DISH Network Corp (NASDAQ:DISH ) to save US$3 billion using small business loophole

DISH Network Corp(NASDAQ:DISH) has been found to have approximately 14 million subscribers with revenue US$3.68 billion in its recent Q. No wonder it does not meet the standards of many out there of a small business. This did not demonstrate to be a hindrance between the satellite company and federal government’s just-completed wireless spectrum auction, while it saves US$3 billion on US$13.3 billion.

DISH tactics were not illegal, however it did not sit well with AjitPai, the Federal Communications Commission Commissioner,shown by his statement inviting FCC Chairman Tom Wheeker to come forward in releasing an investigation for these multibillion dollar subsidies.

According to The Wall Street Journal, DISH won its bids through two subsidiaries, of which it owns 85%:

“Filings with the FCC describe both as a ‘very small business’ with revenue below US$15 million,”

Pai thinks DISH’s efforts, while legal, represent a misuse of the intent of the rule:

“Dish, however, has annual revenues of almost $14 billion, a market capitalization of over $32 billion, and over 14 million customers. Its participation makes a mockery of the DE program.”

DISH released a statement on its official website justifying itself and the following is quoted below:

“We respectfully disagree with the criticism of the Designated Entity program, and we are confident that we fully complied with the DE rules in the AWS-3 auction, which were unanimously approved by the full Commission. The DE program has been successful in providing much smaller entities the ability to access stronger capital structures, which has facilitated their meaningful participation in an auction process from which they would otherwise be precluded. Our approach — publicly disclosed ahead of the auction — was based on DE investment structures that have been approved by the FCC in past wireless spectrum auctions, including structures used by AT&T and Verizon.”

DISH made its intentions clear utilizing this method before the auction and the FCC took no action.




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