Will Regulation Kill Drones?

Danielle Beurteaux

Earlier this month, California governor Jerry Brown vetoed a bill that would have place drones in flightrestrictions on drone usage. The bill, introduced (partially) as a privacy measure, restricted drone flying private property to above 350 feet, while keeping out of official airspace.

Drone regulation is a contentious issue. Supporting a the bill would “stifle innovation and kill jobs,” says the drone industry. (Which is like the Old Faithful of economic warning statements, but anyway).

But it’s not regulation that often kills investment. Unregulated environments are difficult areas in which to invest—too much gray area and thus elevated risk.

Here’s an example: cryptocurrencies, the most famous of which is bitcoin. Unregulated and not insured, they’ve yet to become an accepted currency by most buyers or sellers. A government agency recently classified bitcoin as a commodity, effectively labeling bitcoin as property, not currency.

The FAA’s drone regulations won’t be finished until sometime mid-to-late-2016. Take it from the American Bar Association. The lack of regulation is a problem:

“…the legal and regulatory challenges for businesses that want to utilize drones will likely be endless as well. In the meantime, companies will have to navigate a nebulous array of proposed federal rules and local or state guidance.”

Sounds like fun.

If the fuzzy legal area isn’t enough, insurance might push commercial drone use off the Cliffs of Insanity. According to this piece from Fortune.com, trepidation about potential liabilities and the lack of cohesive regulation is leaving some insurance companies trying to figure out how to write policies that cover drone operations.

What’s happening is that states are aggressively passing their own drone laws, each with their own delightful idiosyncrasies. But some drone supporters, according to the Pew Trust article, think the states are “overstepping their authority and hamstringing an industry ripe for growth.” Think of the equivalent for private and commercial aircraft—it would be practically impossible to take a flight across country.

Oregon, ahead of the curve on this one, passed legislation in 2013 that covers a whole host of drone activities, including making it illegal for drones to fly under 400 feet over private property, while also exempting drone hobbyists and taking into account Oregon’s drone manufacturing industry.

But none of this has stopped venture capitalists from investing. According Bloomberg Business, VCs have invested $210 million in drone technology companies. (For some context, one report put the total of VC deals in 2014 at just under $50 billion.) Intel has invested $60 million in a drone manufacturer, and drone companies are investing in drone companies.

Drone enthusiasts might not like it, but regulations are coming eventually. For now, you’ll have to check at the state level to find out if you’ll be allowed to hunt with a drone (not in Maine), snap photos of fireworks (a no-no in Tennessee), or take an image of private property or individual without consent (s’up, Florida).

Want more on how innovation is changing the business world? See Thinkers: Don’t Kill Your Chances To Make It In The Digital Economy.




Danielle Beurteaux

About Danielle Beurteaux

Danielle Beurteaux is a New York–based writer who covers business, technology, and philanthropy. Her work has appeared in The New York Times and on Popular Mechanics, CNN, and Institutional Investor's Alpha, among other outlets.


Regulation , Drones