C. D ata Specifications of Major Users A better sense of the nature and scope of the projected user demand for land remote sensing satellite data emerges from considering user specifications in terms of institutional categories as well as by types of use. This section presents user needs in that framework. 1. Federal Agencies The largest U.S. user group consists of the Federal agencies. In 1979, the U.S. Department of Agriculture, the Department of the Interior, the Civil Works Program of the U.S. Army Corps of Engineers, NASA (which provided data to industry, state and local governments, and the academic community for cooperative research and demonstration programs), and other Federal agencies used approximately 50 percent of the data provided by U.S. data distribution centers. While use by all groups is expected to expand during the coming decades, the Federal government probably will continue to dominate the market. Performance characteristics related to the analysis of renewable resources dominate the current projected needs of Federal agencies, including o Frequent repeat observations -- especially during critical times in the growing season; o Delivery of data within 48 hours to monitor global crop conditions in certain circum- stances; o Spectral bands that are most useful in discrimi- nating between various types of vegetation, such as wheat and other small grains; o Higher resolution to facilitate analysis of timber, rangeland, and small fields; and o Capacity to collect and process large volumes of data to deal with global conditions. - 46 - Federal programs related to geology, lithology, land forms and related activities of the Department of the Interior, the Corps of Engineers, and other agencies need data from the visible, the near, shortwave and thermal infrared, and the radar portions of the spectrum. These system performance characteristics are similar to those for private industry discussed below, but most Federal users need non-renewable resources data only from the United States. Monthly to seasonal frequency and data delivery within a month are adequate in most cases. Some Federal data requirements related to planning and environmental management support major program objectives, such as water quality assessment, wildlife habitat monitoring, coastal zone activities, beach erosion assessment and flood control. The system performance characteristics of the Landsat MSS, combined with data from the blue-green band of the TM at resolutions higher than the TM ' s 30 meters, would meet the needs of these users. The volume of data taken uniquely for these purposes would be relatively low, and all of it would be taken over the United States and its territories. A data set taken monthly to seasonally and delivered within one or two weeks would meet most requirements. The Federal government also has a substantial interest in the availability of land remote sensing satellite data to support its economic development activities and aid programs abroad through the Agency for International Develop- ment and other Federal and international agencies. These activities are described in greater detail in Chapter VIII. The data needs are described below. Preliminary Federal agency needs are summarized in Table III-2. These projections of data needs are tentative until further analyses are completed of their programmatic value. 2. State and Local Governments Organizations in thirty-five states have used Landsat data — some as part of demonstration programs, some as parts of established programs. According to the National Governors Association, use by state and local governments is expected to expand as the technology to extract information is further transferred to local government organizations and to the value added service industry, which can provide derived products to meet governmental needs. - 47 - ■o .<£ £ S E co 2 g<£ p E cu *i u. H CC .22 H— .— O O CU oi to o 1_ CD < E E ID O Lf) CN CN If) O O O r- co oo 'O o CO CO ?a CN o ,- > o > c 3 C7 (U CC E D E a o co CO Q Q I o •- E 3 E +-■ CL O co oo S^ CO CM CN I I I E E E o o o i- CO CO o o a> a > LO S co _l CN > > co ca Q o *-> co o a 8 $ o CO 0) o .— QC CU CO CO c > CO ♦■» "53 8 CJ CO CJ 0) > o 0) a a> CC CC CJ n CM o o o o M — o "D ro CJ ■a o OJ CO a z. 3 E a a QC O CN ■ 8- 6 co cu £ 3 (J 2 > o CJ o a o o o o o m a D a> E r jj cu o > O CO Cl) m *-> CO CO 3 Q cx £ co o> ■2 S ~ 3 00 •£ 6 c * 2 - 48 - Renewable resource applications establish data specifications for resolution, spectral bands and data delivery that are similar to those of the Federal government. Only domestic data are required. For non-renewable resource applications, system performance characteristics that meet the requirements of Federal agencies and domestic industries also would satisfy those of state and local governments. Some state and local government requirements for data needed for land use management and environmental quality protection are more stringent. They call for higher resolution over urban and suburban areas than over rural areas; as well as time-series analyses to detect detailed changes. The relative costs of acquiring these data by satellite or aircraft need to be considered. Other planning and environmental management requirements are similar to those of the Federal agencies. Table III-3 summarizes the possible require- ments of state and local governments. 3 . U.S. Commercial Organizations Those companies involved in the search for and extraction of oil and hard minerals are currently the largest commercial users of Landsat data. Commercial use of the data for crop monitoring and forest management is in the early stages, and projections are that this demand will grow substantially as the interpretation is transferred to the commercial sector and data continuity is assured. Another new market that has begun to develop is the consulting and design engineering community. This value added service industry is composed of those firms that have established the capability to extract information from Landsat data to meet the requirements of their customers. It is expected to grow rapidly in the future. Spectral specifications for both industry and government use are the same as those specified for the TM, with data from the infrared and thermal portions of the spectrum being more important than for other applications. Industrial users who need global data place a relatively higher priority on the acquisition of stereoscopic data over those portions of the globe that have inadequate topographic information. Good quality data taken seasonally and made available within a few weeks would meet most needs, although delivery within a day or two of acquisition is important to those firms that are sending out field parties. Required data volumes are much higher because industry is involved in the global search for new mineral sources. - 49 - Eh o a> 2 CO _3 W c* CO > s u H 2 2 m c cn H % % > fa CO rH > 2 o O fa rH ft) a U CO ■H CO IH «« J w a c < Eh < E U O O s Mh ft) ■J fa 5 ro\P< a cc 1 fa CO M Eh Q rd H < 2 "o H Eh < 03 •f CO hH -P c fa fd o iJ W tf Q O K < H >H D c tf o < fa sj & T3 D W en td m 0) 3 CO > _a> JO 03 ** a V ^9 ^_ u o CMI < E 3 o nP vP T3 '5 55 ^ 1 ft) CO CN CO «fr 1 1 ID CM 1 CO Z> E «£> a> a (/> vt > > CO CO > CO c in E i E E CO a o Q o a) c o o CO o pit E 3 E *e $s o S5 CM O ^- CO ** Ml CO CO o o o 1 1 ^ 1 | | CO D > ^ 1 ' 00 LU Q 1 o CQ ^t a O £ E 1 o o _ 00 IT) E a. > > > CO CO Q O ft) E ■q -o as 1 o o 6 6 o 2 «sf «* r^ o ft) o t- CO CO I- G ^ fN 4) 0) i/> E ft> "7/> > 3 E (9 V > CO Q to Q > _ CO 0) . .. V Q. 8 C CO E 2 c _o _3 ■6 91 D o > O g. CO & 8) to 5 £ C CO C 3 ,0 km ft) o ft) c CO CD »J ft) > o co w ft) > o |f a. cc CO a CO To *-< I CO 0) CO E £ 0) Si E £ CO ft) a a; CC > o < o o a> ft) CO « 5 CO ^ *- 00 UJ C - 5 5 S ftl - 50 " Renewable resource applications by industry demand no operational system performance characterises beyond those that would be required by Federal users. No unique commercial requirements for data related to planning and environmental management have been identified. A system that met the stated needs of Federal, state and local government users would be adequate for commercial purposes. Possible requirements of U.S. private industry are summarized in Table III-4. 4. Foreign Users Thirty-six percent of the revenue from sales of standard data products at the EROS Data Center came from users with foreign addresses. Sales to additional users abroad have been made by countries that have established ground receiving stations. Such purchases may increase as analytical capabilities become more widely developed. NOAA will assist in organizing and will participate in regional meetings with foreign users in order to be better apprised of the interests and data needs of users in other countries. Commercial and governmental users in other countries have identified requirements for resolution, spectral bands, repeat observations and data delivery that are substantially similar to those of their counterpart organizations in the United States. At lower resolutions, such as 80 meters, approximately the same volumes of data would be acquired and processed to meet the needs of domestic and foreign users because of domestic requirements for foreign data. As resolution increases to 30 meters or higher, the demand by foreign users is expected to grow more rapidly. - 51 - co ,— , Eh o s 00 w OS s ,_H w 05 ■» H rH D O iH w •H & a w < H rtj IH > < fa O c >< & 15 > >■ re re ft e 0) ai c E E oo Q Q re > E > o i o o 00 5 <» O 0) 0) U CO 00 «- an o 1 a 5 .CT> CJ o IA 0) E o Q o «i re « E ra 7 0! • LL */) 0) _3 re > E 3 E Q. o «- O) r»» cm 1 1 E E o o © O 1 a > 2 s£ a? t- CO 1 1 >• > re re a a CM •* re O re 9) < 13 C re -1 °re A oc s m 1 o o © 1 o © © f- co h- fm CO 5 z 00 CU 3 re a o o S ft ra V < E 3 E E i -*P VS PS r^ cm o 1 s 5 IS CM CO 1 1 e O O u 2 O Wl > CO 1 1 E E o o > co to 5 > > ra ra Q O <* O overage for s; 7-9 Days C CU I 5 D CO 00 «- © o v) V) ^ o s M oc V CU Ml _ o « E o Q 3 «— i 1 5- S oc s W fl) o *•> «•- re > E 3 vp vP f to CO CO ^5 CO CO v a 1 **• r— tMI ^- co «- CO 1 ! re *-» 00 "8 o O s o E S 1 V* SZ'5 E D o Ifl *5 1 1 Q- 1 > > « 5 S Hi 1 a O 1 1 E E t 5 re re a g 0) 3 "8 9 © o o o CM ^ o « a c o «- CO o oc < LU Z CM s > « 1A ra E k. cu Q _,_ re ** ra u CU « *» CU re a. V 9) c re 00 8 «, => 2r ° ra ♦- Q c vT.2 > U ft re w 0) > ft re w CU ft re u 4) > o ra Q "ra 3 C C < ■D c 8 00 CU w ra 3 O" CO a. QC is ra a CO "ra a 00 a> re » 91 1=2 re 1 0) QC > o ra 9) < o $ i_ CU *•> 00 0) « E UJ E ^ 3 lO o 22 > C 1 ! E 2 .2 -o ■a 2 8f I 3 _ o — * 5 re aj s * > r "S ? c £ 1 a - 53 CHAPTER IV PERFORMANCE OPTIONS FOR THE FULLY OPERATIONAL SYSTEM Two crucial decisions relevant to the Administration's objective of having a Fully Operational System are when to begin development of a system more specifically designed to meet projected user needs on an operational basis and what additional data specifications are to be met. As set forth below, the earliest that a new system can be brought into operation is 1989. A decision on when to initiate and implement the Fully Operational System requires careful examination of the Federal government's priorities, needed financial assistance, private sector interest in taking over the system, user demands during the Interim Operational System and the potential risk of foreign satellite systems obtaining a portion of the domestic and foreign land remote sensing market. This chapter explores some of the potential technical options for the Fully Operational System, including extending and improving the Landsat D-based Interim Operational System. Preliminary system studies, further discussions with users, and market and pricing assessments will have to take place before a decision can be reached on the preferred option. While prompt resolution of the question of private sector ownership would facilitate participation by the private system operator in the design of the system, some minimal initial funding and development of key elements of the new system may have to take place simultaneously with a decision about the institutional arrangement for private sector ownership or operation in order to better meet the requirements of users. A. System Performance Options This section presents four hypothetical systems that could serve as the basis of a Fully Operational System: (1) An extension of the Landsat D series; (2) A "Minimum System"; (3) A "Middle System"; and (4) A "Maximum System". - 54 - 1 . Common Elements The four systems presented below differ primarily in levels of resolution, spectral bands and frequency of coverage, with all of them using more reliable, longer life solid state multilinear array sensors, rather than the mechanical scanners currently being used on the Landsat D series of satellites. User requirements for data from longwave thermal infrared, now on the Landsat D series of satellites, and microwave sensors may be most efficiently met through the modification or addition of appropriate sensors aboard NOAA's polar-orbiting environmental satellites or the National Oceanic Satellite System and will be considered by NOAA in the future design of these satellites. Operational systems for environmental and geophysical data collection from in-situ observing platforms already exist on NOAA's satellites and will be continued. Land data acquired via these and other satellites could be transmitted to the operator of the Fully Operational System for distribution to users. The initial formats for standard data products produced by the Fully Operational System using any of these tentative designs would be similar to those produced by the Interim Operational System, although the system operator could alter the format in response to users' needs. Standard data products would be available routinely. A "quick-look" capability to assess the quality of images acquired within 12 hours of observation, and coverage of disaster events on a limited basis within 6 hours, would be desirable. 