FAA May Be Off Target With Forecast For Threefold Growth In Commercial Drones

There’s some good information in the FAA’s new five-year Unmanned Aircraft Systems (UAS) forecast, but there are reasons to doubt the accuracy of the agency’s projections in two areas that have captured attention: the claims that there will be roughly threefold growth in the numbers of commercial drones and UAS-certified pilots. Here’s the good, the bad, and the ugly in the report.

The Good

There is some good analysis in this report. For example, it seems the FAA finally gets that drones have a wide variety of price points and the bulk of commercial activity has been driven by low-cost consumer-grade aircraft:

“Currently, the consumer grade dominates the non-model sector with a market share approaching 95 percent. However, as the sector matures and the industry begins to consolidate, the share of consumer grade non-model aircraft is likely to decline but will still be dominant. By 2023, FAA projects this sub-sector will have around 85 per-cent share of the overall non-model sUAS sector.”

This insight is mostly consistent with independent surveys and reports like this one, which finds more than 91% said they bought drones costing over $2,000 for professional purposes—either governmental, academic, or business.

The other good thing in this report is the FAA’s admission that the historical commercial drone registrations outpaced their own predictions by 80%.  Previously, they predicted a healthy growth rate of more than 40%—but they underestimated it.

“Last year, we forecasted that the non-model sector would have around 229,400 sUAS in 2019, a growth rate exceeding 44 percent from the year before (2018). Actual data far exceeds that trend with over 277,000 aircraft already registered by the end of 2018. Our forecast of non-model sUAS last year thus fell short by almost 80 percent for 2018 (or 277,000 actual aircraft vs 158,900 that we projected last year).”

The Bad

A closer look at the report reveals a few oversights and curious assumptions for their forecasts. Some of the key metrics and growth trajectories came from a survey the FAA conducted in June-July of 2018 about commercial activities performed in 2017 under Part 107. The survey sent to 89,000 individuals was intended to get a snapshot of non-model/commercial mission characteristics, including locations, aircraft types used, and altitudes flown. But the response rate to the survey—which was complex and time-consuming—was low (approximately 8 percent).

Still, the report projects the U.S. commercial drone fleet (small non-model UAS) to nearly triple from 277,386 in 2018 to 835,211 in 2023, an average annual growth rate of almost 25 percent. However, the main oversight is that most people don’t deregister their aircraft.  They may if they register a new one, but if they stop using one they are not going into the Registry to delete it. This keeps the current number inflated.

Another noticeable problem is the survey results are inconsistent with internal FAA data. And to be fair, the FAA admits there are big variations between the survey results and their aircraft registry. For instance, almost a third of survey respondents use one small drone; their aircraft registry (i.e., the Registry) indicates 55 percent use one small drone. The survey indicates that, for those operating multiple small drones, 54 percent operate 2-9, but the registry claims just on third fly multiple drones.

Another issue is the survey found the largest commercial use for drones was in R&D and in training/education missions (21%). But year over year, other industry benchmark surveys find the number one use for commercial drones is aerial photography and video. This disconnect is no surprise given how the FAA worded their survey questions. In this instance, the question asked for the number of missions performed on average per aircraft in each of activity they listed, not about its major intended use. Given most businesses were new to drones in 2017, it makes sense that the FAA found a lot of aircraft flew training missions back then—not actual industrial missions such as mapping and inspections as happens today.

The Ugly

Perhaps the biggest problem with the FAA report is in the Remote Pilot Forecast section. It predicts the number of UAS-certified pilots is “set to experience tremendous growth following the growth trends of the non-model sUAS sector.”  It predicts commercial drone activities may require almost 350,000 remote pilots in five years—a three-fold increase. Many in the press have run with this assumption and taken it to mean that the commercial drone industry is set to triple in the next five years. But a closer look calls this into question and makes that forecast specious.

To start, the FAA does not maintain a database showing the number of remote pilot certificate (RPC) holders who are current.  They only report gross new RPC holders. As reported here, 126,299 individuals have been issued a remote pilot certificate as of March 15, 2019.  But as of the same day, only 7,306 individuals have taken the remote pilot certification recurrent knowledge test, which is required every two years. Given remote pilot certification started in August 2016, that means only 20% of the original pilots have renewed their license to operate commercially.  To be fair, that figure may be higher but not by much since Part 61 pilots with an existing RPC and have met their flight review requirements are considered RPC current.

If the number of certified remote pilots is the benchmark for commercial drone industry growth (because, almost uniformly around the world, regulations demand each drone operation have one pilot), it seems crucial the FAA keep and report a database on current RPC holders in the U.S. That information would enable all to predict with greater certainty the growth of the commercial drone industry.

This article first appeared on Forbes.com
Image: A drone operator demonstrates a DJI Matrice 100 drone at the Applied Drone Technology for Business Conference. Photographer: Paul Faith/Bloomberg © 2019 BLOOMBERG FINANCE LP

Evaluating the Economics of BVLOS Drone Operations

We just announced the release of our latest research on commercial drone operations. The Economics of Using Drones for BVLOS Inspections is a white paper sponsored by PrecisionHawk, the leading provider of drone technology for the enterprise, which provides a foundation for businesses to evaluate when it’s best to use traditional ground and manned aviation, line of sight drones, or BVLOS (for “beyond visual line of sight”) drone inspection approaches. It’s designed as a comprehensive primer of drone inspections in specific industries.

The paper answers questions like:

  • What’s the best way to enable an effective drone strategy?
  • What are the economic benefits of operating drones?
  • What are the costs, benefits, and risks of using drones for BVLOS operations?
  • How does that compare with traditional inspection methods?

