In a record auction that drew $45 billion in bids this January, Dish Network’s designated entities Northstar Wireless and SNR Wireless managed to win $13.3 billion in bids during the ASW-3 auction bidding. The Federal Communications Commission (FCC), however, is currently investigating the eligibility of the two companies and their participation in the auction after Verizon Communications Inc. alleged that Dish illegally colluded with them.
The auction was a big victory for Dish, behind AT&T’s $18.2 billion but ahead of Verizon’s $10 billion win. Verizon, the nation’s largest wireless carrier, is accusing Dish of violating antitrust rules, in part because of its aggressive and complex bidding strategy. Dish did not technically win any licenses but rather worked with Northstar Wireless and SNR Wireless, of which it owns 85 percent. Because they were eligible for a 25 percent discount for small businesses, the two companies saved Dish and its partners about $3.3 billion. Verizon says that Dish took advantage of their designated entities, which are designed to help small businesses participate in such spectrum auctions.
Verizon met with the FCC April 22 and told officials that Dish had coordinated such a plan and suppressed competition. Verizon representatives pointed out that “collusive bidding during an auction is expressly prohibited and subject to sanctions by the FCC.”
In its defense, Dish says that it followed all of the auction’s rules and disclosed its bidding strategy prior to the auction. On behalf of the company, a Dish spokesman stated that the auction was done fairly and said, “We are confident that we fully complied with all legal requirements, including antitrust law.”
After Verizon announced its position on the issue, Dish responded in a statement, saying, “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.”
There are still weeks ahead before the FCC makes its decision on whether or not to accept the bids or reject the discount. It is likely that it will not release a ruling until the summer. It is understood that as of today, the FCC is reviewing potential changes to its bidding rules and is seeking comments on how it should improve the auctions. This is in part because of the criticisms against Dish in the AWS-3 auction bidding this year and some proposals are designed to block the kind of bidding strategy that Dish used.
A number of other corporations have also complained about the discounts that Dish received. Regardless, it should be noted that the AWS-3 auction was the most successful spectrum auction in FCC history because of the designated entity program and participation by businesses like Northstar Wireless and SNR Wireless.