DISH to Lose $3.3 Billion Subsidy from FCC

FCC Commissioner Pai: ‘Win for taxpayers and legitimate small businesses’

FCC Commissioner Ajit Pai
August 18, 2015

The Federal Communications Commission (FCC) will not allow DISH Network to capitalize on a $3.3 billion taxpayer-funded discount it claimed to purchase wireless licenses earlier this year, after the agency ruled that the company does not qualify as a small business.

The Wall Street Journal reported: 

The Federal Communications Commission voted unanimously Monday to deny $3.3 billion in discounts sought by two small partners of Dish Network Corp. in an airwaves auction earlier this year.

The order was circulated by FCC Chairman Tom Wheeler in July and the agency had briefed the company on its recommendation. The decision led Dish Chairman Charlie Ergen to shift his tone earlier this month on possibly entering the wireless industry, saying that selling or leasing its airwave holdings might make more sense.

With the denial, Mr. Ergen had said the company had three options: refuse to buy the spectrum and pay a penalty; pay the additional $3.3 billion; or sue the FCC to overturn the decision.

Dish said it was disappointed in the FCC’s decision because it had complied with all legal requirements in its bidding. "We will the review the order when it becomes available, as we consider our options going forward," said Dish’s general counsel, R. Stanton Dodge.

The decision follows a months long inquiry after DISH Network secured a $3 billion taxpayer-funded discount to purchase nearly half of the wireless licenses sold at a government auction in January.

The company secured the discount through the FCC’s "designated entity" program, which is intended to help small businesses compete, by using two small companies it controls.

DISH co-founder Charlie Ergen is a major Democratic donor.

Republican FCC Commissioner Ajit Pai praised the decision the deny the company the taxpayer-funded subsidies, saying DISH was the "wizard controlling the entire show from behind the curtain."

"When the FCC’s Wireless Telecommunications Bureau disclosed that DISH Network Corp. (DISH)—a Fortune 250 corporation with annual revenues of $14 billion and a market capitalization of over $32 billion—owned 85 [percent] of two companies that claimed over $3 billion in small business discounts in the AWS-3 auction, I called for the FCC to conduct a thorough investigation," Pai said in a statement.

"Having completed that investigation, my colleagues and I now conclude that the two companies—Northstar Wireless, LLC (Northstar) and SNR Wireless LicenseCo, LLC (SNR)—are controlled by DISH and thus are ineligible for any small business discounts," he said. "They now owe the U.S. government $3.3 billion."

"This is the right answer under the law, and it is a win for taxpayers and legitimate small businesses," Pai said.

Published under: FCC