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Former Walmart General Counsel Discusses the Future of Drone Delivery Services and AERO Foundation

October 23rd 2017

Q&A with Aaron Crews: Current Text IQ General Counsel & VP of Strategy, Former Walmart Senior Associate General Counsel & Global Head of E-Discovery discusses the future of drone delivery services

Aaron Crews, general counsel and vice president of strategy at TextIQ, photographed in their Manhattan office on August 30, 2017. Photo: David Handschuh/ALM

Wal-Mart Stores Inc. is not only one of the largest retailers and employers in the world, but has a logistical supply chain and distribution infrastructure that rivals nation state capabilities. Aaron Crews is currently General Counsel and Vice President of Strategy for Text IQ and previously served as Senior Associate General Counsel, Global Head of E-Discovery and technologist for Walmart. Aaron has a long track record of utilizing technology to address some of the most complex business and legal issues relevant to retailers worldwide.

There’s a lot of hype surrounding the commercial application of drones. Are direct-to-consumer drone delivery services realistic in the immediate future?

Aaron: Yes. The drone technology necessary to enable direct-to-consumer delivery services already exists and is not merely a hypothetical. Commercial drone delivery networks have been successfully deployed in a number of countries for various applications.

In 2016, Iceland’s largest online retailer partnered with a drone service provider to launch direct-to-consumer parcel delivery within the capital of Reykjavik. In 2017, an American company successfully launched and integrated a fully autonomous drone delivery system in Switzerland to expedite the delivery of medical supplies and blood products between hospitals. Similarly, in Rwanda, there’s a drone delivery system for delivering blood and vaccines on a national scale.

Moreover, the Chinese e-commerce company JD.com is currently building 150 drone operation sites and is reportedly already operating over 100 routes over the mainland this year. JD.com claims their drone delivery operations will initially benefit rural population the most and will lower the cost of freight delivery by 70%.

If the technology exists, why hasn’t commercial drone delivery launched for major retailers within the US?

Aaron: Accessing low-altitude private airspace is not simply a regulatory issue in the U.S., but a constitutional one.

There’s a fundamental legal issue surrounding why major e-commerce retailers are not yet delivering packages to American consumers via drone. In the U.S. drone operators need permission to fly at low-altitude over private property without trespassing, short of an eminent domain action.

As the Supreme Court articulated, compelling low-altitude access and use of airspace over private property would be a form of taking that would subtract from the enjoyment, use and control of one’s property: United States v. Causby, 328 U.S. 256 (1946). See Navigable Airspace for Drones: Private Property Rights and Regulated Airspace.

While regulators can allow low-altitude drone flight over private property, they cannot compel the property owner to grant consent. I found AERO Foundation’s voluntary participation approach, where property owners can earn passive income, coupled with utilizing the blockchain to reserve flight routes, to be an elegant solution to a tricky and significant legal issue.

What’s the FAA’s regulatory posture?

Aaron: While I can’t speak for the FAA, their participation in various private/public joint drone initiatives and ongoing interest in unmanned aerial vehicles appears favorable. FAA Administrator Michael Huerta expressed sentiment that the FAA expects companies, not government regulators, to solve a majority of the fundamental issues concerning drone services. “[The industry] is going to do it more quickly and efficiently than the FAA ever could through regulations.”

What do you find interesting about the blockchain and how is it relevant to AERO and commercial drone services?

Aaron: The blockchain in its simplest form is an open distributed ledger. It enables everyone to work from the same information and can make it drastically easier for all parties to interact and participate in a complex system.

For example, right now if you wanted to make an asset available for rent, you’d have to go through an intermediary to advertise availability and then either use a third party to reserve its use and process payment (ex. Uber or AirBnb) or manage the reservation and payment yourself (ex. Craigslist). Therefore, even in the best case scenario, it’s still a relatively burdensome process that can certainly be classified as non-trivial.

Conversely, in a Peer-to-Peer blockchain-based economy, all parties can go directly to the blockchain to notify all network participants and interested parties that their asset or service is available. Better yet, the actual reserving and compensation of parties can be automated if done correctly in a blockchain-based economy.

How could the blockchain help AERO or make airspace navigable for drones?

Aaron: In order to fly directly to consumers, drone service providers will need the ability to operate at low-altitude over property owned by parties not requesting the drone service. Therefore, commercial drone service providers need a mechanism to easily be granted permission from every property owner they fly over along the course of a low-altitude flight route.

AERO addresses the missing technological and legal components necessary to enable and easily facilitate the consent of property owners for low-altitude drone flight over private property.

By utilizing the blockchain, AERO provides a voluntary and relatively easy way for property owners to generate passive income, while providing available flight routes for drone service providers.

What’s the benefit of direct to consumer drone delivery? Is it faster, cheaper or just cool?

Aaron: Interestingly enough, drone delivery implemented correctly is shockingly both cheaper and faster. The staggering cost savings is probably something most people would be surprised to learn. According to Deutsche Bank, “Robots and drones would reduce [parcel delivery costs] to near-zero immediately and allow for much faster delivery times.”

The last few miles from distributor to consumer could in the very near term be rapidly expedited. Thus, drone delivery isn’t just practical, it will redefine expectations and dramatically lower costs for a majority of items. According to the NYTimes, 86% of parcels are under 5 lbs. and can be handled with existing drone technology.

Besides faster and cheaper parcel delivery, how else do you think drone delivery could impact consumers?

Aaron: There are immediate, real-world use cases that could have a materially positive social impact. For example, pharmaceutical delivery straight to consumers, via drone could serve to accommodate persons with limited mobility, the elderly and improve the lives of consumers that rely on third parties like family, caretakers or traditional shipping for medication.

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