Regulator: Airwave 'abuse’ hurt small companies

Dish Network’s plan to use a pair of smaller subsidiaries to buy up licenses to the nation’s airwaves “had an enormous impact” on small businesses, according to one of the regulators overseeing the deal.

Ajit Pai, a Republican member of the Federal Communications Commission (FCC), increased his criticism of the satellite TV provider on Monday.

ADVERTISEMENT

“[W]e now know that Dish’s abuse of the program had an enormous impact on actual small businesses serving actual customers,” he said in a statement.

For weeks, Dish Network has come under increasing criticism that it used two smaller subsidiaries to game the FCC’s rules in a recent auction for spectrum licenses. The companies qualified for special discounts meant to encourage participation by smaller companies, but critics point out that they are 85 percent controlled by Dish and appear to have been used to grab up airwave licenses on behalf of the satellite giant.

Pai on Monday cited multiple cases in which small companies were outbid in the auction by the Dish subsidiaries.

For instance, Nebraskan company Glenwood Telephone Membership Corp. was the provisional winner of two spectrum licenses, but it was outbid by one of the Dish subsidiaries, according to Pai. The same is true of Rainbow Telecommunications Association, which serves rural parts of Kansas.

“In every one of these cases, the Dish entities outbid small businesses that claimed either no discounts or a lower discount than those sought by Dish,” Pai said.

Use of the subsidiaries could add up to a $3 billion subsidy to Dish, opponents fear.

The transactions are currently pending before the FCC.

In a letter to Rep. Frank Pallone (D-N.J.) late last month, FCC Chairman Tom Wheeler said that agency officials “take seriously concerns that parties may seek to capitalize on our rules in order to receive benefits intended for small businesses or to game the auction process.”

“We will not grant licenses to any party that does not strictly adhere to those rules and precedents,” he added.

Pai said that even if Dish was not found to break the rules, there should still be changes made to the FCC's rules.

"Whether or not they violated our rules, the FCC must take immediate action to ensure that this abuse never happens again," he said.

– Updated at 3:28 p.m.