The Positive Impact Of The Election On The Drone Business
Storm light, Taos Mountain

Hi all –

Now that the election is behind us and we are once again one Nation under God, I thought it would be appropriate to consider the impact that the election and the Trump administration is likely to have on the drone industry. One of the many unique things about this election is that there was very little discussion of policy. So my analysis is based on a lot of tea leaf reading, which puts me on equal footing with the WSJ, The Economist and other fine business publications.

But first I need to ask all of you for a “yuge” favor. There is a lot of interest in the Commercial UAV Implementation Survey which will launch in February 2017. Right now we are getting input about what people want from the survey, as well as their top issues.

2017 Commercial UAV Implementation Survey
Please click to go to the survey.

If you are involved in standing up a drone group, or have clients that are, or simply know people you think have an opinion worth hearing, I would very much appreciate it if you could send them to http://bitly.com/cuavsurvey. It takes all of two minutes. Thank you.

Totally worth your time is Will Drones Expand The Sharing Economy?, an interview with Alphabet’s“Captain of Moonshots,” Astro Teller, a brilliant guy with an amazing vision. The interview has nothing to do with X ending their deal with Starbucks to deliver soy lattes, and everything to do with social change. In fact says Teller, “I think people over-focus on drones plus burritos.”

Also good for a think is If You Think This Election Was Insane, Wait Till 2020 by Peter Diamandis. “Imagine how, in four years’ time, technologies like artificial intelligence (AI), machine learning, sensors and networks will accelerate.” Of course these are the same technologies that will shape the future of our industry… Provocative is a good word here. Thanks to reader Bruce P for
the share.

Now back to 2017 and the likely effect of the election and the Trump administration on drones, UAVs, sUAS’, RPAS and everything else that flies, floats or crawls with a sensor.

As my DC readers and the headlines will tell you, along with a new President comes a new Cabinet and thousands of senior level managers to implement their policies. It is literally a changing of the guard with all of the good, the bad and the ugly that implies. It is the imperfect nature of the process that led me to write “mostly.” There is no doubt about the opportunity.

We’ll start with the impact on the FAA, then move on to the implications of the high profile initiatives that we have heard about throughout the campaign. Depending on your persuasion this may seem incongrous, but as the headline suggests for the most part there is good news for the industry.

The FAA And The Election

I went back through the website and came up with a list of elected officials who figured prominently in the 2016 FAA Reauthorization Bill (FESSA) to see who made it and who missed the cut. Since this one of those things one needs to get right, I then reached out to friends on K Street for their much appreciated insights.

The Senate

The Senate Aviation Subcommittee Chair, Kelly Ayotte (R-NH) was defeated. TBD who will succeed her, but whoever it is will play a large role in FAA reauthorization which is coming up in September 2017. Senator Dan Sullivan (R-AK) is a potential candidate.

Chairman John Thune (R-SD), Ranking Member Bill Nelson (D-FL), and Aviation Subcommittee Ranking Member Maria Cantwell (D-WA) remain in place.

John Hoeven (R-ND) a FAA test site proponent was re-elected.

Chuck Schumer (D-NY) was re-elected and is expected to be the Senate Minority Leader. He is a proponent of geofencing and anti-drone initiatives, and one has to assume that he was instrumental in securing funds to help make New York a UAS development center.

The House

The leadership of the House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA), Ranking Member Peter DeFazio (D-OR), Aviation Subcommittee Chairman Frank LoBiondo (R-NJ), and Aviation Subcommittee Chair Rick Larsen (D-WA) remain in place.

Eight members of the House Transportation and Infrastructure Committee will not return, either because they were defeated, sought other office, or retired – Hanna (R-NY), Ribble (R-WI), Brown (D-FL), Mica (R-FL), Hardy (R-NV), Kirkpatrick (D-AZ), Hahn (D-CA), and Miller (R-MI).

