XPONENTIAL 2018: Past the Part 107 Bubble issue of Dronin' On 05.05.18
Colorado Convention Center – apres les deluge

Hi all –

Happy to be back on the high mesa after a rainy week in Denver. Hats off to Team AUVSI for a tremendous 2018 XPONENTIAL. 8,500 dronistas from around the globe – not one of them wearing a wife beater. There were 200+ presenters, including two thought-provoking keynotes – shout outs to and for Dr. David Autor, MIT and Dr. Zeynep A. Tufekci, UNC. Plus some 700 stands filled with enough shiny objects to strain any department budget.

Hot news flash. Gas engines are back! And new entrants like FlightWave were showing their hydrogen powered Jupiter-H2.

I want to say thank you to everyone who took the time to tell me how much they enjoy Dronin’ On, how useful it is and most importantly, how balanced the coverage is. Welcome to all of you who are joining this morning for the first time.

Two choice quotes:

One wag wondered “How did you get in to XPONENTIAL? You’re certainly not on the AUVSI Christmas card list” – for which I have to thank Tom McMahon, AUVSI’s
VP PR
.

And “I can tell you have fun with this” – from the FAA’s point man for all things UAS, Earl Lawrence who clearly has a very dry sense of humor.


Safety and Security” were paired constantly.

A million variations of “We must all work together” reflect the tone established by retired FAA Administrator Michael Huerta – neat legacy.


In a delightful meeting over ice water, Marke “Hoot” Gibson, CEO, NUAIR was one of many who expressed confidence that tech is a solved problem, the challenge is on the soft side – policy and regulation. To explore the issue, Hoot is working with Syracuse University to establish a UAV Law and Policy Institute.

One line I really liked was “Beyond the Part 107 bubble.” Kind of like been there, done that; now let’s get going. Not to burst said bubble, but there is lots left to do…

THE FAA

The FAA kicked the week off with LAANC Beta Wave 1: South Central. The final deployment is scheduled to begin September 13. Here’s why that matters.

On the Facebook UAV Legal News & Discussion forum moderator Vic Moss reported that:

It is currently NOT possible to use your 107.29 (Night) Waiver with any operations associated with LAANC. Or any waiver for that matter. I received not only a follow-up email from the FAA stating this very thing, yesterday morning I received a phone call from the FAA making sure that I had received the email.

I am allowed to say that this is something the FAA UAS office is currently working on. LAANC has to be fully implemented, and then BETA testing for waiver integration to happen. I’m told that it likely won’t be this fiscal year. [Federal FY ends 9/30 so no.] 

I asked, and Vic confirmed that for waiver based ops, pilots will need to go through the manual waiver process. Hopefully, the FAA staff will have more time to respond to individual requests…

Props to Josh Ziering and the gang at Kittyhawk for their partnership with Jeppesen – nice to have a real map company in the LAANC space. Or as only they could put it “Jeppesen provides long-standing experience and credibility to fortify a disruptive, early-stage company in Kittyhawk.” Mama don’t let your babies grow up to be cowboys…

I had breakfast with Sean Guerre to discuss the panels I will be moderating at the upcoming Energy Drone Coalition Summit. He asked whether I knew what the deal was with Part 107 licenses – the first ones will be coming up for renewal August 28. The big energy companies are already trying to figure out what they need to do. This is called planning ahead.

Vic told me that:

Final plans will be announced in June (in theory). But in all likelihood, we’ll retake the test at CATS [the 600+ FAA Knowledge Testing Centers]. But Joe Morra [Manager, Safety and Operations Branch, FAA UAS Integration Office] did mention the possibility of an online option in a panel yesterday.

According to the rumor mill, V1 of the XPONENTIAL agenda had DOT Secretary Elaine Chao taking the stage to announce the “winners” of the UASIPP program.

Instead, Steven G. Bradbury, General Counsel, U.S. Department of Transportation showed up to say that the announcement was forthcoming, and that the selection would include “A variety of scenarios, locations, partners and applications. As well as a balance of competing interests.”

