Companies Waiting To Cash In On Drones

What’s the deal with drones? We know drones are war machines. We know drones provide spectacular aerial footage for Hollywood. We know hobbyists race drones. But where is the commercial sweet spot? More importantly, when will regulators allow the Amazons and Facebooks, the energy and mining companies, to exploit the vast data resources non-military drones can provide?

Businesses, private citizens, and all levels of government are interested in piloting drones. From detecting pipeline leaks to disaster recovery, from monitoring crop stress to coastal security, drones go where humans can’t, capturing images and gathering data that save lives and create wealth.

Drones spark both controversy and the imagination. Drones trend and make great cover stories. But where are they flying? Has anyone received a drone-delivered Amazon package?

At this point, disconnects exist between both industry and the FAA, and the promise and reality of unmanned aircraft systems (UAS) for industry applications. When can we have them? What are the legal implications? And who will profit from drones? The commercial airspace for drones is cloudy, now let’s see if we can clear it up.

Drones mean business

The global market for non-military drones has already hit $2.5B and cruising with double-digit growth. Japan, Australia, the U.K. and France have approved UAVs for commercial use. Stateside, Silicon Valley companies and investors have been throwing lots of money at a technology still waiting for liftoff. Despite the rabid interest and big-money support, the commercial drone industry in the U.S. does not officially exist.

Aren’t we the innovators? Hasn’t privacy in this country been swept under the rug? Safety is a serious drone issue, yes. But current rules separating non-commercial from commercial drones are murky and the FAA has been slow-cooking a plan to address commercial drones – including safety issues - for years now. Meanwhile, the rest of the world is jumping the market and beating the U.S. at its own first-to-market game.

What’s the holdup?

The FAA’s draft rules for small UAS conducting non-recreational operations were released in February. The FAA rules define small drones as weighing less than 55 pounds, flying under 500 feet and under 100 mph. The FAA will issue final rules at a later date. Here’s what we know:

  • • Operators can fly drones only during daylight hours
  • • Operators are responsible for avoiding collisions with manned aircraft
  • • Drones must remain in operator’s line of sight
  • • Operators must stay out of airport flight paths and restricted spaces
  • • Waivers will be issued for companies currently operating under an exemption

Exemption? There is a loophole? The FAA can approve commercial applications falling under Section 333 of the FAA Modernization and Reform Act of 2012. Section 333 authorization permits commercial flying of drones under tight parameters, including operating at less than 200 feet and keeping a certain distance from airports. Approval rates for these applications have been notoriously low due to the FAA’s tiny staff and strict procedures.

Think before you fly

Getting back to the draft rules, privacy and safety are the main issues. Many fear commercial drones are simply another surveillance technology, or a disaster waiting to happen. In fact, a 2014 AP poll concluded only 21 percent of Americans support drones for commercial use.

Drones also raise a host of legal questions for commercial operators:

Do trespassing rules apply? How can aerial footage be used? Are drones an invasion of privacy? Will commercial operators carry insurance? Who is liable if a drone crashes into a plane, or injures someone on the ground? Meanwhile, drone technology is outrunning the FAA rules and commercial interests are pressuring regulators to act now before the economic window of opportunity closes.

A ready-made market

Startups are popping up everywhere, designing and manufacturing drones for an exploding number of non-military pursuits. Amazon, Google and UPS want drones to make deliveries. The American Red Cross thinks drones would aid in disaster recovery missions by surveying conditions and locating survivors. ADM, the world’s largest corn processor, can use drones to assess crop damage over a much wider area than claims adjusters doing it on foot. And don’t forget the dollar signs tied to makers of drone software, chipsets and components. Industry analysts project a domestic commercial drone industry would be worth $13.6B and yield 70,000 high-paying jobs – in just the first three years.

To its credit, the FAA has been busy testing interactions between manned and unmanned aircraft at multiple sites. They have also attempted to speed up the Section 333 exemption approval process. Weaving privacy, safety and economic opportunity into a healthy framework appears to be the FAA’s ultimate goal.

Amazon yells loud because their application must stretch the draft rules and be deployed over a massive footprint. In the background, other commercial entities use exemptions to quietly go about their drone business. Drones are polarizing. Like other emerging technologies, drones carry a fear factor only time and experience can quell.

In the end, congress has given the FAA until September 2015 to finalize its rules. The FAA, in turn, said a "safe integration" plan for UAS would be incremental, hinting a final rule with commercial provisions would be published later this year.

Peter Diamandis, XPrize founder and space entrepreneur, told Inc. Magazine last year regulation is now the biggest challenge facing entrepreneurs with big ideas. In this case, Diamandis was right. Drone dreamers are running faster than regulators. That’s the deal.

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