SCIENTIST IN LAB: "We developed a nano-quad rotor capable of agile flight".

NARRATOR: In a lab at the University of Pennsylvania, it's hard to know if this is the work of manic hobbyists or level-headed scientists. Drones attract both.

SCIENTIST IN LAB: "Multiple vehicles can fly as a formation".

NARRATOR: What we do know is that the technology making unmanned flight possible is getting smaller and is evolving at breathtaking speed.

SCIENTIST IN LAB: "The team can also navigate in environments with obstacles".

CHRIS ANDERSON (EDITOR-IN-CHIEF, 'WIRED' MAGAZINE): "Here's what we know - cheaper, better, faster. Thanks to these things in our pockets, thanks to Smartphones and Wii controllers and you know other consumer electronics, we have all the necessary elements to create a drone. This has just happened over the past four or five years".

DR PETER SINGER: "This is a technology that's a game changer. It's been so on the military side, it will be the same on the civilian side".

NARRATOR: For many Americans, drones have been a controversial weapon prowling over foreign battlegrounds, targeting and striking the enemy. But as the military campaigns wind down, the drones are coming home.

DR PETER SINGER: "This is a powerful technology. It is real. It is coming. No amount of handwringing is going to stop it".

NARRATOR: The technology is being reborn in swarms of ingenious mainstream hardware, drones of all shapes, sizes and uses. Anything from an opportunistic snap of a celebrity.... to crime fighting.... to government surveillance.

CHARLES KRAUTHAMMER: "My problem is once you start with this, it doesn't stop and I'm very concerned we're at the beginning of a revolution in surveillance that will not stop".

NARRATOR: Just as wireless and mobiles reshaped the way we live our lives, drones are looming as the next big game-changer. And flying alongside them are important questions about safety, security and privacy - and who will be at the controls?

This is what happens when they're in the hands of some airborne anarchists. Team Blacksheep, the bad boys of a growing garage drone movement, are barnstorming their way across America. Buzzing the nation's most treasured landmarks, then posting their audacious missions online.

RAPHAEL PIRKER ('TEAM BLACKSHEEP'): "Well I mean part of what we do is try to stir up controversy, I mean just to show what can be done with these drones. You have to cross certain boundaries to actually do that, to show people the technology is here".

CNN PRESENTER: "This was filmed from a remote controlled plane, an RC plane soaring high over the city...."

NARRATOR: Their most controversial mission was across New York's skyline, getting under the nose of Miss Liberty herself. For some New Yorkers it was an outrage exposing big holes in city security.

RAPHAEL PIRKER: "It went viral on the internet, the whole thing just exploded. All the news networks were covering it, but I think the connection between 9/11, the huge security surrounding the Statue of Liberty and someone just flying a plane over the statute kind of also showed that the security there is really a little bit of a circus. But I think what struck most people is that it was actually possible".

NARRATOR: For years conventional hobbyists have been allowed to fly model planes as long as they stay below 400 feet, away from populated areas and aren't used for commercial purposes. But this is very different. A remote control range stretching to the horizon and beyond, auto pilot GPS and the all-seeing live stream camera. In America this kind of flying is illegal, but in three years time the US will open up its skies to drones.

RAPHAEL PIRKER: "Well we basically we use a modified remote control receiver and a video transmitter which is down here, together with a video camera and with that we can fly about ten miles with these kind of antennas. I mean you could basically go further if you changed some antennas around".

NARRATOR: Team leader Raphael Pirker doesn't actually live in the US. When not launching drone raids across America, he's back home in the sanctuary of Switzerland.

RAPHAEL PIRKER: "I think that the commercial applications are just too overwhelming to have any draconian rules against them. Yeah, I mean I see it that within three or four years the drones will actually be flying alongside normal aircraft".

NARRATOR: Out in the New Mexico desert motorists are being watched, oblivious to the fact that they're in the cross hairs of a "Reaper" the most formidable military drone flying today.

USAF INSTRUCTOR TO STUDENT: "We don't want to get too close or he will hear us"

This is just an exercise for student drone pilots at Holloman Air Base in New Mexico. The US Air Force is in the midst of radical change - now training more drone pilots than fighter pilots.

USAF STUDENT TO INSTRUCTOR: "We've got movement on the vehicle.

USAF INSTRUCTOR TO STUDENT: "Continue search along the roads to the north and south of that river."

It's extraordinary global technology. These trainees are learning to be fully fledged military operators making remote life and death decisions, flying missile armed drones on the other side of the world.

