Dish-Connected Bidders Won’t Get Billions in DE Credits

Dish Network has confirmed reports that the FCC intends to withhold $3.3 billion in credits that Dish’s bidding partners obtained in this year’s AWS-3 spectrum auction. Verizon (NYSE: VZ), for example, told the FCC in April that it thought Dish and its two DE partners engaged in a “bidding ring, intended to drive out competitors and then suppress rivalry among the ring members”.

In addition, the FCC will not designate the matter for a hearing, or refer it to the FCC enforcement bureau or the Department of Justice, indicating the commission had not found any collusion or other breach of auction rules. “However, we respectfully disagree with the proposed denial of the bidding credits”, Dish Executive Vice President R. Stanton Dodge said in a statement. Dish’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”, he said.

The draft order could still be changed as it looks for approval from a majority of the Commissioners. In spite of its 85 percent stake in each of these companies, Northstar and SNR claim that Dish does not control the affiliates.

An FCC spokeswoman declined to comment.

“Dish has a tremendous amount of respect for the FCC commissioners and staff, and we appreciate their hard work on this matter”. The two had little to no revenue, which is one of the key requirements to receive discounts on bidding as “very small businesses”. That would mean they should have to pay the full amount for airwaves won in an auction earlier this year because they wouldn’t qualify as small companies.

SNR and Northstar together emerged with the second-highest bids in the $45 billion auction, behind AT&T Inc and ahead of the largest U.S. wireless carrier Verizon Communications Inc. Its likeliest response is a legal challenge to the FCC’s order.

During the auction, Dish’s affiliates acquired around 25MHz of spectrum near the now deployed AWS 1.7/2.1GHz spectrum to supplement Dish’s 700MHz spectrum and 2GHz AWS-4 spectrum, which consists of satellite spectrum repurposed for terrestrial service. Dish’s ability to spend is already severely weakened by the fact that it paid out around $8.7 billion in AWS-3 FCC license deposits last quarter and has around $14.4 billion of debt on its balance sheet.