Charging that the actions of DISH Network and affiliates SNR Wireless and Northstar Wireless in the Advanced Wireless Service (AWS)-3 auction earlier this y ear “deprived other bidders of the ability to fairly win licenses that they intended to immediately use,” T-Mobile asked the FCC last Friday to block DISH and its affiliates from participating in upcoming reauctions of AWS-3 licenses on which the companies defaulted last month.
T-Mobile’s request follows up on the FCC’s decision in August to deny $3.3 billion in bid credits to SNR and Northstar, which had participated in AWS-3 sale as small business designated entities (DEs) that qualify for a 25% discount off of their gross winning bids. In deny ing SNR and Northstar the bid credits and their status as DEs, the FCC concluded that both companies had “a financial dependency on” DISH of “unprecedented size and scope.” Facing liability for full pay ment of their collective gross winning bid of $13.3 billion, SNR and Northstar defaulted selectively on 197 of the 7 02 licenses they had won. Notwithstanding that default, and citing its earlier pronouncement that DISH and its affiliates had otherwise complied with disclosure and other FCC rules that governed the AWS-3 auction, the FCC concluded in a separate order that there was no grounds on which to “render an adverse decision as to Applicant’s basic qualifications to hold licenses.” The FCC further decreed that, while Northstar and SNR would be required to submit interim default pay ments amounting to 15% of the gross winning bids for licenses that they surrendered to the FCC, neither company would be deemed as a “current defaulter,” as the FCC had sufficient funds on hand from the companies’ previous upfront pay ments to cover the default pay ments. (Under the FCC’s rules, current defaulters are allowed to bid in spectrum auctions but are required to submit upfront pay ments that are 50% higher than what would otherwise be due.)
However, in its letter to the Commission last Friday , T-Mobile pointed out that the decision of SNR and Northstar to default on a portion of their AWS-3 licenses, together with their activities with DISH during the AWS-3 auction, effectively “seized control of the timing of the release of the spectrum assets from the FCC which is now faced with delay ing deployment of the defaulted licenses.” T-Mobile further claimed that, if DISH or its affiliates re-acquire some or all of the defaulted licenses during the reauction, DISH “will effectively give itself an extension of time to meet the build-out requirements for the defaulted licenses.” Describing that scenario as “an outcome that should trouble the Commission,” T-Mobile argued that a ban on DISH, Northstar and SNR’s participation in the upcoming AWS-3 reauction “is consistent with the Commission’s often-stated emphasis on maintaining the integrity of the auction process.” Officials of DISH, Northstar and SNR offered no comment.