March 10, 2016

Creating an Environment of Permissionless Innovation for Unmanned Aircraft

Testimony before the Senate Committee on Small Business and Entrepreneurship
Key materials

Mr. Chairman and members of the committee, thank you for inviting me here today to comment on commercial applications of unmanned aircraft for small businesses. My name is Eli Dourado and I am a research fellow at the Mercatus Center at George Mason University, where I study the regulation of emerging technologies and direct Mercatus’s Technology Policy Program.

Permissionless Innovation in Airspace

We are at an exciting point in the history of unmanned aircraft. I think of drones as occupying a similar position now as the Internet did in the late 1980s. As members of this committee know, until 1989, use of the Internet for commercial purposes was generally prohibited. The removal of that prohibition resulted in an explosion of innovation, much of it completely unanticipated, that has persisted until today.

As with the Internet in 1989, commercial use of drones is highly restricted, but will soon become generally available. And as with the Internet in 1989, we have only the vaguest idea of how drones will be used in daily life in the future.

That vague picture does include some applications that we already understand: using drones for photography and inspecting equipment, for evaluating the health of crops, for transporting goods with a high value-to-weight ratio. The improvements in logistics generated by unmanned aircraft will allow new business models, doing for local and small businesses what the shipping container and services like UPS and FedEx did for global trade.

But I want to stress that what are likely to be the most important applications of unmanned aerial systems remain unknown, just as the most important Internet applications were unknown when the Internet first became commercialized.

We must, to the maximum extent possible, treat airspace with a very light regulatory touch. A regime of “permissionless innovation,” in which there is a default position of “innovation allowed,” will allow us to reap the greatest gains from unmanned systems. I urge every member of this committee to set aside the fearmongering that accompanies every new technology and embrace the possibilities for innovation and economic growth that commercial drones provide.

Commercial Drones Are Not Dangerous

To be sure, permissionless innovation is a much more controversial proposition for the physical world of commercial drones than for abstract information on the Internet. What if a drone collides with a passenger jet and takes down everybody on board?

Fortunately, the best evidence shows that commercial drones do not pose a serious risk to the airspace. To evaluate the danger that drones might pose to traditional aviation, my Mercatus colleague Sam Hammond and I examined 25 years’ worth of wildlife strike data from the FAA. This dataset provides an excellent lens through which to view the possible danger that drones create for other aircraft.

US national airspace is home to an estimated 10 billion birds, and the FAA has recorded over 160,000 wildlife strikes since 1990. Of those 160,000, only 12 strikes have resulted in human fatalities. And of those 12, only one incident involved a commercial flight—and that involved not a bird, but a pair of white-tailed deer loitering on a runway.

We estimate that a drone is likely to collide with other aircraft about once every 374,000 years of continuous operation. And using statistical analysis on the risk that birds of different weight pose to humans onboard aircraft, we estimate that a 2kg (4.4 pound) drone will cause an injury to a human passenger every 187 million years of operation. This is well within the realm of acceptable risk.

Proposed Drone Regulations Remain Unduly Restrictive

Given that drones pose little risk to the airspace, the FAA’s proposed drone regulations do not adequately protect the need for experimentation and innovation.

For example, in its proposed regulations, the FAA does not allow drones to carry external loads. This means that operators may be prohibited from delivering items that do not fit within the drone’s fuselage.

The FAA does not allow operators to exercise their see-and-avoid responsibilities through technological means, such as onboard cameras. This limits drone operations to the operator’s line of sight, which will needlessly cripple drones’ ability to operate over longer distances.

The FAA will not allow drones to operate outside the hours of sunrise and sunset. There are numerous possible drone applications that might benefit from nighttime operation. For example, consider the use of thermal imaging in a search-and-rescue operation. This would be more useful at night, when the ambient temperature is most different from human body temperature.

The FAA has said that no one will be allowed to transport property for compensation via drone without filing for an air carrier operating certificate. This may be prohibitively expensive for companies that wish to create small, local delivery services using drones.

The FAA has proposed a “one drone per operator” rule, essentially rejecting the idea that onboard computers might be used to pilot drones in general, with a human operator ready to intervene if any one of, say, a dozen drones encounters an unexpected situation. This rule drastically raises the cost for small businesses of operating multiple drones.

Finally, the FAA has so far prohibited drone operation over populated areas. Some of the most promising applications of drones, such as local delivery services that improve the logistical capabilities of small businesses, may only make sense in populated areas. This prohibition will simply rule out those business opportunities.

Conclusion

As this committee considers how best to prepare for a future in which drones create new opportunities for small business, I urge you to insist upon a light-touch regulatory environment for commercial drones. Thank you for your interest in this issue and for the opportunity to testify.