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Drone Economies: Emergence from the Military AAG 2015
- 1. Drone Economies: Emergence from the Military Jeremy W. Crampton Susan M. Roberts New Maps Collaboratory & Department of Geography University of Kentucky
- 2. Outline 1. Drones are “flying the military coop” • Economic impact • What kinds of drones are coming 2. A new zone of profit is being colonized by capital • We’re in a new “post-permissive” time • The market is not pre-existing, but is being created • New terrestrial geographies are being formed 3. Implications and discussion • Drones as general purpose technologies • Pervasive, improving, innovative • Accelerate economic production and consumption • Uneven benefits
- 3. Nature and size of the drone market • Beyond the military • Commercial, civil/public safety • Relatively unexamined DoD request for FY2016: ~$3 billion on “unmanned systems” • Cf. $~50 billion on aircraft, $26 billion on navy • $821 million on MQ-9 Reapers AUVSI Economic Report. Three years after deregulation: • 70,000 new jobs • $13.6 billion ($82 billion by 2025) 1. Drones are “flying the coop” from the military • Economic impact • What kinds of drones are coming
- 5. High Altitude, Long Endurance (HALE) • RQ-4/MQ-4 Global Hawk Medium Altitude, Long Endurance (MALE) • MQ-1 Predator • MQ-9 Reaper Tactical UAVs • RQ-7 Shadow • RQ-21A Blackjack Small and Micro UAVs • RQ-11 Raven • RQ-20 Puma Unmanned Combat Air Vehicles (UCAVs) • X-47B (in development, budget reduced)
- 7. 2. A new economic zone of profit is being colonized by capital • We’re in a new “post-permissive” time • The market is not pre-existing, but is being created • New terrestrial geographies are being formed
- 9. • “Ban first, regulate later” Apply and receive a “Certificate of Authorization” (COA) • Special Airworthiness Certificate— Experimental Category (SAC-EC) • Section 333 Exemption from SAC • 159 granted out of 1,096 received • 6 month process via Federal Register Law enforcement, companies, civil groups, universities (Sec. 333) • Below 400 feet AGL • Weigh no more than 55lbs • Remain in visual line of sight (VLOS) • Avoid major airports (< 5 miles away) Conform to model aircraft rules 2014 2015
- 10. Opposition by Airline Pilots Association (ALPA), National Agricultural Aviation Association (NAAA), with pushback by Small UAV Coalition. “[I]t is vitally important that the pressure to capitalize on the technology not lead to an incomplete safety analysis of the aircraft and operations.” –ALPA Congressional Testimony, March 24, 2015 Source: FAA and Center for the Study of the Drone Types of Section 333 Exemptions, as of April 6, 2015
- 12. The commercial market for drones is made universities the state (national, state, and local) regulatory agencies (most importantly the FAA); and).
- 13. “They’ll let somebody small, like an Aurora, or someone like that come forward and establish a foothold. It’s much easier for them to acquire than to develop that market”— Interview
- 14. Google acquisitions: 2007: ImageAmerica (undisclosed) 2013: Waze $966 million 2014: SkyBox $500 million (mini satellites) 2014: Titan Aerospace (undisclosed) (HALE drones) 2014: Ascenta $20 million (HALE)
- 16. Source: ARK Invest 2015 “At $1 per package, Amazon’s internal rate of return on its UAV investments should exceed 120%. Because delivery of a five pound package will cost $0.14, the margin will allow Amazon to break even after the first year.”
- 17. New terrestrial geographies Built upon older military-industrial complex But less concentrated, more contested: “There isn’t a Silicon Valley for unmanned aircraft” –Interview
- 19. 3. Implications and discussion • Drones as general purpose technologies • Pervasive, improving, innovative • Accelerate economic production and consumption • Uneven benefits Aerial filming, research, inspections for insurance, motion pictures, imaging construction sites, mining, gas, oil, wind turbines, real estate, agriculture, surveys, telecommunications, patrols, bridges… Constant innovation. Since 2013 DJI: Phantom, Phantom 2, Phantom 2 Vision, Phantom FC40, Phantom 3 Professional, Phantom 3 Advanced Technology contributing to the wage- productivity gap?