2. Options At this stage in the planning process, only a limited number of systems options could be examined in a preliminary conceptual fashion. The number of possible technical configurations is large. For example, existing instruments could be redesigned for improved performance, or new instruments such as imaging radars, high-resolution cameras, or thermal infrared heat detectors, could be flown. To focus this initial examination, NOAA developed data specifications having three different levels of quality and utility, drawing upon the still imprecise information on user requirements summarized in Chapter III. NOAA's synthesis of the possible data specifications for the three general classes of uses at the minimum, intermediate and maximum levels is presented in Table IV-1. - 55 - 3 H - X <> UJ CO r^ c o E UJ O < C\l X3 C re CO T3 c o 5 OJ > •u > > Z < T3 CO CO - X 3 o 2 ro E o 00 r- 2 r- E o o ro X ro en 3 o. TT Ti- X CO r^ r CN "O ro O E ^-" X "O 0) c o t)> to 0) in ■D CO CO X o >■ > > to Xt s> 5 3 O > . ro r- in t E "5 o H <* o o 00 o in 3 Q. T co r-. (N T3 C «- ro n > m ro C CO (O D O > >- oj > (0 2 CO 4 > C 1- LO E 5 o 00 «, E > S E o r- «■ s b h- 1*1 ? ■o C $ ro o O in o X ft) o E £ o — *r a> b ro CO g ro O o -£ CO — > o en o *» rr E E c 5) o — or ± E c F b a> o X CO ♦^ "8 CD $) -D T5 - 2 c -= ~ lo ro 2 LO «- P 5 O O J= 0) *- ~ O I u gj 00 *-• ui rn " W UJ > O > c ro o 0) ro Q LU c o u QJ F D "J w u a> O en CI i2 ? a, CO Z < ro 'J C 1. c or 3 CO O. ro ro -* OJ > n > 0) LU o 0) -o 5 r CC u a r- U z cc < 0. X oj • oj X T) Q. *" m °" •w to ro ro E5 n oj ,, C T3 ,y ro _ *" PS™ - c * ll — -r, C fo ^ ™ > ? w 5 * co 8. to ro > ro 0) > ro C c c c m m o X c X C o Oi 0) LO c; s=- Nn ro c OJ i OJ *F o OJ OJ X o CT) o LO LO o LO T> \S> CD CD OI r» cn rN tn ro O o O o •- CN ro OJ a> ro OJ a CO LO rN ro CD LD on O C OJ > o LO b CD O b LO o CNJ '3- b OJ OJ S E CO _ 5 E I 2 o o Lf> to b b co «- b »- en v H u Eh H J w H Q J en Q CQ H IH < rt s Eh Eh Eh «. U 5 g D 2 < H X 2 u 2 Eh u «- 2 Q < 1 Eh s < o in Eh a Ch 2 Eh < Cm J HIGH RESOL. SYSTEM ( Panchro- matic) 2m MAXIMUM SYSTEM E o E o E o CNI E o E o CM E o CM "1 MIDDLE SYSTEM E o CO E o CO E LO ■D C TO o CO CNI E o CO E o CO E o CO o| MINIMUM SYSTEM E o 00 E o 00 E o <3- -o c co O 00 cnI E o 00 -o O a; 00 C o "1 LANDS AT D SERIES E o CO E o CO E o CO E o CO E o CO E o CO E o CN E o 00 E o 00 E o 00 CNI E o 00 •o c 1- E a. CM lo d LO d T"- E a. CD d CM LO d CN E a, O) CD d CO CD d CO E a. d CO d E a. LO J"*. ^- ID LO LO E a LO CO CM 00 o CM E a. LO CN d CO -a c CD jQ CO CO 2 E a. CO d LO d E a. d CO d LO 00 d d CD E a. 00 d Q) o o ■D o c 3 O u 5 CO VI ■a h- E q o ID c CD qj O > C > a c O £ ♦; CD LL o Ol ■D 3 F > 5 a> > a o u '5 or "CD Ol CO £ > C a. CD c -C ■o ■a CD 0) 3 CD 3 ■a > o co CD O Ol c O CD > ■6 a 0) c c co .!£ 0) > O o a c F > a o > en 3. T3 CD CD F n C a> ffi «- X) Ol Ol c -C CD CO I a> 0) 0) o O u u O Ol CD r~ C CD .O CC a a> C "O c •a O in 3 CO CO CD CD F CD u o CO O -O 01 Ol w a> c 01 LL :» Crt l- O w CN| n\ »| - 58 - This system would provide a level of service less than the Landsat D system. c. The Middle System This system would provide coverage in the same bands as the Minimum System at two different resolutions: 30 or 40 meters and 60 or 80 meters. The lower resolution will be half that of the higher resolution in order to facilitate use of a single sensor and simplify on-board data processing. As soon as technology allows, TM shortwave infrared bands 5 and 7 would be added at both resolutions. Observations from TM band 3 at 15 or 20 meter resolution would be a highly desirable addition. This system would provide an 8 or 9 day revisit frequency most of the time, In addition, imaging sensors could be steerable to avoid cloudy areas or to pick up areas which were covered with clouds at the regular viewing time. The number of scenes processed each year would be 40,000 equivalent scenes at 60 or 80 meters resolu- tion and 20,000 equivalent scenes at 30 or 40 meters resolu- tion; 10,000 equivalent scenes at 15 or 20 meters resolution would be gathered from limited areas. This system, without 15 or 20 meter resolution, would provide a level of service essentially equivalent to the Landsat D system. d. The Maximum System This system would provide coverage in the four TM visible bands 1 through 4, at a resolution of 10 meters, plus TM shortwave infrared bands 5 and 7 at 20 meters resolution. On board data processing also would provide data at 40 and 80 meters. The latter would provide regular coverage of global land masses; the 10 and 20 meter data would be gathered from limited areas. This system would produce global coverage equivalent to about 40,000 MSS scenes at 60 or 80 meters resolution, plus 40,000 equivalent scenes at 30 or 40 meters resolution. About 40,000 scenes of areas about 90 km square would be produced at the full resolution of 10 or 20 meters. This system would provide a level of service far in excess of the Landsat D system. 59 - A supplement to this system would be necessary to meet the need for data from a single panchromatic spectral band at a resolution of 2 meters. Such a system would require a much lower orbit than is planned for the other missions and thus could not be a shared satellite. The ground system would be specially designed for data at 2 meter resolution,, with an output of 40 , 000 scenes 20 km square per year. one of two ways? Stereo capability might be provided in o Stereo adaptation of the multilinear array imaging system in TM spectral band 3, or the addition of electronic camera systems similar to the Return Beam Vidicon to the Middle or Maximum System spacecraft; or o Separate spacecraft specially designed for stereo coverage, with either film or electronic imaging, which could be flown as infrequently as every 10 years. The minimum capability of the stereo system would be coverage of the Earth's land mass with 30 meter stereo heighting capability once every 10 years. This coverage could be improved to include imagery acquired in each of the four seasons and to raise the stereo heighting capability to 15 meters. 3 . Cost Estimates Only approximate estimates can be made of system costs at this time. They do not include NASA and NOAA system development, market expansion, or planning and management costs, nor do they include the cost to add a longwave thermal infrared or advanced microwave sensors to the operational system. Rough estimates of ten-year capital and operating costs of the full systems at each level are:J_/ o $2.0 billion for Landsat D continuation; o $1.0-$1.5 billion for the Minimum System; o $1.5-$2.5 billion for the Middle System; 1/ All costs are in FY 1980 dollars. - 60 - o $3.0-$5.0 billion for the Maximum System; and o $4 to $5 billion additional for the 2 meter system. While any estimate at this time is premature, the thermal infrared capability, with a resolution on the order of 100-200 meters, probably can be added to an existing operational spacecraft without exorbitant cost. The additional cost to produce one global set of satellite stereo data is estimated to be $200 to $400 million for 30 meter stereo heighting capability and $300 to $700 million for 15 meter stereo heighting capability. These estimates assume that: o The spacecraft will be launched and re- trieved by shuttle; o Retrieved spacecraft will be refurbished for reuse; o Data will be relayed to ground via geosta- tionary satellites; and o Highly reliable, all solid state sensors and onboard data storage devices will be used, with sufficient redundancy to achieve a goal of five-year life for each spacecraft mission before the end of the ten-year operational period. 4. Timing Considerations Initiation of any of these operational system alternatives is highly dependent on the development of reliable sensor and other spacecraft subsystem components needed to achieve long life for each spacecraft and initiation of detailed system trade-off studies and system design. The Minimum J>r Middle System probably could be launched by the end of this decade if necessary R&D and initial system studies are initiated in the next few years. A tentative schedule based on a new spacecraft appears in Table IV-3. This development period might be one year less if the shortwave infrared channels are omitted on the first spacecraft and a shorter life for the initial spacecraft is - 61 - H N H IH EH D S « w o Eh (/} < S3 O H Eh S Eh CU W o u < I > H W Q 1 fa U a D £ fa W 2 fa > H Eh Eh fa Eh o o o TT M Cl 1 1 i | ■ ml 3 ■ 01 1 *> f ■ IS 1 ,? 1 01 Ol 1 -s'l 1 \" 1 1 J 5 X i i ~ I* SB 1 ■ I 1 ^i s r ■ ■ 3 if 1 u, * < B B| s < > J41 SI J < o _5-<. UJ < ^ H 01 » — — •«• u ii4] -g. 1- O B s> m Z 4 UJ I - 4 O ■ cc j3 CC CO 5 S 01 CI _JL_ je. «._„*. y. J j» s i ■ 1 1 i 1 1 , i S a m cc < CO ■- IB 4 4 a. 1 1 J 1 te 5 "" > < K E fc Ol < 4 a. 01 *S ! 1 J2 " w ^ J I ! i >-j 1 "- 1 CO y 5] E < K (- K u Q D| B » « H o 00 I o o o t ►-HI- » < < < « co to c Q o a i z z z < < < < » 55 uj "" "" "" =*I-I. l _h- 5 S 5 5 8* § 5 5 | | 1 S 3 u s | | = i i £ i °» a. o. 2 2 uJ R c ^ £ = CC O 4 t < - 62 - accepted. The improved Landsat D system could also be launched in 1989, as soon as the solid state sensors have been developed and integrated into the Landsat D spacecraft, as shown in Table IV-4. The Maximum System would take at least two additional years to implement. Stereo capability can be included in the same general time frame. If existing technology is used with a dedicated spacecraft and ground system for stereo capability and full funding is made available for design in FY 1982 and construction in FY 1983, a launch as early as 1988 may be feasible. B . Initial Evaluat ion The following provides an initial, very tentative evaluation of the hypothetical options. Decisions on performance specifications will only emerge from the lengthy interactive process between preliminary system design, user requirements analysis and cost estimating that will be a part of the ongoing planning process for the Fully Operational System. The Minimum System does not appear to meet the currently stated needs of the majority of users, especially with respect to resolution, which is particularly important for the renewable resources and environmental management user groups. It has lower performance characteristics than even the Landsat Thematic Mapper, which will be used for the Interim Operational System, and would amount to a regression in the quality of available data. It would not come close to meeting the competition that may be provided by the French and the Japanese systems, so both U.S. tech- nological leadership and a large part of the market for U.S. data and standard data products could be lost. A system with this level of performance probably would not be worth the investment. The upgraded Landsat D system and the optimum Middle System are relatively similar in cost and performance. Indeed, additional system study may show that the basic multi-mission modular spacecraft (MMS) used for Landsat D can be improved to serve as the optimum Middle System spacecraft. These systems would have to provide higher operational reliability, incorporate the latest technology and lower average annual costs through longer spacecraft life if users are expected to forego other data sources in favor of land remote sensing satellite data. A 15 meter - 63 - U 2 H «-» Cs3 Eh H Eh 2 P En h h <; 2 Eh K E D U W W H S U CQ H < # Eh Cm P WWfc >H W WWOh w ■5* JH2 I < c< o > 2 w H OWD H w W Eh Q U P H < IH J P J C< P Q O fa W W P 2 W 2 H > H CQ H Eh Eh Z ^ < O W Eh U 2 2 ^ W Eh O O O 03 01 01 b 01 en oi to en 0> I 1 ? 1 4 1 01 ■ a j. < I! 01 01 ■ < !« ij s z < 5 = 1 e Ol Cn i | 2 < 1 1- iij H - 01 h Km CO I "* m 5 *s< B« 1 cn l v, a« vl ■ si 1 T 2 ■< tj <• s 10 Q ^ o cn < O 2 ""; S B O £ Cn 00 Cn ** i CO CD < 5 i -Is K 8 £ j, « 1 00 en 1 . z li a . s 1 CO en a - 5 [u Z 31 I 3 < - z in CO en 5 [ ! • — D O O i CO en " 5 ' I 1 z z" < z < z < CO en ! 8 < OB CD < B m < CO en * < 2 1 > t- < en > O o t/1 to ^ I s s t s s s <> J Ifl J "1 B) »1 B) b b ^ " K t >- !r !- 1- t- k " Q i_ "" S x £ S x x < < < < f < £ * £ g g Q O O wg £ O C "• u. u. u. < ! ! 