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June 8, 2015
The Honorable Thomas Wheeler
Chairman
United States Federal Communications Commission
445 1ih Street
Washington, D.C. 20551
Dear Chairman Wheeler:
In the Federal Communications Commission's (FCC or Commission) recent AWS-3
Auction DISH Network funded two companies, Northstar Wireless LLC (Northstar) and SNR
wireless LLC (SNR), which won more than 700 licenses in the auction and have now applied for
the 25 percent bidding credits that are available to "very small businesses" under the FCC's rules
governing designated entities (DEs). If the FCC awards those bidding credits, they will have
won $13 billion of spectrum while having to pay only $10 billion, at a cost to American
taxpayers of $3.3 billion.
Following the auction, a number of smaller companies that bid in the auction have raised
concerns that they were squeezed out of the bidding on spectrum licenses in the auction by the
actions of DISH and its two DEs. Significant evidence also has emerged that strongly suggests
that D[SH and its DEs closely coordinated their bidding in ways that appear designed to obtain
an artificial advantage in the auction over other bidders, to drive other bidders out of the auction,
and to claim a significant discount at taxpayer expense in the process.
For example, one company, VTel Wireless (VTel), has explained that it actively
participated in nearly every previous spectrum auction and succeeded in obtaining spectrum in
those auctions. I In the AWS-3 auction, however, VTel contends that it was effectively squeezed
out by the coordinated bidding activity of DISH, Northstar, and SNR, which made it appear that
three other bidders were competing for the license to VTel when in fact it was only the DISH
entities. Similarly, a group of rural telephone companies have explained that the coordinated
bidding by DISH and its DEs "systematically and quickly drove most of the Telecos out of the
auction. ,,2
1 Letter from Bennett L. Ross, on behalf of VTel, to Marlene H. Dortch, FCC(March 26, 2015), available at
http://apps.fcc.gov/ecfs/document/view?id=60001041479.
2 Letter from Donald L.Herman, Jr. on behalf of 10 rural telephone companies, to Marlene H. Dortch FCC(March
25,2015), avajjable at http://apps.fcc.gov/ecfs/document(view?id=60001041455.
These reports are troubling and merit your thorough investigation. When Congress
established the Commission's auction authority, it also required the Commission to "ensure that
small businesses, rural telephone companies, and businesses owned by minority groups and
women are given the opportunity to participate in the provision of spectrum-based services.,,3
Accordingly, I encourage you to carefully investigate all aspects ofthe conduct of DISH
and its DEs in the AWS-3 auction before determining whether to award licenses or grant
discounts to these entities.
Additionally, as cited in footnote 580 in the FCC's AWS-3 Auction Order, the FCC
requested the United States Small Business Administration's (SBA) approval of its final rule
adopting small business size standards differing from the SBA's size standards. However, no
mention is made of a response from the SBA. The Committee requests a copy of both the FCC
letter to the SBA requesting the alternate size standards as well as the SBA's response permitting
use of such alternate standards.
Thank you for your prompt attention to this matter. If you have any questions regarding
this request, please contact Joe Hartz, Professional Staff with the Committee at (202) 225-5821
or joe.hartz@mail.house.gov.
Sincerely,
s(sCkw
Steve Chabot
Chairman
347 U.S.C. §309(j)(4)(D).