Legal Battle With FCC Not Worth $3 Billion, Advisers Tell DISH

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Peter Fricke Contributor
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Analysts say it would be cheaper for DISH Network to give up $3.3 billion in small business rebates rather than fight a legal battle with the government to keep them.

The Federal Communications Commission is likely to rule that DISH is ineligible for the credits, and a report released Tuesday by Capital Alpha Partners, a strategic policy research firm, advises DISH against challenging that decision in court, saying the FCC could withhold $10 billion in broadcast licenses DISH has already paid for until the case was resolved.

“If the FCC objects,” the report warns. “It would hold onto the licenses and the $10 billion DISH already paid for them while the process unfolds. [DISH] already spent the $10 billion, but will not have the associated spectrum assets.”

Moreover, Capital Alpha says, the FCC might be able to delay a final verdict in the case, which could “complicate the ability of DISH to participate in the 600 MHz auction,” expected to begin early next year. (RELATED: NAACP, Steve Forbes Accuse DISH of Bilking Taxpayers Out of $3 Billion)

At the FCC’s most recent spectrum auction, DISH was the largest beneficiary of credits under the so-called “designated entity” program, which provides qualifying small companies a taxpayer-funded rebate for 25 percent of the purchase price to help them compete against their larger rivals when bidding for spectrum.

“We still believe DISH followed the DE rules,” the report asserts, but “in this high-stakes staring contest, we believe it would be easier for DISH to give in to the regulatory resistance and pay the $3 billion.”

The FCC has since acknowledged that DISH took advantage of the program by creating two shell companies that would be eligible for the subsidies, using its vast financial resources to keep competitors at bay before dropping out to allow one of the spinoffs to win the license (and the credits). (RELATED: DISH Set Up a Bunch of Companies to Claim Billions in ‘Small Business’ Credits)

The FCC, though, may soon take the first steps toward formally declaring DISH ineligible for the credits by opening the matter up for public comments, The Wall Street Journal reports(RELATED: DISH’s Duplicitous Actions Spur Action by FCC)

Following the 10-day comment period, the FCC would then render its final decision, and individuals close to the proceedings say it is likely to reject DISH’s claims.

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