As expected, Dish Network will miss out on the US$3.3 billion worth of spectrum discounts it accumulated during the AWS-3 auction by bidding via a number of smaller entities.
In a statement on Wednesday, the satellite TV provider revealed that it – as well as representatives from said entities – met with the Federal Communications Commission (FCC) this week to discuss a draft order drawn up by the regulator that recommends Dish be prevented from receiving the discounts.
"Dish has a tremendous amount of respect for the FCC commissioners and staff, and we appreciate their hard work on this matter. However, we respectfully disagree with the proposed denial of bidding credits," said Dish general counsel R. Stanton Dodge, on Wednesday.
Dish spent $13.3 billion acquiring licences in the AWS-3 auction, also known as Auction 97, that concluded at the end of January, raising $44.9 billion in total.
It participated via three smaller subsidiaries, two o f which – Northstar Wireless and SNR Wireless – won spectrum. Under the FCC’s ‘Designated Entity’ rules, the pair both qualified for a 25% small business discount on the airwaves, reducing the bill by $3.3 billion.
This prompted a storm of criticism from rival bidders and a U.S. government investigation that sought to ascertain whether Dish’s bidding tactics breached the auction rules.
Late last week, the Wall Street Journal reported that the FCC had concluded that Dish’s practices were in violation of the spirit of the AWS-3 auction and therefore it will have to pay the extra $3.3 billion.
According to the draft order seen by Dish this week, the FCC has ruled that Dish has a controlling interest in Northstar Wireless and SNR Wireless, therefore Dish’s revenues should be attributed to them. As a result, Northstar and SNR are ineligible for the spectrum discount.
"Our approach to the AWS-3 auction, which followed 20 years of FCC precedent and complied with all legal requirements, was intended to enhance competition — in the auction and in the marketplace long term," Dodge insisted. "Our investments in NorthStar and SNR helped make the AWS-3 auction the most successful spectrum auction in FCC history, and resulted in more than $20 billion of direct benefit to the American taxpayer."
