The FCC on Wednesday said it approved the applications of two designated entities affiliated with Dish Network (NASDAQ: DISH) during the AWS-3 spectrum auction, along with seven other bidders. However, the FCC has not yet decided whether the Dish-affiliated companies will receive bidding discounts worth around $3.3 billion. Instead, the agency has formally opened up the companies' applications for public comment and other third parties can file petitions to deny the companies from getting the licenses or the discounts.
So far the FCC has determined that two Dish DEs, Northstar Wireless and SNR Wireless, filed long-form applications that included all of the proper documents. The companies, along with the seven others, have been accepted, but the FCC is still reviewing all of the applications, and has issued a public notice to that effect.
"The Notice does not opine on the merits of any of the applications, nor does it make a finding that any of the applicants who have requested small business bidding credits are eligible for--or will receive--them," wrote Roger Sherman, chief of the FCC's Wireless Telecommunications Bureau, in a blog post.
Wireless carriers, lawmakers and FCC commissioners have criticized Dish, which they argue manipulated the FCC's rules and potentially even the auction itself to unjustly claim the bidding credits. Now interested parties, most likely wireless carriers like Verizon Wireless (NYSE: VZ), AT&T Mobility (NYSE: T) and T-Mobile US (NYSE:TMUS), can file petitions to deny the applications. The deadline for those petitions is May 11, with five days allotted after that for reply comments and another five days for rebuttals.
Verizon, for example, has already filed comments with the FCC indicating that it thinks Dish and its two DE partners engaged in a "bidding ring, intended to drive out competitors and then suppress rivalry among the ring members." Verizon alleged that Dish and the two DEs bid against each other to create a "false perception that multiple other parties were interested in those licenses" and then when other bidders dropped out of bidding they avoided bidding against each other.
"This result is virtually impossible to explain in the absence of coordination and collusion," Verizon said in a recent filing with the FCC. Dish has denied the charges and said that it and its two DEs followed the FCC's rules.
The FCC has yet to grant the licenses to Northstar and SNR, in which Dish holds an 85 percent economic interest. Dish's designated entities bid for 702 licenses, winning 25 MHz of total spectrum including 13 MHz of paired spectrum.
Sherman added that the FCC's staff will continue to rigorously assess applicants' compliance with Commission rules. If any Petitions to Deny are filed, they will be considered as part of its review. "We will consider each application on its own merits and make licensing and any bidding credit decisions according to the specific facts and totality of circumstances in the record," Sherman wrote.
Northstar Wireless and SNR Wireless made $13.3 billion in gross provisional winning bids. Both Northstar and SNR bid as so-called designated entities, a designation that receives a 25 percent discount on spectrum purchases. The DE rules are aimed at helping small businesses, rural telephone companies, and businesses owned by members of minority groups and women participate in spectrum auctions.
"The applications that seek small business bidding credits are the most complex, given that they detail the nature of the applicant's ownership and control structure, and require the review of the related corporate agreements that in some cases consist of a highly complex set of rights and obligations, including agreements pertaining to equity ownership, funding, joint bidding, and management services," Sherman wrote.
In addition to the two Dish-affiliated DEs, the FCC accepted the applications of 2014 AWS Spectrum Bidco, which is affiliated with TerreStar and Jarvinian; Advantage Spectrum, which is controlled by U.S. Cellular (NYSE:USM); Cypress Cellular, controlled by LP Anderson Pacific Partners; an individual, Beaulah Kurian; Orion Wireless, controlled by the David G. Behenna Trust; RigNet Satcom, controlled by Kohlberg Kravis Robert investment funds; and Tristar License Group, controlled by William Mounger II.
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