FCC Member Seeks Investigation of Dish Auction Discount

A member of the U.S. Federal Communications Commission on Monday called for an investigation of a $3 billion discount granted to partners of Dish Network in the government’s recent auction of wireless licenses.

Republican Commissioner Ajit Pai of the five-member FCC called on agency Chairman Tom Wheeler to review the award, saying that giving such a lucrative break to a company as large as Dish “makes a mockery” of the small-business discount program at the taxpayers’ expense.

In a relatively common process for FCC auctions, Dish and partners invested in separate companies with little to no revenue that can receive a 25 percent discount in auction bidding as “very small businesses.”

The companies spent $13.3 billion at the record-setting auction but provisionally received a $3.3 billion discount. The government gives such discounts with the goal of helping new entrants to the industry better compete with incumbents.

Following standard procedure, FCC officials will now scrutinize the details of legal and financial ties of those separate companies to Dish and other corporations to ensure their independent operations.

An FCC official on Monday said the agency will evaluate whether applicants are the ones “running the show” by reviewing agreements with Dish on bidding, financial dealings, management, day-to-day operations and network sharing.

The agency will also study what the companies’ comments and actions after the auction indicate about their relationship, as well as data on their bidding activity, the official said.

Dish had an 85 percent non-controlling ownership interest in the bidding entities, Northstar Wireless and SNR Wireless LicenseCo, which were also backed by financial firms Catalyst and BlackRock.

FCC rules do not prohibit corporations from backing small entities, but are meant to reject firms that serve as a front for corporations or plan to quickly flip the acquired spectrum.

“Our approach — publicly disclosed ahead of the auction — was based on (designated entity) investment structures that have been approved by the FCC in past wireless spectrum auctions, including structures used by AT&T and Verizon,” a Dish spokesman said in a statement.

The FCC is also weighing whether to alter bidding credits eligibility and rules for its auction of highly coveted low-frequency airwaves planned for 2016. And an official in Pai’s office said they would do whatever they can to close discount loopholes for that sale.

(Reporting by Alina Selyukh in Washington and Luke Koshi in Bengaluru; Editing by Gopakumar Warrier and Christian Plumb)

This article originally appeared on Recode.net.

Will you support Vox’s explanatory journalism?

Most news outlets make their money through advertising or subscriptions. But when it comes to what we’re trying to do at Vox, there are a couple of big issues with relying on ads and subscriptions to keep the lights on:

First, advertising dollars go up and down with the economy. We often only know a few months out what our advertising revenue will be, which makes it hard to plan ahead.

Second, we’re not in the subscriptions business. Vox is here to help everyone understand the complex issues shaping the world — not just the people who can afford to pay for a subscription. We believe that’s an important part of building a more equal society. And we can’t do that if we have a paywall.

So even though advertising is still our biggest source of revenue, we also seek grants and reader support. (And no matter how our work is funded, we have strict guidelines on editorial independence.)

If you also believe that everyone deserves access to trusted high-quality information, will you make a gift to Vox today? Any amount helps.

One-Time Monthly Annual

$5/month

$10/month

$25/month

$50/month

Other

$

Yes, I'll give $5/month

Yes, I'll give $5/month

We accept credit card, Apple Pay, and Google Pay. You can also contribute via