July 22, 2015 / 10:21 PM / 4 years ago

UPDATE 1-FCC tells Dish no go on discounts in recent airwaves auction

(Adds details of the meeting with FCC)

By Alina Selyukh

WASHINGTON, July 22 (Reuters) - U.S. Federal Communications Commission officials on Wednesday told Dish Network Corp that the staff review of the recent airwaves auction found Dish’s two affiliates ineligible for $3.3 billion in small-business discounts.

The officials also said the agency did not plan to refer the auction matter to its enforcement arm or the Justice Department, indicating that the review found no evidence of collusion or other rule violations, the company said in a statement.

In a proposed order, which now goes to the FCC’s five members for a vote, the agency staff found Dish had a controlling interest in the two entities, Northstar Wireless and SNR Wireless, rendering them ineligible for the 25 percent discount that they had sought.

A rejection of the discount would mean SNR and Northstar would have to pay more than $3 billion back to the FCC in order to keep the spectrum licenses they won in the FCC’s record-setting auction that ended in January.

“DISH has a tremendous amount of respect for the FCC commissioners... However, we respectfully disagree with the proposed denial of the bidding credits,” Dish Executive Vice President R. Stanton Dodge said in a statement.

“Our approach to the AWS-3 auction, which followed 20 years of FCC precedent and complied with all legal requirements, was intended to enhance competition - in the auction and in the marketplace long term.”

Dish has not said how it plans to respond, but it is expected to dispute the decision, possibly in court.

Dish and other companies had invested in SNR and Northstar in a relatively common process for FCC auctions. The two had little to no revenue, which is one of the key requirements to receive discounts on bidding as “very small businesses.”

The government gives the discounts with the goal of helping new entrants to the industry better compete with incumbents. The FCC earlier this month voted to restrict the amount of discounts small businesses can receive in future auctions.

SNR and Northstar together emerged with the second-highest bids in the $45 billion auction, behind AT&T Inc and ahead of the largest U.S. wireless carrier Verizon Communications Inc .

Reporting by Alina Selyukh; Editing by Sandra Maler and Lisa Lambert

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