1 1! s 3 5 1 j; 1 i Si - > < - 64 - TM band 3 with twice the resolution offered by the 30 meter TM band 3 on the Landsat D could be desirable. In addition, the development by 1989 of an all solid-state multilinear array system with a 15 meter TM band 3 would place the U.S. at least on a par with the French and Japanese systems, which are scheduled to begin operation in the mid-1980s. The Maximum System meets virtually all stated user needs, but at a cost that users will probably not be willing to pay. Until experience is gained with the data from the TM system and more widespread use of land remote sensing satellite data develops, the additional value of the refine- ments offered by this system is somewhat speculative. Moreover, the development of the Maximum System will take at least an additional two years. To reach firm decisions on system specifications will require further analysis of user requirements, including stereo requirements, the marginal costs of various additional capabilities, the establishment of budget priorities and the mechanisms for system financing. - 65 - CHAPTER V REVENUES, PRICING POLICIES AND FINANCIAL ASSISTANCE The Administration has established as a national goal eventual ownership and operation by the private sector of our civil land remote sensing activities, and directed NOAA to plan for system financing including pricing policies for the users sharing of costs. Accordingly, marketplace objectives should play a significant role in the design and management of the Interim and Fully Operational Systems, although a number of other considerations, such as the desire to assure U.S. technological leadership, will also shape the final decisions. This chapter examines the Interim and Fully Operational Systems from a business point of view that requires the generation of revenues to recover capital and operating costs and to provide a reasonable return on capital through the provision of a valuable service to users. The chapter identifies the policy choices involved and the nature of the Federal financial commitment that may be required for private sector ownership, reviews the revenue currently projected to result from new pricing policies and potential market expansion activities and discusses alternative mechanisms for capital and operating assistance. Finally, the chapter examines alternative approaches to sharing the burden of Federal financial assistance among the Federal agencies. A. Projected Revenues and Costs Revenues of the operational system will be generated by sales of data and standard data products and by foreign ground station access fees. The current price of data and standard data products is based upon the cost of reproduction, with no attempt being made to control additional reproduction by users, so that a computer compatible tape costs $200 and various types of Landsat images cost between $8 and $50, J_/ The current access fee is a nominal annual payment of $200,000 per station. In 1978, the current Landsat system generated $4 million from sales and access fees of $1.8 million for a total of nearly $6 million in annual revenues. Of the $4 million, $2.7 million was derived from sales and $1.3 million is the value attributed to the data distributed without charge. 1/ All revenues are in FY 1980 dollars. - 66 - A hypothetical five to ten fold price increase, phased in over a period of some years, assuming the increases are absorbed without any significant overall loss of sales to competing sources of data (such as aerial photography, field party surveys and foreign land remote sensing satellite systems) could increase revenues over time to $30-60 million per year simply by raising prices. \J In addition, assurance of data continuity and reliable delivery of data and standard data products, combined with a market expansion program discussed in Chapter VII, should enhance the prospects for growth in unit sales volume. If one assumes a hypothetical 10% growth in data sales per year and only a hypothetical 5-fold increase in both the price of standard data products and foreign station direct reception fees, then by the year 2000, annual revenues of $140 million would be generated by the system. Unfortunately, reliable projections of market growth and price elasticity are not possible at this time. However, the doubling of current unit sales at higher prices is a possible goal. The tentative estimates for the hypothetical Fully Operational System options, described in Chapter IV, indicate that approximately $100 million to $400 million or more in annual revenue would be necessary, depending on the technical capabilities of the system selected, to cover total annual costs. They include operating and maintenance costs, replace- ment of capital equipment, dividends, taxes, interest on debts, marketing, insurance, and a reasonable return on initial capital. Similar tentative estimates covering the remaining total annual costs for the Interim Operational System indicate that approximately $150 million in annual revenue would be necessary to cover total annual costs. B. Pricing Policies 1. Standards The pricing of data and standard data products from the Interim and Fully Operationals System should conform as much as possible to the following standards: 1/ Whether subsequent reproduction of dissemination of data products by Federal agencies and other users would need to be conditioned upon payment of fees to make prices well above cost of reproduction meaningful remains to be seen. This matter is addressed under the heading Control Over Data an d Standard Data Prod ucts in Chapter VI, Section B.l. - 67 - a. Consistency . Pricing policies should be developed that are consistent for foreign and domestic users. Foreign and domestic users, with the possible exception of the Federal agencies who might pay higher prices as a form of financial assistance (as discussed below), should pay the same price for the same product and associated services. Fees charged to foreign ground stations receiving data directly should be set to encourage consistency between prices for domestic and foreign standard data products. b. Assistance to Special Users . Certain classes of users whose data usage is in the public interest may be driven out of the market by higher prices. While the policy of consistency precludes discounts, such users could seek direct Federal grants to enable them to purchase needed land remote sensing satellite data at established prices, in special and selected circum- stances. c. Market development . Especially during the Interim Operational System, prices should be established in a manner to increase the volume of unit sales without losing major customer demand. Price changes should be announced well in advance so that users, especially those dependent on governmental appropriations processes, can plan their budgets accordingly. 2. Fee Structure Examples of the types of fees the operator of the Interim and Fully Operational Systems could charge for data and standard data products are: o Basic Fee . A fee paid by each user on each standard data product it purchases from the U.S. system operator. These fees would vary in proportion to the cost incurred in producing that product. They would be paid by users of both real-time and retrospective data. Other factors such as timeliness, the placing of special orders and special handling could be reflected in a surcharge schedule. - 68 - o Royalty Fee . A fee paid by each U.S. and foreign user and foreign ground station operator on the reproduction or resale of Landsat standard data products. o Direct Reception Fee . One or more fees paid by foreign ground station operators receiving data directly from U.S. land remote sensing satellites. Examples of such fees are: (1) an annual access fee like the $200,000 fee per station per year currently being paid by Landsat station operators, and (2) a transmis- sion fee paid by foreign ground station operators for data transmitted to and received by the foreign ground stations. This latter fee would be based on the amount of data requested. A further study of pricing options will be made during FY 1980 and FY 1981 for review by the Program Board and the Land Remote Sensing User Advisory Committee. 3. Price Levels The objective of users sharing of the costs of the operational system precludes a continuation of the present policy of limiting prices to the cost of reproduction and leaving user reproduction completely uncontrolled. 1/ While specific price levels for specific products cannot reasonably be established without more detailed study, two approaches to pricing during the Interim Operational System are being considered: Option 1. Price Increases Designed to Maximize Revenues NOAA would raise prices when it assumes responsi- bility for the Interim Operational System to levels designed to maximize immediate revenues from sales. For instance, price increases effective in FY 1983 would be announced in FY 1981 as a result of preliminary pricing studies, and would be confirmed through contracted market studies in FY 1982. T7 Some users oppose increasing prices above the present cost of reproduction level, which they believe maximizes the public benefit. - 69 - Pros: o Generates revenue to help offset recurring costs of the Interim Operational System. o Tests the market for land remote sensing data at relatively high prices early enough to provide some feedback to decisions with respect to the Fully Operational System, including the potential for private sector investment. Cons; o Foregoes introductory pricing to develop the market? could price some users out of the market and discourage new users. o Creates an opportunity for market penetration by foreign land remote sensing satellite systems. o Factual information on price elasticity for data and standard data products cannot be obtained until the Interim and Fully Operational Systems are more clearly defined. Option 2. Price Increases Phased to Promote Development NOAA would raise prices on a phased basis when it assumes responsibility for the Interim Operational System. Data and standard data products would be priced at levels initially designed to encourage potential users to invest in support equipment and to reduce the use of competing methods of data collection. Initial price increases effective, for instance, in FY 1983 would be announced in FY 1981 as a result of preliminary pricing studies. Price increases for FY 1984 and subsequent fiscal years would be developed through contracted market studies in FY 1982 and announced in late FY 1982. Notification of price increases well in advance would be provided to test demand without distortion from temporary budget shortfalls resulting from unanticipated price changes. Pros : o Factual information on price elasticity for data and standard data products cannot be obtained until the Interim and Fully Operational Systems are more clearly defined; - 70 - o Users acquire data at rates that will allow them to assess its utility to their operations and make long-term commitments; and o Long-term increases in market volume, through encouragement of new users and avoidance of pricing some existing users out of the market, may generate greater revenues for the Fully Operational System. Cons: o A lower revenue flow may result during the early phases of the Interim and Fully Operational Systems, possibly discouraging private sector investment. C. Financial Assistance The Federal government could reduce the gap between the revenues and the total annual costs that likely would be experienced by a private operator or a government corporation in a number of ways, ranging from providing some or all of the initial capital to agreeing to pay higher prices for the data and standard data products it uses. To the extent that the Federal government chooses to provide or underwrite initial capital, the level of operating assistance can be correspondingly reduced, and vice versa . Actual outlays for operating assistance unlike capital assistance, can be deferred until the system begins to deliver products, if an advance commitment guarantees the operator a market for its products. The following paragraphs briefly identify the primary capital and operating assistance techniques: 1 . Capital Assistance a. Grants — The Federal government could give one or more qrants to a private operator or a government corporation, which would require neither the payment of dividends or interest nor repayment of principal, and would thereby directly reduce the revenues required to meet costs. Federal grants as direct payments might be unattractive in tight budget times as compared with equity or loan guarantees. b. Equity Guarantees — A private operator could raise capital in the private financial market by issuing stock at a Federal government-guaranteed minimum - 71 - price. The Federal government could purchase any unsold stock at the end of a specified period at the guaranteed price and could stand ready thereafter to repurchase that stock at that same price. Such a price guarantee might make the stock offering of a private operator attractive enough at the outset so that all stock would be purchased by private investors. c. Government Loans and Loan Guarantees — The Treasury Department or the Federal Financing Bank could make loans to a private operator by buying corporate bonds, or NOAA could guarantee loans made to a private operator or to a government corporation by the Treasury Department, the Federal Financing Bank, private investors, or all three. All such loans, except those from private investors, would involve interest rates at or near Treasury rates, which could be well below the market rate. The interest rates on private loans guaranteed by NOAA would be somewhat higher depending upon market conditions. 