Court Rules Two Airwaves Bidders Can Get Another Shot
30 August 2017 - 7:11AM
Dow Jones News
By John D. McKinnon
WASHINGTON -- A federal appeals court ordered the Federal
Communications Commission to give two firms affiliated with Dish
Network Corp. another chance at success in an airwaves auction
where the FCC determined they were ineligible for crucial
small-business discounts.
The ruling means that the companies, SNR Wireless LicenseCo LLC
and Northstar Wireless LLC, will have a shot at getting back
hundreds of millions in penalties they paid to the government due
to the failure of some bids, according to lawyers involved in the
case. The companies even could receive the discounts and spectrum
they were forced to forgo two years ago. But the extent of the
companies' victory was far from clear.
The controversy arose after SNR and Northstar submitted winning
bids totaling $13.3 billion for a significant chunk of the spectrum
the government was auctioning in 2014. The two companies asked the
FCC for $3.3 billion in the small-business credits, which are
designed to reduce the cost to smaller firms competing against
larger players for valuable airwaves.
The FCC later determined that SNR and Northstar were ineligible
for the credits, because the companies were "not simply partners
with Dish, but were under Dish's control," according to the court's
opinion. The two companies bought some of the licenses at full
price, but were forced to relinquish other spectrum licenses they
had won in the auction, which also triggered penalties totaling
hundreds of millions of dollars.
In its decision on Tuesday, the appeals court held that the FCC
was within its rights to decide that the two companies were too
closely tied to Dish, which was providing financial backing for
their participation in the auction. But the court added that the
agency didn't make it clear to the companies ahead of time that
they wouldn't be able to modify -- or "cure" -- their agreements
with Dish, in the event that the agency objected that the
satellite-TV giant had too much control over them.
Now the FCC must give the companies another chance to modify
their agreements, the court held.
But the decision by the U.S. Court of Appeals for the District
of Columbia Circuit leaves the FCC with significant discretion, and
it could simply touch off another round of litigation.
"Nothing in our decision requires the FCC to permit a cure,"
Judge Nina Pillard wrote for the three-judge panel. "That choice
lies with the FCC. But if the very opportunity to seek one is to be
foreclosed, applicants must have clear, advance notice to that
effect," particularly given the hundreds of millions of dollars at
stake, Judge Pillard said.
FCC officials took comfort in the court's determination that
their denial of credits for SNR and Northstar was justified under
the agency's rules. Agency officials suggested they would focus on
protecting the discount program from abuse.
"Today's D.C. Circuit decision explains in painstaking detail
why the commission reasonably determined that Dish abused a program
designed to help small businesses," FCC spokeswoman Tina Pelkey
said in a statement. "This is an important victory for American
taxpayers....Going forward, we need to make sure that this program
is available only to legitimate small businesses that actually
control their own destinies."
Dish cheered the decision, saying in a statement: "We are
pleased this has been referred back to the FCC. We look forward,
along with Northstar and SNR, to working with the FCC to address
any concerns they may have."
SNR said in a statement that "it is pleased that the court found
that the FCC did not give SNR fair notice of its decision not to
afford SNR the opportunity to cure concerns the FCC had about SNR's
contractual arrangements with DISH and has remanded the case back
to the FCC to allow SNR to cure those concerns."
Northstar couldn't immediately be reached for comment.
Write to John D. McKinnon at john.mckinnon@wsj.com
(END) Dow Jones Newswires
August 29, 2017 16:56 ET (20:56 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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