USAF DRONE INSTRUCTOR: "So I have the opportunity to go to work, fly a mission, no matter where it is, do the job, and then I put on a different hat and I come home to my wife and my kids".

USAF OFFICER: "This is not a video game. This is real life and we train our folks to make this real life. This makes a big difference. This is a force multiplier and I tell you there are more troops on the ground that are alive today because of this airplane".

NARRATOR: But increasingly they're also a force multiplier for other government agencies. Nine unarmed military style drones almost identical to these Reapers, already fly for the US Customs and Border Patrol, hunting for illegal immigrants. Last year one was called in to help a North Dakota Sherriff catch cattle rustlers. Now the possibilities seem endless.

To get a taste of what's now on offer in the domestic drone market all roads lead to Las Vegas which is hosting the world's largest convention of unmanned aerial vehicles as the experts like to call them.

Here there are drones for every purpose - from emergency response to monitoring farm stock. There's one message - if it's dirty, dangerous or dull, get a drone to do it.

SALESMAN: "This airframe can also be utilised in law enforcement, disaster relief, industrial applications. In addition to all the capabilities, it's also very good at dusting the floors. Every home owner should have one of these in their house".

NARRATOR: These sales people are working to a Congressional order domestic airspace be opened up to civilian drones by 2015, a deadline now fuelling a multi-billion dollar market.

SALESMAN: "The entire unit could easily fit in a single rucksack".

It's estimated that a staggering 30 thousand drones of all shapes and sizes could be buzzing around American skies by 2020.

Domestic police forces are already taking off. Aerovironment which builds 85% of the US military's small drones has been quick to launch its first cop drone, The Qube.

STEVE GITLIN: "I can say that in the US alone there are something in the order of 18,000 local law enforcement agencies and about 99% of them don't have any kind of aviation unit. So that represents a pretty big market opportunity just here and that's just law enforcement. When you layer in fire departments, hazardous material teams, search and rescue teams, agriculture, security and even commercial applications like pipeline inspection, it could become a significant market and it's global in nature".

NARRATOR: The sales pitch is compelling. Why buy a two million dollar police helicopter when a twenty thousand dollar quad-rotor can chase down the bad guys. With GPS, autopilot and a live video feed to police smart phones, they can run but they can't hide.

KEN CORNEY: [Ventura County Police Chief] "It's very exciting and the future's going to be special. It will be a benefit to law enforcement. It's a force multiplier in that you're able to use technology to use less people. You walk through this trade show and you realise the future is here, it's now and all this exists. It's just working through the bureaucracies and the politics and the community engagement of operating these domestically".

NARRATOR: But with the swarm building, who will keep order in the skies? The Federal Aviation Administration has the job of making America's drone age a reality. Leading robotics expert Dr Peter Singer, reckons the regulators are way behind reality.

DR PETER SINGER: "Congress though has said 2015, FAA figure it out. Figure out how to allow all this to happen. The problem is the FAA is an agency that essentially deals with the airspace management. It's thinking about things like how do we make sure these micro drones don't crash into other planes - but that misses all sorts of the other political legal ethical issues that play out with this. Everything from how do we ensure rights of privacy to what way should the police be allowed to use them? What way should they not be allowed to use them? To how do we keep bad actors from utilising these technologies?"

SALESMAN AT CONVENTION: "What the autopilot does is stabilise the vehicle in the air"

NARRATOR: Drones are first and foremost surveillance platforms and that worries both civil liberties groups and conservative pundits who now fear flying police cameras above every backyard barbecue.

CHARLES KRAUTHAMMER: [Interview on Fox News] "This is not what we want. I would say that you ban it under all circumstances and I would predict, I'm not encouraging but I'm predicting the first guy who uses a second amendment weapon to bring a drone down that's been hovering over his house is going to be a folk hero in this country".

CHARLES KRAUTHAMMER: "I think people may take the law into their own hands but I say that really tongue in cheek. I do think this is a country that really does value its freedom, above everything else".

NARRATOR: Syndicated columnist and conservative commentator Charles Krauthammer is leading the charge against the rise of the machines.

