Tom Wheeler, chairman of the Federal Communications Commission.
Photograph by Jim Watson — AFP/Getty Images/file

After Dish claimed $3.3 billion of "small business" credits in a recent spectrum auction, the FCC is proposing new bidding rules.

By Jeff John Roberts
June 25, 2015

When the FCC ran a spectrum auction last year, everyone was surprised to learn who obtained $3 billion worth of “small business” credits: It was none other than the TV giant, Dish Network, which critics say worked with two tiny companies in order to game the bidding process.

Dish’s strategy, which saw it win $13.3 billion worth of bids in an auction that raised $45 billion, outraged competitors and public interest groups, and triggered an FCC investigation into whether Dish should be allowed to claim the credits. The purpose of the credits is to help small and rural operators obtain precious spectrum licenses to compete in the wireless market.

The Dish DISH investigation is still ongoing but, in the meantime, FCC Chairman Tom Wheeler announced proposed rules intended to stop similar shenanigans during future auctions. Specifically, the rules call for a ban of joint bidding and a cap on the credits that a company can receive in any one auction.

The proposals come as the agency lays the groundwork for a massive auction expected to take place next year. That auction will see wireless companies bid on spectrum currently allocated to TV broadcasters, and is expected to raise billions for the U.S. Treasury and for emergency services networks.

On a conference call on Thursday, a senior FCC official avoided pointing figures directly at Dish, but did say the purpose of the new rules is to stop big companies from “gaming” the system.

The official suggested the prime tools to accomplish that are the ban on joint bidding, and the cap on credits, which will top out at $150 million for small businesses and $10 million for rural service providers. The rules also propose restrictions on “unjust enrichment.”

The proposed FCC measures come amid a growing clamor for spectrum to serve the booming wireless market, and concern from some that incumbents such as AT&T and Verizon are hogging too much of it. For next year’s auction, the FCC is planning to set aside 30 MHz of spectrum for bids from smaller companies – on Thursday’s call, the FCC official indicated that Chairman Tom Wheeler does not plan to heed T-Mobile’s GOOG request to raise that amount to 40 MHz.

The Chairman’s office plans to circulate a full copy of the new bidding rules today, and the Commission is expected to vote on them at its July meeting.

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