FCC Chairman Said to Reject DISH Affiliates Spectrum Discounts

Two partners to Dish Network Corp., the nation’s third-largest pay-TV provider, had been poised to reap more than $3 billion in small-business discounts after the two companies picked up around $13.3 billion in spectrum during an auction earlier this year.

But the Federal Communications Commission could soon foil the plan after staff there concluded the winning bids by the two companies during Auction 97 didn’t qualify for the discounts, The Wall Street Journal reported, citing people familiar with the issue.

Colorado-based DISH owns an 85 percent controlling interest in both Northstar Spectrum, LLC, and SNR Wireless Holdco, LLC, the parent companies of Northstar Wireless and SNR Wireless, according to a regulatory filing.

FCC Chairman Tom Wheeler on Wednesday circulated a draft order to his colleagues after FCC staff concluded the companies’ conduct violated what the Journal described as “the broad spirit of the auction’s rules.”

On Thursday, the FCC released an order that updated competitive bidding rules for auctions. Among the reforms: a prohibition on joint bidding and multiple applications by one party and parties with common controlling interests except in limited circumstances.

Wheeler said in a statement that the “restriction is based on encouraging competition both in the market and in the auction.”

Auction 97 raised an unprecedented $41.3 billion, with 31 winning bidders fetching 1,611 licenses. DISH’s two affiliates picked up nearly half of the wireless licenses sold, according to the Journal.

A Dish spokesman declined to comment on the newspaper report.

DISH, the satellite television provider with 13.8 million pay-TV subscribers in the United States, has been accumulating billions of dollars in spectrum licenses, though it doesn’t offer cellular service today.

In March, T-Mobile’s colorful CEO John Legere complained that the auction had been dominated by just three companies: AT&T, Verizon and DISH. But AT&T shot back that T-Mobile’s true rival was DISH, which had outbid T-Mobile on 132 licenses to win the rights.

“By ‘stacking’ bids on licenses, they [DISH and its affiliated companies] could place up to 3 bids on a single license … while only being at risk to have to actually purchase the license once,” AT&T’s Joan Marsh wrote in a Feb. 20 FCC filing, referring to Northstar Wireless and SNR Wireless.

DISH said in a May regulatory filing that it has invested more than $5 billion in 2008 to acquire certain wireless spectrum license and related assets. Separately, the company referenced applications by Northstar Wireless and SNR Wireless to acquire the AWS-3 licenses for which they were named a winning bidder in Auction 97. DISH said in the same filing that the U.S. Senate Committee on Commerce, Science and Transportation had requested information from the company concerning its relationship with Northstar Wireless and SNR Wireless and DISH’s participation in the auction.

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