Hilton Goldstein Sees Broad Implications For Innovation In
Avionics Development
By Hilton Goldstein
I started Hilton Software several years ago sitting on my living
room floor typing with one hand and feeding my newborn with the
other. I have worked incredibly long hours to achieve success in
the aviation market. Our flagship product, WingX Pro7, has for
several months been the #1 Top Grossing Navigation iPad app on
Apple's App Store beating out the big guns such as Tom Tom and
Garmin.
WingX started life as a Weight and Balance application on
Windows Mobile devices, but soon moved into being an A/FD resource
and has grown exponentially ever since now sporting full GPS
navigation and even Synthetic Vision. The beauty of government
data, or so we were told, is that our tax dollars have already paid
for it so it is effectively free. The FAA openly and implicitly
supports this notion by giving anyone and everyone free access to
their data. Moreover the FAA has made it well-known that their data
is free, an example of which is ADS-B weather. I certainly did not
have a business model back then, but quite frankly I may have been
more stupid than visionary to start an aviation company writing
software for mobile devices long before Steve Jobs made mobile
commonplace in our lives. But I did start my little company and I
started it in my proverbial basement. I could barely afford to keep
going with miserably low revenue only because the data I was using
was available for free. There are many other examples of this
entrepreneurship today - just look at how many aviation apps are
doing well on the App Store, look how many free and really good web
sites there are now.
It is almost impossible to think of a way to fly without a good
set of current charts in one form or another. Additional
functionality is at our fingertips - for example WingX Pro7 not
only includes enroute charts, but also geo-referenced approach
charts, airport diagrams with SmartTaxi, in-flight weather (using
free ADS-B data), and real-time traffic. Each of these items adds
additional safety and increases heads-up time - none of which would
be available today if I had to pay for this data, I simply could
not have afforded it.
Fast-forward a few years… Remember that free data? Well,
the FAA sent out an email a few weeks ago saying that the rug was
going to be pulled from under us and data would no longer be
provided free. There were several problems with the email, most
importantly was its complete lack of specifics. And to make matters
worse, the FAA had already starting to restrict data access and
continues to do so despite our requests not to do so. Apps consume
a lot of data and it takes days to process all these gigabytes each
28-day cycle. So when the FAA suddenly reduced the availability
time to just 24 hours before the effective data, changes had to be
made without warning.
But back to the free data… All we were told is that this
data was no longer free and that we were invited to a Dec 13
meeting in DC. When word of this got out, it was not pretty. Some
websites shut down immediately as a result of the email. To make
matters worse, and for reasons unknown, the media were specifically
barred from the meeting even in listen-only mode. The reason given
was that vendors might not want to disclose their ideas and plans
at this meeting but somehow the expectation was that we would
freely share these ideas with the FAA while our competitors were
sitting next to us. This made the PR side of the roll-out bumpy to
say the least. Pilots wondered what the FAA was hiding, what
happened to transparency, and why the media blackout?
I think the FAA made a bad call. Emotions took over and there
were even conspiracy theories that Jeppesen was in some way behind
this in an effort to make their higher priced charts more
competitive. At this time, I firmly believe that there is zero
truth to this. Instead Jeppesen is working to improve their Jepp
TC/FD software. So let's put this conspiracy theory to bed, it just
ain't so. It was also reported that the FAA would require each of
us to sign NDAs to participate in the meeting. However, on a call
with the FAA, I was told that NDAs were definitely not required and
that we were free to talk about and write about the meeting. No
NDAs limiting the sharing of meeting discussions were signed by
anyone at the meeting.
WingX Pro 7 With SynthVis
The meeting started with the FAA sharing numbers of declining
chart sales that was creating a shortfall of $5M and that each user
would be required to pay $150 to make up the difference - the FAA
admitted in the meeting that this number was possibly derived from
incorrect usage numbers. This number was not fixed, but was a
median number. The exact charge would be based on a tiered system
which pushed the price for small companies on a per user basis to
$250. To put this in context, many apps today sell for $10-$50,
many are free. This tiered system would top-out at about $100 per
user.
