The US Federal Communications Commission (FCC) has issued an order preventing satellite TV giant Dish from purchasing broadcast spectrum rights under the guise of a small business.
The FCC ruled that the company cannot operate two small subsidiaries and receive discounts reserved for small businesses, while bidding for spectrum during the upcoming AWS-3 Auction 97. The auction will determine the rights carriers hold to operate wireless broadband networks in various US cities and districts.
The last such auction brought $45bn in total for the government.
Dish had previously been accused of operating two smaller companies, Northstar Wireless and SNR Wireless, in order to take advantage of the designated entity program, a rebate intended to allow smaller companies to bid for local spectrum rights alongside large national carriers.
The FCC noted that Dish, through an 85 per cent controlling interest in each of the companies, would effectively be able to control each in order to purchase spectrum with a discount it would otherwise not qualify for. The commission said back in June that it would be seeking to prevent abuse of the rule.
Had Dish been allowed to bid with the smaller firms, it could have nabbed more than $3bn in credits.
According to its last quarterly report [PDF], Dish logged approximately $3.7bn in revenues from January through March alone.
While the ruling will keep a big player from taking advantage of the credits program, FCC commissioner Mignon Clyburn noted that it could also unintentionally block some small companies from obtaining financial backing from investors.
"I hope this case will not have an undue chilling effect on the ability of small businesses to enter into relationships with large investors," she said in a statement.
"And I encourage small businesses to follow the guidance offered in this Order as they negotiate similar agreements in the future."
The wireless spectrum auction is tentatively set to take place in the first quarter of next year. ®