2. Operating Assistance a. Federal Purchase Guarantees — NOAA could contract with a private operator or a government corporation for a specific flow of land remote sensing satellite data and standard data products designed to meet the minimum data needs of all Federal users over a period of several years at prices that would ensure that revenues from these purchases cover virtually all the costs of operation. Other users probably would be charged lower prices, since the operator (and therefore the Federal government) would benefit from sales at any price above direct production costs for the additional standard data products. Federal users could purchase additional standard data products at current market prices at any time. b. Overall Price Assistance — The Federal government could agree to pay a private operator or a government corporation a fixed amount for each unit of data or standard data product sold to all or specific groups of users. The amount could be adjusted periodically based on an evaluation of the corporation's operations. c. Appropr iat ions — The Federal government could provide funds to a private operator or to a government corporation to increase the revenue stream sufficiently to assure cost recovery. The amount could vary annually or be - 72 ~ fixed at the outset on the basis of a projection of long-term needs. In the latter case, the corporation would retain a full incentive to reduce costs and increase revenues. d. Free Services — The Federal government could provide launches, data transmission service from the satellite to the ground facility via TDRSS, or insurance for space hardware to a private corporation or a government corporation, thus reducing the corporation's costs substantially e. Tax Incentives — Accelerated deprecia- tion or additional investment tax credits could be granted to a private operator to reduce its taxes. Since this form of assistance is not useful if the private operator has no tax liability, tax incentives would be effective only for an operator with taxable income from land remote sensing or other operations. The appropriate financial assistance mechanism may depend on the institutional option selected. Various institutional options and assistance mechanisms are considered in Chapter VI, D. Appro priation of Fe deral Financial Assistance Costs Three possible options exist for allocation of the Federal financial assistance costs among the budgets of NOAA and the Federal user agencies; Option 1. NOAA Budgets all Funds NOAA would be responsible for obtaining appropriations for that portion of the capital and operating costs of the "core 98 Interim and Fully Operational Systems not covered by revenues as an add-on to its existing budget. In addition, NOAA would seek funds for any optional components beyond the core system that are required to meet the special needs of users, such as, for example, stereoscopic or other special sensors, or more frequent coverage. The pros and cons of Option 1 are: Pros : o Provides NOAA with leverage to establish priorities among users' technical requirements; o Focuses responsibility for policy and budget development and presentation in a single agency? and o Focuses policy and budget review in four Congressional subcommittees. - 73 - Cons ; o Fails to provide adequate incentives for user agencies to make tradeoffs between satellite and other data sources, and between programs uti- lizing land remote sensing satellite data and other mission programs; o Focuses program justification in NOAA's Congressional committees, thereby diluting the influence of the constituencies of user agencies; o Requires justification of special system capabilities before Congressional subcommittees that are not necessarily knowledgeable about the specific requirements of the individual user agencies. Option 2. NOAA Budgets "Core" System Funds; User Agencies Budgets Special System Capabilities NOAA would obtain appropriations only for that portion of the capital and operating costs of the "core" Interim and Fully Operational Systems not covered by revenues as an add-on to its existing budget. These "core" systems would include the space and ground segment elements necessary to meet the common needs of the majority of users. The costs for any special system capabilities, such as stereoscopic or other special sensors or more frequent coverage, would be budgeted by the user agencies that want these capabilities.^/ The pros and cons of Option 2 are; Pros; o Provides NOAA with leverage to establish priorities among users' technical require- ments for the core system; o Focuses responsibility for policy and budget development and presentation for the core system in a single agency; \J In addition, joint funding arrangements with the private sector could be negotiated. 74 - o Focuses policy and budget review of the core system in four Congressional sub- committees; o Provides incentives for user agencies to make cost tradeoffs with respect to the special system capabilities between satellite and other data sources, and between programs utilizing land remote sensing satellite data and other mission programs; and o Requires agencies with special needs to justify provision of any special system capabil ities. Cons ; o Fails to provide incentives for user agencies to make cost tradeoffs between satellite core system and other data sources; o May require NOAA to coordinate budget presentations with one or more other agencies and complicates the budget approval process; o Requires justification of special system capabilities before additional sets of authorization and appropriation committees that are not necessarily knowledgeable about land remote sensing from space; and o Focuses program justification for the core system in NOAA, thereby diluting support from the constituencies of other agencies. Optio n 3. U ser Agencies Fund All Sy stem Funds The major Federal user agencies would obtain the appropriation of their proportionate share of that portion of the capital and operating cost of both the "core" and any special system capabilities of the Interim and Fully Operational Systems not covered by revenues. - 75 - The pros and cons of Option 3 are: Pros: o Provides maximum incentives for Federal user agencies to make cost tradeoffs between satellite and other data sources, and between programs utilizing land remote sensing satellite data and other mission programs; o Most fairly distributes costs based on expected use; o Brings to bear the constituency influence of the user agencies; o Shows commitment of Federal user agencies to the benefits of this program; and o Gives participating agencies more leverage in setting priorities. Cons: o Limits NOAA's effectiveness in establishing priorities between users' technical requirements; o Splits responsibility for program budget review among many Congressional subcommittees; o If one Federal user agency withdraws from or loses Congressional support for the program, costs to the remaining agencies would increase unexpectedly, or the System could be jeopardized; o Makes NOAA's technical defense of the budget difficult due to the large number of concerned Congressional committees; and o Would lessen the probability of non-Federal user requirements being considered in the design of the system. - 77 - CHAPTER VI INSTITUTIONAL APPROACHES TO PRIVATE SECTOR INVESTMENT AND MANAGEMENT Four principal institutional alternatives are examined in this Chapter for meeting the goal of eventual operation by the private sector of the U.S. civil operational land remote sensing satellite activities. In addition to these alternatives, the need for legislative policies to guide a private sector owner in its operation and for the establish- ment of a regulatory framewrk to oversee any private owner's activities are discussed. A. Institutional Alternatives Four major options have been identified for achieving some degree of private sector operation of the U.S. civil land remote sensing satellite system. These options are: o A private corporation; o A legislatively established for-profit private corporation? o A government corporation with private sector operation and with a subsequent transfer to the private sector. o Federal agency ownership with private sector operation and with a subsequent transfer to the private sector. These options were developed in part and reviewed at two workshops conducted with representatives of a broad cross- section of private corporations interested in the land remote sensing satellite program. An initial assessment of some pros and cons of these options is set forth below. Option 1. Private Corporation A private corporation or a consortium of private corporations would be selected to own and operate all or a - 78 " part_1_/ of the Fully Operational System. This arrangement would have the following attributes: o A private corporation would be selected through a competitive process to own and manage the system for a specific period of time. Re- competition would occur at the end of this period. o The private corporation's own management and board of directors would be responsible for managing the system. o The capital needed to develop and build the system would be provided through private equity, private debt investments and corporate retained earnings. No Federal loans or loan guarantees would be provided. 2/ _]_/ Industrial interest in owning and operating the U.S. civil land remote sensing satellite system varies. Two companies have expressed interest in owning and operating both the space and the ground segments. Other companies, depending on whether they are aerospace or data processing companies, have expressed interest in either the space segment or the ground segment, with the Federal government owning and operating the other segment. In addition, interest has been expressed among mineral and petroleum companies in a specialized satellite system that would provide stereoscopic data. 2/ Industry representatives are in agreement that, in the absence of Federal data purchase guarantees, this option is not viable at this time because of the projected gap between system revenues and system costs and the uncertain market during the 1980s. Their preferred Federal assistance appears to be a long-term service contract by which the Federal government would guarantee a certain annual income to the private corporation, for perhaps a ten-year period, in return for having its requirements for standard data products met. The Department of the Navy's Leasesat is an example of this approach. The private corporation would be required to meet non-Federal user requirements and would assume the associated business risk. below: - 79 - o A portion of the system's revenues would be provided by a long term Federal contract guaranteeing purchases of the standard data products required to meet the government's needs. ]_/ o The private corporation would assume the risk of recovering the remaining percentage of its capital and operating costs, plus a profit, through an aggressive market development program. o The private corporation would be regulated by NOAA to ensure compliance with U.S. national and international policies. 2/ The pros and cons of Option 1 are set forth Pros : o Would achieve the goal of private sector ownership and operation at the earliest possible time;3/ o Could place some of the financial risks in the private sector. T/ The contract terms would provide the necessary financial assistance by setting the prices to be paid by the Federal government for its basic data needs at a sufficiently high level to make cost recovery feasible. Alternatively, the quantities of data, but not the prices, could be specified, with a separate fixed subsidy in addition. 2/ NOAA would need authorizing legislation to enable it to regulate any private system operator, to enter into a long-term service contract on behalf of Federal user agencies and appropriations to finance any long-term service contracts. 3/ Transfer of Federal land remote sensing equipment or designs to private ownership may be inhibited by the possible existence of contract restrictions protecting equipment suppliers against the transfer of such technology. - 80 ~ o Would defer Federal outlays for the fully operational system through use of a long-term data purchase contract by whose terms control over the private owner's activities could be establ ished . o Would provide a strong profit incentive for vigorous market development and system efficiency. o Might be more responsive to market demands than the Federal government since a private corporation is likely to spend more resources on market development . o Would permit Federal reassessment of this option at the end of the contract period. Cons: o Would probably be infeasible unless long-term Federal purchase guarantees were given. o The Federal government would be able to appoint members to the private corporation's Board of Directors to ensure Federal participation in the day-to-day direction of a system largely serving Federal needs and largely funded with Federal monies. o Changing Federal information needs might not always be met by a private corporation. o A private corporation owning the space segment and the resulting data could cause foreign concerns about abuse, possibly leading to adverse foreign and space policy consequences. o Could make it more difficult to achieve the goal of complementarity with foreign operated satellite systems, since limited Federal control of the private corporation's satellite activities would exist. o Could make it more difficult to achieve potential savings by integrating atmospheric and oceanic operational remote sensing satellite activities with those for land remote sensing. o In the absence of sizeable Federal capital and operating subsidies, the competitive process for ownership and operation of the system would be limited to a few very large corporations. o Those large corporations who would respond to a competitive selection process might have potential - 81 - conflicts of interest as users or as system providers with the operation of a land remote sensing satellite corporation. Option 2. Federal Establishment of a For-Profi Private Corporation The Federal Government, through legislation, would establish a for-profit private corporation to own and operate all or a part of the U.S. civil land, remote sensing satellite system. This corporation would have the following attributes: o Federal and non-Federal representation would be provided on its Board of Directors. o The capital needed to develop and operate the system would be provided through the sale of capital stock and debt obligations in the private financial market or through the Federal Financing Bank and the Department of the Treasury ._]_/ If all the corporation's stock were not purchased on the private market within a pre-determined period, the