Vancouver Sun

Regulatory restrictio­ns hampering U.S. firms

Strict regulation­s spurred by security and privacy concerns hinder booming businesses

- CLAIRE BROWNELL Financial Post cbrownell@nationalpo­st.com Twitter.com/clabrow

The wildfires that tore through Fort McMurray, Alta., last spring presented firefighte­rs plenty of problems, not the least of which were the myriad invisible hot spots smoulderin­g under the thick smoke that threatened to flare up at any time.

Satellite imagery company DigitalGlo­be Inc. knew where those hot spots were. The Coloradoba­sed company had been taking pictures of the fires from space for the Alberta government, capturing a light wavelength known as shortwave infrared that penetrated the smoke to reveal heat.

DigitalGlo­be’s satellites could identify hot spots as small as threeand-a-half metres in length. But the U.S. government would only allow the company to release data with a resolution of seven metres — meaning if the hot spot was the size of a pickup truck or smaller, DigitalGlo­be wasn’t allowed to tell firefighte­rs where it was.

Walter Scott, DigitalGlo­be’s founder and chief technology officer, said the U.S. government’s refusal was typical of a regulatory regime that was designed 30 years ago, when satellites had few applicatio­ns beyond the military. Now that satellite imaging is a booming commercial business, the industry says it’s time for an update. Privacy advocates, on the other hand, are urging caution. As facial-recognitio­n technology improves and the speed of distributi­ng images gets closer to real time, the potential for nefarious or invasive uses of satellite images grows.

Scott said DigitalGlo­be, which Canadian space company MacDonald, Dettwiler and Associates Ltd. (MDA) is now buying in a $3-billion deal, never got an explanatio­n from the government for why its applicatio­n to release the higher resolution data was denied.

The company has been seeking approval to sell its shortwave infrared imagery for more than three years to no avail, Scott said. U.S. National Oceanograp­hic and Atmospheri­c Administra­tion officials did not respond to a request for comment.

But being allowed to sell better images is as important to satellite companies as it is other organizati­ons. In cases such as the Fort McMurray wildfires, lives are at stake.

“It’s not the big areas that are burning that are the cause of concern — you can see those. It’s the hot spots that might flare up that could place a firefighte­r’s life in danger if you don’t know about them,” Scott said. “Those are the ones that are more concerning. And those are the ones where, unfortunat­ely, we have not been able to release the native resolution data.”

But more broadly, the future of a potential multibilli­on-dollar market rests on what any new regulation­s look like.

Today, satellite imagery clients range from insurance companies to shipping firms to hedge funds.

“It would be a stretch to say every business will be using satellite imagery, but you can make an argument that the majority of large businesses could benefit from adding satellite imagery to their technologi­cal stack in some way,” said Zack Bogue, co-managing partner of venture-capital firm Data Collective, which has investment­s in three satellite companies. “We’ll see that over the next five years.”

Over time, the U.S. government has loosened some of its regulation­s related to image resolution and exporting equipment, but still keeps close control over who companies can sell images to and what new technologi­es get licences.

That tight grip has benefited Canada, with MDA, DigitalGlo­be’s soon-to-be parent company, developing a lead in commercial radar satellite technology that many in the industry have said was made possible because of this country’s more permissive approach.

No one is arguing for complete deregulati­on, however. There are obvious national security and privacy concerns that must be addressed as satellite imagery becomes cheaper and more readily available.

Current commercial satellite imagery resolution restrictio­ns make it impossible to identify individual­s, but there’s not much the owners of factories, ships and homes can do to stop the distributi­on of images they would prefer stay out of the hands of competitor­s or the general public.

Tamir Israel, a staff lawyer at the Canadian Internet Policy & Public Interest Clinic, said the privacy concerns raised by satellite imagery are similar to those related to drone photograph­y and closed-circuit television and will only become more heightened as technology improves.

“The solution is not to not let the high-resolution data out. The solution is to deal with the privacy problems better,” Israel said. “Eventually, there’s going to be a need for some internatio­nal standards-setting around how to make these types of protection­s global in nature.”

Terrorists and enemy states are among the unsavoury characters who would be eager to make use of high-resolution satellite imagery in the absence of restrictio­ns.

Ram Jakhu, director of the Institute of Air and Space at McGill University’s faculty of law, said the industry understand­s it will always be important to keep some restrictio­ns for national security reasons.

“There are certain areas and facilities that should not be made public internatio­nally or that informatio­n could fall into the wrong hands,” he said. “The private sector understand­s that very well. I don’t think the private sector is or should be asking for total freedom.”

But Nick Allain, a spokesman for Spire Global Inc., which provides satellite imagery of oceans and remote areas, said a little more freedom would be nice. He said four of the startup’s 125 employees are full-time legal staff to help the company navigate existing laws and regulation­s.

One recent U.S. regulatory change particular­ly welcomed by Spire was the decision in 2013 to make it legal to export small satellites for civilian purposes. The government had considered such satellites weapons before then.

 ?? JASON FRANSON/THE CANADIAN PRESS ?? DigitalGlo­be hopes to see rules updated for satellite imagery. It used the technology to capture images of the Fort McMurray, Alta., fires from space.
JASON FRANSON/THE CANADIAN PRESS DigitalGlo­be hopes to see rules updated for satellite imagery. It used the technology to capture images of the Fort McMurray, Alta., fires from space.
 ?? DIGITALGLO­BE VIA AP ?? A view of a satellite image in the wake of the Fort McMurray wildfires taken by DigitalGlo­be. The bright red areas represent land untouched by the fire while the destroyed areas are black and grey.
DIGITALGLO­BE VIA AP A view of a satellite image in the wake of the Fort McMurray wildfires taken by DigitalGlo­be. The bright red areas represent land untouched by the fire while the destroyed areas are black and grey.

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