Advice from an U.S. FAA official, a legal expert and the first real estate pro to secure a waiver to use an unmanned aerial vehicle in his business can help you determine your course
Drones are finding their places legally in a variety of settings across industries
Communications companies are using them to provide Wi-Fi signals to remote communities. High-end resorts offer unmanned aircraft that follow skiers and videotape them as they fly down the slopes. Some companies even offer drone-powered child-tracking systems for worried moms and dads. “It really gives a whole new meaning to the term ‘helicopter parent,’” joked Jim Williams, manager of the FAA’s Unmanned Aerial Systems Integration Office. Williams was among experts at the REALTORS® Legislative Meetings & Trade Expo this month, who shared their knowledge about the prospects for safely aligning drone technology and the real estate industry.
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THE DRONES REPORT: Market Forecasts, Regulatory Barriers, Top Vendors, And Leading Commercial Applications
The fast-growing global drone industry has not sat back waiting for government policy to be hammered out before pouring investment and effort into opening up this all-new hardware and computing market.
A growing ecosystem of drone software and hardware vendors is already catering to a long list of clients in agriculture, land management, energy, and construction. Many of the vendors are smallish private companies and startups — although large defense-focused companies and industrial conglomerates are beginning to invest in drone technology, too.
In the most recent report from BI Intelligence, we take a deep dive into the various levels of the growing global industry for commercial drones, or unmanned aerial vehicles (UAVs). This 32-page report provides forecasts for the business opportunity in commercial drone technology, looks at advances and persistent barriers, highlights the top business-to-business markets in terms of applications and end users, and provides an exclusive list of dozens of notable companies already active in the space. Finally, it digs into the current state of US regulation of commercial drones, recently upended by the issuing of the Federal Aviation Administration's draft rules for commercial drone flights. Few people know that many companies are already authorized to fly small drones commercially under a US government "exemption" program.
Here are some of the main takeaways from the report:
- The global commercial drone market will take shape around applications in a handful of industries: agriculture, energy, utilities, mining, construction, real estate, news media, and film production.
- Most growth in the drone industry is on the commercial/civilian side, as the shift away from the military market gains momentum. The market for commercial/civilian drones will grow at a compound annual growth rate (CAGR) of 19% between 2015 and 2020, compared with 5% growth on the military side.
- E-commerce and package delivery will not be an early focus of the drone industry.
- Legacy drone manufacturers focused mostly on military clients do not have a natural advantage in the fast-evolving civilian drone market.
- Proposed US regulation would effectively end the ban on commercial drone flights and would allow low-altitude flights of small drones within view of a ground-based pilot. The rules are unlikely to be finalized before early 2017. Some believe it will happen earlier. But we believe it most likely that widespread though heavily restricted commercial UAV flights will become routine sometime that year.
- Technology barriers are at once a roadblock and a huge business opportunity.
- Many of the notable early commercial UAV manufacturers are emerging outside of the US market: These include Switzerland-based senseFly (owned by France-based Parrot), Canadian firm Aeryon, publicly traded Swedish firm CybAero, Shenzhen, China-based DJI, and Korea-based Gryphon.
- The commercial-drone industry is still young but has begun to see some consolidation and major investments from large industrial conglomerates, chip companies, and defense contractors.
Also in attendance at the forum on drone use was the first REALTOR® to apply for and receive a Section 333 waiver, which allows him to use an unmanned aerial vehicle (UAV) for commercial reasons under certain restrictions.
Doug Trudeau, associate broker at Tierra Antigua Realty LLC in Tucson, Ariz., said when the FAA released preliminary guidelines in June 2014 restricting the commercial use of drones, he grounded his quadcopter, which he’d outfitted with a GoPro camera, and began looking into what it might take to get it off the ground legally. He eventually became the 13th person to obtain an exemption from the FAA to use drone technology in his business. As of May 15, the FAA had granted more than 300 exemptions.