enabling statute could provide for government purchase of a limited percentage of the unsold stock or for the withdrawal of the stock offering and use of another opt ion. 2/ o Stock ownership by private corporations active in the aerospace, data processing and value-added service fields would be limited to a specific percentage of the corporation's stock. o A portion of the corporation's revenue would be provided through a long-term Federal service contract guaranteeing purchase of the standard data products required to meet the Federal government ' s needs . ]_/ NOAA would need authorizing legislation to enable it to obtain up-front appropriations covering any government loan. 2/ If necessary, the statute could authorize the Federal government to guarantee a base price for the shares of stock purchased by the general public. However, such a guarantee would significantly limit the assumption of risk by the private sector under this option. If not enough stock was purchased, the desirability of moving forward with such an institition would have to be reassessed. below: - 82 o The corporation would assume the risk of recovering the remaining percentage of its capital and operating costs, plus a profit, through an aggressive market development program. o The corporation would be precluded from it- self building the space and ground segments and would be required to procure its hardware and software through a competitive bidding process. o The corporation would be regulated by NOAA to ensure compliance with U.S. national and international policies. The statute also could provide for periodic Federal review of the corporation's affairs. The Pros and Cons of Option 2 are set forth Pros : o Would achieve the goal of eventual private sector ownership and and operation earlier than Options 3 and 4,J_/ o Would ensure Federal participation in the day-to-day management of a system largely serving Federal needs and largely funded with Federal monies. o Would spread financial risks among private investors, private lenders and the Federal government. o Use of a long-term data purchase contract would defer Federal outlays for the Fully Operational System, although any Federal equity participation would require immediate outlays. o Would provide a strong profit incentive for vigorous market development and system efficiency o Might be more responsive to market demands than the Federal government since a private corpora- tion is likely to spend more resources on market development. T7 Transfer of Federal land remote sensing equipment or designs to private ownership may be inhibited by the possible existence of contract restrictions protecting equipment suppliers against the transfer of such technology. - 83 ~ Cons ; o Once the corporation is established, the Federal government might be committed to its continued support for an indefinite period of time if it turned out to be unsuccessful financially. o Would create a statutory monopoly, limiting entry into the market by other private corporations for the foreseeable future. o Although less likely to cause serious concern than Option 1, a legislated private corporation owning the space segment and the resulting data is more likely than Options 3 and 4 to raise foreign concerns about abuse, possibly leading to adverse foreign and space policy consequences. o Might make it more difficult to achieve the goal of complementarity with foreign operated satellite systems than under Options 3 and 4. o Might make it more difficult to achieve potential savings by integrating civil atmospheric and oceanic operational remote sensing satellite activities with those for land remote sensing than under Options 3 and 4. Option 3. Federal Establishment of a Wholly- Owned Government Corporation with a Subsequent Transfer to the Private Sector The Federal government would establish a wholly-owned government corporation to own and operate the U.S. civil land remote sensing satellite system. This corporation would have the following attributes: o The corporation would report to the Secretary of Commerce. o Federal and non-Federal representation would be provided on its Board of Directors. o The members of the Board of Directors would be appointed by the President or the Secretary of Commerce. o The capital needed to develop and operate the system would be provided through government purchase of the equity interest in the corporation and through the sale of below: :4 _ debt obligations in the private financial market or through the Federal Finance Bank and the Department of the Treasury. o A portion of the corporation's revenue would be provided through a long-term Federal service contract guaranteeing purchase of the standard data products required to meet the Federal government's needs. o The corporation would assume the risk of recovering the remaining percentage of its capital and operating costs through an aggressive market development program. o The corporation would be precluded from itself building the space and ground segments and would be required to procure its hardware and software through a competitive bidding process. o The corporation would be managed so as to ensure compliance with U.S. national and international policies. The statute also would provide for periodic review of the corporation's affairs. o The corporation would be transformed into a for-profit private corporation through the sale of its stock or the disposition of its assets to a private corporation or consortium as system revenues warrant. The Pros and Cons of Option 3 are set forth Pros: o Transition to private sector financing and management of the system could occur when system revenues so warrant. o Would continue close Federal management and control of a system for which Federal entities are currently the largest users. o Could make it easier than Options 1 or 2 to achieve the goal of complementarity with foreign operated satellite systems. o Foreign concerns about abuse would be less likely than with Options 1 and 2. :5 - o Offers greater potential for integration of atmospheric, oceanic and land remote sensing satellite activities than Options 1 and 2. Cons : o Would not immediately achieve the goal of private sector ownership. o Would create another government program, restricting participation by private corporations to equipment or service contracts. o Would place all financial risks on the government. o Would not provide as strong an incentive for recovering all costs through data and product sales since, historically, the market development programs of Federal agencies have been unsuccessful. Option 4. Federal Agency Ownership With Private Sector Operation with a Subsequent Transfer to the Private Sector As the Federal program manager, NOAA would develop and own the U.S. civil land remote sensing satellite system and private corporations would operate all or a part of the system under contract with NOAA. When the system becomes financially viable, it would be transferred to the private sector The option involves the following: o A private corporation would be selected through a competitive process to operate all or a part of the system for a specific period of time. Re-competition would occur at the end of this period, period. o The government would be responsible for the capital and operating costs of the system. o Users would pay the Federal government fees for data and standard data products. o Transfer to private sector ownership would take place when the system becomes financially viable. The Pros and Cons of Option 4 are set forth below: - 86 - Pros: o Would ensure maximum Federal control of a system largely serving public needs and largely funded with Federal monies during the period of Federal ownership. o Could make it easier to achieve the goal of complementarity with foreign operated satellite systems during the period of Federal ownership. o Could minimize foreign concerns about abuse during the period of Federal ownership. o Could enhance potential for savings through integration of atmospheric, oceanic and land remote sensing satellite activities during the period of Federal ownership. o Would permit Federal reassessment of private sector ownership options after the implementation of the Interim Operational System. Cons : o Would achieve the goal of eventual private sector operational involvement, but would not do so now. o Transition to private sector financing and management of the system would be deferred at least until the early 1990s or until an industry proposal is accepted. o Would place all financial risks for development of the first Fully Operational System on the government . o Would require appropriations of initial Federal outlays for the Fully Operational System in 1982. o Would not provide as strong an incentive for recovering all costs through data and product sales since, historically, the market development programs of Federal agencies have been unsuccessful These options will be carefully examined by the Administration over the next several months to determine which alternative best serves Federal, state and local government and private sector interests. B. Factors Affecting Industry's Decisions on Invest- ment Private sector representatives tentatively have identified a number of factors that will have a strong - 87 influence on the willingness of private individuals and organizations to invest in land remote sensing satellite operations. This section reviews these factors and some initial Federal responses. Inevitably, the Federal govern- ment, in considering the national interest, may not give a private operator all of the advantages it might want. The information with respect to these concerns comes from discussions with industry representatives. In a June 1979 report, an interagency task force led by the Department of Commerce and NASA reported on the results of its discussions with fifty people in aerospace, financial, and other companies on the issues, opportunities and options for private sector investment. NOAA discussed the issues raised in this report individually with companies known to have given additional thought to the investment questions since the June 1979 report and at two investment workshops convened in April, 1980. While the private sector does not speak with a single voice, the issues discussed below were considered important to many, if not all, of the companies. 1. Control Over Data and Standard Data Products Fees for data and standard data products, including revenues from foreign ground stations, represent the primary source of income for the private operator, other than some form of government data purchase guarantee. Reproduction or resale of standard data products by a user without additional payments could reduce the revenue of the private system operator and make the system less viable financially. Three areas are of major concern: o Data or standard data products purchased by a private organization or a government agency may be reproduced for use in-house; o Data or standard data products puchased by a user may be reproduced or resold for use by other users; and o Data or standard data products purchased by a Federal agency may have to be provided at private request under the Freedom of Informa- tion Act (FOIA) at the cost of reproduction. To address these concerns the Federal govern- ment would probably have to enact legislation to enable the system owner-operator to own the data and standard data products and condition their dissemination on the pay- ment of appropriate fees. The protections of the United States copyright laws would apply for a private owner and purchasers would not be able legally to reproduce or resell the data or standard data products without permission or payment of royalties to the copyright owner. Reproduction by foreign purchasers would be governed by international copyright agreements. The system operator could require all users to sign a sales agreement at the time of purchase prohibiting unauthorized resale or reproduction, and similar protection could be incorporated in the agreements with the operators of the foreign ground stations. Under the FOIA, Federal agencies may be required or allowed to produce or reproduce the data or standard data products for external users at the cost of reproduction. Legislation limiting this authority and providing for the exemption of land remote sensing satellite data and standard data products from the "cost of reproduc- tion" pricing provision of the FOIA is one way to resolve this concern. Finally, the value of copyright protection may be significantly diluted if minor modifications to the format of the data or standard data products would free the derived product from the reproduction prohibition. If additional study indicates that legislation is required to preserve the value of the original copyright, it could be sought. 2. Equal Access to Data and Consistent Pricing Policies Present U.S. policy requires nondiscrimina- tory availability of land remote sensing satellite data and consistent pricing policies applicable to both foreign and domestic users. The information extracted from certain data can have a particularly high economic value when it is used, for example, in commodities trading and in mineral exploration activities, particularly if it is not generally available. Some users would therefore be willing to pay a premium for privileged access. While the practices of public nondiscrimi- natory availability of data and consistent prices may - 89 - discourage some investors, they represent a carefully considered U.S. policy and no recommendation for change is made. 3. Cost Recovery through Data Sales A primary concern for a potential private operator is the large gap between present system revenues and system costs. Opportunities for data ownership, Federal financial assistance and sales of data to the Federal government, in addition to implementation of a realistic pricing program (see Chapter V) and a market expansion program (see Chapter VIII) will be important elements in establishing private sector confidence in the future profitability of land remote sensing satellite activities. 