{"id":1317,"date":"2015-02-16T20:00:49","date_gmt":"2015-02-17T04:00:49","guid":{"rendered":"http:\/\/droneanalyst.com\/?p=1317"},"modified":"2017-01-04T10:26:33","modified_gmt":"2017-01-04T18:26:33","slug":"faa-drone-rules-market-winners-and-losers","status":"publish","type":"post","link":"https:\/\/droneanalyst.com\/2015\/02\/16\/faa-drone-rules-market-winners-and-losers\/'","title":{"rendered":"FAA Proposed Drone Rules: Market Opportunity Winners and Losers"},"content":{"rendered":"

On February 15, 2015, the commercial drone industry breathed a collective sigh of relief. The Federal Aviation Administration\u2019s proposed new rules<\/a> for small unmanned aircraft systems seemed, at first blush, somewhat practical. \u00a0The FAA regulations will eventually allow commercial operations of drones that weigh under 55 pounds in U.S. airspace, without requiring operators to acquire a pilot\u2019s license. You can read the full 195 pages of proposed rules here<\/a> (hereafter sUAS notice of proposed rulemaking, or NPRM) and some analysis about them here<\/a>, here<\/a>, and here<\/a>.<\/p>\n

In this post, I\u2019ll focus on what I think are the immediate economic winners and losers. \u00a0My analysis is concentrated on the business impact and market opportunities that the proposed rules have for drones manufacturers, distributors, service providers, and investors.<\/p>\n

What do investors need to know?<\/strong><\/h3>\n

According to CB Insights data<\/a>, 2014 investments in the budding drone industry topped $108M across 29 deals. Year-over-year funding increased 104% as venture firms jumped into the drone space with sizable bets. Still, over the past couple of years, I\u2019ve heard VCs and potential investors discussing the FAA bottleneck and questioning whether this was the right time to invest.\u00a0 Regulatory uncertainty has kept many on the sidelines. But this new clarity should help investors, including those interested in investing in operational and data \/ information services.<\/p>\n

Clarity comes in not only knowing what the rules will look like, but also in the FAA\u2019s commitment to no longer regulate UAS like they do manned aircraft — and in no uncertain terms the U.S. Department of Transportation\u2019s (DOT) understanding of the macro-economic impact of commercial sUAS. In a document<\/a> captioned Notice of Proposed Rulemaking Regulatory Evaluation, Small Unmanned Aircraft Systems<\/em>, the author states:<\/p>\n

“This proposed rule would create an enabling business environment which would encourage the growth of private sector activity in the manufacturing and operating of small UAS. Therefore, the major benefit of this proposed rule is that it would enable new non-recreational aviation activities for small UAS in the NAS where such operations are currently not permitted without an FAA-issued exemption. The private benefits would exceed the private costs if there is only one UAS and that UAS operation earns a profit.”<\/p><\/blockquote>\n

As noted here<\/a>, it\u2019s possible this is a leaked early draft that has since been revised or is otherwise incomplete or inaccurate. [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][Update: see comment below with link to actual doc]<\/em> Still, the DOT evaluation explores in depth four potential markets: aerial photography, precision agriculture, search and rescue\/law enforcement, and bridge inspection. These fall more in line with what I believe are the proper commercial market segments:<\/p>\n