Senate Committee Starts Investigation Of Possible Collusion Of Dish and Affiliates In Spectrum Auction


The Senate Committee on Commerce, Science and Transportation is kicking off an investigation into allegations that Dish Network colluded with other bidders to win for itself up to $3 billion in discounts in the most recent spectrum auction held by the Federal Communications Commission (FCC).

In a letter addressed to the FCC, Senate committee chairman Sen. John Thune asked the commission to provide all correspondences between it and Dish and Northstar Wireless and SNR Wireless, the two Dish-owned wireless networks accused of coordinating with Dish to deliver discounts only "very small businesses" are eligible to receive.

"The Committee has significant questions about whether conduct surrounding the bidding employed by Dish Network and two affiliates adhered to both the letter and intent of the law, since it may ultimately cost three billion dollars in public funds," said Sen. Thune in a statement.

The accusation stems from a complaint filed by bidding rival Verizon, which said in an April 24 document filed before the FCC that "extensive evidence" shows Dish colluded with Northstar and SNR and violated not only the FCC's spectrum bidding rules but also antitrust law. Dish, which has a market capitalization of approximately $32 billion, owns 85 percent of both Northstar and SNR.

Both companies won a combined $13.3 billion worth of spectrum to control airwaves in Boston, Chicago, and New York, accounting for nearly 30 percent of all the $45 billion in licenses won during the FCC's Auction 97 held from November to January. This is second only to the $18.2 billion worth of airwaves won by AT&T. However, being the small businesses that they are, Northstar and SNR enjoy a $3 billion discount on their bids, pegging their payments at only $10 billion.

Dish itself, did not win any license, despite actively bidding on spectrum when other bidders, such as Verizon, AT&T, and T-Mobile, were also going after the same airwaves, thus creating the illusion of increased demand for that block of spectrum. However, when competing bidders dropped out, the three companies stopped bidding against one another.

"In examining the behavior of Dish, SNR, and Northstar as well as its effects, it is not difficult to draw comparisons to the activities described in Justice Department guidelines on common antitrust violations such as bid rigging, complementary bidding, and bid suppression," said [pdf] Sen. Thune in his letter to the FCC.

For its part, Dish says it looks forward to working with the Senate committee and the FCC throughout the investigation but maintains it complied with all bidding rules.

Photo: Dave Lindblom | Flickr 

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