Drones

Capital moves like quicksilver around the globe today as investors and entrepreneurs look for more hospitable tax and regulatory environments. The same is increasingly true for innovation. Innovators can, and increasingly will, move to those countries and continents that provide a legal and regulatory environment more hospitable to entrepreneurial activity. I was reminded of that fact today while reading two different reports about commercial drones and the sharing economy and the global competition to attract investment on both fronts. First, on commercial drone policy, a new Wall Street Journal article notes that:

Amazon.com Inc., which recently began testing delivery drones in the U.K., is warning American officials it plans to move even more of its drone research abroad if it doesn’t get permission to test-fly in the U.S. soon. The statement is the latest sign that the burgeoning drone industry is shifting overseas in response to the Federal Aviation Administration’s cautious approach to regulating unmanned aircraft.

According to the Journal reporters, Amazon has sent a letter to the FAA warning that, “Without the ability to test outdoors in the United States soon, we will have no choice but to divert even more of our [drone] research and development resources abroad.” And another report in the U.K. Telegraph notes that other countries are ready and willing to open their skies to the same innovation that the FAA is thwarting in America. Both the UK and Australia have been more welcoming to drone innovators recently. Here’s a report from an Australian newspaper about Google drone services testing there. (For more details, see this excellent piece by Alan McQuinn, a research assistant with the Information Technology and Innovation Foundation: “Commercial Drone Companies Fly Away from FAA Regulations, Go Abroad.”) None of this should be a surprise, as I’ve noted in recent essays and filings. With the FAA adopting such a highly precautionary regulatory approach, innovation has been actively disincentivized. America runs the risk of driving still more private drone innovation offshore in coming months since all signs are that the FAA intends to drag its feet on this front as long as it can, even though Congress has told to agency to take steps to integrate these technologies into national airspace.  Continue reading →

DroneIf you want a devastating portrait of how well-intentioned regulation sometimes has profoundly deleterious unintended consequences, look no further than the Federal Aviation Administration’s (FAA) current ban on commercial drones in domestic airspace. As Jack Nicas reports in a story in today’s Wall Street Journal (“Regulation Clips Wings of U.S. Drone Makers“), the FAA’s heavy-handed regulatory regime is stifling America’s ability to innovate in this space and remain competitive internationally. As Nicas notes:

as unmanned aircraft enter private industry—for purposes as varied as filming movies, inspecting wind farms and herding cattle—many U.S. drone entrepreneurs are finding it hard to get off the ground, even as rivals in Europe, Canada, Australia and China are taking off.

The reason, according to interviews with two-dozen drone makers, sellers and users across the world: regulation. The FAA has banned all but a handful of private-sector drones in the U.S. while it completes rules for them, expected in the next several years. That policy has stifled the U.S. drone market and driven operators underground, where it is difficult to find funding, insurance and customers.

Outside the U.S., relatively accommodating policies have fueled a commercial-drone boom. Foreign drone makers have fed those markets, while U.S. export rules have generally kept many American manufacturers from serving them.

Of course, the FAA simply responds that they are looking out for the safety of the skies and that we shouldn’t blame them. Continue reading →

drone picToday, Ryan Hagemann and I filed comments with the Federal Aviation Administration (FAA) in its proceeding on the “Interpretation of the Special Rule for Model Aircraft.” This may sound like a somewhat arcane topic but it is related to the ongoing policy debate over the integration of unmanned aircraft systems (UASs)—more commonly referred to as drones—into the National Airspace System. As part of the FAA Modernization and Reform Act of 2012, Congress required the FAA to come up with a plan by September 2015 to accomplish that goal. As part of that effort, the FAA is currently accepting comments on its enforcement authority over model aircraft. Because the distinction between “drones” and “model aircraft” is blurring rapidly, the outcome of this proceeding could influence the outcome of the broader debate about drone policy in the United States.

In our comment to the agency, Hagemann and I discuss the need for the agency to conduct a thorough review of the benefits and costs associated with this rule. We argue this is essential because airspace is poised to become a major platform for innovation if the agency strikes the right balance between safety and innovation. To achieve that goal, we stress the need for flexibility and humility in interpreting older standards, such as “line of sight” restrictions, as well as increasingly archaic “noncommercial” vs. “commercial” distinctions or “hobbyists” vs. “professional” designations.