It is hard to imagine how politicized the selection process is. Hoot opined that no matter which ten of the 150+ applicants the Secretary announced, the other 140+ would have all been waiting for her when she came off the stage.

A lot of exhibitors (aka Interested Parties) who were hoping to do the happy dance had to put a pin in it. Maybe next week.

SECURITY

After making nice and reaffirming Madame Secretary’s commitment to our success, Mr. Bradbury told the crowd (paraphrasing here) that it was time to wake up and smell the coffee. Variations on this theme were repeated by every government agency that took the stage, echoing previous comments by Acting Administrator Dan Elwell, Earl Lawrence and others. It goes like this.

“Critical concerns about safety and security have to be the top priorities…There is no tolerance for aviation mishaps. If there one major incident, or a major terrorist attack, we all understand that would be a significant setback.”

The essence is that DOJ, DHS and DOD need the ability to interdict and down UAS threats. All earlier drones will need to be equipped with the ability for Remote ID… we will be asking for public input and comment.

So how hard will that be? Here’s something to ponder.

Brendan Schulman, VP Policy, DJI did an excellent seminar recapping the awesome work of the Remote ID ARC which focused on meeting the needs of law enforcement. Later he told me that DJI has already pushed out a software patch and their entire fleet is now squawking on their C2. That’s at least half of the US fleet, perhaps two thirds. But, like the proverbial tree falling in the forest, there is no one who can hear it. They were doing live demos of Aeroscope on the roof.

Compare and contrast that with a report on Facebook from Colin Snow, CEO, Skylogic Research who posted a Proposal for FCC Rules for UAS Command and Control Spectrum.

The Federal Communications Commission (FCC) is seeking public comment on a proposal by the Aerospace Industries Association (AIA) to adopt service rules for the use of 5030-5091 MHz by small Unmanned Aircraft Systems (sUAS). 

As concerns 336, Mr. Bradbury was succinct:

We respect and value their freedom and rights, BUT the current 336 rule impedes the FAA’s ability to come up with new approaches… Congress is considering ways to address this. We need a way forward.”


The AMA has really good juju. Everyone gets all squishy about the Rime of the Ancient Modeler.


So, there is a new frame for this: The AMA is not the problem. Part 107 is not the problem. The problem is everybody else – aka the 800,000+ clueless, careless and criminal that the current registration program has failed to educate or prosecute… i.e. the very same folks who the FAA forecast says will buy another 1 -2 million drones in the next few years.

Now that that’s clear, please read the rules, “Unmanned aircraft not flown under section 336 must be registered under part 107.” Pop another bubble…

In the immortal words of Steve Jobs, “There must be a better way.” Time to think different =)

Mr. Bradbury also noted what most of us already know – that many state and local governments are putting statutes on the book to address privacy and trespass issues – some of which will inevitably conflict with the FAA. As you would expect, Federal law must prevail including something that has suddenly come to the forefront; the April 24 announcement that the FAA has economic authority under the Air Taxi Exemption to grant approvals for delivery. The stage is now set for beaucoup lawsuits.

Beyond Mr. Bradbury’s presentation, there were at least two other sessions that explored security from the Federal perspective. On Monday I sat in on Remote ID: What Works and What the Federal Government Really Wants. Jim Poss, CEO, ISR Ideas (Maj Gen, USAF Ret) opened with a clueless, careless and criminal
highlight reel.

With what’s past for prologue, it was time for Anh Duong, Program Executive Officer, Unmanned Aerial Systems, Department of Homeland Security, Science & Technology Directorate.

With a nod to privacy and civil liberty, Ms. Duong set up the duck saying that the only way to deal with anticipated UAS traffic volumes was to pre-sort the legitimate from the criminal to facilitate “A 10 second kill chain.”

She then shared the security agency “wish” list:

  • Make people show photo ID’s when they buy a drone.
  • For UTM, establish flight corridors with designated entry and exit points.
  • Mandate more physical features to enhance visibility.
  • Define data retention policies while ensuring privacy.
  • Once the drone is in the air, no one knows what it is. She wondered if it would be possible to carve out designated hobbyist fly zones. (That’s the sound of a lead balloon hitting the ground at AMA headquarters.)

