The competition in the United States for telecommunications power is mammoth. Rivalries among broadband and wireless providers have raged for years, increasing in aggression as more spectrum becomes available through government auctions. The result? The fight for bands bolsters telcos’ competitiveness. The recent debate over Dish Network’s participation in the latest round of spectrum auctions this January is demonstrative of this trend as other giant telcos seek to dismantle the discounts Dish received on its spectrum bids, and put it in jeopardy of losing its spectrum altogether. Reports circulated this week indicating that the F.C.C. is now involved in what appears to be a rather backhand move on the part of Dish to reduce its spectrum bill.
The wireless auction that ended in January saw the distribution of $45 billion worth of spectrum. Dish garnered $13.3 billion worth of bids from it, and claimed $3.3 billion in discounts that go to small businesses. The broadband giant had financially supported — and owned 85% of — two smaller companies, SNR Wireless and Northstar Wireless, which did the bidding for the spectrum. The small company discount is 25%, and thanks to Dish’s bankrolling, SNR Wireless and Northstar Wireless saved the tech giant that $3.3 billion.
Verizon appears to be the most irritated by this move on the part of Dish, and filed a complaint with the Federal Communications Commission alleging that Dish violated the rules of the auction. (It bears noting that Verizon garnered only $10 billion worth of spectrum, putting it at third place after Dish, and AT&T — the top bidder.) Last week, Verizon told the F.C.C. that Dish and its partners suppressed competition and divided markets in order to lower its final bill. On April 27, the Wall Street Journal reported that “people familiar with the matter” say that the F.C.C. might actually deny Dish those billion-dollar discounts, although that decision will not be issued for weeks. Verizon also claims that Dish has likely violated antitrust rules, and that its coordinated bids with SNR and Northstar gave other bidders the false impression that there was more competition from smaller companies. Dish naturally has replied that it is in compliance with all regulations.
The fuss from rival telcos is loud because spectrum is a coveted item. While it remains to be seen how the F.C.C. will decide on whether or not Dish played a sneaky card, the debacle over its right to those discounts highlights the divisive nature of the spectrum market in the U.S.