Currently there are more than 4,500 SpaceX’s Starlink satellites orbiting the Earth, and this number is expected to rise to 42,000 in the next 10 years. SpaceX’s next biggest competitor, tech giant Amazon, has plans to launch more than 3,200 broadband satellites into orbit.

With this many privately-owned satellites in low Earth orbit, there are concerns about catastrophic collisions in outer space, signal interference and the sheer number of satellites located there.

In response to the challenge of allocating this shared resource, Enrique Guerra-Pujol, a law professor in the UCF College of Business and the School of Accounting, has proposed a new model of outer space governance in the new issue of the Annals of Air & Space Law: outer space auctions.

Under the existing legal framework, if a private firm like SpaceX plans to launch a satellite into orbit from the U.S., it must first obtain permission from three public agencies: the Federal Aviation Administration (FAA), which has jurisdiction over the launching and re-entry of commercial space vehicles; the Federal Communications Commission (FCC), which has jurisdiction over the orbits of communication satellites launched from the United States; and the International Telecommunication Union (ITU), which allocates radio-frequency allocations to the ITU in accordance with the provisions of the international treaty governing the use of radio frequencies, called the Radio Regulations.

“What if, however, these agencies used auctions instead of giving away these resources for free?” Guerra Pujol says.

Guerra Pujol’s new study provides a systematic analysis of the problem of space congestion and proposes a market-based solution through the implementation of outer space auctions, drawing inspiration from Coasian principles.

Coasian solutions propose using market mechanisms to allocate resources efficiently.

A historical precedent for orbit and launch auctions is the Omnibus Budget Reconciliation Act of 1993 or OBRA-93, which gave the FCC the legal authority to use auctions to allocate property rights in the electromagnetic spectrum, Guerra Pujol says. Subsequently, the United States Congress expanded the FCC’s auction authority when it enacted the Balanced Budget Act of 1997.

The researcher says most business firms are already familiar with the first-price sealed-bid auction or blind auction in which bidders simultaneously submit secret bids so that no bidder knows how much the other auction participants have bid. The bids are not opened until a certain date, and the person with the highest bid — or second-highest bid in the case of a second-price auction — is declared the winner. This simple format, however, is not the method used by the FCC to allocate licenses in the electromagnetic spectrum. Instead, the FCC uses a method called the simultaneous ascending auction or simultaneous multiple-round auction.

In principle, the FCC or ITU, or both, could use some variation of the simultaneous ascending auction to allocate orbit or launch licenses, especially for the new generation of mega-constellation satellites since the simultaneous ascending auction format is flexible enough to accommodate the plethora of variables in the case of orbit auctions, such as variation in radio-frequencies for diverse applications, different orbits, different altitudes, or variable numbers of satellites, Guerra Pujol  says.

Researcher’s Credentials

Enrique Guerra Pujol joined UCF in 2014 and has published dozens of scholarly articles, five book chapters and two textbooks. He has a Juris Doctorate from Yale Law School and bachelor’s degrees in Spanish literature and political science from U.C. Santa Barbara. His areas of research include law, markets and property rights.