FCC denies Dish Network $3.3 billion in discounts

The Federal Communications Commission has ruled against Dish Network Corp. and voted unanimously to deny Dish’s $3.3 billion in discounts that two partners received earlier this year at an airwaves auction. The management services agreements between Dish and the entities also showed Dish had control, the official said.

The decision comes after a months-long review of Dish’s financial and operational ties to the two companies, Northstar Wireless LLC and SNR Wireless LicenseCo LLC, which had bid $13.3 billion in the record-setting auction that ended in January.

FCC Chairman Tom Wheeler announced in a statement that the FCC had voted to deny bidding credits to SNR Wireless and Northstar Wireless, the Designated Entities (DE) that acted on Dish’s behalf in the auction. “I’m proud that our thorough, fact-based analysis ensures that bidding credits only go to the small businesses our rules aim to serve”. Ergen has said he could consider not paying for the spectrum his company won in the auction, which carries a 15 percent penalty and seems unlikely.

Dish’s entities have paid about $10 billion, the FCC official said, and must pay the remaining $3.3 billion within 30 days or provide a letter of credit to make the payments within 120 days.

FCC staff had recommended that the commission decline to award discounts to SNR and Northstar, people familiar with the matter had told Reuters.

Dish said it complied with all legal requirements after a July 22 FCC briefing outlining the agency’s preliminary decision to disqualify the partners.

“It will eliminate some of the very negative handcuffs on the spectrum”, Ergen said, explaining that paying in full would allow Dish to sell or lease the spectrum with less restrictions. “This does not advance the public interest goals of promoting economic opportunity and competition and disseminating licenses among a wide variety of applicants”, she said.

Dish had disclosed its arrangement with the companies ahead of the auction, including its plan to coordinate bidding.

– see this WSJ article (sub. req.).