Crafty move by Dish to ‘save’ $3bn

Some might call the move shrewd, and others might suggest it’s crafty, but the Federal Communications Commission (FCC) is asking that its chairman Tom Wheeler rule on whether Dish Network is entitled to claim a $3 billion discount in its final bids last week totalling $13.3 billion in the FCC’s wireless AWS-3 spectrum auction.

Any operator is entitled to gain a discount if it has less than $15 million in annual revenue, and the scheme was designed to give very small telcos which operated in smaller communities a slight advantage in bidding for this extra spectrum.

However, Dish structured its bids as part of a pair of partnerships that were below this threshold.

FCC Commissioner Ajit Pai is saying that to give such a lucrative break to such a large business “makes a mockery” of the FCC’s small business discount scheme.

EchoStar speedily bounced back with its response, saying: “We respectfully disagree with the criticism of the Designated Entity program, and we are confident that we fully complied with the DE rules in the AWS-3 auction, which were unanimously approved by the full Commission. The DE program has been successful in providing much smaller entities the ability to access stronger capital structures, which has facilitated their meaningful participation in an auction process from which they would otherwise be precluded. Our approach — 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 AT&T and Verizon.”

With or without the discount, Dish Network is going to end up what one analyst called a “spectrum powerhouse”. One way or another Dish Network and Charlie Ergen is now one of the Top 5 spectrum holders in the US.

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