The Privatization of Landsat

by Marissa Herron

source:NASA

The History of Landsat

The idea of land remote sensing from satellites was formally proposed by the U.S. Geological Survey (USGS) in 1965. The USGS director, William Pecora, intended to use the satellite observations to gather knowledge about the natural resources on Earth[1]. The proposal was met with resistant from the Bureau of Budget and the Department of Defense. The concerns were whether the use of an expensive satellite capability was fiscally responsible compared to an aircraft platform, the potential compromise of national security, and the potentially destabilizing impact of intelligence collection over foreign territory[2]. Despite these concerns, the first Landsat satellite was eventually built by NASA and launched in 1972. Although originally called the Earth Resources Technology Satellite, this satellite is now recognized as Landsat 1[3].

NASA operated the Landsat satellites from 1972 – 1982. President Carter, in 1979, signed Civil Operational Remote Sensing Presidential Directive 54 directing the transition of Landsat management to the National Oceanic and Atmospheric Administration (NOAA)[4], with the eventual goal of privatization. NOAA operated the Landsat satellites from 1983 to 1985[5]. Following the Land Remote Sensing Commercialization Act of 1984, the operations of Landsat were assumed by the Earth Observation Satellite Company (EOSAT, now Space Imaging EOSAT) through a government contract overseen by NOAA[6]. This government contract also included the development of future Landsat satellites and exclusive data rights[7]. The intent of the 1984 Act was to fully privatize U.S. land remote sensing capabilities[8].

The Land Remote Sensing Policy Act of 1992 realized the shortcomings of the 1984 Act and returned Landsat to a fully funded government capability overseen by NASA[9]. At present, NASA continues to receive funding for defining the requirements, completing the development, and launching Landsat with USGS providing input on user needs, operating the satellite, and distributing the data[10]. The data rights reside with the government; and NASA (since the 1990’s) adheres strictly to a free and open data policy[11], to which USGS also abides.

The time period between the 1984 Act and the 1992 Act represented an attempt to commercialize the U.S. land remote sensing system. This early attempt at commercialization did not materialize primarily due to high barriers to entry and a requirement on the distribution of data.

The Land Remote Sensing Commercialization Act of 1984

Leading up to the Land Remote Sensing Commercialization Act of 1984, the political environment drivers were a “constrained national budget and a trend toward commercializing government functions in an effort to reduce direct government costs.”[12] Both President Carter and President Reagan supported the continuation of Landsat and the goal of privatization. However, Carter preferred a more gradual approach whereas Reagan, feeling the pressure of reduced government spending, chose to pursue a faster approach to privatization[13].

A year before the 1984 Act, the General Accounting Office produced a report that assessed five federally funded studies about land remote sensing satellites. This report entitled the “Costs and Uses of Remote Sensing Satellites” concluded that “none of the studies provided a sufficient basis for determining the current feasibility of a profit-making system.[14]” The report acknowledged an uncertain user base and demand elasticity. Early indications suggested that an increase in the price of data would result in a decrease in demand[15]. Another report in 1984 stated that the fiscal year 1983 experienced a three – fold increase in the price of Landsat data and a similar decrease in demand. The report further stated that a full cost recovery was estimated to result in a twenty – fold increase in data prices[16]. The elasticity of demand was not aligned with the intent of full privatization.

Despite the study results and amidst budget pressures, the Land Remote-Sensing Commercialization Act of 1984 was signed by President Reagan[17]. The 1984 Act intended to set in motion a path to privatization of land remote sensing satellite systems while maintaining worldwide leadership.

Important to note is that during the 1980’s the U.S. perceived weather satellites as a public good, but not land remote sensing satellites. Nearly a decade since the launch of the first Landsat satellite, the user base and data applications remained poorly understood. The political drivers for reduced government spending overshadowed the thorough consideration of whether or not the user base would support privatization.

The 1984 Act transitioned the Landsat operations and development to EOSAT through a government contract with NOAA. This contract ensured the continuation of Landsat, but the company’s federal funding created a high hurdle for potential privately funded competitors. Furthermore, the barriers to entry included the high cost of development, the length of time to build, and the cost to launch. Spaceflight requires significant up front investment before any gains can be realized. Additionally, a single launch failure, a failed component, poor integration, etc. can destroy a significant investment in a single satellite. EOSAT unfortunately realized this risk when Landsat 6 failed to reach orbit[18]. The high barriers to entry were not aligned with the intended goal of privatization. 

The high barriers to entry placed even more emphasis on the ability to recover costs through the sale of data. Although the 1984 Act gave exclusive data rights to private operators, the policy also included a requirement that private satellite operators make data available to all users on the same terms. This requirement constrained the profitability of private operators. A few years later, the 1987 UN Remote Sensing Principles, specifically Principle XII on non-discriminatory access carried forth the 1984 Act’s requirement of equal terms for all consumers of the data[19]. Principle XII’s intent was to make the remotely sensed data available to sensed States under reasonable terms. This recognized an international acceptance and trend towards treating unenhanced land remote sensing data as a public good.

