During a conference call with analysts on Wednesday, DISH Network CEO Charlie Ergen discussed his company’s wireless spectrum strategy in the event the FCC disallows bid discounts accrued by a pair of DISH-affiliated designated entities (DEs) in the Advanced Wireless Service (AWS)-3 auction. Ergen acknowledged that an FCC order denying the bid credits “would be a complicating factor” for DISH as it decides whether to participate in the incentive auction next year.
DISH holds an 85% economic interest in SNR Wireless and NorthStar Wireless, a pair of small business DEs which, together, posted gross winning bids of $13.3 billion for 702 licenses during the AWS-3 sale. Despite the fact that SNR and NorthStar had previously been deemed eligible for DE bid discounts of $3.3 billion, FCC officials informed DISH on July 22 that the agency planned to revoke SNR and NorthStar’s DE status on grounds that the stake held by DISH in both companies constitutes a controlling interest which would make SNR and NorthStar liable for full payment of their respective AWS-3 auction debts. The FCC, meanwhile, has yet to issue an order denying the bid discounts.
While he described himself as a “pretty big fan of Chairman Tom Wheeler” and of the FCC’s work under Wheeler’s leadership, Ergen related his belief that the FCC would make a big mistake in denying the bid credits, especially as “we were fairly confident [the FCC] was encouraging us to do exactly what we did.” Although Ergen said DISH might consider leasing or selling its wireless spectrum assets if the bid credits are rejected, he did not entirely dismiss prospects for retaining his company’s wireless licenses or entering the incentive auction, stressing: “we’re going to see the rules and see if there is a way to participate.” Apart from the AWS-3 licenses won by SNR and NorthStar, DISH controls 40 MHz of mid-band AWS-4 spectrum as well as 10 MHz of PCS H-block spectrum that has yet to be deployed. As he promised to confer with his company’s bidding partners after reading incentive auction procedural rules and the FCC’s upcoming decision on the DE bid discounts, Ergen added: “there’s . . . $3.3 billion of complications potentially, and I think there’s a trust factor.”