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Ergen and Dish Lose Out After $3.3 Billion FCC Ruling

Charlie Ergen
(Image credit: Future)

Already not flush with cash as they attempt to bootstrap a nationwide 5G wireless network, Dish Network and company Chairman Charlie Ergen received some unhappy news from the FCC earlier this week. 

As outlined by Fox Business, FCC commissioners unanimously ruled that Dish improperly received a $3.3 billion government discount on a winning bid for $12 billion worth of wireless spectrum purchased at auction in 2015.

The discount was tied to an FCC program aimed at helping small businesses obtain spectrum. Ergen claimed that winning bidder Northstar, which he also oversees, is a separate company from Dish

The government isn’t buying that claim. The FCC said Dish owns 85% of Northstar. The agency has fined Ergen $500 million, and its forcing Dish/Northstar to forfeit $3.3 billion worth of the spectrum.

And if the FCC can’t recoup the full $3.3 billion after auction, Dish and Ergen would have to make up the difference out of their own pockets. 

"There is no doubt that Charlie will be paying something," an unnamed telecom executive told Fox Business. "The government will auction this off and there is demand, but there are other auctions which means it will probably not go for $3 billion.”

Certainly, this is a bad time for Ergen to have to pay a speeding ticket. 

Dish was the facilitating third party in T-Mobile’s $40 billion purchase of Sprint earlier this year. The satellite TV company, which also operates virtual MVPD Sling TV, is now on the hook to build out a nationwide 5G network, replacing wireless competition lost through the consolidation. 

As part of that complex T-Mobile/Sprint arrangement, Dish shelled out $1.4 billion for pre-paid wireless service Boost Mobile over the summer. 

According to Ergen, meanwhile, Dish will “inevitably” merge its satellite TV operations with DirecTV, after AT&T sells the latter to private equity.