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.”