Computer companies want the Supreme Court to reverse the Federal Communications Commission's decision to deny Northstar Wireless billions of dollars in designated-entity bidding credits in its AWS-3 spectrum auction, arguing the decision was a case of illegal government overreach.

The Computer & Communications Association has joined an amicus brief by The Phoenix Center and four others supporting Northstar’s appeal of that decision on due-process grounds.

CCIA and company said if the FCC had problems with Northstar, it should have it should have stopped the auction “before the omelette was scrambled.” Northstar followed the rules, it argued, but the FCC “moved the goalposts” because it was unhappy with the auction result.

The brief does not mince words: “The Commission disavowed its prior decisions, treated the Petitioner inconsistently from entities that previously qualified for Designated Entity benefits, and even treated the Petitioner differently from other applicants for such benefits in the same auction. Disparate treatment like this can only happen when an agency feels unconstrained by the ordinary bounds our Constitutional system imposes on those who wield government power.”

FCC commissioners had unanimously ruled that Dish Network improperly received a $3.3 billion government discount on a winning bid for $12 billion worth of wireless spectrum purchased at the 2015 auction. The discount was tied to an FCC program aimed at helping small businesses obtain spectrum. Dish Network chairman Charlie Ergen claimed that the winning bidder — Northstar — is a separate company from Dish.

The FCC disagreed, ruling that Dish owned 85% of Northstar. The agency fined Dish $500 million and decided to force Dish/Northstar to forfeit $3.3 billion worth of the spectrum.

Northstar appealed that decision to the U.S. Court of Appeals for the D.C. Circuit, which has primary jurisdiction over FCC decisions. In June of 2022, that court backed the FCC, setting up the appeal to the Supreme Court, which has not decided whether to take the case. ▪️

Federal Commuications Commission commissioner Ajit Pai said Dish's use of designated-entity (DE) rules makes a "mockery" of the just-completed AWS-3 spectrum auctions. He called on FCC chairman Tom Wheeler to investigate what he calls the DE rule-driven multi-billion dollar subsidies to Dish.

Dish was the second largest bidder with over $10 billion in licenses, including over $3 billion through co-investments with smaller businesses. Dish actually bid about $13.3 billion, but it drops to $10.4 billion with the 25% designated entity discount.

"Those discounts came through the FCC's designed entity program, which is intended to make it easier for small businesses to purchase spectrum and compete with large corporations," said Pai. "Dish, however, has annual revenues of almost $14 billion, a market capitalization of over $32 billion, and over 14 million customers. Its participation makes a mockery of the DE program."

Pai says that Dish's 85% ownership stake in those bidding ventures makes a mockery of the designated entry rules.

The FCC loosened those rules last year to make it easier for small businesses to bid by allowing them to lease the licenses to larger carriers and still get the bidding credits, but Pai dissented saying that it would invite auction end-runs by big business.

The chairman's office had no comment at press time about Pai's complaint. Dish spokespeople were not available for comment at press time.