Report: $98M in 900 MHz Reconfiguration Costs for Florida Utility Under PDV/EWA Proposal
Tuesday, September 25, 2018 | Comments

NextEra Energy continues to “vigorously oppose” the proposal by Enterprise Wireless Alliance (EWA) and pdvWireless to reconfigure the 896 – 901/935 – 940 MHz band for broadband operations. The Florida electric utility submitted to the FCC a cost-benefit analysis (CBA) that found the direct costs of reallocating the 900 MHz band in the parts of Florida served by NextEra’s subsidiary Florida Power & Light (FPL) will be $98 million.

A CBA performed by Coleman Bazelon estimates within NextEra’s region, the proposal will result in total benefits to society of at most $83 million, but possibly as little as $4 million based on an earlier auction of spectrum blocks similar to the 3/3-megahertz block proposed by EWA/PDV. Bazelon estimated the proposal will result in one-time transition costs of $62 million, ongoing costs of $35 million, and potential externality costs of up to $1 billion in FPL’s areas of operation.

The September report is titled “The Economics of the 900 MHz Rebanding Proposal: A Cost-Benefit Analysis” and implemented Office of Management and Budget (OMB) CBA guidance to analyze the EWA/PDV proposal.

“As such, the costs to implement the proposal would exceed the benefits,” the report said. “Specifically, I estimate that the proposal would have net private costs in excess of benefits in these regions of Florida alone of at least $15 million — assuming the higher total benefits of $83 million — and perhaps net costs in excess of benefits of $93 million. When the results of my CBA are scaled up to the national level, I predict the total net cost over benefits of the proposed spectrum reallocation to be significant.”

The FCC earlier this month froze new applications in the 900 MHz band. The freeze followed the FCC opening a notice of inquiry (NOI) to examine changes in the 900 MHz band.

“Expanding the analysis of the EWA/PDV proposal in Florida to a national level suggests that the net effect of this policy would result in losses of as much as $418 million to U.S. firms and citizens in total,” said the report.

Those figures may understate the negative impact because they assume that FPL can successfully reconfigure its current 900 MHz network to provide the same level of service after reconfiguration. FPL is estimated to restore electrical service following catastrophic events such as Hurricane Irma one to two days faster because of its current, hardened 900 MHz voice dispatch system. Because of the increased probability that a major hurricane will affect Florida in any given year, should the 900 MHz transition not work as planned, then additional costs would be borne by the residents and businesses of Florida and the nation, between $506 million and $1 billion in FPL’s areas of operation. The analysis does not reflect the costs that will be incurred by other narrowband incumbents forced to move channels, the report said.

“While critical infrastructure industries (CII) entities such as FPL need new broadband spectrum for their operations, the small amount of broadband service gained under the EWA/PDV proposal would not offset the negative cost-benefits summarized above, the disruption that would be caused by rebanding, the reduction of available channels for future narrowband growth, and the likelihood of interference from the neighboring broadband provider and among the users in the compressed narrowband segment that use their systems for mission-critical communications such as power restoration after natural disasters,” a letter from NextEra to the FCC said.

The full report is here. The letter is here.

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