Amazon.com (NASDAQ:AMZN), Wal-Mart, and others are champing at the bit to get the commercial use of drones in this country off the ground. The Federal Aviation Administration is obliging them; it just released a new set of regulations on how the drone business will work in our skies. Those rules are quite comprehensive, and they open a lot of potential for commerce.
In this segment from the MarketFoolery podcast, Chris Hill, Aaron Bush, and Simon Erickson examine what those new regulations are, what they mean for the U.S. economy, the reaction from Corporate America, and more.
This podcast was recorded on June 22, 2016.
Chris Hill: We have some movement on the commercial-drone front. The FAA has released new regulations that will go into effect in late August. Aaron, I was struck by the fact that, beyond dictating what these rules are going to be, in terms of, who gets to fly drones, what's involved in terms of licenses and that sort of thing. You don't need a pilot's license; you need a drone license, which is apparently a lot easier and a lot cheaper to come by. The FAA went out of its way to talk about what this is going to do for the U.S. economy, saying, "We think the commercial drone industry is going to add 100,000 jobs in the next two years. It's going to add $82 billion to the US economy", and yet I get the sense that they're not popping the Champagne over at Google or Amazon or Wal-Mart and places that are ...
Aaron Bush: Not quite.
Hill: Where are we now when it comes to commercial drones?
Bush: Previously, there was pretty much a rule on every single thing you could do with a drone. This allows you to operate it with fewer restrictions, still manually controlling it within line of sight, but it doesn't quite extend to autonomous drones, which is what the Googles and Amazons are most interested in. They deliver packages doing their own thing. We as humans don't even have to deal with it too much. We're not quite there, but this is a good step in the right direction because there are plenty of use cases that don't have to be autonomous.
I was looking at the numbers a little bit, and as you mentioned, 100,000 jobs potentially. They anticipate up to $80 billion or more in value created in the next decade. Currently, how it's done with getting permission from the government to use drones, there's just a giant backlog of companies requesting permission. The government has to go one by one and look at each one. Now that's going to go away, and there will be thousands of companies, across all industries, that will have the ability without having to wait anymore to start using. I think that is the big news here.
Simon Erickson: Especially for investors, because now things get interesting. It's kind of neat having a drone follow you around as you're surfing on Hawaii's North Shore or whatever you're doing, action-sports related, but the real bang for your buck as an investor is going to be, how is a commercial company going to monetize drones into their business, and what does that mean for shareholders?
Aaron Bush owns shares of Amazon.com. Chris Hill owns shares of Amazon.com. Simon Erickson has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.