We also highlight the growing tension between the agency’s current regulatory approach and the First Amendment rights of the public to engage in peaceful, information-gathering activities using these technologies. (Importantly, on that point, we attached to our comments a new Mercatus Center working paper by Cynthia Love, Sean T. Lawson, and Avery Holton entitled, “News from Above: First Amendment Implications of the Federal Aviation Administration Ban on Commercial Drones.” See my coverage of the paper here.)

Finally, Hagemann and I close by noting the important role that voluntary self-regulation and codes of conduct already play in governing proper use of these technologies. We also argue that other “bottom-up” remedies are available and should be used before the agency imposes additional restrictions on this dynamic, rapidly evolving space.

You can download the complete comment on the Mercatus Center website here. (Note: The Mercatus Center filed comments with the FAA earlier about the prompt integration of drones into the nation’s airspace. You can read those comments here.)

Continue reading →

DroneThe use of unmanned aircraft systems, or “drones,” for private and commercial uses remains the subject of much debate. The issue has been heating up lately after Congress ordered the Federal Aviation Administration (FAA) to integrate UASs into the nation’s airspace system by 2015 as part of the FAA Modernization and Reform Act of 2012.

The debate has thus far centered mostly around the safety and privacy-related concerns associated with private use of drones. The FAA continues to move slowly on this front based on a fear that private drones could jeopardize air safety or the safety of others on the ground. Meanwhile, some privacy advocates are worried that private drones might be used in ways that invade private spaces or even public areas where citizens have a reasonable expectation of privacy. For these and other reasons, the FAA’s current ban on private operation of drones in the nation’s airspace remains in place.

But what about the speech-related implications of this debate? After all, private and commercial UASs can have many peaceful, speech-related uses. Indeed, to borrow Ithiel de Sola Pool’s term, private drones can be thought of as “technologies or freedom” that expand and enhance the ability of humans to gather and share information, thus in turn expanding the range of human knowledge and freedom.

A new Mercatus Center at George Mason University working paper, “News from Above: First Amendment Implications of the Federal Aviation Administration Ban on Commercial Drones,” deals with these questions.  This 59-page working paper was authored by Cynthia Love, Sean T. Lawson, and Avery Holton. (Love is currently a Law Clerk for Judge Carolyn B. McHugh in 10th Circuit U.S. Court of Appeals. Lawson and Holton are affliated with the Department of Communication at the University of Utah.)

“To date, little attention has been paid to the First Amendment implications of the [FAA] ban,” note Love, Lawson, and Holton. Their article argues that “aerial photography with UASs, whether commercial or not, is protected First Amendment activity, particularly for news-gathering purposes. The FAA must take First Amendment-protected uses of this technology into account as it proceeds with meeting its congressional mandate to promulgate rules for domestic UASs.” They conclude by noting that “The dangers of [the FAA’s] regulatory approach are no mere matter of esoteric administrative law. Rather, as we have demonstrated, use of threats to enforce illegally promulgated rules, in particular a ban on journalistic use of UASs, infringes upon perhaps our most cherished constitutional right, that of free speech and a free press.” Continue reading →

Give us our drone-delivered beer!

That’s how the conversation got started between John Stossel and me on his show this week. I appeared on Stossel’s Fox Business TV show to discuss the many beneficial uses of private drones. The problem is that drones — which are more appropriately called unmanned aircraft systems — have an image problem. When we think about drones today, they often conjure up images of nefarious military machines dealing death and destruction from above in a far-off land. And certainly plenty of that happens today (far, far too much in my personal opinion, but that’s a rant best left for another day!).

But any technology can be put to both good and bad uses, and drones are merely the latest in a long list of “dual-use technologies,” which have both military uses and peaceful private uses. Other examples of dual-use technologies include: automobiles, airplanes, ships, rockets and propulsion systems, chemicals, computers and electronic systems, lasers, sensors, and so on. Put simply, almost any technology that can be used to wage war can also be used to wage peace and commerce. And that’s equally true for drones, which come in many sizes and have many peaceful, non-military uses. Thus, it would be wrong to judge them based upon their early military history or how they are currently perceived. (After all, let’s not forget that the Internet’s early origins were militaristic in character, too!)

Some of the other beneficial uses and applications of unmanned aircraft systems include: agricultural (crop inspection & management, surveying); environmental (geological, forest management, tornado & hurricane research); industrial (site & service inspection, surveying); infrastructure management (traffic and accident monitoring); public safety (search & rescue, post-natural disaster services, other law enforcement); and delivery services (goods & parcels, food & beverages, flowers, medicines, etc.), just to name a few.

