FCC to Deny Dish Network Spectrum Discount

The Federal Communications Commission reportedly will reject $3.3 billion in spectrum discounts requested by partners of satellite-TV provider Dish Network Corp., for spectrum awarded in the recent AWS-3 auction.

After a review of $13.3 billion of winning bids by two small companies backed by Dish, FCC officials concluded that the two entities didn’t qualify for the small-business discounts, the Wall Street Journal reports.

FCC Chairman Tom Wheeler is said to have circulated a draft order denying the discounts to the FCC’s other four commissioners.

Aside from forcing Dish to pay more for its spectrum, the denial of bidding discounts will not likely affect strategic thinking at Dish, but will force Dish to come up with the full $13.3 billion amount of the bids, rather than the lower $10 billion amount the discounts would have provided.

At the same time, though, there are rumors that Dish Networks talks with T-Mobile US parent Deutsche Telekom about an acquisition of T-Mobile US by Dish Network, are faltering.

Perhaps not surprisingly, the two parties do not agree on how to structure the deal, and how to value it. Charlie Ergen is known to be a fierce negotiator, while Deutsche Telekom likely prefers a deal weighted mostly to cash, rather than stock.

Observers speculate that it is possible other bidders could emerge, especially Comcast Corp., Altice SA and Sprint Corp.

Any bid by Sprint might seem doomed to failure, given the consistent antitrust rejection of any proposed combinations of any of the leading four U.S. mobile companies, including a proposed Sprint bid to buy T-Mobile US that was specifically rejected.

The other possibilities would likely face lower hurdles. Deutsche Telekom reportedly has approached Comcast about a potential bid.

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