Here is an excerpt:

As the commercial drone industry continues to evolve, widespread BVLOS drone inspection has the potential to significantly change business models for oil and gas, utilities, insurance, and other industries. Representatives we spoke with in those industries point to four main drivers motivating them to explore BVLOS operations:

  • Safety, as in preventing fatal helicopter crashes or accidents from having to manually climb towers to take readings;
  • Costs, or reducing dependence on a $1,500-per-rotor-hour helicopter and personnel and even cutting the time and expense of the multiple flights needed in flying drones within visual line of sight (VLOS);
  • Data inconsistency and lack of quality, since manual data collection sometimes involves photos taken from a helicopter traveling at speed and at different heights for each flight—which leads to inconsistency—or hand-written notes taken while visually inspecting with binoculars—which leads to imprecise or poor quality data;
  • Time to value, meaning that BVLOS flight can cover a wide area and collect high-quality data much more quickly than traditional means, so, for example, insurance claims of total loss can be indemnified faster.

The 21-page report also provides a guide for when—and how—to deploy drones to inspect assets, use cases for how drone missions compare with traditional methods, and insight from PrecisionHawk’s customers about how they’re refining their inspection strategy—and their results.

You can register to get the free report here: http://bit.ly/2Rn8z6y

Image credit: PrecisionHawk

Seven Trends That Will Shape the Commercial Drone Industry in 2019

This post first appeared in Forbes

In many ways, 2019 will be another big year for the commercial drone industry. Last year saw a wider rollout of the FAA’s LAANC program (the Low Altitude Authorization and Notification Capability that provides access to controlled airspace near airports), the launch of the UAS Integration Pilot Program from the FAA, and some significant developments for new regulatory frameworks for drones in Europe and in India. This year, expect more of the same—but with a few twists.

Trend 1 – Expanded business use

Adoption of aerial drones and drone technology will not be as widespread as some might expect. Instead, it will grow in select industries like agriculture, construction, insurance, mining and aggregates, public safety and first responders, oil & gas, survey engineering, telecommunications and utilities.

Last year, companies began to move beyond the provisional use of drones—where they were outsourcing to determine a drone program’s feasibility—to standing up or expanding internal teams to manage workflows and data. This year, expect to see reports about companies expanding their teams and adding use cases that take advantage of the waivers allowing limited beyond visual line of sight operations.

Trend 2 – Slower, more steady growth

The number of certified remote pilots is the benchmark for commercial drone industry growth. That’s because, almost uniformly around the world, regulations demand each drone operation have one pilot. Last year, the number of FAA-certified remote pilots grew about 50% over the previous year, to approximately 115,000. That increase was mostly made up of pilots who work for companies, enterprises or public agencies with internal drone programs as opposed to pilots who operate for drone-based service providers. It’s clear that commercial industries are now driving growth rather than individual interest as in years past.

One thing to keep in mind when looking at FAA numbers is that the month-over-month growth rate is beginning to slow. That may worsen given the current partial U.S. Government shutdown, which will delay the grant of new certificates. It may also slow further because some drone-based service providers who are not making money (most aren’t) will choose not to re-certify as a remote pilot.

Trend 3 – Further vendor consolidation

Much of the industry’s growth so far has come from the early hype about how drones were going to “transform” industries as well as huge forecasts that fueled investment. Over the years, we’ve seen those dreams turn to smoke as vendors like 3D Robotics and GoPro fell out of the sky. Last year was no exception. The $118M collapse of Airware and the release of Parrot’s disappointing financial results give us a glimpse into what will come.

Still, there is good news, and you can expect more moves like PrecisionHawk’s acquisitions as vendors seek leadership positions in key industries and secure new revenue streams.

Trend 4 – Public distrust and civil liability

Despite the benefits of commercial drone use, the general public still has concerns about drones with regards to safety, security, privacy and public nuisance. After the Gatwick debacle, expect more headlines in 2019 of unauthorized drone sightings and the coming drone apocalypse. In many ways these stories hurt legitimate commercial operators who often need to gain permission from reluctant land owners so they can perform inspections and survey maps for infrastructure unreachable by other means.

Here in the U.S., there is another tea kettle about to boil over. A little-known but highly influential group known as the Uniform Law Commission (ULC) will continue to work on a proposed “Tort Law Relating to Drones Act,” which concerns drones and privacy. If their proposal is adopted by states, we could see an arbitrary line drawn 200 feet in the sky that would establish a new aerial trespass zone giving property owners the right to establish no-fly zones. Right now, their draft goes much further than any existing state or federal law and, if enacted, would create a complicated patchwork of differing state laws that inhibit commercial operations. Until then, expect to see more local and state laws like this one in Pennsylvania aiming to protect people’s privacy from drones.

Trend 5 – More regulation – maybe

Some predict 2019 will be the year the FAA finally implements a requirement for remote identification for all drones, recreational and commercial, flying in the U.S. It’s expected this will be combined with a new rule for flights over people for small drones. But there is a big difference between the FAA proposing a rule (called the Notice of Proposed Rulemaking or NPRM) and that rule becoming law. The difference can be anywhere from six to nine months. So it’s likely we’ll see a proposed rule, but implementation will be like Waiting for Godot.

To be clear, Drone ID is not a slam dunk, and the specifics of the ID signature are still being debated within the FAA. Even so, Drone ID needs to exist for Unmanned Traffic Management (aka UTM) to become a reality. UTM should help enable some of the most talked-about use cases for drones, from package delivery to aerial taxi services, but don’t expect this first iteration of remote ID to live up to the headlines or vendor expectations of a global autonomous drone network – as that would ignore the arduous political processes in each country or region to make UTM even possible.

