The U.S. Federal Communications Commission (FCC) will retain US$3.4 billion worth of mobile spectrum licences acquired by Dish Network in the AWS-3 auction earlier this year, and has imposed a financial penalty on the satellite TV operator for its failure to pay in full for those licences.
Dish won a significant amount of spectrum – racking up a bill of $13.3 billion – in January’s AWS-3 auction, but drew controversy by exploiting a loophole in the rules designed to help small players. It bid via three smaller subsidiaries, two of which – Northstar Wireless and SNR Wireless – won frequencies. Under the FCC’s designated entity (DE) rules, the pair both qualified for a 25% small business discount on the airwaves, reducing the overall bill by $3.3 billion.
In August the FCC ruled that Dish is not entitled to those discounts.
This week Dish announced that the FCC will retain $2.2 billion worth of the spectrum won by Northstar and $1.2 billion of that secured by SNR, leaving the pair paying $5.62 billion and $4.27 billion respectively for airwaves.
"Dish and the entities in which it has invested are expected to have an average of approximately 75 MHz of spectrum nationwide," the satellite operator said.
"The eligibility of Northstar Wireless, SNR Wireless and their investors (including Dish) to participate in future auctions, including any re-auction of the AWS-3 licenses retained by the FCC, is not affected," Dish added.
Dish said it has loaned Northstar and SNR $413 million to pay the penalty imposed on them by the FCC for defaulting on payments for the retained licences.
The companies could have more to pay, depending on how the FCC fares in any future attempt to re-auction the licences.
According to Reuters, which cited an unnamed FCC official, the regulator will seek to re-auction the licences, which number 197 in total, after it concludes its so-called incentive auction – the sale of 600 MHz frequencies currently held by broadcasters – next year.
Should the re-auction raise less than Northstar and SNR agreed to pay first time around, the two affiliates would be on the hook to pay the balance, the newswire explained.