Continue reading →

Yesterday, an administrative judge ruled in Huerta v. Pirker that the FAA’s “rules” banning commercial drones don’t have the force of law because the agency never followed the procedures required to enact them as an official regulation. The ruling means that any aircraft that qualifies as a “model aircraft” plausibly operates under laissez-faire. Entrepreneurs are free for now to develop real-life TacoCopters, and Amazon can launch its Prime Air same-day delivery service.

Laissez-faire might not last. The FAA could appeal the ruling, try to issue an emergency regulation, or simply wait 18 months or so until its current regulatory proceedings culminate in regulations for commercial drones. If they opt for the last of these, then the drone community has an interesting opportunity to show that regulations for small commercial drones do not pass a cost-benefit test. So start new drone businesses, but as Matt Waite says, “Don’t do anything stupid. Bad actors make bad policy.”

Kudos to Brendan Schulman, the attorney for Pirker, who has been a tireless advocate for the freedom to innovate using drone technology. He is on Twitter at @dronelaws, and if you’re at all interested in this issue, he is a great person to follow.

James Barrat, author of Our Final Invention: Artificial Intelligence and the End of the Human Era, discusses the future of Artificial Intelligence (AI). Barrat takes a look at how to create friendly AI with human characteristics, which other countries are developing AI, and what we could expect with the arrival of the Singularity. He also touches on the evolution of AI and how companies like Google and IBM and government entities like DARPA and the NSA are developing artificial general intelligence devices right now.

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In an op-ed at CNN, Ryan Calo argues that the real drone revolution will arrive when ordinary people can own and operate app-enabled drones. Rather than being dominated by a few large tech companies, drones should develop along the lines of the PC model: they should be purchasable by consumers and they should run third-party software or apps.

The real explosion of innovation in computing occurred when devices got into the hands of regular people. Suddenly consumers did not have to wait for IBM or Apple to write every software program they might want to use. Other companies and individuals could also write a “killer app.” Much of the software that makes personal computers, tablets and smartphones such an essential part of daily life now have been written by third-party developers.

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Once companies such as Google, Amazon or Apple create a personal drone that is app-enabled, we will begin to see the true promise of this technology. This is still a ways off. There are certainly many technical, regulatory and social hurdles to overcome. But I would think that within 10 to 15 years, we will see robust, multipurpose robots in the hands of consumers.

I agree with Ryan that a world where only big companies can operate drones is undesirable. His vision of personal drones meshes well with my argument in Wired that we should see airspace as a platform for innovation.

This is why I am concerned about the overregulation of drones. Big companies like Amazon, Apple, and Google will always have legal departments that will enable them to comply with drone regulations. But will all of us? There are economies of scale in regulatory compliance. If we’re not careful, we could regulate the little guy out of drones entirely—and then only big companies will be able to own and operate them. This is something I’m looking at closely in advance of the FAA proceedings on drones in 2014.

Yesterday at Forbes, William Pentland had an interesting piece on possible disintermediation in the electricity market.

In New York and New England, the price of electricity is a function of the cost of natural gas plus the cost of the poles and wires that carry electrons from remotely-sited power plants to end users. It is not unusual for customers to spend two dollars on poles and wires for every dollar they spend on electrons.

The poles and wires that once reduced the price of electricity for end users are now doing the opposite. To make matters worse, electricity supplied through the power grid is frequently less reliable than electricity generated onsite. In other words, rather than adding value in the form of enhanced reliability, the poles and wires diminish the reliability of electricity.

If two thirds of the cost of electricity is the distribution mechanism, then, as Pentland notes, there is a palpable opportunity to switch to at-home electricity generation. Some combination of solar power, batteries, and natural gas-fired backup generators could displace the grid entirely for some customers. And if I understand my electricity economics correctly, if a significant fraction of customers go off-grid, the fixed cost of maintaining the grid will be split over fewer remaining customers, making centrally-generated electricity even more expensive. The market for such electricity could quickly unravel. Continue reading →

Timothy Ravich, a board certified aviation lawyer in private practice and an adjunct professor of law at the Florida International University School of Law and the University of Miami School of Law, discusses the future of unmanned aerial system (UAS), also known as drones.

Ravich defines what UAVs are, what they do, and what their potential non-military uses are. He explains that UAV operations have outpaced the law in that they are not sufficiently supported by a dedicated and enforceable regime of rules, regulations, and standards respecting their integration into the national airspace.

Ravich goes on to explain that Congress has mandated the FAA to integrate UAS into the national airspace by 2015, and explains the challenges the agency faces. Among the novel issues domestic drone use raises are questions about trespass, liability, and privacy.

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