The Federal Communications Commission (FCC) is on the verge of blocking the US$3.3 billion in spectrum auction discounts that Dish Network racked up by bidding in the recent AWS-3 contest through a number of smaller entities.
The regulator has carried out a review of the satellite TV operator’s bidding practices and has concluded that the bidding vehicles it used were in violation of the spirit of the auction and therefore do not qualify for the discount, the Wall Street Journal reported on Thursday, citing unnamed sources familiar with the matter.
The sources said Tom Wheeler, chairman of the FCC, circulated a draft order to that effect to his fellow commissioners earlier this week.
Dish spent $13.3 billion acquiring licences in the AWS-3 auction that drew to a close in January, raising $44.9 billion in total.
It took part in the auction through three smaller outfits, two of which – Northstar Wireless and SNR Wireless – secured airwaves. At the time, the pair both qualified for a 25% small business discount under the FCC’s ‘Designated Entity’ rules, designed to help smaller companies secure spectrum. However, in late April the U.S. government opened an investigation into the matter, seeking to ascertain whether Dish broke rules on collusion.
In addition, last month Wheeler revealed that he had shared a set of draft rules with the FCC that, if approved, will make it easier for small companies to acquire spectrum while at the same time preventing big players from exploiting loopholes in the system.
The Wall Street Journal noted that if the FCC does reject Northstar and SNR’s discounts, the companies will be required to pay the additional $3.3 billion. They will not be able to walk away.
