The US Federal Communications Commission (FCC) tightened the rules to its designated entity initiative, following an alleged misuse of the system by US broadcaster Dish Network earlier this year.

The program, designed to encourage smaller companies, rural players and minority-owned entities to participate in spectrum auctions, was hit by controversy after satellite broadcaster Dish Network used two of its “designated entities” – Northstar and SNR – to win spectrum worth $13.3 billion in the recording breaking US auction, qualifying for a $3.3 billion discount.

This prompted FCC chairman Tom Wheeler to order a review of the process earlier this year, pledging to fix the program.

In one of many new reforms relating to next year’s spectrum auction. the FCC has now placed a $150 million cap on discounts for companies qualifying for the scheme, and an additional $10 million limit on the overall amount any entity – “either a small business or rural service provider” – can receive in small markets

The amended competitive bidding rules also “prohibit joint bidding and multiple applications by one party as well as parties with common controlling interests”.

In the past, the FCC allowed companies to coordinate during auctions if they announced their plans in advance.

A limit has also been placed on the amount of spectrum smaller entities can lease to non-controlling investors.

In a statement, Wheeler said the new reforms outlined his commitment to providing innovative small businesses with “the opportunity to participate meaningfully in spectrum auctions and to spur additional competition”.

He said: “Our competitive rules must be carefully crafted and vigorously enforced to protect the integrity our auction programs.”

In light of the new reforms, the Wall Street Journal reports the FCC is poised to reject the discount it afforded to Dish earlier this year, following a long review by FCC staff.

According to a WSJ source, the FCC concluded the company’s bidding conduct violated the “broad spirit of the auction rules”.

Dish has always claimed it adhered to the rules, and it is believed that chairman Charlie Ergen will be willing to take the matter to court.