4. Federal Regulation Federal regulation of a private operator of the land remote sensing satellite system will be necessary to some extent because of treaty obligations and national security interests, in addition to the national and foreign policy considerations discussed below in Section D. Regulation should be kept to the minimum required to implement these obligations. Regulatory policy for the Fully Operational System should be established well in advance of the private operator's assumption of responsibility for the system, and to the maximum extent possible remain constant for the useful life of the system. 5. Competition with Data from Federal R&D Systems The concern has been expressed that data freely available from Federal R&D land remote sensing satellite systems will compete with the data from the private operational system, reducing private system revenues. NASA probably will continue, however, to develop some advanced experimental sensors and spacecraft systems for land remote sensing because: o National policy requires maintenance of U.S. technological leadership, a function assigned to NASA under the 19 58 Space Act, to be in a favorable competitive position with respect to foreign systems; and - 90 - o High costs and high risks are associated with these developmental systems, and experience in the satellite communications arena indicates that the private sector may not fund R&D activities to the extent necessary to maintain national leadership. Since NASA currently is required by its enabling statute to ensure the widest practicable and appropriate dissemination of information concerning its activities and the results thereof, one solution could be to establish procedures under which the private operator would distribute NASA's experimental land remote sensing satellite data to potential users other than those directly engaged in programs in cooperation with NASA. Fees compatible with those from the Fully Operational System could be charged for the experimental data. In addition, NASA could limit its R&D in land remote sensor technology to those areas where the most advanced technological efforts are involved. 6. Federal Competition in Services Federal agencies prepare information products derived from standard data products provided by the system operator to meet the needs of the agencies and their con- stituents. Such activities present two potential problems to the private sector: o In-house preparation of information products could hamper transfer of the resulting technology to non-Federal users and the value added service industry; and o Distribution of information products by Federal agencies could preclude development of markets for similar private sector information extraction services, thus reducing the consumer market available to the value-added service industry. Although transfer of technology to non-federal users is essential if the full range of benefits to the nation from the operational land remote sensing satellite system is to be achieved and private sector investment is to be encouraged, some agencies have missions that require them to produce information products for constituent groups. Land remote sensing satellite data are often only one of - 91 - many inputs into these products. Thus, the in-house produc- tion of derived information products for governmental purposes should not be prohibited, but should not compete with the private sector where at all possible. Federal agencies already are required to use private sector services whenever the private sector can provide them rather than compete with it. OMB Circular A-76, "Policies for Acquiring Commercial or Industrial Products and Services Needed by the Government", reaffirms the Federal government's general policy of reliance on the private sector for goods and services, while recognizing that governmental functions must be performed by government personnel. This Circular establishes the policy that the Federal government should not be in competition with the private sector where the capacity exists to meet Federal needs. As private sector capabilities in the field of land remote sensing satellite data analysis and information extraction expand, Federal and non-Federal users can be encouraged to locate and make use of these commercial capabil ities. 7. Federal Government's Role in Technique Development and Training Federal agencies conduct certain large, high-cost demonstration projects, such as LACIE and AgRISTARS, to meet their needs. However, these programs often are conducted by government personnel using government facilities. Consequently, they may not contribute directly to the development of the value added services industry and to the expansion of its capability to deliver these new services to other potential users. Major portions of the federally funded training programs now are conducted at government centers through workshops, "hands-on" training programs, and other activities under the technology transfer programs. Little use is now made of the training and demonstration capabilities of the not-for-profit or value added services companies in these Federal programs to train users in Federal, state and local governments, industrial concerns and foreign organizations. The Federal policy expressed in OMB Circular A-76 applies to demonstration and training programs and provides that, if cheaper, they should be performed under contract by the private sector. As discussed in Chapter - 92 - VII, A-76 analyses can be used to determine if private sector provision of these services is cost effective. If so, Federal agencies should contract with private firms to provide demonstration and training programs on a reimbursable basis, for a wide range of users. 8. Coordination with Foreign Satellite Operators Present U.S. civil space policy requires that the U.S. promote development of complementary nationally- operated satellite systems so as to increase benefits for all nations. Industry representatives share this view that duplication in spacecraft and ground systems should be avoided whenever possible. Potential private system operators are concerned, however, that this policy may preclude the development of U.S. satellite systems which could provide high market value standard data products, such as stereoscopic data, similar to those produced by foreign systems. Foreign land remote sensing satellite systems have both competitive and cooperative aspects. The prospects for competition and cooperation with foreign land remote sensing satellite operators are discussed in Chapter VIII. A related industry concern is that the U.S. system would be in competition with foreign owned systems that may be assisted financially by their governments, putting the U.S. industry at a competitive disadvantage unless the U.S. operation is similarly treated. Since financial assistance in some form may be needed until a reasonable return on investment can be realized by a private operator, the impact of possible foreign government assistance to foreign systems should be addressed in that context. 9. Long-Term Government Financial Commitments The Federal government is currently the major user of land remote sensing satellite data and standard data products and is likely to continue to be a major user, at least during the 1980s. As discussed in Chapter V, the extent to which the Federal government is willing and able to provide financial assistance to the operator of the land remote sensing satellite system may be a key factor in the private sector's decision to invest. Of concern to industry is the duration and binding nature of any Federal commitments. - 93 - The private sector wants to avoid making substantial initial capital investments in spacecraft and ground facilities only to find that changed policies or economic conditions have eliminated the anticipated revenues from Federal data purchases or assistance. C. Policies to Involve the Private Sector During Federal Ownership of the Interim System During NOAA's management of the operational system, substantial efforts should be made to encourage private sector investment through: (1) Expanding opportunities for the value-added service industry by: o Encouraging large users of data products to arrange for their own special processing capabil ity; o Assisting customers in occasional need of special processing to locate appropriate capability in the private sector; and o Providing only two types of special services, for which extra fees will be charged: (a) special tasking of the satellite to provide data on areas not in the archives and not normally observed in routine operations, and (b) accelerated preparation of standard products when the need for data is urgent. (2) Use of the private sector to the fullest extent possible to conduct market expansion activities described in Chapter VII below. (3) Contracting with private corporations to operate all or part of the operational system on terms that allow a fair rate of return. Such contracts might include suplying retroactive data or operating all or a part of the ground system under general NOAA supervision. — C. ' — D. ■\ec:la:::r. of Private Sector Cperaticp When NCAA ' s responsibilities as the system operator are transferred tc another entitv, the i~.rle~en- tation of international oh ligations a d h e r e p. c e to national co licies and achievement ot national coals wil r e c u i r e ^ c^"t*"^wii" , c F e d ^ r ^ 1 reo^'atio" c ^ 1 a "" d »~ ^s ~ ^> ~ ^ ^ ^ -> ^ * -» ^ c;3 '"- = " * * t e activities t ~ a t extends c e v c p. d the ~" e d e ^" a * c o v e r p. ~ 1. Federal Policies Acclicacle to the Civil nsmc Satellite S v s t e p. T n e necessarv recera^ reculatcrv t r a*** ^ wo r s ""est he estaclished i " a n v lecis'ation actr , or*"""" , c c ^ * v a t s sector ownership and operation of our civil operational land remote sensing satellite activities. The following are the na;cr policy areas expected to require regulation: a. Conoliance with Treaties several treaties and acree~e , ™'ts that a c c 1 v to t'^e s c = c e sc t ' v * t * 6 s o - " t '"* a r i v i ] cc^^atic" 5 " "a^d *" e ~~ c *~ e s ^ ~ s * ** c sate" lite c ** o*c r a~* ~ h a o^'^c'c 3 ! t ^ e a ~ * ^ s 3 "d ac*"e ,= "~ i2 " , ""s are *, 1 N the T r e a t v op Prmcioles Go v e r p. i p. c the Activities of States ip the Exploration, and Tse of Cuter Space, including the y(ccr. a p. d Cther Celestial 3 o d i e s the Cuter Soace C r e a t v N , .iter Space, and ,4 V treaties and acree""*epts reached ip the ~pterp.aticp.al C e 1 e c c ~ p*. cicaticp.s . r. lor, i Che Cuter Soace C r e a t v stioulates m Article '.'I t h c t States tear international responsibility* for outer soace activities whether carried op bv" covernunental agencies or non-govern~ent al entities, and for assuring that such activities are carried out ip conformity with the C r eatv's cipcicles ip sue oo r t c ** t'~— use of cuter soace for ^ - a -, ^ «r , , 7 ~, . . ^ .-, -, ~ _a ,5 3 — -" -^»- - '~ .3 A a - i - • * -> ^ a" TC a O 7P *" ■"* "5 ■'•» , a?^a^- tive of tp.e decree of their eccr.ctic cr scientific develcorent. " \rf 3 ' 19~5, the President called for supervision i _ anc regulation ot any private sector entity s space activities tc ensure, inter al la , that advances m lap.d remote sep.si.ng from space will ce permitted under controls ap.d when such p.eeds are justified and assessed ip relation to civil benefits, national security and fore ic n oolicv. - 95 - The Liability Convention and the Registration Convention implement the broad principles of the Outer Space Treaty by requiring, respectively, (a) that each State which launches a space object be absolutely liable to pay compensa- tion for damage caused by its space object on the surface of the earth or to aircraft in flight, and (b) that each launching State register with the Secretary-General of the United Nations information identifying the space objects, launching State, registration number, date and location of launch, basic orbital parameters and general function. The International Telecommunications Union, a UN Organization, controls the allocation of the radio frequency spectrum to satellite services throughout the world. b. National Space Policy Considerations In addition, U.S. civil space policies that reflect significant national interests should be applied to the activities of nongovernmental entities in enabling legislation or implementing regulations. These policies require, among other things: o The widest practicable dissemina- tion of data and results from civil space programs, except where specific exceptions are established by legislation, Executive Order, or directive; o The monitoring and, if necessary, control of technological advances and capabilities in accordance with national policies; o General support of nondiscriminatory direct readout to foreign ground stations under specific conditions; o Pricing policies that are consistent with respect to foreign and domestic users, and o Pursuit of complementarity with foreign-operated satellite systems so as to limit U.S. program costs, but protect against unwarranted technology transfer. - 96 - c. Provision of Adequate Data for Governmental Use National policy should establish that a private owner