House UAS Caucus Co-Chair Joe Heck (R-NV) unsuccessfully ran for Senate. TBD which House Republican will co-chair the caucus with Rep. Dan Lipinski (D-IL).

House Energy and Commerce Committee Chairman Fred Upton (R-MI) is term-limited under party rules. The Committee has jurisdiction over FCC and spectrum. The smart money has his replacement as Rep. Greg Walden (R-OR) or Rep. John Shimkus (R-IL).

FAA AdministratorMichael Huerta is an appointee. His term expires in 2018. He will have a new boss, a player yet to be named Secretary of Transportation.

Former Virginia Secretary of Transportation and DOT advisor Ms. Shirley Ybarra of the Reason Foundation is overseeing the DOT transition effort for the incoming administration. Ms. Ybarra managed the transfer and privatization of Dulles and National Airports to the Washington Metropolitan Airport Authority and authored Virginia’s Public-Private Transportation Act of 1995, often hailed as a model of public-private partnership legislation. Obviously not a stranger to the FAA.

And The Hill has reported that Washington lobbyist Martin Whitmer will lead transportation transition efforts. Some of Whitmer’s current and former clients include the Association of American Railroads, the Air Line Pilots Association, the U.S. Travel Association, Penske Truck Leasing and the National Asphalt Pavement Association. Both the railroads and ALPA already have an interest in drones.

The FAA has been able to carry out its mission regardless of who is in the White House – given the economic value of the NAS there is no reason to believe that will change. All of which provides reason to think that 800 Independence will be one of the few places in Washington where business will continue as usual. But as always, the devil is in the details.

Some of you will remember that in August 2016, the White House Office of Science and Technology Policy (OSTP) held the first-ever Workshop on Drones and the Future of Aviation. At the event OSTP announced new steps to promote the safe integration and adoption of UAS. This included spectrum, showcase projects at DOI, the UTM initiative and the whole issue of federal versus states rules – aka the patchwork quilt.

At the time I published 4 Questions From The White House Drone Workshop based on an article by Wiley Rein LLP. The first question was how much can get done by November…? And here we are.

I regularly write that people’s desire for privacy is a potentially limiting factor to broad industry growth.

Given the historical Republican preference for small government and states’ rights, it is reasonable to assume that the quilt will grow as states continue to craft their own drone regulations. But as you will also see, an increased emphasis on surveillance in the name of national security is likely to bring a new federal focus. In both cases, the issue will continue to evolve along the twin axes of personal privacy and data privacy.

Infrastructure

A massive investment in infrastructure will be a centerpiece of the
Trump administration.

Logically DOT will lead, and despite all of the rhetoric about the “corrupt political Establishment,” for practical reasons plenty of pork will flow to the states. The inevitable budget pressures on these projects will be good news for our industry which can provide cost savings and risk reduction in areas like inspection, construction, surveying and mapping.

Given the shortage of pilots, it is easy to imagine increasing pressure on the FAA to provide waivers that will permit autonomous or semi-autonomous operations before UTM development is completed. In the meantime, training and safety will become better and better businesses.

Defense

In a speech in Philadelphia in early September, Mr. Trump called for eliminating the sequester on defense spending and increasing military spending to boost troop levels and the number of ships and aircraft. As I write, defense industry stocks are climbing.

At the same time, the four services have been expanding their focus on drones and anti-drone technology for both fiscal and tactical reasons. When you compare the modest investment and time to deployment for a drone system to a carrier or an F-35 or a new nuke, you have a formula for fast growth.

This will be great for the primes who are positioned to play the game, developers, universities, technology consultants and others with the prerequisite skills. There is also considerable potential for a peace dividend in the form of greatly improved C2, better sensors and advances in AI, deep learning and related fields. AUVSI is likely to go back to its roots.

As WarOnTheRocks points out, “Trump could simply increase defense and infrastructure spending by increasing the debt. In that scenario, the sky is the limit.” In which case a rising tide will certainly float our boat. Though he and Paul Ryan first have to come to an agreement about which is the Better Way…

Surveillance, Spectrum and Manufacturing

The MIT Technology Review ran a story called Questioning the New President’s Tech Policies which offers yet more clues.

