FCC moves forward with plans to change designated entity rules amid criticism of Dish's AWS-3 strategy

FCC Chairman Tom Wheeler is pressing ahead with a plan to change the agency's rules on designated entities ahead of next year's incentive auction of 600 MHz broadcast TV spectrum. Wheeler has vowed to fix the rules so that they benefit truly small businesses and are not used as a front to let major corporations win discounts on spectrum.

Dish Network (NASDAQ: DISH) has been roundly criticized by carriers, lawmakers and others for manipulating the FCC's designated entity system in its bidding strategy for the AWS-3 spectrum auction to get discounts. Dish has pushed back against that, arguing that it followed the FCC's rules.

Wheeler "circulated a draft Competitive Bidding Comment public notice to commissioners yesterday," FCC spokeswoman Kim Hart told FierceWireless. The movement at the FCC was first reported by Reuters. According to Reuters, the public notice will seek comment on the best ways to reform the rules. Designate entity rules are designed to ensure that small, rural and minority-owned businesses can compete with large companies in auctions.

The FCC probably won't vote on the issue until its April meeting. After that, it will likely review public comments on the topic for months.

The move by Wheeler should come as no surprise. Last week at a hearing of the Senate Commerce Committee, Wheeler said the FCC would address the issue. "We are going to fix this," he said, according to The Hill. "We are going to issue a new public notice on this to make sure that this specific issue is teed up. We are going to make sure that designated entities have the opportunity to participate and not have designated entities be beards for people that shouldn't."

Dish partnered with two designated entities during the AWS-3 auction, and the two DEs ultimately secured more than $3 billion in discounts in the AWS-3 auction. However, the FCC is still reviewing the DE credits that were awarded and has said no spectrum will be granted to entities that violated the auction rules.

Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE:T) and T-Mobile US (NYSE:TMUS) have each criticized Dish's strategy in filings with the FCC. They have also said the results of the AWS-3 auction--which raised close to $45 billion in bids, a record amount--shows that the commission needs to take a tougher line on joint bidding.

A Dish spokesman did not immediately respond to a request for comment. However, a Dish representative in a statement to Reuters said that the company is looking forward to working with the FCC for rules on the incentive auction.

For more:
- see this Reuters article

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