The US Federal Communications Commission (FCC) voted to declare that two Dish Network affiliates are ineligible to receive $3.3 billion government discounts for airwaves bought in the recent US AWS-3 auction.
The decision comes after FCC chairman Tom Wheeler issued an order last month relating to Northstar Wireless’ and SNR Wireless’ applications for the licences.
The FCC briefed Dish on its recommendation at the time, stating the order would find the broadcaster has a controlling interest in both companies. This would mean its revenue should be attributed to Dish, thus making the two partners ineligible to receive discounts.
In a statement released yesterday, Wheeler said: “Our review of two winning bidders in the recent AWS-3 auction has concluded that they (SNR and Northstar) in fact are not eligible for bidding credits.”
“I’m proud that our thorough, fact based analysis ensures that bidding credits only go to the small businesses our rules aim to serve.”
SNR and Northstar won wireless licences worth approximately $13.3 billion in the auction earlier this year. The companies received 25 per cent bidding credits, based on revenue, giving them $1.4 billion and $1.9 billion in discounts respectively.
Following a month long review of Dish’s ties to the two companies, an FCC official reportedly told the Wall Street Journal (WSJ) the regulator found Dish had the power to control the smaller companies. The management services agreement between Dish and the two affiliates also showed that Dish had control, according to the source.
Following Wheeler’s order last month, Dish chairman Charlie Ergen said the company had three options should the FCC rule to reject the discounts.
Ergen claimed Dish could respond to the FCC by filing a lawsuit, opt to reject the licences and pay a penalty, or keep the licences and pay back the $3.3 billion.
The WSJ reports Dish’s partners have already paid $10 billion, and must pay the remaining $3.3 billion within 30 days.
Following the controversy, the FCC tightened rules to its small business auction discount scheme, with the amended guidelines now prohibiting joint bidding.
The regulator also placed a $150 million cap on discounts for companies qualifying for the scheme.