- 20. Mark Zuckerberg, CEO Facebook on the next 1 billion people online: “If we connected a billion more people to the Internet, 100 million more jobs would be created, and more than that would be lifted out of poverty”
- 21. Conclusions. “What’s becoming increasingly clear is that whatever the next war is, it is unlikely to have such permissive airspace as to allow us to fly our current generation of UAV’s with the impunity they enjoyed in those conflicts.” (Interview 2014). – A “post-permissive” environment beyond the military – Contesting regulations – New economic landscapes of constant innovation
Editor's Notes
- Our Argument A new economy of drones is being formed: 1. Beyond the military (dollars and numbers) 2. As a new market Colonization of new zones of capital accumulation; zones which are being demarcated, secured, and produced by the state (FAA) All conduct becomes economic conduct (Brown 2015) 3. Drones are “general purpose technology” (GPTs) Pervasive, improving, create innovations
- “these things are not just for spying or bombing people” (Pirker quoted in Feith 2014).
- Discuss v. briefly, just to note that total number of drones in each category, and total = 11,109, but most in small UAS category
- Consumer drone industry not yet at military level, but not insignificant either. DJI first $1B? Valued at $10B?
- Post permissive not just being no longer flying military drones in completely dominated airspace (eg Iraq and Afghanistan) but moving beyond the hobbyist flying that has between permitted since 1981 under a general agreement with FAA (Advisory Circular, AC). Is this neoliberalism or the capitalist economy? Colonizing the “commons” ie the skies with regulations and commercial activities at multiple positions vertically. Taking away from hobbyists—all conduct is economic conduct (Brown)?
- Three legal ways to fly a drone in the USA. Problems with exemptions: remain in visual line of site (VLOS), must have sports pilot license, many restrictions (28 for Amazon’s application!) Early on companies like BP, Conoco-Phillips got SAC-EC, but now the trend has been Sec. 333
- M&A Lobbying (ADD) Innovation
- Note each actor is not discrete. The field is rife with collaborations, partnerships, coalitions, M and A etc etc The “emerging market” for commercial drones is being brought into being through a great deal of work on the part of a range of actors: large defense contractors smaller tech firms the military DARPA political/lobbying organizations (notably AUVSI)
- Signs of a forming market: lots of change and M&A, fluctuations Aurora: HQ Manassas, VA outside Wash DC. Supplies NASA, DoD, MIT. (If needed: Aurora Market themselves as defense, law enforcement, scientific. Have R&D office in Cambridge, MA where work with MIT on eg., cooperative team on micro air vehicles (MAVs) for flying in “dense urban environments” without GPS (inspired by sonar in bats). Also MIT SPHERES project (a testing platform onboard the International Space Station).
- Google and Facebook acquisitions in the drone, aerial imaging sector. Titan , a start-up founded in 2012. In 2014 Google acquired a young start–up called Titan Aerospace which specialized in high altitude solar powered UAVs that could be used to perform many functions that have been handled by satellites including imagery and the provision of access to the internet. Google has also acquires several other robotics companies. Meanwhile Facebook has acquired UK-based company Ascenta, which has been developing a UAV. Amazon’s Jeff Bezos is promoting Prime Air – which will use drones to make deliveries (as is already done in Australia, for example see the CNN story). These moves by high-profile non-military companies, has spurred interest in commercial applications of drone technologies.
- ARK Invest: “Barring regulatory obstacles, Amazon would face an upfront cost of about $100m to buy tens of thousands of drones. The company also would see expenses of about $300m to deploy them to deliver 400 million orders annually, according to the report, which based its findings on existing technology and prices.”
- VC investment by geography: Nearly half the deals outside traditional tech investment areas of S. Cal, Boston & Silicon Valley
- Drones as GPTs are producing innovations for capitalization by recombining and rearranging things in ways that create new value (“new growth theory” in economics). GPTs offer a way to sustain capital relations by providing new job opportunities and persistent innovation in small start-ups, “exploring innovation for innovation’s sake…technological innovation became a fetish object of capitalist desire” (Harvey, p. 95). Certainly see this in drone industry where new applications are mooted and tested every day, eg, Amazon Prime Air. Differences are though that not as impactful as a meta-GPT, ie digital networked technologies in general
- Billion more people and a billion more customers!