MIT “Trump is likely to expand surveillance programs and attempt to erode rights to encrypt data. (He openly criticized Apple over its refusal to unlock the San Bernardino iPhone.)”

• db.c Again, privacy is a key issue. No one knows the entirety of what the NSA does, but it is a safe bet that it will do even more of it. One possible side effect will be increased federal, state and local law enforcement investment in drone surveillance. And given the preference of police departments for mil spec gear, this could be the tipping point that brings more defense players into the commercial drone business.

MIT “Meanwhile, net neutrality rules—which demand that Internet providers treat all content equally—could be relaxed while he’s in office. (He called Obama’s push for the policy a “top down power grab.”)”

• db.c The President has the prerogative to pick the head of the Federal Communications Commission, which has broad regulatory power over the nation’s cable, phone and satellite companies.

In a matter of days the outsider has turned to the insiders to staff his administration.Suddenly, draining the swamp doesn’t seems to matter quite as much… Politico and the New York Times both report that Trump has tapped Jeffrey Eisenach, a controversial anti-regulation figure who has worked for years on behalf of Verizon and other telecommunications clients, as the head of the team charged with staffing the FCC.

Two things here. The need for spectrum is essential to our growth so how allocation is managed very much matters. And current FCC restrictions on jamming severely restrict anti-drone interdiction techniques so it is possible that in the name of security those rules could be revisited.

MIT “But there’s one policy he’ll struggle with: his calls to have the likes of Apple manufacture hardware in the U.S., rather than China, will prove difficult to enact.”

• db.c For similar reasons it is equally unlikely that prosumer drone manufacturing will ever come back to these shores if it ever was here. Although an increase in tariffs (euphemism for the threatened trade war) could increase product prices. Heck, it could cut off the supply entirely.

On the subject of a trade war, the view from Handelsblatt (a German business magazine) is:

According to a study by the Peterson Institute for International Economics, Mr. Trump’s protectionist policies could trigger a full-blown trade war that would send the U.S. economy into recession.

A trade war would hit the aerospace, engineering, information technology and machinery industries the hardest, according to the study. Employment would fall by 4 percent across the board in 19 states from California on the west coast to Massachusetts on the east coast and many states in between.

“Donald Trump’s threats to Mexico and China – he could do them if he wins, it’s within the executive power of the president,” Adam Posen, the president of the Peterson Institute, said at Handelsblatt’s U.S. Election Camp in Washington, D.C.

“Our estimate is that it would put literally millions of people out of work and do terrible things to the economy,” Mr. Posen said. “It’s very high stakes.”

 

The Environment

One area where I am sad to say I don’t see any good news is the environment. A traditional GOP target, Mr. Trump will find support for his statement that “climate change is an expensive Chinese hoax” as well as his plan to gut the EPA, bring back coal and cede the high ground to China by withdrawing from the Paris Accord. Reuters and others are reporting that early reaction out of China is something like pure joy.

Reduced regulation is likely to entail massive budget cuts (something’s gotta give right) so the DOI, NOAA and other public agencies will need to accelerate the use of drones to help make up for lost staff and to monitor our dwindling resources.

So all in all, it’s mostly positive. Appointments will matter as will policy priorities. Defense and infrastructure will get a boost as will tech unless there is a trade war. The environment is going to lose bigly.

I know that most of you read this when it’s breakfast time in America, but it feels like we all need a nightcap, so let me offer up an Eye Candy Tag Award Winner called A Drone Lights Up The Night for your enjoyment. It’s a series of stills from locations in Northern California, Nevada, and Iceland using a custom LED lighting rig Velcro’d to a drone. Sweet.

Thanks for reading and for sharing.

best,
ck

Christopher Korody
DroneBusiness.center
chris@dronebusiness.center
follow me @dronewriter