Canada’s Huge Opportunity to Become ‘Drone Valley’

In southern British Columbia, just north of the border with Washington State, Amazon is testing the next generation of unmanned aerial vehicles, quietly preparing for the eventual launch of a drone-based delivery service.

But, if the e-commerce giant had its way, it wouldn’t be doing the tests in Canada at all.

American tech companies come north of the boarder for a variety of different reasons. To access talent, be closer to customers or to take advantage of generous tax credits, but in this case there’s only one reason Amazon is here: regulations.

Flying drones for commercial purposes is banned in the United States without special permission for federal regulators. Those exemptions are not only hard to get and subject to long delays, they also come with conditions that make the type of testing Amazon wants to do impossible.

Here in Canada, getting a commercial permit to fly a drone is comparatively easy.

And Amazon isn’t alone, a group of researchers at the Massachusetts Institute of Technology tried twice to get a license for drone-related research before giving up and coming to Canada.

Reports suggest that other companies are doing similar things – though it’s not clear exactly who.

“It looks like we’re starting to become a destination country for huge companies like Amazon, so it’s a great strategic advantage,” Diana Cooper, an Ottawa-based lawyer who specializes in  unmanned aerial systems and robotics, told The Globe and Mail.

The situation has the potential to give Canada something of a first-mover advantage in the emerging drone technology space.

And there’s good reason to get in on it, the Teal Group, an aerospace and defence consulting firm, predicts that the civilian UAV industry will double over the next 10 years, to $11.5 billion. And that’s just spending on hardware.

It could be a huge opportunity for Canadian companies to iterate and innovate as well as to form partnerships with American businesses that want to do the same thing. But it’s an advantage that could easily be lost.

After all, Amazon is only testing its drones in Canada because of U.S. regulations, a loosening of those rules would have the company heading straight back across the border. That’s why it’s so important for Canada to build capacity in the drone space now, if it’s going to profit from it in the future.
There are some positive signs.

Last year, Transport Canada issued 1,672 permits for commercial drone operations. That’s up from 949 the year before.

The U.S., in comparison, issued a mere 24 exemptions to its rules in 2014. That’s attracting some attention.

Last week, Switzerland-based Zurich Insurance Group introduced a new insurance product for commercial drone operators. It’s the first policy of its kind in the world and it’s only available in Canada.

The company said that’s due to the sophisticated regulatory framework here in Canada, which sets out clear rules and limits risks, while allowing operators to obtain permits through a straight-forward process.

That could spur growth even further.

There are already some Canadian companies making big strides in the field.

Calgary-based Trace seems likely to push things forward by integrating facial-recognition and tracking technology to allow for self-controlled drones.

There’s also Vancouver’s Avian Robotics, which is building drones using 3D printing to keep costs down.

Ultimately, though, the same factors giving Canada a leg-up in the space could also constrict the size of the drone market. If the U.S. doesn’t open the door to more commercial uses, it’s not only going to slow down development, it’s also going to slow down adoption.

Still, changes are in the works and while U.S. regulators might not be ready to open the door to delivery drones yet, it’s better to be ahead of the curve than behind it.