Trend 6 – DJI’s continued dominance

SZ DJI Technology Co., Ltd. (a.k.a. DJI), a Chinese company, continues to dominate the market and has made gains this year in every product category, from drone aircraft at all price ranges, to add-on payloads, to software. Recent survey data shows DJI is still the dominant brand for drone aircraft purchases, with a 74% global market share. Much of DJI’s dominance can be attributed to its aggressive product development, technological advancements and partner development in the enterprise channel. Last year, the company released two new series of enterprise products (Phantom 4 RTK and Mavic 2 Enterprise) that target industrial users. It’s safe to predict their leadership will continue given their strategic investment with Hasselblad, their recent investment in an R&D facility in Palo Alto, California, and their partners in the enterprise space such as Microsoft.

Trend 7 – Sensors, software, and AI advancements

Along with the new imaging sensor integration announcements in 2019 (such as smaller, more lightweight LiDAR), expect to see imaging software advancements as companies seek to combine RGB, thermal imaging, orthomosaic, and data from IoT sensors. More aerial imaging and mapping software firms will likely announce artificial intelligence (AI) capabilities. Right now, most of this is cloud-based machine learning (a.k.a. deep learning and predictive analytics), where datasets are trained by specialized teams. Already, there are some drone-based AI solutions for image recognition/machine vision, but it’s still early in the technology development cycle and AI is near peak hype.

Some big news for 2019 could be workflow integration of drone data and workflow into predictive maintenance and service solutions, as well as enterprise asset management systems such as those from IBM, INFOR, Oracle and SAP. Capabilities could include documentation, tracking and GIS data integration. That may bring a yawn to some, but when you can connect the dots and show the effect of drone data on the balance sheet, CFOs and CEOs will take notice and drive further enterprise adoption

Image credit: Mark Kauzlarich/Bloomberg

Three Forces That Shaped the Drone Industry in 2018

This was a big year for the commercial drone industry as a whole. It saw a significant increase in the business adoption, the expansion of the FAA’s LAANC program (the Low Altitude Authorization and Notification Capability that provides access to controlled airspace near airports), the launch of the UAS Integration Pilot Program from the FAA (aka IPP), new products like the Phantom 4 RTK from DJI, and some significant developments for new regulatory frameworks for drones in Europe and in India.

In this post, I’ll illustrate some of the market trends over the past year using data from our third annual drone industry benchmark report and describe what I think shaped the drone industry.

Listen to this companion Drone Radio Show podcast here for the complete assessment.

If I was to distill the key forces of 2018 on the drone market into three things, I would say they are:

  1. Business adoption
  2. Vendor contraction and expansion
  3. The DJI effect

Force 1 – Business adoption

Adoption of aerial drones and drone technology was not widespread, but it did grow in select industries such as insurance, utilities, construction, and survey engineering,

In 2018, we saw companies begin to move beyond the provisional use of drones—where they were outsourcing to determine a drone program’s feasibility–to standing up or expanding internal teams to manage workflows and data.

You can see this trend, particularly in the U.S. when you realize the growth in the number of certified Part 107 remote pilots. The U.S. began the year with about 74K certified remote pilots, and as of the end of November, we had about 112.5K. So we’ve added about 38,500 pilots this year. That’s a 50% increase over last year.

The thing about this increase is that it’s mostly pilots who work for companies, enterprises, or public agencies with internal drone programs.  We saw this trend in the data from our annual benchmark survey conducted over the summer.

Force 2 – Vendor contraction and expansion

There were some winners and losers this year in the race to gain more customers and satisfy investors.

Probably the biggest contraction story was the $118M collapse of Airware. Fortunately, Delair acquired Airware’s software solution, which ensures the continuity of service for existing customers and dealers. The agreement also included keeping the team from construction and mining specialist Redbird, which Airware initially bought in 2016.

The other contraction was from Parrot. Earlier in the year, Parrot released its ANAFI work drone for the commercial drone market. But then just last month, Parrot’s CEO announced disappointing financial results because of what he called “a significant consumer drone market contraction.” Suffice it to say they are running on thin cash flow, and it will be interesting to see if there will be a right-sizing of Parrot and its affiliates like senseFly and Pix4D in 2019.

Another big move this year was PrecisionHawk’s acquisitions of both HAZON and InspecTools. These businesses specialize in inspection services and technology for the energy sector. They bring PrecisionHawk the domain expertise that will enable tighter integration between collecting and analyzing drone data—something customers want. We think these acquisitions position PrecisionHawk as a leading service provider for companies wanting to perform asset inspections—specifically those companies in the oil & gas, insurance, and utility industries that need beyond visual line of sight (BVLOS) operations. If you recall, PrecisionHawk was part of the FAA’s Pathfinder Program, so they have extensive experience in BVLOS ops.

Force 3—The DJI effect

You can’t talk about the drone industry without mentioning market leader DJI. The company continues to dominate the market and has made gains this year in every category, from drone aircraft at all price ranges, to add-on payloads, to software. Our survey data shows DJI is still the dominant brand for drone aircraft purchases, with a 74% global market share in sales across all price points.

DJI’s current global market share is two percentage points higher than it was last year (72%), and is a significant change from 2016, which showed them with 50% market share.

On that note, many industry and UAS news pundits speculated that security concerns about DJI small drone aircraft would be the death knell for DJI (a China-based company), but clearly these fears did not affect their sales. To stem concerns about DJI’s data security practices, the company hired a forensic investigation company, Kivu Consulting, Inc., to independently review DJI’s UAV data transmission and storage practices. Kivu’s analysis of the drones and the flight control system (drone, hardware controller, GO 4 mobile app) concluded that users have control over the types of data DJI drones collect, store, and transmit.

