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.

FMI: www.faa.gov, www.hiltonsoftware.com