A third panel member was associate counsel for the National Association of REALTORS®, Lesley Walker. Though the legal landscape will remain somewhat cloudy until the FAA issues its final rulemaking on drone use in commercial contexts (expected in 2016 or 2017), the panel discussion offered some guidance to help you decide whether pursuing an exemption makes sense for your business.
Safety Is Priority No.1
Securing an FAA exemption requires operators to obtain a “certificate of authorization” that addresses height restrictions and the need to steer clear of airports, among other procedures. But even operating within those restrictions can carry significant risk, said the panelists.
In their eagerness to use drones, Trudeau said his colleagues often overlook the potential dangers inherent in the technology. The batteries currently used in many unmanned aerial vehicles can be “highly explosive” upon impact, so a crash in a remote forest could turn into a catastrophic wildfire. He said the potential damage in a ground collision in a populated area or with a passenger-laden helicopter should give any drone operator reason to pause.
Don’t Just Jump in Because It’s Cool
Trudeau isn’t new to video marketing; he’s been actively using the medium to highlight features of high-end properties for at least five years. He was excited about the prospect of using a drone for aerial shots because it was a natural extension of his existing marketing strategy.
“I pursued it not to start something new, but to improve on what I was already doing,” he said.
“It only takes one freak accident,” Trudeau said. “That 2.86-pound device can cause devastation if not handled the right way.”
One reason to pause before introducing drones into your business is the expense. The equipment cost can easily top a thousand dollars. But also, under current rules you’ll need to hire a licensed pilot to operate the drone’s flight for you if you don’t have your own license. Trudeau said he pays a pilot $100 an hour to assist; he added it was much cheaper than the estimated $10,000 he might have spent to acquire his own private pilot’s license. Williams noted that the agency is looking into creating a modified license for drone operators, but that this step will take time to develop.
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The technology may also cost users more than they expect because of liability issues. When Trudeau first looked into purchasing insurance, his agent warned him that the $500,000 policies he was looking at might not be enough to cover potential damage caused by a drone, suggesting instead a $1 million policy.
Make Something Worth Watching
Trudeau cautioned against using too much bird’s-eye-view video and imagery on listings.
“Don’t do a flyover looking at the roof,” he said, noting that such overhead shots rarely add anything useful. Also, he advises keeping the videos under two minutes in length. His video tours are usually around a minute and a half, and “of that 90 seconds, only 10 to 20 seconds will be from the air.”
He also notes that reaching great heights with drone-assisted video doesn’t necessarily offer value to the consumer.
“There’s a sweet spot in terms of elevation,” Trudeau said. Above about 20–30 feet, the surrounding environment tends to become more pronounced than the actual property you’re trying to feature. “At 50 feet, that enhancement becomes prominent, and you lose something.”
Trudeau said he was expecting the process to secure an exemption would take 120 days, but he ended up needing 177. He experienced unexpected delays, such as having to prove his China-made quadcopter hadn’t been registered with China’s equivalent of the FAA, in which case it would not be permitted. But he noted that everyone involved was new to the process when he started out, and that subsequent applications should be smoother.
“What’s taken me longer will take you less time,” he said. “The people who work for the FAA are great, hard-working people. The problem is they are understaffed and underfunded.”
At the forum, Walker added that NAR plans to host a webinar on June 23 to help members who want to learn more about the exemption. Stay tuned for more details.
Know Who’s in Charge
Walker said that U.S. NAR (USA National Association of REALTORS®) gets calls from members who wish to report improper use of drone technology, but that “those concerns are to be directed toward the FAA.”
“There’s some confusion among NAR membership. It’s not the association’s role to adjudicate that. The association’s place is to enforce the Code of Ethics.”
Williams said his agency welcomes public support in their investigative duties.
“The FAA encourages everyone in the community to report to us if they see anyone operating unsafely,” he said. He added that “most people are not doing this maliciously,” but may be unaware of the rules and safety procedures.
“Liability is a very different question,” he said. “If something actually happens, it’s not the FAA you have to worry about.”