The high cost of access to space meant the costs were passed on to the consumer of the data. Under NOAA, the cost of Landsat data increased up to 600%[20]. As suggested by earlier reports, consumers were no longer able to afford the increased cost and the demand for the data decreased. 

To further exacerbate the increasing costs and decreasing market demand was the unexpected introduction of global competition. The 1984 Act was written into law during a time when the U.S. had the global monopoly on land remote sensing capabilities. However, France launched the Satellite pour l’Observation de la Terre (SPOT) satellite in 1986[21]. This land remote sensing satellite provided better resolution data at lower cost compared to Landsat. A couple years later, India launched their first remote sensing satellite called IRS-1A[22]. The U.S. now had international competition amidst a shrinking customer base and increasing costs. Despite the 1984 Act’s expectation of increased market demand, the result was actually decreased demand for U.S. data with the government remaining the largest consumer of the Landsat data.

The Land Remote Sensing Policy Act of 1992

The realization that the 1984 Act’s attempt at commercialization was premature and no longer viable led to the creation of the 1992 Land Remote Sensing Policy Act[23]. The 1992 Act repealed the 1984 Act and returned Landsat to a fully funded government capability. Responsibility for Landsat was removed from DoC/NOAA and given to the joint management of NASA and the Secretary of Defense[24]. Landsat Program Management continues to this day, under NASA oversight. The 1992 Act retained the eventual goal of commercialization but recognized that a slower pace was necessary. Instead the 1992 Act focused on reinstating the role of government in collecting and maintaining Landsat data, emphasized data continuity, and directed technology development towards cost reduction. 

The priority of data continuity was recognized with the direction to immediately begin development of Landsat 7. Although government funded, the 1992 Act specified that Landsat 7 would be contracted with the private sector (as occurs today). Reporting requirements and a Landsat advisory process were also created to provide accountability to the program and guide the future development in the interest of the users. 

The 1984 Act was written when variables such as market demand were not well understood. The ill-fated assumption that market demand would increase also reflected a lack of foresight into how the data would be used and by whom. The years between the 1984 Act and the 1992 Act came with the realization that Landsat data offered great opportunity for science and academia. These users tended to be government agencies, research organizations supported by government, and academic institutions. The 1992 Act represented a matured understanding of the user base and directed the development of a data policy. The new data policy was required to make unenhanced data available to all users at the cost of fulfilling the request, to provide timely and reliable delivery of the data to all users, to retain U.S. ownership of the unenhanced Landsat data, to support commercial remote sensing development and services, and to ensure compatibility with existing systems[25]. In effect, the 1992 Act was recognizing a minimum public good[26] (the taxpayer funded unenhanced Landsat data and data continuity), but leaving the door open for private entities to build a business case on enhanced data (i.e. products and quality) and the timeliness of data. Differentiating between a public and private good in terms of unenhanced and enhanced data sounds simple in theory, but the unenhanced Landsat data continues to improve with technology improvements. Thus, the line distinguishing between the two products moves with each new Landsat satellite. The burden of innovation falls on the private sector to distinguish a business case.

Also directed in the 1992 Act was the creation of a technology demonstration program for Landsat. The goals of this effort were to advance sensor capabilities and to reduce the cost of future Landsat systems. This technology demonstration effort continues in the present and has accomplished improvements in reducing sensor size which enables a smaller satellite platform and, thus, reduced costs. The inclusion of this technology demonstration program was an acknowledgement of the expensive barriers to entry and the role the government can serve in reducing those barriers.

Also included in the 1992 Act was a stipulation that the development of future Landsat systems should give preference “to private sector system development, without competition from the U.S. Government, if a successor land remote sensing system to Landsat 7 can be funded and managed by the private sector while still achieving specified goals and without jeopardizing U.S. domestic, national security, and foreign policy interests.” Here again the 1992 Act is recognizing and continuing the original goal of the 1984 Act, but not mandating the specifics of what and when privatization will occur. With the decreasing cost to access space and the efficiency gains in satellite development, the investment costs and risks have reduced sufficiently to enable the existence of privately funded operators. However, the barriers to entry remain sufficiently high that carefully scoped business cases must be developed, and competition is limited. For those companies that are beginning to overlap with some of Landsat’s capabilities, NASA is considering data licensing opportunities. This is a challenging endeavor since NASA’s free and open data policy is not aligned with a private entity’s business case which places value in the data. The success or failure or potential innovations of these data licensing approaches is yet to be determined.

