EchoStar Challenges AWS-3 Auction Rules in 10th Circuit
EchoStar is asking the 10th U.S. Circuit Court of Appeals to require the FCC to change rules in the AWS-3 auction order that commissioners approved in July (see 2507240055). In the order, the FCC rejected arguments by EchoStar, parent of Dish Network, that the agency should use the same designated entity (DE) rules in the reauction that it employed in the original (see 2507220033).
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Many of the licenses for sale in the upcoming auction were returned to the FCC by Dish Network, which EchoStar has since purchased, and if bids are too low, the company said it could be on the hook for a default payment penalty of billions of dollars. Dish won $3.5 billion in licenses through two DEs, Northstar and SNR, in Auction 97, which ended in January 2015. A reauction has been in the works since that year (see 1510020055).
EchoStar had warned the FCC it would consider legal action if its arguments were rejected (see 2504020017).
In a petition for review Friday, the company said adoption of more restrictive DE rules, including a cap on bidding credits available to small businesses, “will reduce both the potency and likelihood of participation by small businesses” in the auction and “undermine relied upon expectations that the competitive bidding rules for Auction 97 would continue to apply to any reauction of AWS-3 licenses.” The order “violates EchoStar’s due process rights, as well as its investment-backed expectations, by increasing EchoStar’s liability for past conduct.”
EchoStar also said the order violates the Administrative Procedure Act because it “did not sufficiently consider, or did not consider at all, evidence that broader designated entity participation would be an important factor contributing to the success of the auction.” It doesn’t address arguments that “the same ground rules for the auction was a necessary premise of the guarantee executed by EchoStar to settle the dispute arising from the first auction.”
In addition, the order violates the Communications Act, the petition said. “By changing the competitive bidding methodology for the AWS-3 licenses, the Commission has adopted two methodologies for the same class of licenses.” The FCC didn’t respond in its order "to this line of argument in EchoStar’s comments at all.”
The FCC said in the order that it's “not persuaded by arguments that the Commission may not use competitive bidding rules, including DE eligibility requirements, that differ from those used in Auction 97.” All auctions since 2015 “have been conducted under the updated rules in effect at the time, including the increased gross revenue thresholds we adopt today for the AWS-3 service-specific rules.” The order noted that the rules being used “have led to robust participation by small entities and rural providers.”
EchoStar noted that it filed in the Denver-based circuit court since the company is based in Englewood, Colorado. The 10th Circuit is considered a middle-of-the-road court, with seven judges appointed by Democratic presidents, five by Republicans.