UPDATE: FCC Commissioner Slams Dish Network’s AWS-3 Auction Discounts

This article has been updated to include a statement from Dish Network.

FCC Commissioner Ajit Pai Monday released a scathing statement, slamming the FCC for allowing companies to abuse the Designated Entity (DE) program and accusing Dish Network of doing so in the just-concluded AWS-3 spectrum auction.

Pai called upon FCC Chairman Tom Wheeler to launch an investigation into the multi-billion dollar discounts Dish got on the spectrum it won at auction, calling into question whether or not Dish should be able to secure such discounts.

“For the sake of the FCC’s integrity, American taxpayers, and genuinely struggling wireless entrepreneurs, I hope not,” Pai said in a statement.

Pai’s dissent comes after last Friday’s announcement of the Auction 97 winners revealed that Dish was able to get more than $3 billion in discounts because of its bidding partners’ DE status. Dish’s American AWS-3 Spectrum company spent no money in the auction but its partners, Northstar Wireless and SNR Wireless, in which both Dish maintains majority ownership, successfully bid for and acquired $7.8 billion and $5.5 billion worth of spectrum respectively.

Pai said the FCC is currently on course to strip the DE program of more of its safeguards preventing “giant corporations from engaging in these types of shenanigans.”

Dish responded in a statement, saying its auction approach was disclosed ahead of time and based on DE investment structures that have been approved by the FCC and used by AT&T and Verizon in past auctions.

“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,” Dish said in a statement.

After its discounts, Dish ended up the third highest bidder in the AWS-3 auction. AT&T spent $18.2 billion to get what it called a “near nationwide contiguous 10×10 MHz block.”

Verizon spent $10.4 billion, T-Mobile spent $1.8 billion and U.S. Cellular spent $338 million.

In total, the AWS-3 auction grossed $44.9 billion but netted $41.3 billion after the DE discounts awarded Dish’s bidding partners.