As I’ve have noted in our report, much of DJI’s dominance can be attributed to its aggressive product development, technological advancements, and partner development in the enterprise channel. DJI’s leadership role existed as early as 2015, when we looked at FAA data on commercial drone registrations. The company continues to release new product after new product, and it leads other manufacturers with technology and enterprise ecosystem partnerships.

We predicted last year that this would continue well into the future, given their current lead, their strategic partnership investment with Hasselblad, their recent investment in an R&D facility in Palo Alto, California, and the continuation of their AirWorks Conference enterprise partner ecosystem event.

That’s it for now. Look for a follow-up piece on our specific predictions for 2019, which will include investments, technology improvements, ecosystem partnerships, and software innovations.

Listen to the companion podcast here: http://bit.ly/2EynyIY

If you have questions about what’s in the report I mention or would like to comment, write me at colin@droneanalyst.com.

 

Image credit: Shutterstock

Commercial Drones and GDPR: What You Need to Know

Assessing what GDPR means for commercial drone hardware and software vendors, service providers, and enterprise users.

By Colin Snow and Charlotte Ziems

Have you noticed an increase in the number of emails lately that say “we have updated our privacy policies and terms of service”? It’s not just the big players like Amazon, Apple, Google, and YouTube, it’s just about everyone – and for good reason. They’re all preparing for May 25, 2018, when new regulations go into effect that apply to personally identifiable data they collect on citizens of the European Union.

Disclaimer: Nothing in this post should be interpreted as legal advice—you alone are responsible for GDPR compliance and should consult legal counsel to do so. We’ll assess only the basic GDPR concepts you should know, and at a high level. So let’s start with the basics.

What is GDPR?

On May 25, 2018, the new General Data Protection Regulation (GDPR) will go into effect to protect the rights of Europeans to access and control their personal data. This means any brand that collects and processes the personal data of individuals in the European Union, regardless of that brand’s location, needs to comply with GDPR requirements by the May deadline.

Note that the laws are still being interpreted and definitions changing, so you’ll want to pay attention.

What are the important GDPR requirements?

  • The right to be informed, or being transparent about what you collect and how you use it (Article 12, 13, and Article 14 number 11)
  • The right of access, or allowing individuals to see what personal data you’re processing and storing (Article 15)
  • The right to rectification, or allowing individuals to have their personal data corrected (Article 16)
  • The right to erasure, also known as the right to be forgotten (Article 17)
  • The right to restrict processing, or allowing individuals to stop you from performing operations (collecting, processing, storing, etc.) on personal data (Article 18)
  • The right to data portability, or giving individuals the personal data you have about them (Article 20)
  • The right to object, or prevent you from processing their personal data (Article 21)

Why should you care?

Depending on the nature of the infringement, fines for noncompliance can range from between €10 million and €20 million, or between 2% and 4% of your worldwide annual revenue of the prior financial year, whichever is higher.

Do those in the commercial drone industry need to be GDPR compliant?

That depends. If you have any clients, or have contacts, or perform work in the EU, then yes. The regulation applies when you collect, store, and process data or images that constitutes someone’s “personal data” (such as names, email addresses, phone numbers, etc.), or “personal identifiable information” (such as aerial images of and georeferences to persons).

Who in the commercial drone market might it apply to?

  • Agriculture – probably not those collecting agricultural data, since that type of data rarely attaches personally identifiable information (or personal data) of an individual.
  • Film / Photo / Video – it definitely applies to drone wedding photographers, real estate photographers, film companies, and any other commercial service. GPDR states that pictures containing peoples that can be identified are to be considered personal information and must be handled with care. Unless you are using the pictures for news or art, you must have a consent from the person giving you permission to publish the picture.
  • Inspecting and monitoring – probably not those collecting data on structures (such as towers, transmission lines, or oil rigs), since it rarely attaches personally identifiable information (or personal data) to an individual, but definitely yes to those performing site monitoring where individuals can be tagged or identified.
  • GIS (mapping and surveying) – it depends on the downstream use of the data you collect. You are in the chain of custody and custodians may need to generalize or filter identifiable features or patterns of people from geospatial information.
  • Cloud-based data services – same as GIS. You are in the chain of custody and may need to filter information; otherwise, your risk is high.

Where can you go to find out more information?

GDPR:

Agriculture:

Photographers:

GIS (Mapping and Survey):

GIS and cloud data services:

 

Image credit: Shutterstock and Skylogic Research

Five Biggest Commercial Drone Trends of 2017 and the Challenges Ahead

Last year at this time, I reflected back on the news and trends of the commercial drone markets of 2016 and wrote about the mixed state of affairs ahead for 2017. Throughout the year, I offered my perspective on how the drone industry was still motivated by hype and how assessing forward momentum required hard data on the performance of the various sectors of the industry. To that end, we did research over the summer that surveyed 2,600 respondents on drone purchases, service providers, business users, and software services. In September, we published the data in 2017 Drone Market Sector Report 2017.

In this post, I’ll use that data to illustrate the major trends of the past year and describe what I think are the major challenges ahead for the drone industry.

Listen to this companion Drone Radio Show podcast here for the complete assessment.

Trend 1—Growth

By all measures, the drone industry in 2017 was marked by significant growth – growth in aircraft sales, software licenses, the number of service businesses entering the market, and the number of industrial businesses setting up commercial operations.

