Alan Levin and David Mildenberg BLOOMBERG BUSINESSWEEK
Drone Testing Launches Bezos Vision as States See Jobs
December 31, 2013
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  • The six sites chosen by U.S. regulators to test civilian unmanned aircraft will provide a wealth of technical data, starting as soon as six months from now, to help develop drone-safety standards.
    It doesn’t mean people should expect drones to deliver packages or photograph traffic jams anytime soon.
    Regulators are still working on how to ensure drones won’t collide with each other or with piloted aircraft, and how they can operate without causing delays in the congested airspace around large cities, U.S. Federal Aviation Administration chief Michael Huerta said.
    “This is a technology that shows great promise, but it also brings with it significant challenges,” Huerta said in an interview on Bloomberg Television yesterday, after his agency announced the test sites.
    The FAA’s choice of test centers is one of the first regulatory moves to integrate unmanned aircraft into U.S. skies as companies including Inc. (AMZN:US) push to develop commercial drones. Tests will be conducted on such things as sensors that detect other aircraft and guide drones safely out of harm’s way.
    Sales of civilian and military drones around the world may reach $89 billion during the next decade, according to a forecast by the Teal Group Corp., a Fairfax, Virginia-based aerospace research company. Drone makers include Northrop Grumman Corp (NOC:US)., General Atomics and AeroVironment Inc (AVAV:US).
    Book Deliveries
    Amazon Chief Executive Officer Jeff Bezos told CBS’s “60 Minutes” for a Dec. 1 segment that small helicopter-like devices may be able to drop off packages weighing as much as 5 pounds (2.3 kilograms), speeding delivery of books and other items. Bezos said it may take the FAA four or five years to create rules permitting the devices.
    The groups of government agencies and academic institutions that made proposals to the FAA are banking on the drone test sites becoming centers of the new industry.
    “This industry will have an estimated 70,000 new jobs by 2017 and we’ve given New York and Massachusetts a chance to compete for those jobs,” Rob Simpson, president of the CenterState Corporation for Economic Opportunity, a regional development group in Syracuse, New York, that led the successful two-state bid, said in an interview.
    The group, based at Griffiss International Airport in Rome, New York, included a partnership with the Massachusetts Institute of Technology and other universities, Simpson said. Flights will occur over the Adirondack mountains, Lake Ontario and the Cape Cod coastal region, he said.
    Multiple States
    The other winners were the University of Alaska, which also plans test sites located in Hawaii and Oregon; the state of Nevada; the North Dakota Department of Commerce; Texas A&M University at Corpus Christi; and Virginia Polytechnic Institute, in Blacksburg, which will also conduct testing in New Jersey.
    The first site will become operational within 180 days and will run at least through 2017, Huerta said.
    Organizers of the Texas bid expect economic development in the Corpus Christi area, according to a statement. They plan to operate 11 test ranges in the state, led by researchers at campuses in Corpus Christi and College Station.
    “Texas has a long and distinguished history in the aerospace industry, and this test site is an important opportunity to create jobs and grow the industry in our state,” Texas Governor Rick Perry said in a statement.
    Drone testing may produce $260 million in economic impact in Texas over the next decade, including 1,200 jobs, according to a March study by the Association of Unmanned Vehicle Systems International, an Arlington, Virginia-based trade group promoting the industry.
    Growth Forecast
    There will be almost 250,000 civilian and military drones in the U.S. by 2035, according to a study this year by the Department of Transportation. Usage will be sparse at first, growing as technology hurdles are cleared, the study concluded.
    Some users aren’t waiting for the FAA. The agency fined Swiss citizen Raphael Pirker $10,000 for flying a model airplane at the University of Virginia in Charlottesville to make a promotional video in 2011. Pirker is challenging the fine, arguing that FAA has no authority to regulate drones.
    Earning the FAA endorsement for a test site doesn’t guarantee economic development will follow, William Miller, a professor emeritus at the Stanford University Graduate School of Business, said in an interview.
    Political Climate
    Many factors — including local labor laws, proximity to investors and the social and political climate — have to be present before a test facility can spawn a small-scale version of California’s Silicon Valley, said Miller, who has studied entrepreneurs and the regions in which they’ve blossomed.
    “If there isn’t a good set of conditions, the companies don’t thrive. They often move elsewhere,” he said.
    In response to concerns that drones put people’s privacy at risk, the FAA will require test-site operators to maintain records of devices flying at the facility, create a written plan for how data collected by airborne vehicles will be used and retained, and conduct a yearly privacy review.
    Facilities must also adhere to all privacy laws that may apply to drone use, such as restrictions on law enforcement to obtain search warrants, according to the FAA’s privacy policy.