Sticker shock looms over Dish's mobile strategy

The FCC is looking to reject $3.3 billion in discounts on spectrum licenses

Wireless spectrum is likely to get about US$3.3 billion more pricey for Dish Network, the U.S. satellite TV operator that's angling to get into the mobile business.

Two companies affiliated with Dish won frequency licenses in the Federal Communications Commission's AWS-3 auction earlier this year and expected a 25 percent discount that was designed to get smaller players involved. But the FCC's now drafted an order that says those companies don't qualify for the savings because they're really controlled by Dish.

Dish met on Wednesday with FCC staff, along with affiliate companies Northstar Wireless and SNR Wireless, and was informed that a draft order from the agency says the two companies aren't eligible for the discount because Dish owns controlling interests in them.

Northstar stood to save $1.9 billion and SNR about $1.4 billion. They would still be eligible to buy the licenses, but only at the full bid price. In addition, the FCC won't bring the matter to a hearing or refer it to the U.S. Department of Justice, Dish said.

The draft order still needs to be approved by a majority of the FCC commissioners.

Dish said it complied with all legal requirements and that it disagreed with the agency's proposed decision. Its participation in the auction, in which AT&T and Verizon were the biggest bidders, was intended to enhance competition, the company said.

Counting the bids by Northstar and SNR, Dish bid about $10 billion in the auction, nearly as much as Verizon put up. The auction raised more than $40 billion, which will go toward the planned FirstNet national public-safety network.

Dish doesn't have a mobile network but has been accumulating spectrum licenses that it might use for one. After a failed effort to acquire Sprint in 2013, Dish recently was reported to be in merger talks with T-Mobile USA. Meanwhile, AT&T's acquisition of Dish rival DirecTV is expected to close soon.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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