Here are a few statistics:

  • We project U.S. sales in 2017 to be about 3.3M units, which is 36% above 2016 figures. That’s all drones, all sizes. It’s about 1.3M units for the >250gram category.
  • As of October 31st, there were about 837,000 hobbyist users and 107,000 non-hobbyist drones registered with the Federal Aviation Administration (FAA).
  • As of December 1st, there were about 66,000 Part 107 FAA Pilots.

This represents a big change in the commercial market since Part 107 regulations supplanted Section 333 as the means for commercial operations in the U.S. What this and our survey data tells us is the number of service providers currently outpaces demand, and as a result, service prices are coming down significantly.

Trend 2—Consumerization

We said in our report that more consumer drones are being used for commercial work than ever before. For example, our data shows that more than two-thirds (68%) of all drones weighing over 250 grams are purchased for professional purposes—either governmental or business.

Why is this significant? Because the impact of consumer-originated technology on the enterprise is something that can’t be ignored. Enterprises want to take advantage of powerful, yet easy-to-use products (like DJI’s popular consumer models), and put them to work on the job. What this means for operators or businesses is that a shared core technology benefits all users and enables companies to scale the best experiences to everyone. Enterprise customers get the added simplicity and usability of the consumer product that has been built to meet the demands of thousands of customers around the world.  The average individual pilot gets to benefit from the reliability and scalability inherent in the product and demanded by enterprise users.

Trend 3—The DJI effect

Our data shows DJI is the clear market leader in drone aircraft sales and almost every software category. For example, DJI is the dominant brand for drone aircraft purchases, with a 72% global market share across all price points and an even higher share (87%) of the core $1,000–$1,999 price segment. Additionally, in the three categories of software we evaluated, DJI is the market-share leader in two: flight logging and operations, and automated mission planning.

This is significant because by building on top of its existing technology platform, DJI has fast-tracked development and has benefited from economies of scale. By migrating a successful technology stack and feature set upmarket, DJI never has to reinvent the wheel—it just needs to improve upon the original design and save engineering cycles for real innovation.

The upshot is that to stay relevant, all the other major vendors have had to partner with DJI (see Trend 5 Partnerships, below). DJI’s sales success has taken market share from others and has led to layoffs at 3DR, Autel, GoPro, Parrot, and Yuneec. However, fears about data security remain. And this has some speculating about whether DJI can sustain its leadership role in the future.

Trend 4—Investments

According to CB Insights, investments shifted in 2017 from aircraft hardware to software. In 2016, there were 106 deals totaling $542M. Most of these were for hardware. In 2017, VCs focused on software, end-to-end solutions, and counter-drone technology. CB Insights projects the year will end with 110 deals totaling $494M. The most significant investment this past year was 3D Robotics’ $53M Series D round. It saw them pivot from hardware to software services.

Why is this significant?  Because it shows the industry is still maturing. Seed and Series A rounds represented 60% of all deals in 2017; whereas early-stage share peaked in 2015 at 73% of deals. Additionally, some of the most well-funded drone companies are targeting enterprise and industrial inspection.

What this means for operators or businesses is greater affordability. Software advances, computer chip manufacturing techniques, and economies of scale will continue to drive down the cost of drone platforms and sensors and solutions.

Trend 5—Partnerships

This year we saw a change from synergistic merger and acquisitions to the creation of end-to-end solutions via partnerships. For example, look at how DJI’s enterprise partnerships have grown. Consider their AirWorks conference. What drone major vendor wasn’t there? The list included DroneDeploy, Measure, PrecisionHawk, Skycatch, and Sentera, to name a few.

This past year we also saw an uptick in regulators and industry stakeholder partnerships. For example, the Drone Advisory Committee was created to provide the FAA with advice on unmanned aircraft integration from a diverse group of stakeholders. Major commercial participants include Intel, DJI, Amazon, Google X, and Facebook, as well the Aircraft Owners and Pilots Association.

Consider also the FAA’s new UAS Integration Pilot Program. Here, government entities are partnering with private-sector companies, such as unmanned aircraft systems (UAS) operators and manufacturers, to submit proposals to the FAA to fly more advanced operations in their communities, including flying beyond line of sight and over people. This is significant because it’s clear that regulators want to include industry when creating policies.

However, there is some good news / bad news with this.

The good news is greater flexibility. With vendor partnerships, drones will be able to perform more types of data gathering in a shorter timeframe and with more precision than many other options. So, more aircraft, sensor, and software integration.

The bad news is operators and businesses have regulatory uncertainty. We advise our clients to plan for some uncertainty as technology, the public, and bureaucracy find common ground on operations for beyond visual line of sight and over people.

Challenges ahead

Here’s my list of the major challenges facing the drone industry in 2018:

  1. Regulations: We may see more regulatory red tape—e.g., a patchwork quilt of rules as the FAA’s UAS Integration Pilot Program begins to make policy.
  2. Public sentiment: Basic public concerns still exist about drone safety, security, privacy, and their public nuisance. My question is: How can we overcome this?
  3. Business value: We’ve yet to see credible ROI that hits the executive scorecard. The key question is: What monetary benefit do drones and information gleaned from drones provide shareholder value?
  4. Information accuracy: Up to now, drone vendors have been focused on the accuracy of image capture and the rigor of the drone system. For better business value, they need to focus on the accuracy of the data processing and the rigor of data analysis.
  5. IT data governance: This is especially the case for drone inspections where a single drone could collect 50 to 100 gigabytes of data. Managing these large data sets starts to become one of the things that have to be worked out.
  6. Automation: A lot of software automation will come, including artificial intelligence (AI) or algorithms that minimize the amount of human effort to distill all that information and get to some actionable inference. But large scale industrial use of AI is young and it requires manual intervention to distinguish the difference between near-similar objects.
  7. Endurance: We’re still on the quest for efficiencies like better power sources or mixes.
  8. Widespread business adoption: Business and industry adoption is growing, but it’s mixed because of factors such as business risk aversion, concerns over invasion of privacy, and a reluctance by many companies to share too much information about successes.