She also proposed a couple of new ideas.

The first was that UTM be developed as a two-way communications link (maybe it already is?) so that law enforcement (LE) can push out communications and create de facto TFRs. One supposes that LE would be able to erect temporary geofences to deny route approval.

The other is the idea of a voluntary “trusted drone” model, along the lines of TSA Pre√. Ms. Duong wondered what the appropriate incentives would be, but it seems like a worthy idea.


All these things help to enable high speed decision making – “if it doesn’t squawk, it’s coming down.” 


There was another session on Wednesday, Countering the Threat: Combating Nefarious Drone Activity that I was unable to attend. Included were heavy hitters from the Border Patrol, DHS, the FBI and the FAA. The panel was hosted by Patrick Tucker, Technology Editor, Defense One.

Patrick filed A Criminal Gang Used a Drone Swarm To Obstruct an FBI Hostage Raid based on what Joe Mazel, Chief, Operational Technology Law Unit, FBI, Office of the General Counsel and others said on stage: 

An FBI hostage rescue team set up an elevated observation post to assess an unfolding situation. Soon they heard the buzz of small drones — and then the tiny aircraft were all around them, swooping past in a series of “high-speed low passes at the agents in the observation post to flush them,” the head of the agency’s operational technology law unit told attendees of the AUVSI XPONENTIAL conference here. Result: “We were then blind,” said Joe Mazel, meaning the group lost situational awareness of the target. “It definitely presented some challenges.”

Dronin’ On’s resident LE expert Travis Moran pointed out that this is the first time that the FBI and the Border Patrol have shared this kind of story. Hidden behind the cone of silence and “classified” are more and more like them.

Meanwhile the entire CUAS industry – now numbering over 200 hopefuls – is wondering how much it costs to be first. There is more and more copycat BS crowding the space, so herd thinning is inevitable.

One company that is fast emerging as a dominant player is SRC Gryphon Sensors, whose piano black mobile unit with telescoping antenna was a show stopper. They are providing the instrumentation for Unmanned Aircraft System (UAS) Secure Autonomous Flight Environment (U-SAFE) to support BVLOS testing at the Griffiss Test Range, part of the NUAIR Alliance.

Another one gaining traction is Dedrone which will be teaming with the University of North Dakota to Advance Counterdrone and Airspace Safety Research. The big idea is that the Dedrone gear will help to identify “non-cooperative aircraft” (aka bogeys) during UND’s UAS operations.

THE BUSINESS STORY

More and more people are wondering how big the pond we are all fishing in really is. Two studies promise to shed new perspectives

On Monday, the Unmanned Aircraft System (UAS) Demand and Economic Benefit Forecast Study session introduced a study that the NASA Aeronautics Research Mission Directorate (ARMD) commissioned from Modern Technology Solutions, Inc. The objective is:

To establish a rigorous and defensible set of forecasts pertaining to the demand to operate civil and commercial UAS across several existing and emerging new aviation markets.

They are in the process of building out 30 use cases across 11 categories to determine which ones warrant support. As a long time market researcher, I have to tell you that their methodology is impressive. Here’s a stunner:


The study projects that in 2040 there will be 41 million drone deliveries per day.


The forecast is based on the assumption that it will take until 2026 for the regulations to be in place and the infrastructure to be established. Total market saturation for UAS delivery will be achieved by 2044 – 24 years from now.

Interesting take here in ARK Invest.

Our research suggests that, if the FAA approved them today, Amazon’s drones could transport packages to more than 50 million people in roughly 30 minutes. The battery improvements we expect during the next five years could increase their reach to nearly 100 million people, or 30% of the US population. 

Unlocking the Actual ROI for Commercial Drones hosted by Jim Williams looked at the issue from two distinct perspectives. Andrew Carey, Sr. Engineer – Director of Drone Operations for Rio Tinto Kennecott Utah Copper and Richard Lopez, VDC Manager, Hensel Phelps Construction Co. are both deeply immersed in day to day operations. Both focus on safety and training, in fact, their comments were frequently interchangeable. As you would expect, keeping people out of harm’s way is a major program impetus. The ROI comes from providing data that enables better decision making by their internal customers.

