Drone entrepreneurs frustrated as FAA regulation remains up in the air

Timothy Reuter's drone business is taking off.

"I wanted to be part of the revolution that makes flying robots and seeing the world from the sky accessible to everyone," he said.

Reuter has created a pocket-sized unmanned aircraft that sells for $500 and has already sold $1 million worth in four months, reports CBS News correspondent Jeff Pegues.

"Now, the consumer drone market is actually, you know, close to a billion dollars, if not more," he said. "But the overall drone market is going to be tens of billions of dollars."

Businesses are using drones to position themselves for the future. Amazon is testing delivery drones. Farmers are using them to keep track of their cattle and some production companies are putting cameras on them to film commercials. Drones have become an inexpensive and accessible way to help run a business.

But the market is limited because the Federal Aviation Administration bans the use of drones for commercial purposes and that may not change until the end of next year.

Reuter says that won't be soon enough for fledgling drone companies like his.

"They're very frustrated because they want to create livelihoods," he said. "They want to generate tax revenue, they want to create jobs in their local area, and their hands are completely tied by the current regulations."

The FAA is in uncharted territory. When it comes to the use of drones there are several issues, including safety and privacy. Regulators have been trying to rein in the growing use of unmanned aircraft with warnings and orders to stop operation.

This week, in Arkansas, a reporter used a drone to capture a video of storm damage, which prompted the FAA to call the news station and warn against further drone use.

James Burnley, a former secretary of transportation, said making sure the aviation space remains safe is the biggest legal issue.

"Movement in the market place is something that very few people anticipated," Burnley said. "So again, it's very hard to fault the FAA for being a little bit surprised by that. I think we're all pretty surprised."

The uncertainty is causing tension for businesses who see opportunity for growth.

"We want to see light regulation that enables this industry to rapidly grow while protecting citizens privacy and safety," Reuter said.

The FAA says developing all the rules and standards is a very complex task, and they want to make sure they get it right the first time.