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Verizon: Dish & Cos. Colluded on AWS-3 Auction Bids

Verizon has alleged that Dish illegally colluded with designated entities (DE's) Northstar Wireless and SNR Wireless during the ASW-3 auction bidding, according to ex parte notifications of meetings it held with top FCC officials. Dish counters that it complied with all legal requirements, including antitrust laws.

The FCC is now deciding whether those latter two companies should get billions in bidding credits given that they were essentially bidding with Dish dollars — Dish owns a majority stake in both companies.

The collusion charge came in meetings last week between Verizon execs and FCC Republican commissioners and other staffers. Accompanying the Verizon group was Duke Econ professor Leslie Marx, who offered up an analysis of the relationship between the companies she said provided evidence of collusion in violation of antitrust laws and FCC rules.

Among the allegations were suppression of rivalry, distortion of information, allocation of markets and more.

"Collusive bidding during an auction is expressly prohibited and subject to sanctions by the FCC," Verizon pointed out.

The FCC does allow bidding consortia — Dish disclosed its relationship to the other two before the auction — but Verizon says it has never allowed those consortia to justify collusive conduct.

"The purpose of the disclosure rule was in fact to 'facilitate the identification and investigation of any suspect bidding behavior,'" Verizon said.

The FCC last week voted to seek additional comment on how it should change its auction rules, and did so in part because of the criticisms leveled at Dish in the AWS-3 auction bidding.

FCC chairman Tom Wheeler has not spoken directly to those criticisms beyond saying more generally that the FCC wanted to make sure slick lawyers were not able to game the auctions.

“We are confident that we fully complied with all legal requirements for the AWS-3 auction, including antitrust law and the DE rules, which were unanimously approved by the full Commission,” Dish said in a statement. “Our approach — which was fully and publicly disclosed ahead of the auction — was based on DE investment structures that have been approved by the FCC in past wireless spectrum auctions, including structures used by Verizon. Participation by small businesses through the DE program helped make the AWS-3 auction, on a gross and net basis, the most successful spectrum auction in FCC history.