CHARLES KRAUTHAMMER: "And I think people will see this as something of a threat. I mean there's already a sort of discomfort with Google Street View where you see your own house and I've seen my house and you can locate the car in the driveway so we already know that goes on and I don't want anything buzzing over my house and I think most Americans don't either. I would begin with a ban and nibble away from there. I'm really afraid that once we open the floodgates. Look people argue, you have helicopters that can follow you, yes but helicopters are big, they're loud, they're expensive and they're dangerous so you can't possibly keep them up there all the time. They go up for a car chase or somebody on the loose and then you bring them down. With drones everything changes. It's like having a permanent camera over everybody's head, in every street forever".

DR PETER SINGER: "Now we're in a space where they're going to be able to pick up a lot of things that they may not have that warrant for and so it's akin to some of the monitoring of email. We then have to figure out when can they do that, when can't they, what do they do with all that information that they're gathering when they may be monitoring one person but they're picking up all the data on all the others. Do they have to throw it away or can they also sift through that data and try and find bad things? We're not ready for this world and yet that's what we're moving into".

NARRATOR: Under pressure to cut costs media organisations are also taking a keen interest in drone technology. Some are already pushing the envelope. Here online news site, "the daily.com" defies the current ban on media flights by launching a few drones of its own to cover a big story on floods in the American south.

NEWS READER: "Here in Nachos Mississippi this drone video exclusive to The Daily gives a unique aerial view of the struggle to keep the water at bay".

DR PETER SINGER: "It allows a whole universe of new possibilities, you know things that are very positive. Let's just take reporting as an example. We're going to see journalists use this to gather all sorts of stories. We've already seen examples such as reporting from natural disasters when there was flooding in one place they popped up a little drone that monitored what happened in a way that the news wouldn't have been able to cover it before, to documenting issues of abuse. There's been a couple of protests where they have put up little tiny drones to monitor whether the police were going to commit abuses against the protestors, but of course there's a flip side to that. Paparazzi using these, following people in a way that we wouldn't want to see or violates the rights of privacy".

NARRATOR: In the drone age, where there's a celebrity you'll probably find a prying lens hovering nearby.

REPORTER: "Is it a problem for you - all these photographers?"

BODYGUARD: "She loves them".

NARRATOR: Paparazzi drones are yet to take off in a big way in the United States but they are already stalking America's beautiful people on the French Riviera.

PAPARAZZI #1: "In theory, we'd need authorisation to fly over the beach itself so we're just going to skirt around it".

NARRATOR: Celebrity socialite Paris Hilton among the first to be targeted by a remote control, high flying lens.

PHOTOGRAPHER: "Can you see Paris Hilton?"

PAPARAZZI #1: "No".

PAPARAZZI #2: "Try to go as far as possible".

NARRATOR: The drone returned with more than a hundred photos. Unnerved by the new technology, Paris Hilton's bodyguards attempted to seize the craft.

PAPARAZZI #1: "We pretended to erase the memory card - obviously we still have the images".

NARRATOR: However they're used, drones are becoming a very big business, very quickly. Chris Anderson is editor in chief of the tech head bible, "Wired" magazine.

CHRIS ANDERSON: "The size of the industry, you know it's billions of dollars, I think 30 billion dollars by 2015 was one estimate I'd seen".

NARRATOR: Anderson sees a future with a drone in every home, just as the Silicon Valley hotshots once brashly predicted a computer on every desk top.

CHRIS ANDERSON: "So in the same way that Steve Jobs and Steve Wosniak in the 1970s looked at computers which were then mainframes, IBM, etcetera and said you know what? These chips are now available. Let's take computers away from big companies and governments and give them to people, the Apple to ultimately the Mac, that's democratising technology. It's taking technology and giving it to regular people to find new uses and we're at the moment where we can do the same thing with drone technology".

NARRATOR: Chris Anderson isn't just writing about the drone phenomenon, he's making it happen. He owns the San Diego factory which mass produces drone autopilots and they're flying out the door. A few hundred dollars buys you membership of the booming do it yourself drone network.

CHRIS ANDERSON: "Today there's more drones out there being flown by hobbyists then there are by the military. Tens of thousands of these members of our community and thousands of these drones that use our autopilot out there, used by everything from children to college students to you know companies, NASA etcetera, all non-military purposes".

ALEX JONES: "For more than six years I've talked on the air about creating a social network..."

NARRATOR: But down in Texas there's anger over what might be soon appear over the cattle ranch or pickup truck. Controversial radio shock jock, Alex Jones, rallied gun enthusiasts in this online call to arms.

ALEX JONES: [promotion] "Recently the Federal Government announced that 30,000 drones are to be deployed in the skies of America. So we return to Steiner ranch to shoot down a few drones of our own. You're going to see corporations and stalkers using these systems to harass people. Why don't we get together as Americans, reaffirm our Bill of Rights and Constitution and politically shoot down this out of control big brother drone roll out".

