In the privatized-space heyday of the 1990s, the space community talked about a "Teledesic winter." Teledesic was a Bill Gates-backed company promising to launch hundreds of satellites into sky—so many that their shadows, some speculated, might affect Earth's weather. If that sounds grandiose, well, it was. Teledesic and other hyped satellite outfits collapsed spectacularly a few years later.

Now, a new crop of companies is betting on sending constellations of small satellites into space. At the NewSpace conference in San Jose, California last week, representatives from Darpa, Virgin Galactic, and Masten Space Systems discussed launch systems now in development—small, cheap, reusable rockets that will carry small, cheap, replaceable satellites into space. That future would require many more space launches, all of which will have to abide by strict Federal Aviation Administration rules. And that could mean trouble for companies like these.

Put simply, launching a rocket takes a lot of paperwork. "We live with the legacy of missiles," says Jeff Feige, chairman of the Space Frontier Foundation. A rocket is, after all, basically a missile with cargo. Accordingly, the FAA's primary criterion for handing out launch licenses is the safety of those on the ground. This is why most launch sites are on the coast, where debris can fall into the sea. Forget trying to launch next to a major city.

The FAA requires a detailed hazard analysis with every application. For a company applying to launch for the first time, just completing the application would consume half of an employee's time for a full year, says Sean Mahoney, CEO of Masten Space Systems. The FAA makes a decision within 180 days, but if the application has any issues, the process could take much longer.

Today, sending a few small CubeSats into space means hitching a ride with bigger cargo—often on relatively infrequent space station resupply missions. These trips must be scheduled months in advance. That's fine for testing a few satellites, but it won't work for maintaining the large fleets startups envision for real-time imagery, weather tracking, and high-speed global Internet.

For its part, the FAA recognizes the upcoming crunch. "We're trying to get more staff, so that's not something unfortunate we're going to have to face in a couple of years," says Shana Dale, deputy administrator for commercial space transportation. The office also is licensing more inland launch sites, and it can grant licenses in blocks if they become more routine.