EchoStar Hints at Legal Challenge If FCC Changes AWS-3 DE Rules
The FCC must follow the same designated entity (DE) rules in the reauction of AWS-3 as it followed in the original 2014 auction, Dish Network parent EchoStar told the agency in comments this week on an auction procedures NPRM (see 2504010055). EchoStar hinted at a legal challenge if the FCC changes the rules. Two Dish-controlled DEs, Northstar and SNR, defaulted on winning bids in the auction, and EchoStar and the DEs “reasonably could be subject to a deficiency payment” if the auction underperforms, said a filing Tuesday in docket 25-70.
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The Dish DEs defaulted “predicated on the expectation that the defaulted-on licenses would be reauctioned under the same DE rules that applied in Auction 97, and thus would attract a similar number of bidders and a similar level of willingness to bid,” EchoStar said. But the NPRM “proposes to apply substantially more restrictive Part 1 DE rules that will likely lessen competition among bidders and therefore lessen bidding amounts,” it said. The changes include “a restrictive cap on bidding credits for small businesses, restrictions on joint bidding, and a prohibition on investments in multiple DEs.”
EchoStar warned of a “cascading impact” from the revised rules. Bidding by DEs “added more than $20 billion of proceeds to Auction 97, bringing what was expected to be [an] $18 billion auction up to $45 billion,” the company said. Changing the rules now would also “undo the necessary premise underlying DISH’s original commitment to the Commission and impermissibly interfere with EchoStar’s settled expectations, in direct contradiction” to U.S. Court of Appeals for the D.C. Circuit “precedent,” the filing said: “This would result in primary, secondary, and selective retroactivity that violates EchoStar’s due process rights and the Administrative Procedure Act.”
Council Tree Investors also said the FCC must stick with the Auction 97 rules in proposed Auction 113. “Relying on rules the FCC adopted during the summer after the conclusion of Auction 97, the NPRM proposes, inter alia, to impose a series of new conditions on … bidders, conditions that were not present in Auction 97.” The NPRM “treats Auction 113 as just another run-of-the-mill auction of FCC spectrum inventory, but that is not the case,” Council Tree said: “Auction 113 is intended to reauction 200 Auction 97 licenses, all but three of which were returned to the FCC in accordance with established FCC process” by Northstar and SNR “in lieu of paying for the underlying spectrum.”
WISPA, meanwhile, asked the FCC to retain a 35% bidding credit for companies with less than $4 million in annual revenues. “The Commission may be signaling that the geographic areas for the auctions will be so large that companies with less than $4 million in average gross revenues should not participate in the AWS-3 auction” or that a 35% credit would give small players a competitive advantage, WISPA said. Eliminating the credit “disfavors many of WISPA’s smaller members that may desire to acquire AWS-3 spectrum.”