Dish Network Corp. responded Monday to critics of its bidding
strategy in a recent auction of wireless licenses, saying it
followed all the rules and helped competition.
The company came under fire from rivals and some lawmakers after
it won big at the $45 billion auction that ended in January. Dish
itself didn't win any licenses, but the two firms it bankrolled
placed $13.3 billion in winning bids—second only to
AT&T Inc.'s $18.2 billion—then claimed $3.3 billion
in discounts aimed at small business.
Dish's reply came in a response to a letter sent last month by
Sen. (R., S.D.), who suggested Dish's strategy may have violated
auction rules. AT&T and Verizon Communications Inc. have also
argued that Dish's coordination with the firms suppressed
competition in some instances and created the false impression of
increased demand in others.
Dish said auction rules allowed it and the two firms, called SNR
Wireless and Northstar Wireless, to collaborate on bids and discuss
strategy during the auction because it disclosed the arrangement in
advance. Dish also pointed to past government auctions where other
carriers have collaborated in similar fashion with smaller
firms.
The company said its participation in the auction was good for
competition, and its collaboration with SNR and Northstar helped
the firms beat out industry giants AT&T and Verizon for some
licenses they may otherwise have lost.
"Some critics have taken a very narrow view of the auction and
claim that Northstar and SNR cost the American taxpayers over $3
billion," Dish wrote. "But that approach takes the bidding credits
out of context and ignores the results of the auction as a
whole."
Dish said its collaboration with SNR and Northstar allowed the
firms to compete more aggressively and therefore increased the
auction's overall haul by as much as $23 billion. "That result
should be applauded," Dish said.
"The fact that some auction participants are unhappy because
they did not win certain spectrum in the auction at the prices they
wanted is not evidence that competition was harmed," Dish
wrote.
The airwaves at auction are used to carry signals sent to and
from cellphones. They are at a premium now as soaring use of
cellphones to send and watch videos is forcing carriers to boost
capacity.
Dish doesn't offer wireless service but says it is exploring the
possibility. Owning these airwaves, it wrote, could increase
competition in the wireless industry by supporting a new service
provider.
The Federal Communications Commission, which administered the
auction, is currently reviewing Dish's application. The Wall Street
Journal reported last month that agency officials were skeptical of
Dish's tactics and could reject the $3.3 billion discount.
Write to Ryan Knutson at ryan.knutson@wsj.com
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