Conclusion

The common goal between both the 1984 and 1992 Acts was the transition to a fully privatized land remote sensing system. This goal has yet to be achieved and is unlikely to occur in the near term. However, steps in the direction of privatization have occurred. During the years 1984 – 1992, the DoC received zero commercial remote sensing license applications. Following the 1992 Act, DoC granted 17 licenses in the 1993 – 2001 time period[27]. These commercial licenses are indicative of a successfully revised land remote sensing policy. 

The 1984 Act was ahead of its time and influenced heavily by the federal budget priorities of that time period. Furthermore, the user base and market were not well understood. They were correct to anticipate that the user base would grow. They were also correct to anticipate that new applications would result from the availability of the data. However, the high cost to entry, the increasing international competition, and the constraint on profitability of data created too many disincentives. 

A 2021 report from the Landsat Advisory Group acknowledges the following improvements have occurred since the 1992 Act: satellite technology has evolved, the commercial remote sensing industry has grown, data analysis capabilities have improved, and the user base has expanded[28]. Additionally, the U.S. continues to provide global leadership and international partnership in land remote sensing. These achievements suggest a successful outcome of the 1992 Act. The future of land remote sensing data is continuing to evolve, and the growth of the private sector presents new opportunities. 


[1] https://landsat.gsfc.nasa.gov/about/history

[2] https://landsat.gsfc.nasa.gov/about/history

[3] https://landsat.gsfc.nasa.gov/about/erts-flight-profile/, The satellite was launched as ERTS-A and then designated as ERTS-1 once operational orbit was achieved. The second satellite was designated ERTS-B and later renamed Landsat 2.

[4] https://www.jimmycarterlibrary.gov/research/presidential_directives, https://www.jimmycarterlibrary.gov/assets/documents/PD_54.pdf

[5] https://pubs.usgs.gov/fs/1997/0084/report.pdf

[6] https://landsat.gsfc.nasa.gov/about/erts-flight-profile/

[7] https://ntrs.nasa.gov/citations/20030025296

[8] https://www.govinfo.gov/content/pkg/STATUTE-98/pdf/STATUTE-98-Pg451.pdf

[9] https://www.spacelegalissues.com/the-land-remote-sensing-policy-act-of-1992/, https://www.fgdc.gov/ngac/meetings/april-2021/ngac-paper-revisiting-the-land-remote-sensing.pdf

[10] https://www.nasa.gov/saa/domestic/34746_34746_NASA-DOI_Annex_1_Landsat9_Fully_Signed.pdf

[11] https://science.nasa.gov/earth-science/earth-science-data/data-information-policy
This policy remains a present day requirement (for all partners) when NASA cooperates with an international entity to build a new satellite capability.

[12] https://ntrs.nasa.gov/citations/20030025296

[13] https://ntrs.nasa.gov/citations/20030025296

[14] https://www.gao.gov/assets/rced-83-111.pdf

[15] https://ntrs.nasa.gov/citations/20030025296

[16] https://books.google.com/books?id=-IqD-9WcOTMC&dq=landsat+data+elasticity+demand&source=gbs_navlinks_s

[17] https://www.spacelegalissues.com/the-land-remote-sensing-commercialization-act-of-1984/

[18] https://www.un-spider.org/node/11761, https://earthobservatory.nasa.gov/images/80408/landsat-data-continuity-mission-takes-off

[19] “As soon as the primary data and the processed data concerning the territory under its jurisdiction are produced, the sensed State shall have access to them on a non-discriminatory basis and on reasonable cost terms. The sensed State shall also have access to the available analysed information concerning the territory under its jurisdiction in the possession of any State participating in remote sensing activities on the same basis and terms, taking particularly into account the needs and interests of the developing countries.” https://www.unoosa.org/oosa/en/ourwork/spacelaw/principles/remote-sensing-principles.html

[20] https://earthobservatory.nasa.gov/features/LandsatLooks/page2.php

[21] https://earth.esa.int/eogateway/missions/spot

[22] https://www.isro.gov.in/Spacecraft/irs-1a

[23] https://www.fgdc.gov/ngac/meetings/april-2021/ngac-paper-revisiting-the-land-remote-sensing.pdf, https://www.spacelegalissues.com/the-land-remote-sensing-policy-act-of-1992/

[24] https://www.congress.gov/bill/102nd-congress/house-bill/6133

[25] https://www.congress.gov/bill/102nd-congress/house-bill/6133

[26] This is similar to GPS data and Space Situational Awareness (SSA) data being provided as a public good.

[27] https://ntrs.nasa.gov/citations/20030025296

[28] https://www.fgdc.gov/ngac/meetings/april-2021/ngac-paper-revisiting-the-land-remote-sensing.pdf
This report also mentions that in 1992 Landsat distributed 4,500 images mostly to the federal government vs. in 2019 millions of images were distributed worldwide.\

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