Dish set to lose billions in wireless auction discounts

Dish set to lose billions in wireless auction discounts
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Federal Communications Commission Chairman Tom Wheeler has circulated a proposal to deny Dish $3.3 billion in discounts that it claimed by bidding through smaller companies in an airwave auction that ended earlier this year.

Dish's claim of the designated entity discounts had been blasted by lawmakers and some at the commission. Critics claimed the company gamed the system by bidding through two smaller firms — Northstar Wireless and SNR Wireless — in order to claim the discounts aimed at helping smaller companies in the auction.  

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The company made the announcement Wednesday after meeting with officials from the FCC's telecommunications bureau who have determined the discounts don't apply because Dish has a controlling interest in the two smaller companies. The companies would be allowed to keep the spectrum but have to pay full price. 

Dish said the order would not recommend the matter go to the enforcement bureau. Requests for relief from others would also be denied, according to Dish.

The company noted that the item has not yet been finalized. And the full commission would have to approve it. 

"DISH has a tremendous amount of respect for the FCC commissioners and staff, and we appreciate their hard work on this matter," said Stanton Dodge, the company's general counsel. 

He added: "However, we respectfully disagree with the proposed denial of 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.”

The FCC did not respond to a request for comment. 

Dish spent the second highest amount of money bidding for spectrum, despite not yet having a wireless network. AT&T spent more than $18 billion in bids, while Verizon spent more than $10 billion. 

The auction netted the government billions as wireless companies are increasingly hungry for available spectrum to satisfy demand from mobile phone users. 

A larger incentive auction is scheduled to take place next year. The FCC recently voted on rules aimed at closing loopholes in the designated entity program after Dish's attempt.