The FCC has released a Memorandum Opinion and Order (“Order”) denying over $3 billion in small business credits claimed by DISH’s small business partners, Northstar Wireless, LLC (“Northstar”) and SNR Wireless LicenseCO, LLC (“SNR”) in Auction 97 (the “AWS-3 Auction”).  Northstar and SNR each asserted that it had less than $15 million in gross revenues over the past three years and therefore qualified as a “very small business” under the Auction 97 rules, which would entitle each of them to a 25% discount off the amount of their gross winning bids.  DISH holds an 85% equity interest in each Northstar and SNR.

The Order determines that DISH has de facto control over and the power to control Northstar and SNR, and therefore the average gross revenues of DISH over the past three years (over $13 billion) must also be attributed to both Northstar and SNR while evaluating their eligibility for the small business bidding credits.  Accordingly, Northstar and SNR do not qualify as “very small businesses.”

Notably, the FCC does not find that Northstar’s or SNR’s bidding activity violated the FCC’s rules that governed Auction 97, as it determines that both parties adequately disclosed their agreements and bidding arrangements with the FCC.  The Order directs Northstar and SNR to pay the full gross amount of their winning bids in Auction 97.  Once the full payment is received, the Wireless Bureau is directed to process their applications for the AWS-3 licenses.

It has been reported that DISH is “respectfully disappointed” in this decision, and will “consider [its] options going forward”.  Such options could include: paying the additional $3 billion for the licenses, refusing to purchase the spectrum and paying a penalty; or pursuing an appeal of the Commission’s order.

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