FCC Releases Text of Dish DE Decision

The FCC has released the text of its decision to deny over $3 billion in bidding credits to NorthStar and SNR Wireless, a decision that one commissioner said should not end the government investigation into Dish's dealings, and that another said was proper but did nothing to advance diversity of ownership.

The order explained that the credits were denied because Dish had provided the two minority-owned companies the majority of their capital and had contracted to build out and run their wireless network, which the FCC concluded was a controlling interest that invalidated the small business designated entity (DE) bidding credits NorthStar and SNR had claimed in the AWS-3 spectrum auction.

The vote was unanimous, but not without reservation.

Both Republican commissioners were solidly behind the decision. Ajit Pai called it "an important step toward ensuring that our designated entity program benefits legitimate, independent small businesses and respects American taxpayers and consumers alike." Had the credits been granted, it would have meant $3 billion less in the treasury's coffers for deficit reduction. Fellow Republican commissioner Michael O'Rielly said it was the right result.

Pai had called for an investigation of the relationship after he learned that Dish owned 85% of the companies. He said in his statement that the FCC decision should not necessarily be the end of that investigation. "I leave it to the U.S. Department of Justice’s Antitrust Division to decide whether any conduct exhibited during the auction and described herein runs afoul of the Sherman Act’s proscriptions."

For its part, the FCC order does not refer it to Justice, having concluded that Dish had not conspired to violate antitrust laws. O'Rielly also said he thought it would have made sense to refer the issue to Justice to let it rule on any antitrust questions given that was its subject matter expertise.

Democratic commissioner Mignon Clyburn, who voted to "concur" rather than to approve (that is short of "yes," but counts as approval) outlined her reservations.  

She said she concurred because under a "proper" interpretation of the rules on DE bidding credits Dish "has the power" to control the companies. But she also said it was unfortunate that the decision will likely mean that the small businesses, "who obviously lacked bargaining power when negotiating these agreements, will not be able to retain their licenses," with Dish likely paying the money, with the companies required to turn the licenses over to Dish.

"This does not advance the public interest goals of promoting economic opportunity and competition and disseminating licenses among a wide variety of applicants," she said, adding: "I hope this case will not have an undue chilling effect on the ability of small businesses to enter into relationships with large investors."

A Dish spokesperson had no comment on whether the company would challenge the decision. "We are reviewing the order as we consider our options going forward," the company said in a statement.

"Dish has a tremendous amount of respect for the FCC commissioners and staff, and we appreciate their hard work on this matter," the statement said. "However, we are respectfully disappointed that the Commission voted to deny the bidding credits. Our approach to the AWS-3 auction, which followed 20 years of FCC precedent and complied with all legal requirements, was intended to enhance competition -- in the auction and in the marketplace long term. Our 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."

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.