Skyward CEO Mariah Scott (remember that Jonathan has a new role) introduced a new market adoption survey that polled 1,736 US companies, doing a minimum of $50M in annual revenues, on their current and projected UAS utilization. This includes companies like financial services and healthcare that have no obvious use cases.

The Skyward team is in the process of putting together a presentation and a webinar. Stay tuned for the details. With the caveat that you should wait for the finished presentation, here are the key points Mariah shared.

The Good

  • 92% reported that the drone benefit exceeded the cost.
  • 88% of all adopters reported positive ROI within one year.
  • 40% spend $50K or more per year.
  • 75% expect to increase their spend.

The Sobering

  • 61% of those surveyed have no plans to utilize drones.
  • 20% are unsure if their companies will utilize drones.
  • 10% currently use one or more drones.
  • 2% plan to begin using by the end of 2018.
  • 7% have future plans.

As Mariah pointed out, the fact that 10% of the companies are already using drones less than two years after Part 107 was introduced is encouraging. Even more heartening is the ROI.

The big barrier to adoption should come as no surprise – the complexity of understanding and complying with the regulations.

That said, 1,736 is a massive, totally projectable sample. I used the NAICS “Counts by Annual Sales” for companies over $50M in revenue to look at the total market.

  • I found ~100,000 companies that match the survey criteria. (Because of the way NAICS breaks the numbers, that’s a guess that could be
    considerably lower.)
  • 20% is 20,000 companies which is a quick and dirty estimate of the mid and enterprise market. (Obviously some of those unsure will come over.)
  • Multiply by $50,000 for Year One and you get $1,000,000,000.00 – a billion dollar spend.

Add to that small business which includes huge user categories like photography, mapping and service providers; add government agencies and NGOs, an ever increasing spend and someday there will be plenty to be happy about…

Beyond the regulatory challenge keeping some people out of the market, I would add two gating factors to my cocktail napkin:

  • The distribution is uneven – we don’t know how NAICS maps against the study sample.
  • There is an upper limit to what any given company will spend on drones, software and services.

I want to give a quick mention to National Unmanned Aerial System Standardized Testing & Rating Facility (NUSTAR). NUSTAR is an $80M+ idea that right now is looking for money and clients. Think of it as Consumer Reports for UAS to answer the question “How do we know what’s good?”

The data will be used for UTM mission approvals as well no doubt as a buyers guide. Fabulous panel. It’s PK’s baby, he told me that he is committed to seeing it happen… Let it be written, let it be done.

COMING ATTRACTIONS

XPONENTIAL 2018 is fading in the rearview mirror, so it’s time to start planning the rest of the year. Many of you know that last year InterDrone Founder Ted Bahr sold the show to Emerald Expositions, then took a hard-earned sabbatical. He’s a devoted reader so I was glad to have the opportunity to catch up and have a
long chat.

Ted told me that Emerald asked him to come back as Chairman of InterDrone. He also said that Acting FAA Administrator Dan Elwell has agreed to give the opening Keynote. Be interesting to see where we are by then. Hint to Dan and Earl -since we’ll be at the end of the LAANC beta, it would be great to hear some actual utilization numbers segmented by airspace type, geography and service providers.

I’ll be there doing some panels.

BTW Conference Director Katie Flash is still putting the 2018 program together so if you have any last minute submissions, please send your ideas along to katie.flash@emeraldexo.com.

I also had a chance to spend time with Lisa Murray, who took time out for a well-deserved vakay after a successful year two for Commercial UAV Expo Europe before diving into Commercial UAV Expo Americas.The focus will be on current applications in a wide range of verticals along with some policy.

Thanks for reading and for sharing. Back issues of Dronin’ On are here.

best,
ck

Christopher Korody
Editor and Publisher
chris@dronebusiness.center
follow me @dronewriter