of our civil operational land remote sensing satellite system be required to meet the data requirements of government users because of the importance of this data to the missions of Federal agencies and the responsibilities of state and local governments, many of which derive from Federal statutes. d. Improper Use of Inside Information When the system is transferred to the private sector, private investors and corporations will have control over the land remote sensing satellite system and the initial data stream. This data, as discussed above, can be particularly valuable to anyone who has exclusive rights or advance access to it. Continued implementation of existing policy for equal access to the data and standard data products is recommended. In addition, appropriate steps must be taken to ensure that the data is not improperly used for the financial advantage of a private owner, investor or corporate board member. In addition to direct legislative prohibitions of these abuses, prohibitions or restrictions on stock ownership or board membership by those with potentially conflicting obligations or interests may be necessary. e. Preservation of Competition and Pricing Policies Another important public policy, expressed in the Federal antitrust laws, is the preservation and promotion of a free competitive economy. Although Federal governmental action may grant an exclusive license or give a statutory monopoly to a private operator, the operator's pricing policies, procurement, data production and dissemination policies should not be allowed to restrain competition beyond the scope of the government grant. For instance, Federal regulation should insure that the private operator's procurement of major facilities, such as satellites or ground stations, is accomplished by competitive bidding, and that small and minority businesses are given an opportunity to compete. All users should have nondiscriminatory use of and equitable access to the data and standard data products generated by the System. The Federal government should regulate the operator's pricing policies to prevent abuse of its monopoly position. The fees charged by a private - 97 - operator should provide a reasonable rate of return and be structured to avoid discrimination or undue preference to any class of users. 2. Selection of Lead Regulatory Agency An agency must be identified to take the primary responsibility for the regulation of the private operator. This designation should be timed so that appropriate administrative arrangements can be established and any necessary regulations can be adopted before the transfer of system operation to the private operator. As part of its on-going management responsibilities, NOAA should assume primary responsibility for the implementation of this Federal regulatory role, with other agencies maintaining specific regulatory roles in areas of their particular responsibility, such as the foreign and antitrust aspects of the System. - 99 - CHAPTER VII MARKET EXPANSION Land remote sensing data obtained from spacecraft have been used to help meet user decisionmaking needs for only a few years, often on a limited, trial basis. If the system is to pay for itself and be transferred to the private sector, strong efforts must be initiated to stimulate new uses of the data products and to evaluate the domestic and foreign markets that develop. This chapter briefly states the prerequisite for a market expansion and evaluation program, summarizes efforts to date to develop uses for Landsat data and standard data products, and suggests actions that could be taken to ensure an agressive program of market growth and evaluation during the 1980s. A. Prerequisite for a Market Expansion Program As noted in Chapter II, continuity of land remote sensing data is a prerequisite to the increased use of land remote sensing satellite data. Users will not rely on satellite data until its continuity, with adequate reliability and timeliness are assured. Only then can users confidently invest in the personnel, training and processing equipment necessary to utilize the data and standard data products in their operational programs. Without these assurances, growth in the utilization of the data will be limited and any new efforts at market expansion might be inappropriate and unsuccessful. B. Current Market Expansion Activities Within the Federal government, the primary respon- sibility for market expansion activities for Landsat data and standard data products has been shared by NASA and the EROS Data Center ( EDC ) of the Department of the Interior. - 100 - NASA, in addition to providing Landsat data from the R&D program, has been engaged in substantial technique development and test programs made up of several components: o The Application Systems Verification and Transfer Program , consisting of over 20 large scale feasibility projects directed at testing, demonstrating, and transferring Landsat applica- tions in representative operational settings, with the direct participation of user organiza- tions. These projects serve as detailed proto- types for large, relatively homogeneous user markets and provide a major stimulus for more widespread use of the demonstrated application. o The Regional Remote Sensing Applications Program , through NASA's three regional centers, is conducting a national scale technology demonstra- tion and training effort to develop capabilities within the states to apply Landsat data to their every day resource management problems. State-wide programs have been undertaken in approximately 30 states, and more than 1500 state agency personnel have been trained. o The University Applications Program , designed to build university capabilities for the conduct of research, education, and public service activities supporting the transfer of Landsat technology, primarily to state and local governments. In addition to developing recognized centers of expertise in Landsat applications, the University Applications Program serves to stimulate the development of basic specialized remote sensing courses in the university curriculum and the creation of the body of trained people that are critical to any successful long-term technology transfer program. Over 25 such university programs have been established. About 160 Federal and contractor support personnel are engaged in these efforts. The NASA FY 1980 budget for these programs totals $10 million. 101 - The EROS Data Center also has played an active role in the development of user capability. It has: o Conducted about 20 seminars per year, primarily for Interior personnel , which also serve as the primary medium of training for students sponsored by other government agencies, state governments, and foreign organizations; o Sponsored approximately 30 cooperative projects, primarily for DOI investigators, with six more planned for FY 1980? and o Encouraged curriculum development for post graduate studies, primarily at the University of Michigan, Harvard University, and the University of California* About 10 Federal contractor support personnel and $1.0 million were devoted to training and technology transfer activities in FY 1980. Other Federal agencies have focused primarily on the development of users within their own organizations. To date, USDA, the U.S. Army Corps of Engineers, and the Department of Commerce, through the Census Bureau and NOAA, have been most active in this regard. The Agency for International Development has conducted a grant program designed to increase Landsat technology awareness in develop- ing countries and has supported the establishment of regional training and user assistance centers in Africa and Asia. The private sector has been involved in the development and sale of devices for visual interpretation and computer analysis of remote sensing data, the provision of processing and analysis services that add value to the data products, and contract support to NASA and the EROS Data Center in data dissemination and the transfer of remote sensing technology. In addition, some 178 colleges, universi- ties, and nonprofit organizations are providing instruction in remote sensing or photogrammetry . A number of professional societies conduct symposia designed to inform their members about scientific and technical developments and operational applications of land remote sensing from space. - 102 - Several international organizations have been active in helping foreign users of Landsat data. The United Nations and some of its specialized agencies have sponsored training programs and are helping to develop Landsat data analysis programs in developing countries. The Inter-American Development Bank makes loans for development projects using Landsat data and has funded training programs for Latin American users. Similarly, the World Bank makes loans for Landsat analysis activities in connection with development projects in Africa and Asia. Finally, certain foreign countries — among them Canada, Japan, the Federal Republic of Germany, France, and Italy — utilize Landsat data and related analyses in connection with their own foreign assistance programs. C. Some Suggestions for a Market Expansion Program In order to expand the beneficial use of land remote sensing satellite data and thereby enhance the market for system products two factors should be considered: tailoring the system to user needs, and helping users benefit from the products. Ways to implement these objectives are suggested below: 1 . Tailoring the System Continuing attention to user requirements through market surveys and other studies is essential for the system to be refined and for detection of new markets as they emerge and develop. Particular study of the user requirements of local governments, the private sector, international organizations, and foreign nations is necessary, since these market areas are so far the least well understood. By its compilation of preliminary user requirements, NOAA has already initiated a significant step in marketing the system to user needs over the long term. These preliminary user requirements will play a key role in determining the characteristics of the Fully Operational System. Other actions that could be taken in order to validate these requirements are: o Developing standard data products which will be made available over for long periods of time, e.g., data in the MSS format; - 103 - o Adding new data products designed to satisfy most nearly the requirements of all users; and o Evaluating systematically the response of users to the products of the Interim Operational System in order to refine the practices being followed and to shape the characteristics to be offered by Fully Operational System. 2. Helping Users Benefit From the Products The three main categories of assistance to users are training, the development of new techniques and applications, and the demonstration of existing and new applications in the users' operations. For all three, user participation and investment are important factors in realizing the benefits of the new technology embodied in satellite remote sensing. This can be encouraged by NOAA's undertaking joint ventures in working with users, wherever that is possible. a * Training . The Department of the Interior has developed successful training equipment and course materials in support of departmental interests, as have other major Federal government users. Major Federal users can be encouraged to arrange for specialized or on-the-job training for their employees to enhance their successful utilization of land remote sensing data. In addition, NOAA could arrange through the private sector for general training on a reimbursable basis for Federal, state, and local government personnel and for foreign students. Specialized training programs can be arranged whenever sufficient demand arises. NOAA also could assist universities and private sector organizations in developing course materials to be used in training students from the private sector. b. Applications Development . NASA probably will continue to develop and share with users technology and techniques for acquiring, processing, and interpreting land remote sensing satellite data as part of its basic responsibility for R&D in space-related technology. NASA also could continue testing new techniques and potential new applications in joint projects with users in all sectors. As part of this program, NASA could undertake the development of a broad array of information extraction procedures aimed at specific applications. - 104 - The NASA budget devoted to continuing its program of remote sensing technology transfer and applications testing is approximately $5.7 million for FY 1981. c. Applications Demonstration . A series of joint demonstration projects with users in all sectors, including other Federal agencies and state and local govern- ments, could enhance the market for land remote sensing satellite data. As part of such a program NOAA could : o Work with the major Federal user agencies to help them expand their development of new applications of the data; o Demonstrate the utility of land remote sensing data in meeting Federal requirements for information imposed on state and local governments; o Explore the uses of government extension programs such as the USDA county agent system, to reach potential users throughout the country; and o Assist the Agency for International Development and other organizations in demonstrations to foreign users. In these joint demonstrations, private sector firms could be used so that they can repeat the demonstrations with additional potential users after each joint demonstration project is successfully completed. 