That’s it for now.

Listen to the companion podcast here http://bit.ly/2CXe6uK.

Look for a follow-up piece on our specific predictions for 2018, which will include investments, technology improvements, ecosystem partnerships, and software innovations.

If you have questions about what’s in the report I mention or would like to comment, write me at colin@droneanalyst.com.

 

Image credit: Shutterstock

Five Valuable Business Lessons about Drone Inspections

We just released a new research report titled “Five Valuable Business Lessons About Drones in Asset and Infrastructure Inspection” This is the fourth in a series of white papers intended to share lessons learned in specific industries and how to maximize the value drones can deliver in those industries. This year, we are building on the analysis we did for the 2016 “Truth About” papers by incorporating real-world experience gained from businesses and drone pilots operating under the Federal Aviation Administration’s Small Unmanned Aircraft Regulations (aka FAA Part 107).

In the report, which co-authored by Chris Korody, we demonstrate what drone operators servicing a wide variety of industries have learned about what works and what doesn’t. We explore both the benefits and limitations of drone inspection projects and offer practical advice to would-be adopters. We answer questions like: What have companies learned about creating their own internal drone operation groups? And where do we go or what can we expect from here?

Here is an excerpt:

“While both media and investors have primarily focused on opportunities for using drones in the construction and agriculture industries, inspection applications have fostered innovation together with significant returns on investment. The reasons begin with the “four Ds”—a term coined by GE Ventures to describe the unique ability of drones to meet the needs of their field services customers. The four D’s describe any activity that’s tailor-made to be performed by a drone, and are:

  • Dull
  • Dirty
  • Dangerous
  • Distant

In a 2014 interview, Sue Siegel, the CEO of GE Ventures, added a fifth “D”—for data—saying simply, “Imagine that if you’re doing it faster, you might be able to do it more often. And more data typically will give you better data.”

The four Ds+1 combination is one of the most compelling arguments for drone adoption in companies where uptime is money, crews are expensive, and structures and facilities are often expected to last 50 to 100 years.

The other compelling argument is cost reduction. McKinsey Consulting’s recent white paper “Preserving the downturn’s upsidehighlights how the oil and gas industry reduced costs by 29% in response to falling oil prices. They show that 40% to 50% of the savings came from eliminating the demand for a variety of services, including manned aviation support. The innovators figured out how to put drones to work.”

The report goes on to discuss how drones and the data from drones offer huge advantages in the oil & gas, telecommunications, and utility industries. It also provides insights from Dexter Lewis, PE, senior engineer in the research and development group at Southern Company (NYSE: SO) which brings electricity and gas to 9 million customers.

You can get the free report here.

If you have questions about what’s in the report or would like to comment on it after reading it, write me at colin@droneanalyst.com.

 

Image credit: Shutterstock

6 Tips for Avoiding Phony Dronie Consultants and Attorneys

How to steer clear of the wrong hire for your drone business

By Jonathan Rupprecht, Esq. for Drone Analyst®

It seems everyone is running toward the “drone” rush to make a quick buck. The way I see it is many of the consultants and attorneys assisting businesses with drone work are in reality experimenting on their clients. Many are unqualified in aviation but skilled in selling. Others have very questionable pasts that will not be mentioned in the marketing material.

Why is the drone industry attracting unqualified individuals? Some reasons:

  • newness of the industry
  • lack of organizations willing to do gate keeping at conferences
  • lack of reporters willing or knowledgeable enough to expose problems
  • few in the industry knowledgeable enough to understand the errors or seriousness of the situations
  • unwillingness to expose others because they themselves are somehow implicated

In light of these factors, you might need some help figuring out who NOT to hire. I outline six below.

1 – Google them like crazy.

Google their name. Google their company. Google everything you can about them as this will generally bring up things that might not have been mentioned in their marketing material.  You want to break down your research into two phases:

  • research articles or mentions for the period of time they started their business and going forward and
  • research articles or mentions for the period of time before they started their drone business.

Figure out when they started their company by asking them, looking up the filing date for their company name in their state’s department of corporations or looking up the whois website domain registration date. (While on that site, also write down the mailing address and name listed.)  Use that date and plug it into Google and then hit search. Then click search tools. Click anytime. Click Custom range. Now run a phase 1 and then a phase 2 search.

You additionally might want to throw in extra words to the Google search just to see if anything hits. For example, “Bob Smith liar fraud theft steal scam criminal crime arrest scandal expose court charged lawsuit.” I’ve been noticing that in phase two, all sorts of goodies pop up. They come from other industries where they have made a name for themselves and are moving into the drone industry where they don’t have a bad reputation.

2 – Find out if they had to hire someone in aviation

This is a big giveaway that they are new to the area. Following up on point one, some are from other industries and had to hire someone with an aviation background to make up for their lack of skills in the area.

In the phase 2 search, you might have noticed a lot of hits where they indicated they were in another industry. You need to figure out WHY they are no longer in that industry and now in the drone industry.

3 – Figure out their real name

I have noticed that some individuals intentionally change their first name. You might want to try variations of their first name. Another way to figure out their true name is to look up their government documents on their state’s department of corporations website. This is likely their true name. Sometimes they might have put down their true name and address on their whois domain registry. Go back and do phase 1 and 2 research with the new name.

