An influential senate committee wants documents and related information from Dish Network that explain how it managed to scoop spectrum at hugely discounted prices in January’s US auction.
“The committee has significant questions about whether conduct surrounding the bidding strategies employed by Dish Network and two affiliates adhered to both the letter and intent of the law, since it may ultimately cost three billion dollars in public funds,” said senator John Thune (pictured), in a strongly-worded statement.
Thune is chairman of the Senate Commerce Committee.
In addition to Dish and affiliates Northstar Wireless and SNR Wireless, a letter is in the post to the Federal Communications Commission, which organised the auction that ran from November 2014 to January this year.
The auction raised an eye-popping $44.9 billion, including $13.3 billion from Dish. However, the satellite broadcaster made bids via its two affiliates, which qualified as small businesses, or designated entities (DEs), under the FCC’s rules. DEs qualify for a discount, in this case some $3.3 billion.
The committee will look at how these affiliated companies approached the auction to establish whether “this three billion dollar price tag was appropriate or a result of wrongful conduct, flawed agency rules, or laws Congress must update.”
The auction rules allow bidders on any particular licence to see the number of competitors they face and the amount they are bidding, but not the other bidding parties’ identities.
“While FCC auction rules allow affiliated companies to share and coordinate some information, they warn that companies are not exempted from anti-trust laws designed to prevent collusive bidding practices,” warned a statement from the committee.
As small businesses, Northstar and SNR were legally entitled to a 25 per cent discount on the price of all winning bids.
According to analysis of data from the auction, quoted by the Senate committee, while Dish appeared to bid aggressively in the early rounds of the auction on hundreds of licences, on every occasion it dropped out when it was only facing Northstar or SNR – ultimately winning zero licenses up for auction while discount-eligible Northstar and SNR collectively won 702 licences.
“In an auction where the identity of bidders was supposed to be blind, complaints by other participants have raised concerns that the pattern of bids by Dish and its affiliates suppressed competition,” said the statement.
Dish has faced criticism before about its bidding tactics (particularly whether as a major corporation it was entitled to indirectly benefit from a discount programme aimed at small businesses).
In a blog yesterday, Roger Sherman, chief of the FCC’s wireless telecommunications bureau, said licence winners in the January auction were now open to public review.
The public can submit Petitions to Deny on any winning bidder’s application. The deadline for filing Petitions to Deny for any of the nine applications (including Dish and affiliates) is 11 May 2015.
In parallel, the FCC will continue to assess applicants’ compliance with commission rules. “The applications that seek small business bidding credits are the most complex,” acknowledged Sherman.
“These are complex and important matters, and we have a long way to go in our review before we reach final conclusions on all of the applications,” he added.