The Wall Street Journal reports FCC looking at DE abuse
The Federal Communications Commission is reportedly looking into revoking the $3 billion bidding discount Dish Network pocketed during the recent AWS-3 spectrum auction.
The Wall Street Journal reported that FCC Chairman Tom Wheeler had instructed his staff to look into Dish Network’s bidding activity tied to Auction 97, with that review possibly resulting in Dish Network losing the more than $3 billion bidding credit that dropped its total auction liability to just under $10 billion. Immediately after the auction concluded, FCC Commissioner Ajit Pai put out a statement requesting that Wheeler begin an investigation into the designated entity program, noting Dish Network’s ability to participate as a DE “makes a mockery of the DE program.”
Dish Network did not directly win any licenses in the auction, but instead backed a pair of DEs in SNR Wireless LicenseCo and Northstar Wireless, which prior to the auction were granted DE status as they each reported less than $15 million in annual revenue. DE rules allow for a 15% credit for small businesses, which are those with annual gross revenue of less than $40 million for the preceding three years, and 25% for “very small business,” or those with less than $15 million in annual gross revenue. Dish Network has annual revenue nearing $14 billion.
Following the close of the auction, Dish Network put out a statement highlighting its participation in the process through its partners.
“As part of the auction process, we publicly filed an application to participate as a potential bidder, and Dish invested in two entities that also publicly applied to participate in the auction as designated entities,” Dish stated.
The FCC’s DE program has been a flashpoint since its inception ahead of the PCS auctions in the mid-1990s. The move was initially an attempt by the FCC to inject more competition into the mobile telecom space, with a focus on minority- or woman-owned small businesses. However, established operators have used the rules to partner with entities granted DE status to get their hands on licenses for a discount, a move that had been expected since the beginning.
The FCC has attempted to curtail abuse of the DE program by setting up build-out requirements for licenses that would force operators to put spectrum to work and keep out those that may look to sit on licenses before flipping them to larger operators. Those requirements have met with limited success as license holders have found ways to meet the rules, while in actuality not offering a commercial wireless service.
Bored? Why not follow me on Twitter