4 – Ask around. Call their competitors and ask if they know anything

This can yield good results, and so can asking your friends what they know. There is a lot of word-of-mouth-only knowledge floating around in this industry. The reason is that some have personal knowledge but don’t want the info to go public because it will hurt them (maybe because they have a business deal with them, they didn’t do proper vetting before recommending their clients to them, etc.).

You can make these calls when you are searching for a consultant or attorney. While talking to Consultant B, you can say that you talked to Consultant A while shopping around.  See if Consultant B says anything. You have to be careful when doing this because the vibes you give off could cause you problems. If someone was asking me what I thought about another attorney, I would be thinking they are either wasting my time because they want to maybe hire the other attorney or they are a problem client and I don’t want them.

5 – Check with the state bar – especially if they claim to be an attorney

Determine how much “legal work” they are doing. Many consultants do everything under the sun, including legal work. Basically, the practice of law is applying the law to the facts at hand. The big problem with this is many consultants are committing the unlicensed practice of law, which is a crime in most states, because they are not attorneys but are applying the law to their client’s facts. They advise you on the law while they themselves break it.

It is always interesting that I have mentioned this and immediately get blowback from the consultants who claim they don’t think it is the unlicensed practice of law. Great! I have a wonderful tie breaker. Call your state bar—or better yet—their state bar, and ask them if what they are doing is the unlicensed practice of law. They aren’t doing anything wrong, right? I’m sure they won’t mind.

Most states have unlicensed practice of law committees and hotlines just for this. (Remember that this is a crime and states take it seriously.) A simple Google search for that phone number will return results. Call it and ask some questions like, “I’m a concerned consumer and I want to know if _____ is committing the unlicensed practice of law by offering a particular service they list on their website.”  This way you can get an unbiased answer on whether they are committing this crime.

Checking the state bar will sometimes show that some attorneys have been disciplined by their state bar. Sometimes it will show worse—that they are not an attorney, or they have been disbarred. I know of one situation that was relayed to me where a person was claiming to be an attorney at a drone conference, but was NOT. Let that sink in. Their attendance at a drone conference is meaningless. Conference organizers are not policemen. Furthermore, just because a website shows their advertisement doesn’t mean anything, either.

Another benefit to licensed attorneys is they have to pass background checks and maintain ethical standards according to their state bar rules; however, consultants do not have any gatekeepers doing background checks or third-party oversight to ensure ethical or legal compliance.

6 – Ask if they have insurance.

Insurance is there to protect you if they make a mistake. Some attorneys have malpractice insurance, but I have no clue how many consultants do. Checking for insurance is great way to weed out the professionals from the posers and dabblers while also making sure you are protected. See if you can get a certificate of insurance from them or call their insurance broker or insurance provider and confirm that they are insured.

Bottom line:

In conclusion, no industry will look out for you, and this applies to drones, too. You need to take care of yourself. And it’s wise to advise your friends to do their due diligence when hiring consultants or attorneys. I suggest that right after you read this, you do research on everyone you are presently in contact with or working with and send this article around to spread awareness.

Image credit – pixabay

Can PrecisionHawk Tame Drone Traffic in the Sky?

PrecisionHawk’s LATAS delivers an innovative air traffic control system for drones, but it’s one of several that depends on the not-so-imminent success of all aircraft using ADS-B.

THE FACTS:

This past week (August 29, 2016), the FAA granted PrecisionHawk a waiver from Part 107.31’s visual line of sight (VLOS) limitations, which gives them the ability to continue their research and to train those who want to offer these extended visual line of sight (EVLOS) flights as a service. The waiver was granted based on over a year’s worth of testing under the FAA Pathfinder program. Under Pathfinder Phase 1 research, PrecisionHawk determined that the extension in range offered by EVLOS operations supports a significant expansion in the area that each drone flight, possibly up to 12 times what is achievable within line of sight.

To do this, PrecisionHawk uses their airspace display technology called LATAS, which stands for Low-Altitude Tracking and Avoidance System. LATAS is an onboard system that connects airspace management technologies, such as sense and avoid, geo-fencing, and aircraft tracking, into a service package for commercial and recreational drone operators as well as regulators and air traffic controllers. Developed to be plug and play or integrated into a drone’s circuit during manufacturing, LATAS is small (3-in by 2-in by 1-in), light (Less than 100 grams) and operational on network speeds as low as 2G. While it is not required to receive an EVLOS waiver, LATAS plays a key role in PrecisionHawk’s own operations. The LATAS web application is a free tool available on www.flylatas.com  and is intended to provide an extra layer of safety and protection operators flying under Part 107.

WHAT’S COOL AND WHAT’S NOT:

As I’ve have noted in Market Impact of the FAA Small Drone Rule, the inability to fly EVLOS restricts some high-margin operations. This new ability allows a drone to improve its economic efficiency and cover acreage which is needed for a large percentage of agriculture fields, mining operations, and large infrastructure sites.

One problem we see with this type of system is it may not be reliable in remote areas.  Even though cell network companies are working to extend their networks by partnering with rural carriers, everyone who uses cell phones knows about gaps in service that happen unexpectedly. These gaps could have much more serious consequences than a dropped call if they happen to a small drone.

Additionally, we see integration with the Harris ADS-B (Automatic Dependent Surveillance – Broadcast) network data as a good thing, but, as we have written about in our in-depth research study ADS-B and Its Use for Small Drone Traffic Management, the FAA’s NextGen mandate for ADS-B has inherent limitations. For one, use of ADS-B “Out” (the signal that says “here I am”) is not required in Class G airspace where most small drones fly, and two, the FAA did not mandate ADS-B “In” (the ability to see other traffic). These together are killers for its effectiveness. Aircraft (including drones) can push all the “Out” signals they want, but if other aircraft can’t receive or “see” them, then they don’t know where your aircraft is and no avionics system can overcome that.

