Drones are Transforming Industries for the Better— How Can Policymakers Help Drive Innovation?

Virtually every movie set in the future will include a panoramic shot of a neon skyline with flocks of autonomous manned and unmanned vehicles zipping through the foreground. While many of the technologies featured in these movies may not come to fruition in our lifetime, unmanned aerial systems (known today as “UAS” or drones) are already flourishing in various forms and have the potential to become commonplace tools used in an enormous range of industries.

Recreational drones have already hit the mainstream in the past year, with more than one million drones sold during last year’s holiday season. And with emerging commercial and governmental applications for disaster relief, pollution remediation, package delivery, public safety and agricultural efficiency, this nascent industry has the potential to completely transform the way we live, work, and play.

As with many innovative technologies that operate in traditionally regulated industries, the future applications of drones will be dictated in large part by the legal and policy framework we establish to inhibit or promote their growth. While policymakers are working to establish rules surrounding drone use and development that could, if done correctly, allow for the widespread use of drones, the rules really only apply to the technology as it exists today. Given the rapid pace of development seen in drone technologies over even the past year, the many startups and larger companies pushing drone technologies into the future will quickly develop applications that the existing policy framework simply cannot handle.

To help paint a picture of where the drone market is heading and what policymakers need to do to ensure that we get there quickly and safely, we outline below some of the innovative technologies that exist today and the promise they hold, and begin a conversation about how policymakers can help innovators realize the full potential of this industry.

A drone is a a vehicle designed for flight that does not have a pilot on board and is instead controlled remotely.


Before addressing the more complicated issues, let’s start with the basics. What do we mean when we talk about “drones”? The definition of what constitutes a drone varies, but broadly, it is a vehicle designed for flight that does not have a pilot on board and is instead controlled remotely. Drones might also be referred to as unmanned aerial vehicles (UAV) or unmanned aircraft systems (UAS). UAS come in all shapes and sizes, and are typically classified by their weight. In the U.S., anything under 55 pound is considered a small UAS. The Federal Aviation Administration (FAA) has also proposed creating a micro-category for any UAS under 4.4 pounds.

Historically, drones have been used most commonly by the military and the CIA for intelligence gathering and striking military targets. But technological innovations have expanded their reach, allowing for new applications that have little resemblance to their military counterparts. Non-military drones are typically broken into two categories: recreational and commercial. Recreational drones have been around for a long time, and a large network of “hobbyists” who operate these drones exists. Commercial drones, on the other hand, are relatively new. Most of their potential applications have not yet been fully explored in the U.S. due to a lack of a regulatory structure under which they can operate (we’ll get into that more later). But even in their infancy, latent commercial applications show huge promise.

Precision agriculture is one of the many promising applications for UAS.


Already, drones are being used to deliver medicine to remote areas, monitor crops, inspect electric and gas facilities, and aerially photograph real estate under a specific FAA exemption. But these exempted applications are approved on a case-by-case basis and operate under conservative FAA restrictions and conditions such as mandatory pilot licensing, a visual line of sight requirement, and a prohibition against operations after dark. Imagine the possibilities if UAS could operate autonomously or at night? From simple activities like delivering pizza to a hungry college student at midnight or more complicated events like working with police officers to track down a criminal, the positive and valuable use cases are endless. Every day, startups are conceiving of unforeseen, revolutionary applications for drone technologies.

These innovations could benefit the U.S. economy immensely. The Association for Unmanned Vehicle Systems International (AUVSI) estimates that UAS could contribute over $82 billion to the U.S. economy in the next ten years, given the right regulatory environment. In that same time period, the industry could create more than 100,000 jobs. In the short term, the Consumer Technology Association (CTA) forecasts that recreational UAS could fuel a $250 million market by 2018. If the FAA finalizes rules that allow for broad commercial use, that could add another $200 million. And if the FAA goes even further to promulgate rules that allow for drones to fly beyond the line of sight of the operator, the market could grow to $1 billion by 2018.

Beyond broad national economic gains, growth in the drone market will stimulate startup activity in regions that have previously lacked robust innovation ecosystems. Because innovation in drone software — and in the case of smaller consumer drones, hardware — requires relatively small capital inputs, startups are well-equipped to drive innovation in the sector. We have already seen transformational growth taking place in regions where the FAA has authorized limited use of drones for testing purposes. In North Dakota, for example, the state has spent almost $34 million to foster UAS development. As a result, startups are springing up left and right, with some raising millions in private investment capital.

Congress passed the FAA Modernization and Reform Act in 2012, which included a number of drone policies. What’s next?


So how do policymakers ensure these innovative companies are able to thrive? In many sectors, startups benefit from what is often referred to as permissionless innovation, or the ability to try out new ideas without having to first seek the blessing of regulators. Arguably, this type of framework has enabled the proliferation of Internet-based companies and the emergence of bitcoin. And while overly burdensome regulations can crush a burgeoning industry, in the case of UAS, a minimal, baseline amount of government involvement is essential. This is because at the most fundamental level, drones require integration into the national airspace (NAS) in order to function.

In 2012, Congress passed the FAA Modernization and Reform Act of 2012 (FMRA) and tasked the FAA with both developing a plan to integrate UAS into the NAS and allowing recreational drones to fly in accordance with community-based organization guidelines. The FAA has since proposed a reasonable — if imperfect — framework to facilitate the sale and use of most commercially available drone technologies. The agency, however, is moving at a glacial pace compared to the speed at which drone technology is evolving. Until the rules are finalized, commercial drones must remain on the ground unless they receive a section 333 exemption, under which only roughly 1,200 exemptions have been approved.

While the proposed rules are admittedly workable, they represent only a first step in an evolutionary process of addressing a rapidly growing industry. As drones become more commonplace and new applications are invented, policymakers will have to address growing questions around safety, liability, privacy, and infrastructure. At a high level, how do policymakers implement safeguards and protections without stifling innovation? How can policymakers facilitate the emergence of innovative applications that have not yet been conceived? How should they approach line of sight restrictions, liability insurance, and pilot requirements?

Answering these questions will be complicated and will require a depth of understanding of the issues on the part of policymakers. Over the coming weeks, we’ll feature input from voices in the UAS industry to address some of these questions. Startups, trade organizations, academics, and innovators will weigh in on current technologies and future applications, policy considerations, and discuss what inputs are essential for to encouraging growth in the UAS sector.

Engine is a non-profit public policy organization that supports startups and entrepreneurship through research, advocacy, and policy analysis. Engine’s FutureTech series is a one-stop shop for policymakers to learn about innovative, emerging technologies, and the developing policy landscape around them.