The FCC decided unanimously this week that DISH CEO Charlie Ergen improperly bid on $12 billion worth of wireless spectrum in 2015, and received a more than $3 billion discount through a government program. Ergen bid on the spectrum in the AWS-3 Advanced Wireless Services auction through SNR Wireless and Northstar Wireless; DISH holds an ownership stake in both companies.
In 2015, the Commission denied their requests for approximately $3.3 billion in bidding credits, finding that they did not qualify for the 25 percent bidding credits available to very small businesses because they were controlled by DISH Network. SNR and Northstar appealed. In 2018, the U.S. Court of Appeals for the D.C. Circuit agreed with the Commission.
In that ruling, the Court also found the FCC had not given sufficient notice that SNR and Northstar would not be permitted to try to fix their control by DISH Network. The court sent the case back to the agency, directing it to offer the companies a chance to renegotiate their agreements with DISH to eliminate DISH’s control. The wireless companies then submitted revised agreements to the FCC.
For the past five years, as the controversy over the deal worked its way through the federal courts and the FCC, Ergen argued that SNR and Northstar were separate entities from DISH. The government didn’t agree and fined him $500 million, according to FOX Business.
This week, the FCC decided, based on the revised agreements, that DISH still possesses “de facto” control over SNR and Northstar. That’s why the agency says SNR and Northstar are still not eligible for the auction bidding credits they sought for the licenses they won in Auction 97. Because SNR and Northstar defaulted on 197 licenses—including licenses in New York, Boston, and Chicago—they paid the full price — $12 billion — for the remaining spectrum they won in the 2015 AWS-3 auction. The FCC said that’s why the companies don’t owe the Commission the additional $3.3 billion that they bid in the auction.
According to the decision, SNR and Northstar are subject to additional default payments that may become due when the defaulted licenses are auctioned in the future.
In a statement, FCC Chairman Ajt Pai said: “The parties’ endgame is as clear today as it was half a decade ago: DISH Network and its shell bidders want this spectrum at a taxpayer-funded discount. The Commission’s answer is as clear today as it was half a decade ago: No. Any well-established business that wants to buy spectrum at an FCC auction is more than welcome to do so through our spectrum auctions (and this FCC has made more spectrum available through auctions and has enabled more participation in those auctions than at any other time in its history). But they’re not doing it on the taxpayers’ dime.”
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