THE COMPETITION:

PrecisionHawk is not alone in their endeavor, and we’re beginning to see others create ADS-B based solutions for drones.

For example in July 2016, DJI and uAvionix announced the release of an ADS-B collision avoidance developer kit. The uAvionix “Ping” sensors are among the smallest and lightest ADS-B-based hardware available for unmanned aircraft. Their Ping ADS-B receiver allows a drone to “see” surrounding aircraft and initiate collision avoidance maneuvers based on that information.

Sagetech has created a family of transponders ideal for the size, weight, and power requirements of unmanned systems applications. Their XP transponder data can be output via RS-232 serial communications to a wide range of compatible flight computers.

Other drone traffic management paradigms have been proposed – for example Google’s SkyBender and Amazon’s “Good, Better, Best”.  I could go on, but you get the point. The pot is beginning to boil.

BOTTOM LINE:

The current FAA plan emphasizes using small UAS in areas outside airport locations which should be geo-fenced to avoid drones interfering with large vehicle landing and take-off activities. But for all these drone traffic management plans, ADS-B technology (or ADS-B-like signal integration) is a key element for tracking and reporting a drone’s position.

NASA knows that someday unmanned vehicles will share airspace at low altitudes with general aviation equipment such as airplanes, helicopters, and gliders. That is why it created the Unmanned Aircraft System (UAS) Traffic Management (UTM) initiative.  Agreeing on a safe and efficient system that will manage both manned and unmanned traffic is a vital concern for the FAA, NASA, private companies, and academic users.

But given the inherent limitations of ADS-B, will any of these systems work as intended?

Image credit: PrecisionHawk

This post first appeared on DRONELIFE.com

 

Will the U.S.’s New Drone Pilot Certification Accelerate Commercial Growth?

FAA testing and certification for small UAS remote pilot certificates begins in earnest this month, but does that mean the commercial drone industry will see rapid growth?

THE FACTS:

Beginning August 29, 2016, the new small UAS Rule for commercial drone operations in the U.S. takes effect.  One very important change is that operators will now have to obtain a remote pilot certificate with a small UAS rating. Under the new rule—also known as Part 107—the person actually flying the drone must have this certificate, or be directly supervised by someone who has one. In advance, the FAA has published a variety of documents to assist businesses seeking to be compliant with the new regulation. You can find an article with references to those documents here.

WHAT’S COOL AND WHAT’S NOT:

The new rule (and the new certification process) marks a complete shift in the way the FAA permits commercial drone operations in the National Airspace System (NAS). Under the old approach, known as Section 333 Exemption, companies or individuals could apply for an airworthiness certificate exemption and then the FAA would grant them on a case-by-case basis. Commercial operations rules also required the pilot-in-command of drone operations to have at least a sport pilot’s license.  At last count (8/19/2016), 5,542 petitions had been granted. The process was intended to provide safe and legal entry into the NAS, thus discouraging illegal operations and improving safety. It was anticipated that this activity would result in significant economic benefits.

The point here is Section 333s were granted to the business operators of the aircraft–not the pilots themselves. The new rule is pretty much the opposite.  It is a pilot-based certification that switches the responsibility from a business entity to a person.

THE RUB:

In March 2016, the FAA released its annual Aerospace Forecast Report Fiscal Years 2016 to 2036, which cites potential sales of more than 600,000 commercial small UAS requiring registration, growing to 2.7 million by 2020. This forecast was developed in conjunction with the Teal Group Corporation. They segment the commercial market into industrial inspection, real estate / aerial photography, agriculture, insurance, and government with industrial inspection taking the bulk of the market at 42%.

But as I have written in Diversity and Hype in Commercial Drone Market Forecasts, Teal’s forecast is inflated and out of touch–as are a lot of others. We currently track 41 different forecasts. The trouble is none take into account existing market trends or the economic force that a lower barrier to entry will have on pricing of drone-based business services. To put this disconnect into perspective, one only need look at other related forecasts.  For example, the revenue of photography services in United States in 2020 is expected to be about $6.7 billion. Portrait studios account for about 70% of industry revenue; commercial photography for about 30% of that. That means commercial photography is only a $2 billion market.  How we get from there to PwC’s prediction that $127.3 billion of current business services and labor will be replaced by drone-powered solutions is baffling to say the least.

BOTTOM LINE:

Our survey data going back to 2014 and even our most recent report tells us that the film/photo/video market is–and will probably always be–the largest commercial drone market segment. Neither Teal nor PwC forecasts account for the full potential of drones in that segment, nor do they incorporate any first-hand knowledge from those who’ve already operate in that segment.  In contrast, I have heard from scores of photographers and videographers who operate their small UAS for business without regard to legality. Most never applied for a Section 333 because of the stringent pilot license requirement. Most have been waiting for this day to arrive so they can get certified and “come out of the shadows” to operate legitimately. Most will never do industrial inspections, or agriculture, or any of the other business services being predicted for commercial drones.

This article says 3,351 people have already signed up with the FAA to have their aviation knowledge tested on the first day possible. I predict most of these are either film/photo/video operators who were granted Section 333s and never had a pilot available to them or those operating in the shadows. I’m just not convinced that means big money for the industry yet. We’ll see what happens, but one thing is for sure—we’ll see a lot of very small businesses (read: photographers and videographers) now openly advertise their aerial services.

Image credit: Shutterstock

This post first appeared on DRONELIFE.com