DISH DEs Denied Discount

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The FCC voted unanimously to adopt a Memorandum Opinion & Order (Order) denying approximately $3.3 billion in bidding credits to SNR Wireless LicenseCo LLC (SNR) and Northstar Wireless LLC (Northstar), two AWS-3 winning bidders that each sought Designated Entity (DE) status for 25% “very small business” bidding credit discounts in Auction 97. The SNR and Northstar license applications and discount request were immediately controversial due to the companies’ apparent affiliation with DISH, which decidedly is not a small business. Several parties—including Auction 97 participants Central Texas Telephone Investments LP, Rainbow Telecommunications Association, Inc., and VTel Wireless, Inc.—filed petitions to deny the applications. In its order, the FCC determined based on a totality of the circumstances that (1) DISH has de facto control over and the power to control SNR and Northstar by way of numerous controlling mechanisms; and (2) DISH’s revenues are attributable to each of SNR and Northstar because, among other things, both entities entered into agreements giving DISH authority over a wide range of their technology, network design, construction, operation, marketing, billing, accounting, and other functions. The FCC also found that the bidding conduct of the “ostensibly independent” SNR and Northstar in Auction 97 corroborates the FCC’s determination regarding the guiding role of DISH, including use of the same initial list of licenses and a series of identical bids for identical licenses. Aside from denying bidding credits, the Order takes no further actions against SNR or Northstar and will allow both companies to be awarded the licenses won at auction provided that additional payments are received. The FCC also declined to designate this matter for hearing or enforcement or refer the matter to the Department of Justice for an antitrust investigation. However, last month the FCC adopted a rural bidding credit and tightened its DE rules in order to promote participation by bona fide small and rural carriers in the upcoming 600 MHz Incentive Auction.

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