That's a huge assumption. Let's not get ahead of ourselves just yet: Orbital Sciences thought they could create cheap launches with Pegasus too. As failures occurred, customers requested more and more safeguards and testing and the cost per launch rose correspondingly.
SpaceX has done an awesome job, but there's a ways to go before the system is confirmed as reliable with consistently reproducible performance.
(For what it's worth, I think they'll do it in time, but it may cost quite a bit more yet)
Thanks for the update on previous attempts. I do think that you could send habitat modules and oxygen tanks up without a huge cost if the rocket blows up. With people, safety becomes crucial. With satellites, less crucial, but still expensive if it fails.
Folks (myself included) have been "thinking" that since the 60s. If you put some commercial numbers on that problem, you'll see it's a lot harder than it looks.
Satellite launch failures alone can cost in the hundreds of millions of dollars -- and that's not even touching the issue of revenue lost to the broadcast company who bought the thing (and waited 3-4 years to see it constructed and launched). Although awful regulation has played a role in preventing launch vehicles from becoming a truly commercial market, The Man hasn't been the only issue keeping launch costs high -- this stuff is hard!
Satellite launch failures alone can cost in the hundreds of millions of dollars
Satellite costs are driven partially by launch costs. If launches are expensive, then satellites need to be highly reliable. If launches are cheap, then satellites need not be so reliable, and therefore can be cheaper.
Insurance averages out the costs of launch failures.
Dropping the costs of satellites improves the market and introduces the possibility of mass-production, further dropping the costs and further increasing demand, which further drops the costs through economies of scale, etc.
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We know what can happen, economically, because we have experience with mass-launchings in the form of the V2.
That document is specious. Getting something to orbit is a lot harder than launching a whack of V2s (holding nothing but an explosive payload) across the English Channel and the huge market for rockets foreseen in 1993 (when that paper was written) disappeared with the bankruptcy of the Iridium, Orbcomm, Globalstar, Odyssey, etc. communication constellations. Today we can mass-produce missiles which are much more effective than the V2, but we still cannot create cheap orbital vehicles.
Mass production and cheap launches would be a sure-fire money-maker, right? That it hasn't happened in a half-century of western rocket technology should raise a bright red flag that something other than willpower or a global conspiracy is keeping it from happening.
The capsule is on top of the stack. Unlike the case of the Space Shuttle, if a SpaceX rocket blows up, the capsule on top can simply jetison away and deploy a parachute.
SpaceX has done an awesome job, but there's a ways to go before the system is confirmed as reliable with consistently reproducible performance.
(For what it's worth, I think they'll do it in time, but it may cost quite a bit more yet)