The chief executives of Kistler Aerospace Corp., Pioneer Rocketplane and Kelly Space & Technology, Inc. joined Rotary and Space Access at a hearing in front of the House Space and Aeronautics Subcommittee. The committee called the meeting, in part, to learn how the government could help these companies launch into space.

The most oft-repeated request was for a tax incentive -- not for the corporations themselves, but in the capital gains tax. The companies, faced with shrinking investor dollars in the wake of a declining satellite telephony market, are desperate for new investors. If the government were to make stock profits from the space industry exempt from capital gains taxes, it would make the launching companies more attractive to investors.

"The perceived risk is all out of proportion to the actual risk [to investors in a space business], " said Pioneer CEO Mitchell Burnside Clapp.

"Work on the vehicle is at a standstill until we complete [raising several hundred million more dollars]," said Kistler CEO George Mueller.

Subcommittee Chairman Dana Rohrabacher, R-Calif., said he was continuing to work on his "zero gravity, zero tax" bill that would cut corporate taxes for space start-up companies, and that he would now include capital gains tax cuts as well.

Rotary CEO Gary Hudson, a longtime innovator in space transportation, said there is a low-cost item that the government could easily provide to help the new companies gain investors: credibility.

Hudson said operating aerospace companies, all of which use expendable launch vehicles, have longtime connections to NASA and essentially use technologies very similar to NASAs, while his and other companies are trying more innovative approaches. When potential investors approach government experts to ask if these new methods will work, they are discouraged.

"I call it the brother-in-law problem," Hudson said. "They say, Gee, that sounds like a good idea, let me go ask my brother-in-law who worked on the Apollo program. And of course he says theres no way they can do it with that amount of money or in that amount of time."

Clapp agreed, asking for greater access to NASA officials to boost credibility and greater access to NASA facilities to use for testing.

"Its ironic that the best wind tunnel access we could get was in South Africa," Clapp said.

Although he is "very concerned" about the collapse of two of the largest satellite-phone companies, Iridium and ICO networks, Kelly Space CEO Robert Davis said he still believes the satellite telecommunications market will support more launching companies.

"There will be a resurgence in satellite telephony and broadband," Davis said, "and it will rise beyond the atmosphere. . .we have not yet touched the surface."

Davis said that the terrestrial network, although it is adapting to increased demands for wireless voice communications, will not be able to handle the increased demand for wireless broadband communications data, fax, and video that will arise over the next decade. That, along with a still viable satellite phone market, will drive the need for low-earth communication satellites, he said.

"I heard this analogy," he said. "When the first cars were built, there were no roads. . .now, no matter where you want to go, theres practically a road right there. . . It develops."