Satellites: the new space race for business

The UK commercial space industry is set to double in size over the next decade

There is more to the final frontier than bubble-helmeted astronauts taking giant leaps in the interests of scientific progress and the planting of national flags.

In fact, the commercial space sector is one of the unsung heroes of the British industry, growing at a steady 9 per cent every year since 1999 – more than three times the rate of the overall economy – and set to double its contribution to GDP over the coming decade, according to research published yesterday by Oxford Economics and Seeda, the regional development agency.

The opening of the European Space Agency (ESA) technical research centre at Harwell in Oxfordshire today will also help. The facility, which is in the same science campus as the massive Diamond Synchrotron facility, will have several areas of activity, including climate change modelling and new exploration technologies such as robotics. But a key part of its mission will be to identify new services exploiting data collected in space. "Harwell will provide a national hub to make sure we get the maximum return for the UK from our space industry," Jeff Alexander, an executive director at Seeda, said.

Space is already big business in the UK. For the individual, it means everything from TV and mobile phones, to weather forecasts, to increasingly popular location-based and navigation services. Less obviously, power generators are starting to use satellites to manage network switching with pinpoint accuracy, while fleet managers and shipping companies can use GPS for tracking and navigation. The space industry already contributes £6.5bn to UK GDP each year, and supports 68,000 jobs. By 2020, it will be worth £14.2bn and employ 115,000.

Sam Moore, one of the authors of the Oxford Economics report, said: "The average person thinks of space as being about the moon landings, but there is also an industry around building satellites and then using the information they provide."

Space is just the kind of hi-tech industry that the Government hopes will replace heavy industry as the UK's ticket to the world's economic top table. Some 60 per cent of those working in the sector are educated to degree level, and the average GDP contribution of £145,000 per employee is four times that of the economy's average worker.

Space is also highly R&D intensive. At the moment the industry invests almost 5 per cent of its economic contribution in R&D, three times the UK average. But the lead times are incredibly long. GPS, for example, may now be a huge industry, but the satellites were first launched in the 1970s and 1980s.

Stuart Martin, the business director for space at Logica, one of the biggest players in the UK industry, said: "The challenge in space is that the time between sending up the satellite and the growth of services using it can be very long indeed. There can be a 20-year investment payback cycle which is almost impossible to manage commercially."

Both factors point to a key role for government in supporting the commercial industry. The UK Government currently spends about £250m a year on space, the vast majority of which is channelled through ESA. Some goes on Europe's two big programmes: the €3.4bn (£2.9bn) Galileo project to build a more accurate rival to the US-owned GPS system (see box), and the embryonic €3bn Global Monitoring and Security System, which will track everything from flood to earthquakes to forest fires. The rest of the spending goes on scientific missions and R&D.

The plea from the industry is not for government money, but for help in readying itself for the vast opportunities to come. Location-based services are an example. In the US, such services are worth about $1bn (£609m) already, but the market is forecast to double once GPS signals can be received inside buildings as well as outside. To make the upgrade means research investment, stronger power supplies on satellites and the allocation of extra frequency bands – all of which can be facilitated by government.

In the short term, what Britain needs most is better co-ordination. The space sector may be growing faster than the economy, but the worldwide industry is growing faster still. Unlike European neighbours such as France and Germany, Britain has no central strategy. Instead, the British National Space Centre (BNSC) designates the lead role on any given project to a single Whitehall department, leaving other organisations' budgets and benefits out on a limb.

"There is a constant struggle because of the way the UK gives ownership to one department which is only ever looking at one part of the picture and trying to justify spending on the programme on that basis alone," Mr Martin said.

The good news is that the situation may be about to change. Lord Drayson, the Science minister, this week announced a three-month consultation on whether the BNSC should be upgraded to become a fully fledged agency, like its European counterparts. "Space is so important to our future," he said at the launch.

The Government is also backing the Space Innovation and Growth Team (IGT), established last month to put together a 20-year roadmap for the UK space industry. The group includes representatives from government, industry and academia and aims to ensure that any barriers to growth are dealt with before they impede progress. The preliminary findings will be published in December, and the full report early next year.

Terry Coxall, the project director for the IGT who also works for space giant EADS Astrium, said: "We need to look forward and prepare the Government's thinking. Space is an enabler: it doesn't do anything itself but is used by lots of other industries, and we need to be thinking about what those might be in advance."

Galileo: Europe's big idea

* Galileo is Europe's biggest civilian space programme: a multibillion-euro, 30-strong satellite network designed to provide the world's most accurate global positioning systems.

* Two test satellites are already in space, and the first four operational units will be launched by the end of next year in French Guiana.

* The scheme has the grand ambition to beat the US to the nascent market for location-based services. The technology is undoubtedly superior to US-run GPS, pinpointing down to just a few centimetres compared with 10 metres at best.

* The list of potential applications is long. GPS is already used by industries as diverse as oil and gas, electricity generation and fleet management, but it cannot be used in safety-critical areas such as air traffic control. One plan for Galileo is to offer contractual certainty, so it could be used to monitor cars' drift in motorway lanes, for example, or to berth ships in dockyards.

* For consumers, improved location-based services may mean anything from sophisticated anti-theft tagging, to helping keep track of elderly relatives, to road-user charging schemes.

* The danger is progress will be scuppered by politics. Galileo was originally due by 2008. But has been dogged by disagreements, leaving some British MPs warning it could become an "orbiting Railtrack".