NARRATOR: Texan drone control aside, drone advocates concede sorting out the safety issues needs a lot of work. As an example of what's potentially ahead, this is what happens when new age meets old in the airspace of Afghanistan. A close encounter between a military drone and an airliner.

Understandably in the busy skies over the United States, airline pilots are appalled by the prospect of sharing space with thousands of unmanned machines. Unmanned aircraft also have a much higher crash rate so what happens when a drone simply falls out of the sky?

CHRIS ANDERSON: "The copters of various sorts, multi copters, four, six, eight blades or single blades etcetera those can be more dangerous. They really are sort of flying lawn mowers in a sense".

DR PETER SINGER: "It's funny because the safety issues are usually treated either in a hysterical manner or in a manner that's a little bit like the ostrich with their head in the sand. So the hysterical manner is you know the idea that you're going to have hundreds of thousands of these systems all flying about, constantly crashing or constantly being used by terrorists or constantly being used in some way that's just Armageddon coming. It's Robo Armageddon. Or you hear the don't worry about it, they're really, really small so even if they crash it won't matter. That just frankly ignores the laws of physics. They go oh but it's just a, you know less than a hundred pounds. Well go up to the top of a ten storey building and take a 100 pound piece of metal and drop it and see if it causes some damage. That's a concern".

ED KAMINSKY: "We're driving really right through the heart of Manhattan Beach California. Homes probably range from I would say three million to a recent sale of sixteen million dollars".

NARRATOR: With one of the world's busiest airports in his city, Los Angeles real estate agent Ed Kaminsky is never too far away from the buzz of passenger air craft and many of the world's best known celebrities.

ED KAMINSKY TO DRONE OPERATOR: Hey Bernie. How's it goin. So here's what I want to do today. Can you get up high enough to see that they are not touching down the sides. Fly down the property line or something like that".

ED KAMINSKY(Drone Realty commercial): "Hey, this is Ed Kaminsky from Shorewood Realtors and we're checking in here from Rancho Palace Springs California. And we are going to take you on a flight around this spectacular property..."

It's still illegal to use drones for commercial purposes but Ed Kaminsky is comfortable with what he's doing ///and interestingly no authority has stepped in to stop him.

ED KAMINSKY: "Obviously our sellers who own the properties love it that we're creating this perspective for the buyers. The buyers seem to really like it because now they can really get a feel of the property without having to go there. We're not using it for anything that would I think abuse privacy or go above height limits as far as airspace goes so for what we use it for, we're not violating any of those issues and what's ///I focus on is what we're doing is right, you know what other people do I can't control".

NARRATOR: And what of the future? Well it's going to be even small and smarter. If it flaps like a bird, it might just be a Hummingbird drone.

STEVE GITLIN - AEROVIRONMENT: "Well something the size of the Hummingbird could conceivably provide customers with a pocketable unmanned aircraft system and as we look at the military market which is the largest adopter of this technology today, that idea of making something as standard issue as a sidearm for example or a helmet, it certainly interests a lot of people".

NARRATOR: But not all small drones are so benign. Aerovironment, creator of the Hummingbird, the unarmed Qube cop drone, has also quietly developed another nasty surprise, it's called the Switchblade.

DR PETER SINGER: "It's a cross between a drone and a munition or rather what you would call it as a robotic kamikaze. It's about the size of a rolled up magazine. A soldier can shoot it off, it flies, observes and then rather than having to call big brother then to fly in and drop bombs on the target, in this case the little tiny drone they can then decide now it's going to turn into a little cruise missile and fly into the target".

NARRATOR: Back in the lab at the University of Pennsylvania, the drones come in peace. Here they're being marshalled to play the James Bond theme. Cute, clever but what to make of them out in the real world?

DR PETER SINGER: "You wouldn't be flying high overhead but able to zoom down and do things what they call perch and stare. Imagine a bird landing on your window sill and peeking in".

NARRATOR: The drones are taking off, the question is do we have the ability to harness a technology now evolving at phenomenal speed. Can society keep up?

DR PETER SINGER: "Moore's law is the idea that our technology, particularly our microchips has doubled in its power capacity just about every 18 months or so. Moore's law though doesn't stop. If Moore's law holds true, the way it's held true over the last forty years, within twenty five years our technologies will be a billion times more powerful than they are today".