While we were trying to make sense of the big picture and how
this huge data user fee was going to affect us and our customers,
the devil was truly in the details. Let's start with "What is a
user?" Many pilots fly with more than one aviation app on their
iPad, would these users be required to pay $100 extra to each
software vendor? According to the plan the FAA presented the answer
is yes. If we include Apple's 30% that they take and keep for
themselves, the real price increase would be closer to $140. What
about our customers running WingX on multiple platforms such as an
Android phone and an iPad? What is a 'user' on a free web site and
how would the FAA charge that web site? For example, let's say that
a web site had 20,000 unique visitors - at $100/user that
one-person entrepreneur's data costs jump from $0 to $2M. The FAA
did propose capping the maximum outlay on their tiered pricing
system, but would $300,000 be any more attractive to the guy in the
basement? How would flight departments and high-volume purchases be
priced? The FAA had no answers to these questions and incredibly
almost seemed taken aback with this new revelation about FAA data
being available on the web. I was disappointed that the FAA did not
come to the meeting with solid usage numbers (which they could have
approximated using data from AOPA, Sportys, etc) and had not looked
at the industry and prepared answers to the most obvious
questions.
I raised the question of what the impact the proposed data user
fee would have on jobs. I asked if they had applied for some of the
$200B unspent stimulus package money. The latter part of my
question was essentially ignored which I took to mean that they had
not applied for stimulus money. OK, I tried, but what about the
effect on jobs? The FAA representative actually said that raising
prices significantly would create jobs. His theory was that the
closing down of those 'people in their basements' as a result of
the data user fees would drive more business to companies such as
ours and we would therefore need to hire people.
I was stunned. The notion of 'people in their basements' as a
bad thing came up several times during the day at which point I
stood up and perhaps somewhat passionately implored the FAA not to
look at basement folks as bad. That is how I started my company,
that is probably how the majority of aviation companies got
started, and that is how HP famously started in Palo Alto. I was
going to ask for an example where raising fees and/or taxes had
created jobs, but the discussion went off on another tangent and we
never revisited the jobs issue.
At one point, we were asked to take an informal vote on whether
we should have a tiered pricing structure (aka the see what sticks
approach). While I don't want to take credit for stopping this
ridiculous vote in its tracks, I was vocal about not taking a vote
on something completely absent of details. The tiered pricing
structure is absolutely horrible for the small guys and favor the
larger companies which will have lower per user costs - is this
what we want? At one point during the day we broke out into groups.
Nothing much came of this time other than one idea certainly worthy
of serious consideration. Let me start by saying that I am a small
government guy and I don't want the government in the data user fee
business. Having said that, if we have no choice, one proposal
which got my attention was for the FAA to setup a web site where a
user could buy an electronic key (I showed that the cost of this
key could be $30-$50 per year). This key would be used by
applications to verify that the user was allowed by the FAA to
download data to their device or view it on a web site. The
advantages of this setup are pretty significant. Firstly a pilot
can use the same key in all their aviation apps, they buy one key
and not one key per application or web site. Secondly free web
sites stay free but will have to add an inconvenient login process.
Thirdly the burden on app developers is reduced considerably. The
software simply has to verify the pilot's key, easy enough. If the
app itself was to charge the $150 to each customer, app developers
would have to write a lot of code to support this. In addition,
aviation companies would have to send the FAA financial summaries
of sales thereby increasing the business expenses, a cost
ultimately that will have to be passed onto the customer.
Other ideas took the electronic key concept too far suggesting
that pilots could purchase data for one or more states or
combinations thereof, that the subscription period could be any
number of months and so. As a developer, I can tell you that this
would be hell to implement, test, maintain, and for the pilot to
configure and manage. Whatever process is chosen ultimately chose
must be simple.
Assuming the US fuel consumption numbers on Wikipedia are
correct, if we were to add a data user fee to fuel sales, I
calculated the number to be less than 0.03c per gallon. Each time
you filled up with 100 gallons, it would cost you about 2.5c extra.
That sure sounds workable. My hope is that by expanding the
supply-side of oil in the US over the coming years, fuel prices
could be almost cut in half - an extra 2.5c per fill-up would be a
drop in the tank. In the meantime, we should put an immediate halt
to an overly complicated data user fee process that will
significantly hurt innovation and safety until we examine all
alternatives.
There is more I could write about the meeting, but hopefully
this write-up at least shines some light on what happened on Good
Luck Road and stops pilots being completely in the dark on this
one. So what's the take-away? We are all still in the dark. The FAA
had promised us that they would release a statement at the end of
the day about the meeting - they did that as promised, but it was
completely void of useful information - there was even back-n-forth
around the room about the wording so as not the scare the public.
So much for transparency. The FAA did acknowledge that the
timeline, which included full implementation by April 2012, might
not be realistic. The sooner the FAA clarifies exactly how this new
data user fee will work, the aviation industry is left in the dark,
wondering if possibly the only bright spot in this threatened
industry is about to stall.