DC Circuit Upholds Denial of AWS-3 Bidding Credits but Gives Dish DEs Chance to Fix

The FCC reasonably looked at precedent when it decided Dish Network held "a disqualifying degree of de facto control" over designated entities SNR and Northstar in the AWS-3 auction, but it didn't give those DEs enough notice that if their Dish relationships cost them their auction bidding credits they would also be denied an opportunity to cure, the U.S. Court of Appeals for the D.C. Circuit ruled Tuesday. Judges Janice Brown, Cornelia Pillard and Stephen Williams, in a docket 15-1330 decision (in Pacer) inked by Pillard, remanded the SNR appeal to the FCC, giving the DEs a chance to negotiate a solution for that de facto control.

Dish had contractual rights to manage almost all the DE business elements, and they "faced enormous financial pressure" to sell to Dish after five years, the D.C. Circuit said. Their auction bids also suggested they were "functioning as arms of Dish" instead of as independent businesses, it said. The FCC argued that letting the DEs have an opportunity to cure creates a moral hazard problem of incentivizing non-compliance with DE rules, but the ruling doesn't require the FCC to permit a cure, the court said: "That choice lies with the FCC."

The agency, Dish and outside counsel for SNR didn't comment. Oral argument in SNR v. FCC was held in September.