A U.S. government committee has opened an investigation into Dish Networks’ bidding tactics during the AWS-3 auction to see if broke rules about collusion.
Dish won frequencies in Auction 97, which concluded at the end of January, with gross bids totalling $13.3 billion.
It participated via a subsidiary called American AWS-3 Wireless, as well as via two designated entities (DEs) – Northstar Wireless and SNR Wireless – both of which qualified for a 25% small business discount under the Federal Communications Commission’s (FCC’s) ‘Designated Entity’ rules.
It emerged after the auction that of Dish’s three bidding vehicles, only Northstar and SNR won spectrum, securing the firm a discount of around $3.3 billion on its licences.
On Wednesday, the FCC approved the licence applications of Northstar and SNR; however, on the same day, the Senate Commerce, Science, and Transport Committee launched an investigation into whether Dish’s bidding tactics violated the auction rules.
To guard against collusion, bidders on a particular spectrum licence can see the number of rival bidders and how much they have bid, but not their identity.
According to the Commerce Committee, analysis of data from the auction showed that Dish bid aggressively on licences unless it was competing only with Northstar and SNR. Dish ultimately won no licences while its discount-eligible DEs won 702.
"The Committee has significant questions about whether conduct s urrounding the bidding strategies employed by Dish Network and two affiliates adhered to both the letter and intent of the law, since it may ultimately cost $3 billion dollars in public funds," said Commerce Committee chairman John Thune, in a statement.
The Commerce Committee has sent letters to Dish, Northstar, SNR, and the FCC requesting documents pertaining to bidding in Auction 97. The recipients have until 15 May to respond.
Dish has maintained throughout the aftermath of the auction that it has done nothing wrong, despite a barrage of criticism from telco giant AT&T and FCC commissioner Ajit Pai, who said its tactics made a mockery of the DE programme.
"An examination of how these affiliated companies approached the auction is the only way for Congress to determine whether this $3 billion dollar price tag was appropriate or a result of wrongful conduct, flawed agency rules, or laws Congress must update," Thune said.
