Pressure is building for the Federal Communications Commission to investigate last month’s record-setting auction of valuable wireless licenses – and for the agency to change the rules for future auctions.
Dish Network secured winning bids at the auction through two partner companies that were able to take advantage of $3 billion in taxpayer-funded discounts for small businesses, despite the fact that Dish is a Fortune 500 company.
Dish didn’t participate in the auction directly. But it holds an 85 percent stake in both Northstar Wireless and SNR Wireless, which came into existence shortly before the auction and reported no gross revenues to the FCC.
Together, the two companies managed to snag $13.3 billion worth of spectrum at the auction for about $10 million, thanks to discounts intended to make it easier for small businesses to compete with large corporations.
Dish says it fully complied with rules set by the FCC, which is responsible for auctioning off the country’s wireless spectrum.
Now calls are growing for the FCC to revise its rules to make it harder for industry giants such as Dish to benefit from federal subsidies in future auctions.
“Wireless spectrum and federal resources are both far too scarce to allow multibillion-dollar corporations to abuse taxpayers this way,” Missouri Democratic Sen. Claire McCaskill wrote in an angry letter she sent on Thursday to FCC Chairman Tom Wheeler.
McCaskill said that she would address the problem through legislation if necessary.
At least one of the FCC’s five commissioners, Ajit Pai, also has objected in a statement to Dish’s apparent abuse of the auction rules, echoing concerns voiced by Dish rivals AT&T and Verizon and by lawmakers.
Sen. Kelly Ayotte, R-N.H., who serves with McCaskill on the Senate Commerce Committee, penned a joint editorial with Pai in the Wall Street Journal earlier this month, decrying the loophole that allowed Dish to benefit from the small business discount as “welfare for telecom giants.”
Ayotte and Pai agree with McCaskill that the FCC should tighten its rules to prevent further abuse. Unfortunately, they say, the agency instead issued proposals last year that would loosen the rules.
“We must change course, and soon, by closing loopholes that allow big businesses to rip off the American people to the tune of billions of dollars,” Pai said in a statement.
Kansas-based Sprint Corp. did not participate in last month’s auction, but the company likely will closely monitor the results of any probe or revision of the rules that could affect next year’s hotly anticipated auction of low-band spectrum. Low-band spectrum is considered particularly desirable because it can penetrate buildings and travel long distances, improving service.
“For Sprint, this is like waterfront property,” said Bill Ho, wireless analyst for the company 556 Ventures. “This is highly valuable stuff.”
Sprint declined to comment.