3 . Other Actions More general support to develop the field of land remote sensing from space could be provided in the following ways: o Information dissemination activities could be conducted to develop public awareness of the potential benefits of land remote sensing satellite data; - 105 - o University centers of excellence could be supported and universities could be assisted in developing research and instructional capabilities in the use of land remote sensing satellite data so as to expand the cadre of trained professionals; o The Small Business Administration and the Economic Development Administration could be involved in assisting new entrepreneurs in entering the land remote sensing satellite field; and o The International Development Cooperation Agency, the International Trade Administration, the Overseas Private Investment Corporation, and the Export-Import Bank could assist in expanding opportunities abroad for U.S. vendors of land remote sensing equipment and services. - 107 - CHAPTER VIII INTERNATIONAL ASPECTS The U.S. land remote sensing satellite program has included significant international participation since its inception. This chapter reviews the history and current objectives of this participation and discusses relationships with foreign data users and with operators of foreign land remote sensing satellite systems. A. History and Objectives International participation in the U.S. experimental land remote sensing program was stimulated by U.S. efforts in the late 1960s and early 1970s to acquaint potentially interested countries and international organizations with NASA's plans for the development of land remote sensing satellites and their prospective benefits. As a result, investigators from some 50 countries took part in three NASA research programs designed to assess the usefulness of land remote sensing satellite data. In addition, agencies in thirteen foreign countries made arrangements with NASA for direct reception of data from the current experimental Landsat satellites. Table VIII-1 lists the status and depicts the coverage of the foreign receiving stations currently operating as well as those being planned. These foreign Landsat stations operate under agreements concluded between NASA and a cooperating foreign government agency which provide for: (a) foreign agency funding and operation of the ground station, (b) public availability of all Landsat data acquired by the station, (c) support for NASA in the event of a Landsat onboard tape recorder failure, and (d) the payment to NASA of an annual access fee (currently set at $200,000 per station per year). The U.S. should continue to ensure international participation in the Interim and Fully Operational Systems under arrangements that contribute to the objectives of: o Fostering international receptivity to and acceptance of U.S. space remote sensing activities; - 108 - TABLE VIII-1 FOREIGN LANDSAT GROUND STATION COVERAGE LANDSAT GROUND STATION STATUS Country Argentina Australia Brazil Canada Prince Albert Shoe Cove Chile* China India Iran* Italy (ESA) Japan Sweden (ESA) Thailand Zaire* Other countries contemplating Landsat Stations: Kenya, New Zealand, Romania, South Africa, and Upper Volta •Note: Chile and Zaire have thus far been unable to fund the establishment of their proposed Landsat stations. The Landsat station in Iran was largely completed and began receiving some test data in late 1978. However, the station ceased operations in early 1979 as a result of the political situation in Iran. TBD = To Be Determined greement Data Data Signed Reception Processing 1976 1980 1980 1979 1980 1980 1973 1973 1974 1972 1972 1972 1976 1977 1977 1975 TBD TBD 1980 TBD TBD 1978 1979 1980 1974 TBD TBD 1974 1975 1976 1979 1979 1979 1978 1978 1979 1979 TBD TBD 1975 TBD TBD - 109 - o Developing a world-wide market for U.S. com- mercial data products and associated hardware and services? o Enhancing the technical quality and scope and reducing the cost of the U.S. land remote sensing satellite program? o Encouraging utilization of land remote sensing satellite data and techniques in the national and regional development programs of developing nations; and o Maintaining U.S. commercial and technological leadership in the field of space remote sensing. In pursuing these objectives, the U.S. should concentrate its efforts on the further development of an international community of data users and on the establish- ment of constructive relationships with those foreign countries also planning to operate land remote sensing satellite systems. B. Relationshi p s with Foreign Users Since the first experimental Landsat was launched in 1972, foreign use of Landsat data has grown steadily. This trend is evident in the growing list of countries establishing Landsat stations (see Table VIII-1) and in the data sales statistics of the EROS Data Center, which currently receives 36% of its sales revenues from users with foreign addresses. A further indication of this trend and the long term foreign market potential for land remote sensing satellite data is the increasing use of remote sensing techniques by national and international development assistance organizations. The Agency for International Development, for example, has worked closely with its counterparts in Canada and France to help the African countries establish three regional training and user assist- ance centers which are making extensive use of Landsat data. The World Bank, the Inter-American Development Bank and a number of UN entities such as the Food and Agricultural Organization and the UN Development Program are increasingly using Landsat Data in support of national development projects. These activities are likely to continue to expand and, as they do, so too will the demand for land remote sensing satellite data. - 110 - 1 . Availability of Data to Foreign Users In recognition of the growing international demand for land remote sensing data, the U.S. should continue to provide for the availability of data from the Interim and Fully Operational Systems through: o Direct readout of data to foreign ground stations . This will carry forward the long-standing U.S. practice of permitting direct foreign reception of data from U.S. civil Landsat satellites; and o Public nondiscriminatory availability of data from one or more U.S. distribution facilities . This practice will assure foreign users access to data acquired outside the coverage zones of foreign ground stations and give them the option of obtaining data either from a foreign-operated ground station or from the U.S. via mail or communications satellites.^/ Under current U.S. civil space policy, the U.S. generally supports direct readout of data from the Interim and Fully Operational Systems; however, if a special purpose remote sensing mission were undertaken, such as the Stereosat mission currently being discussed by a number of U.S. Government and private users, the U.S. could make a separate, SDecific determination of whether and under what conditions direct readout would be available. In connection with these U.S. data distribu- tion plans, NOAA, along with other interested U.S. agencies, should participate in the discussions of the United Nations Committee on the Peaceful Uses of Outer Space concerning land remote sensing satellite data acquisition and dissemina- tion. These U.N. Committee discussions, which began in the \J Communications satellites offer the prospect of relaying data in near real time from distribution centers to users. Though the current cost of such service is high, it may become a viable alternative to direct readout in the next decade should be taken into account as plans for the Fully Operational System are developed. - Ill - early 1970s, have included consideration of a draft set of legal principles to guide such remote sensing activities. A key question concerning these principles is whether they should embody restrictions on dissemination of data. Some countries have expressed the view that dissemination of data without the consent of the sensed country would constitute infringement of a sensed nation's sovereignty. A number of countries are also arguing that the principles should embody priority access to both data and derived information relating to their territory. In the U.S. view, no legal justification exists for contending that the principle of national sovereignty over resources should be extended to include control over data or derived information relating to those resources. The U.S. considers that public nondiscriminatory dissemination of space remote sensing data does not require the consent of the sensed state. On the contrary, the U.S. view is that such public nondiscriminatory dissemination of data is fully consistent with the obligation in the Outer Space Treaty requiring satellite-operating nations to share the benefits of space use as widely as possible and is the most practical and effective way to adhere to this ^ obligation. 2. Pricing Policies — International Considerations Pricing policies that are developed for the Interim and Fully Operational Systems for users sharing of the costs of acquiring and processing data will apply to foreign and domestic users through sales of standard data products and through fees for the reception by foreign ground stations of data transmitted directly from the satellites. As these pricing policies are developed, the following factors will be considered in light of their potential impact on foreign users: o Development of consistent pricing policies for domestic and foreign users alike. o Phasing of price increases to encourage continued growth in the demand for land remote satellite sensing satellite data; and o Adequate lead time for price increases so that foreign station operators can be consulted and so station operators and their user communities can arrange for funding of the added data costs. - 112 - As NOAA develops policies for sharing the cost of acquiring and processing land remote sensing data, several other considerations will be taken into account. One of these is the concern of many foreign users that future cost-sharing arrangements may result in prices which are so high as to inhibit the widespread use of land remote sensing data. Another consideration is the possibility that future U.S. data sales prices -- set to achieve a reasonable amount of cost-sharing -- will be undercut by the prices established by foreign satellite system operators. NOAA will recognize and weigh these considerations as it shapes a realistic and viable pricing structure that encourages the development of a world-wide market for land remote sensing satellite data and helps reduce U.S. expenditures for the Interim and Fully Operational Systems. As plans for the Interim and Fully Operational Systems are undertaken, NOAA, working closely with the Departments of State, NASA, AID and other interested U.S. agencies, should t o Consider foreign user req uirements — - particularly those of developing country users — in planning the Fully Operational System. One step in this direction should be the holding of informal regional meetings to determine user data requirements within the various regions. At these meetings, representatives from the U.S. and other countries operating satellite programs could discuss their respective plans and learn the data requirements of foreign users; ° Conclu d e agreements with those foreign agencies wishing to receive data directly from the Interim and Fully Operational Systems at foreign Landsat-type ground stations. These agreements should establish conditions for direct reception which will support the international participation objectives listed above; o Establish pricing policies for direct reception and U.S. sale of land remote sensing data that take into account the considerations noted above; and - 113 - o Continue the NASA-established Landsat Ground Station Operations Working Group which consists of those foreign agencies operating or planning to operate Landsat ground stations and which provides a useful forum for the exchange of technical informa- tion and experience. C. Relationships with Foreign Satellite Operators As discussed in Chapter I, the European Space Agency, France, India, Japan and the Soviet Union have initiated land remote sensing satellite programs. A number of these foreign programs (which are outlined in Table VIII-2) offer the prospect of both competition and coopera- tion with the U.S. program. 1 . Foreign Competition The potential competitive impact of planned foreign land remote sensing satellites is a subject of considerable significance to the U.S. as it pursues plans for the Interim and Fully Operational System. This competi- tive challenge to U.S. land remote sensing satellite program leadership occurs in several areas: o Sensor Technology Development . France, Japan and the European Space Agency are developing multilinear array sensor systems for use on their land remote sensing satellites. The French multilinear array is scheduled to fly on SPOT in 1984, and the Japanese multilinear array will fly on an ocean observations mission in 1985. NASA is planning an experimental multilinear array sensor, which could be tested on the Space Shuttle in the mid-1980s. A U.S. operational multilinear array sensor could probably not be available for U.S. use before 1989 at the earliest. o Ground Equipment and Services . Though the market for Landsat-type ground station equipment is quite limited, the prospects for sales of equipment, software and services associated with analyzing land remote sensing satellite data are consider- able. 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