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VOL. 128 | NO. 235 | Tuesday, December 03, 2013

Amazon.com Sees Delivery Drones as Future

SCOTT MAYEROWITZ | AP Business Writer

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NEW YORK (AP) Amazon.com is working on a way to get packages to customers in 30 minutes or less – via self-guided drone.

Consider it the modern version of a pizza delivery boy, minus the boy.

Amazon.com said it's working on the so-called Prime Air unmanned aircraft project in its research and development labs. But the company says it will take years to advance the technology and for the Federal Aviation Administration to create the necessary rules and regulations.

The project was first reported by CBS' "60 Minutes" Sunday night, hours before millions of shoppers turned to their computers for Cyber Monday sales.

Amazon CEO Jeff Bezos said in a primetime interview that while the octocopters look like something out of science fiction, there's no reason they can't be used as delivery vehicles.

Bezos said the drones can carry packages that weigh up to five pounds, which covers about 86 percent of the items Amazon delivers. The drones the company is testing have a range of about 10 miles, which Bezos noted could cover a significant portion of the population in urban areas.

While it's tough to say exactly how long it will take the project to get off the ground, Bezos told "60 Minutes" that he thinks it could happen in four or five years.

"Technology has always been a double edged sword. Fire kept us warm and cooked our food but also was used to burn down our villages," said Ray Kurzweil, a technology entrepreneur and futurist. Kurzweil's 2005 book "The Singularity is Near" argues that the age of smarter-than-human intelligence will arrive in the not-so-distant future.

"Drones will deliver packages and provide improved mapmaking and monitoring of traffic, but will introduce similar privacy concerns," he said. Kurzweil noted, however, that security cameras are already in most public spaces, not to mention the ubiquitous camera phone.

Unlike the drones used by the military, Bezos' proposed flying machines wouldn't need humans sitting in a distant trailer to control them. Amazon's drones would receive a set of GPS coordinates and automatically fly to them, presumably avoiding buildings, power lines and other obstacles along the way.

Amazon spent almost $2.9 billion in shipping last year, accounting for 4.7 percent of its net sales.

Drone delivery faces several legal and technology obstacles similar to Google's experimental driverless car. How do you design a machine that safely navigates the roads or skies without hitting anything? And, if an accident does occur, who is legally liable?

Then there are the security issues. Delivering packages by drone might be impossible in a city like Washington D.C. which has many no-fly zones.

"The technology has moved forward faster than the law has kept pace," said Brendan Schulman, special counsel at the law firm Kramer Levin Naftalis & Frankel LLP.

There is no prohibition on flying drones for recreational use, but since 2007, the Federal Aviation Administration has said they can't be used for commercial uses. Schulman is currently challenging that regulation before a federal administrative law judge on behalf of a client who was using a radio-controlled aircraft to shoot video for an advertising agency. Autonomous flights like Amazon is proposing, without somebody at the controls, are also prohibited.

The FAA is slowly moving forward with guidelines to allow expanded use of drones but has had numerous delays. Many of the commercial advances in drone use have come out of Europe, Australia, and Japan.

"The delay has really been to the disadvantage of companies here," Schulman said. "Generally, the government wants to promote the advancement of science and technology. In this case, the government has done exactly the opposite and thwarted the ability of small, startup companies to develop commercial applications for this revolutionary technology."

Amazon spokeswoman Mary Osako said the company has been in contact with the FAA "as they are actively working on necessary regulation."

Bezos founded Amazon.com in 1994 after quitting his job at a Wall Street hedge fund. With Bezos' parents and a few friends as investors, Amazon began operating out of the Bezos Seattle garage as an online bookseller on July 16, 1995. In the nearly two decades since, Amazon has grown to become the world's largest online retailer, selling everything from shoes to groceries to diapers and power tools.

Amazon's business plan has been to spend heavily on growing its business, improving order fulfillment and expanding into new areas. Those investments have come at the expense of consistent profitability, but investors have been largely forgiving, focusing on the company's long-term promise and double-digit revenue growth. Though it may be years before it's reality, drone-powered delivery fits with the company's plan to make delivery as convenient – and fast – as possible.

One of the biggest promises for civilian drone use has been in agriculture.

The unmanned aircraft can fly over large fields and search out bugs, rodents and other animals that might harm crops. Then, thanks to GPS, another drone could come back and spread pesticide on that small quadrant of the field.

Agriculture is also seen as the most-promising use because of the industry's largely unpopulated, wide open spaces. Delivering Amazon packages in midtown Manhattan will be much trickier. But the savings of such a delivery system only come in large, urban areas.

Besides regulatory approval, Amazon's biggest challenge will be to develop a collision avoidance system, said Darryl Jenkins, a consultant who has given up on the commercial airline industry and now focuses on drones.

Who is to blame, Jenkins asked, if the drone hits a bird, crashes into a building? Who is going to insure the deliveries?

There are also technical questions. Who will recharge the drone batteries? How many deliveries can the machines make before needing service?

"Jeff Bezos might be the single person in the universe who could make something like this happen," Jenkins said. "For what it worth, this is a guy who's totally changed retailing."

The biggest losers could be package delivery services like the U.S. Postal Service, FedEx and UPS.

FedEx spokesman Jess Bunn said in an email: "While we can't speculate about this particular technology, I can say that making every customer experience outstanding is our priority, and anything we do from a technology standpoint will be with that in mind."

The U.S. Postal Service wouldn't speculate about using drones for mail delivery. Spokeswoman Sue Brennan referred any questions to Amazon.

Amazon, one of the Postal Service's major customers, recently partnered with the agency to begin delivering packages on Sunday in major metropolitan areas. Sunday service will be available to Amazon Prime members in the New York and Los Angeles areas first, followed by other large cities next year.

With reports from Barbara Ortutay in New York, David Koenig in Dallas and Sam Hananel in Washington D.C.

Scott Mayerowitz can be reached at www.twitter.com/GlobeTrotScott

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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