Drone manufacturers are flying faster than the FAA

Companies betting on big commercial market

WASHINGTON, D.C. - The word drone conjures up images of air attacks and battlefields, but if U.S. companies have their way that word will soon bring to mind crop dusters, land surveyors and more.

The Federal Aviation Administration has yet to establish formal regulations for commercial use of drones in the U.S., but that’s not stopping companies from investing in an industry they believe is on the cusp of taking flight -- literally.

Today, most growth in the drone industry is shifting away from military applications to civilian use, according to a recent Business Insider report. The market for commercial drones is projected to develop at a compound annual growth rate of 19 percent in the next five years. The military side is expected to see 5 percent growth in the same time period.

In the U.S., the increased need for drones, also called Unmanned Aerial Vehicles, results from rapidly evolving applications for the aircraft. From farming to railroad track repairs to surveying oil spills to taking pictures for real estate commercials, UAVs are hot, and many manufacturers are banking on their popularity—even before official federal regulations have been established.

At a Consumer Electronics Show in Las Vegas in January many people were drawn to displays of the flying robots. In 2014, four UAV companies were showcased at the convention; this year there were 15. The top companies included ZANO, Qualcomm and Nixie, which plans a mass-produced drone that will essentially be part bracelet and part flying selfie-stick. But you can already find small UAVs for sale all over, from Walmart to Apple

Consumers are expected to spend an estimated $130 million on drones this year, more than double what they did last year, according to the Consumer Electronics Association. The group says more than 300,000 UAVs were sold in 2014.

A betting man would say the drone market is the top place for manufacturers and innovators to place their pennies. However, the same companies that are cropping up to take advantage of increased UAV use also are taking some big risks. Why? Because the terms of the FAA’s coming-soon guidelines could make or break it for many companies that would like limitations to be based on the technology limits of the drone itself.

Proposed FAA regulations released in February would lift the current ban on the commercial use of UAVs weighing less than 55 pounds. If passed, that proposal would limit UAV use to being manned by an individual (not a computer). Drones would also have to to stay within eyesight of that controller (say bye-bye to package deliveries) and be restricted to flying no higher than 400 feet.

For companies such as Amazon, which are hoping to use drones to transport goods, the proposed regulations would ground the entire operation. And the final rules may be more than a year away because regulators must still read through about 4,500 public comments.

In the name of encouraging innovation, the FAA has granted many exemptions for UAV companies hoping to develop their technology while waiting for an official ruling. So far 248 companies have received that exemption, including producers in Hollywood hoping to shoot scenes for movies and most recently Yamaha for testing crop-dusting drones.

The FAA announced Wednesday that it was establishing a program called Pathfinder with the help of CNN, PrecisionHawk and BNSF Railway to test the use of unmanned aircrafts for newsgathering in crowds, crop monitoring and train track inspections respectively.

"One of the things we have been very focused on ... is a staged implementation," FAA Administrator Michael Huerta said at the Unmanned Systems 2015 Conference in Atlanta Wednesday, in response to a question about the FAA's timetable for setting the regulations. "What we want to ensure is that the industry is not in any way finding themselves needing to take a step back because we do something too fast."

Some companies are betting that the FAA’s final guidelines will be much more lax than currently proposed. And if not, they will have to work around them.

Christian Sanz, chief executive officer of Skycatch, a drone and software maker, is currently working with Chevron to use UAVs to check pipelines often hundreds of miles away. Sanz told Bloomberg that if the FAA requires drones to be used within the line of sight, the tests will be done outside the U.S.

“You have all these multibillion-dollar companies knocking on the door saying, ‘We want to use this now and you need to make it easier,’” Sanz told Bloomberg. According to them, he predicts the FAA will drop such a requirement.

Privacy regulations could also get in the way of these business innovations. Organizations such as the American Civil Liberties Union are concerned about unlawful surveillance and fear that camera equipped UAVs may be misused if not properly regulated. Many states have been working double time to pass laws that would preemptively regulate the use of drones by citizens and the police for when -- no longer if—UAVs are legalized commercially.

Drone technology is ready to soar when the FAA finalizes its guidelines. The question is whether the country will embrace them as whole-heartedly as manufacturers are hoping.

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