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DC court says Dish skirted rules in US airwave auction
Wednesday, 30 August 2017 10:08

A US Court of Appeals has upheld US broadband watchdog the FCC's decision to bar companies connected to satellite provider Dish Network from claiming discounts on their bids in a 2014 wireless spectrum auction.

The DC Circuit's ruling Tuesday said the commission was right to withhold $3.3bn in small business credits claimed by SNR Wireless LicenseCo and Northstar Wireless on the grounds they were both fronts for the satellite TV giant.

The two LLCs were among the companies bidding in the FCC's AWS-3 auction, a sell-off that saw companies commit $45bn for airwave space for use with wireless networks. Looking to increase the participation of regional carriers in the auction, the FCC offered a "credit" program that let smaller firms claim back some of the money they spent.

SNR and Northstar had sought to receive some $3.3bn in credits for their combined bids of $13.3bn for wireless space. The FCC denied the claim, arguing that both companies' ties to Dish (since acquired by DirectTV) made them ineligible.

On Tuesday, the three-judge panel backed up the FCC's claim, declaring that SNR and Northstar were not, in fact, independent companies.

"The FCC reasonably determined that Dish exercised de facto control ... over SNR and Northstar's businesses. Dish had contractual rights to manage almost all of the essential elements of the petitioners' businesses, and petitioners faced enormous financial pressure to sell their companies to Dish after five years," wrote [PDF] Judge Cornelia Pillard.

"In addition, petitioners' auction bids suggested they were both functioning as arms of Dish, rather than as independent small companies each pursuing their own, independent interests."

The ruling means the FCC won't have to award the companies the credits, meaning they are on the hook for the full $13.3bn amount of their bids. The commission, meanwhile, says the ruling vindicated the stance it had all along – large companies have no business trying to get a piece of the incentives it set aside to help smaller operations compete.

"This is an important victory for American taxpayers. In the AWS-3 auction, the two entities claiming over $3bn in taxpayer-funded discounts were not independent small businesses, but rather under the control of Dish," the FCC said.

"Going forward, we need to make sure that this program is available only to legitimate small businesses that actually control their own destinies."

Dish did not respond to a request for comment. ®

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