After meeting with members of the FCC’s Wireless Telecommunications Bureau on Wednesday, officials of DISH Network confirmed that a draft order has begun circulating among the FCC’s commissioners that denies $3.3 billion in small business designated entity (DE) bid credits accrued by a pair of DISH-affiliated DEs which participated in the Advanced Wireless Service (AWS)-3 auction. Together, the DEs in question—Northstar Wireless and SNR Wireless—posted gross winning bids of $13.3 billion for 702 licenses in the AWS-3 auction, which shattered records with nearly $45 billion in total gross bids. Complaints regarding DISH’s alleged control over Northstar and SNR, and the coordinated bidding strategy used by all three entities in the AWS-3 auction, factored into the FCC’s decision last week to adopt amendments to the agency’s competitive bidding rules that cap the amount of bid credits DEs may receive in future spectrum auctions and that prohibit shared bidding strategies among parties with common controlling interests.
Although DISH contributed 85% of the capital held by Northstar and SNR, DISH has consistently maintained that it does not hold a controlling interest in either entity. During Wednesday’s meeting, however, DISH was informed of the contents of the draft order in which the FCC concludes that DISH holds controlling interests in both Northstar and SNR. DISH thus acknowledged in a press statement that the draft order attributes DISH’s revenues to both entities, “which, in turn, makes Northstar Wireless and SNR Wireless ineligible to receive the 25% bidding credits . . . for which each had applied to receive as [DEs] under applicable FCC rules.” Despite rejecting Northstar and SNR’s eligibility as DEs, the draft order deems both entities as qualified to hold the licenses they won, albeit at the full bid price. The FCC also said it has no plan to designate the matter for a hearing or to refer the matter to the agency’s Enforcement Bureau.
Stressing that his company’s approach to the AWS-3 auction “followed twenty years of FCC precedent and complied with all legal requirements,” DISH executive vice president R. Stanton Dodge told reporters, “we respectfully disagree with the proposed denial of the bidding credits.” Dodge further claimed that his company’s investments in Northstar and SNR “helped make the AWS-3 auction the most successful spectrum auction in FCC history, and resulted in more than $20 billion of direct benefit to the American taxpayer.” Officials at Northstar and SNR offered no comment.