The Federal Communications Commission is being called upon to modernize its regulations for the commercial space industry, balancing the need for rapid innovation with robust national security measures to counter growing threats from China. The recommendations come as space systems evolve into a cornerstone of the U.S. economy and military infrastructure.
Experts warn that China's strategy, which blends commercial expansion with military objectives, poses a direct challenge to American leadership in orbit. This has prompted calls for a new regulatory framework that can protect critical U.S. assets while fostering a competitive domestic market.
Key Takeaways
- The U.S. space economy contributed nearly $241 billion in direct gross economic output in 2023 and is considered critical national infrastructure.
- China is rapidly expanding its commercial space sector with strong state support, often using military-derived technology for civilian launches.
- Concerns are rising over China's ability to conduct espionage through commercial space infrastructure and its development of anti-satellite capabilities.
- Recommendations to the FCC include streamlining licensing, tightening foreign ownership rules, and mandating stronger cybersecurity for space assets.
The Unseen Backbone of the American Economy
Space is no longer just the final frontier; it is the critical, often invisible, infrastructure that powers modern American life. From financial transactions at ATMs to the logistics networks that stock store shelves, satellite systems are fundamental to the daily function of the economy.
In 2023 alone, the American space economy generated nearly $241 billion in direct economic output. This figure, however, does not capture the full scope of its importance. Space-based assets enable everything from precision agriculture and weather forecasting to the industrial control systems managing power grids and pipelines.
A Dual-Use Domain
Beyond its economic role, space is integral to U.S. national security. It underpins military reconnaissance, secure communications through systems like MILSTAR, and precision-strike capabilities. The increasing use of commercial platforms like Starlink for military communications, as seen in Ukraine, further blurs the line between civilian and defense assets, placing them directly within the FCC's regulatory purview.
This deep integration means that any disruption to space systems could have cascading effects across society, impacting everything from emergency services to national defense. This vulnerability has become a central focus as geopolitical competition extends into orbit.
Beijing's Dual-Pronged Space Strategy
China has made dominating the space domain a national priority, pursuing a strategy that leverages both commercial growth and military power. Since opening its space industry to private investment in 2014, a surge of new companies has emerged to compete with established state-owned aerospace giants.
This commercial expansion is heavily supported by the state. Many Chinese commercial satellites are launched on rockets from the Long March family, a platform originally developed for military purposes. This fusion of civil and military programs allows Beijing to rapidly advance its capabilities while undercutting competitors.
Global Ambitions, Geopolitical Alliances
China's space activities are also intertwined with its relationships with Russia and Iran. Chinese state and private firms have reportedly provided satellite imagery and other dual-use technologies that support Russian military operations and assist Iranian proxies in targeting U.S. interests.
The primary concern for the U.S. is a familiar playbook: China may use artificially low prices to attract American companies and allies to its space infrastructure. According to analysts, this could hollow out the American private market and place sensitive data on Chinese-controlled systems vulnerable to espionage under Beijing's national security laws.
A New Era of Competition in Orbit
The competition is not limited to economics. China is actively developing and practicing its ability to disrupt or destroy space assets. In March 2025, the Chinese military used a satellite array to simulate "dogfighting" maneuvers in low-Earth orbit, a clear demonstration of its counter-space capabilities.
This follows a 2007 test in which China used a direct-ascent missile to destroy one of its own weather satellites. More recently, the focus has expanded to include cyber operations and electronic warfare designed to blind or disable U.S. satellites without creating physical debris.
"China’s growing aggression in space... suggests that Beijing may eventually target civilian communications networks, such as Starlink, that also serve military units operating in degraded communications environments."
This militarization poses a significant threat, as an attack on dual-use commercial satellites could cripple both civilian communications and military operations during a crisis. The strategy mirrors terrestrial efforts like the Volt Typhoon campaign, which seeks to gain footholds in U.S. critical infrastructure.
Modernizing Regulation for a New Space Race
To address these challenges, experts are urging the FCC to adopt a new regulatory framework that prioritizes both speed and security. The goal is to create a clear, efficient process that encourages American innovation while safeguarding national interests.
Key Regulatory Recommendations
- Streamline Licensing: Implement a "licensing assembly line" with predictable standards and timelines to improve market efficiency and help investors.
- Enhance Flexibility: Create a new licensing category for "Variable Trajectory Spacecraft Systems" (VTSS) to accommodate innovative technologies beyond traditional satellites, such as those needed for lunar exploration.
- Strengthen Ownership Disclosure: Lower the foreign ownership disclosure threshold for applicants from 10% to 5%. This would provide a more complete financial picture and help identify control by foreign adversaries.
- Mandate Data Sharing: Require space station operators to share space situational awareness data to prevent collisions and improve operational safety as orbits become more crowded.
- Boost Cybersecurity Standards: Enforce strong, adaptable cybersecurity requirements throughout the licensing process, including robust encryption, to protect long-life space assets from radio frequency attacks and electronic warfare.
These proposed changes aim to create a regulatory environment that allows the U.S. commercial space sector to thrive while ensuring its assets are resilient against foreign threats. As space becomes an ever-more-contested domain, the balance between fostering innovation and ensuring security will be critical to maintaining America's leadership.