A big Dem donor tries to have his way with the FCC

DISH Network co-founder Charlie Ergen has made it clear where he stands on politics. He is a major Democratic donor, and has been accused both of using his position atop DISH to leverage campaign donations from other executives, and to drop Fox News from the network.

Ergen’s business tactics are now the subject of FCC and Congressional scrutiny. Earlier this year DISH leveraged a loophole in federal rules to score $3.3 billion in taxpayer-funded discounts on wireless licenses in the spectrum auction. The FCC intended these discounted licenses to be used for small businesses, but DISH managed to snag almost half of them at a 25 percent discount through “designated entities” – smaller enterprises that are described as “very small businesses,” and yet these “very small businesses” were controlled by DISH.

{mosads}Typically, companies that own spectrum are required by the FCC to actually use it – which DISH is not doing with the spectrum that it already has. Currently, DISH doesn’t have its own cell phone network or plans in place to build one.  Nonetheless, the FCC has permitted Ergen to extend the deadlines he faced to build out a network.

Other major players – AT&T and T-Mobile – have criticized DISH’s strategy under Ergen, with AT&T arguing that DISH skewed results and drove up prices. The use of three separate designated entities also raises the possible concern that spectrum auction rules could have been violated if collusion occurred, which would be a criminal offense. Verizon suggested as much to the FCC in an April 24 filing, saying there is “extensive evidence of collusion by Dish, Northstar and SNR, which violates antitrust law and the commission’s rules.” And FCC Commissioner Ajit Pai said Ergen’s strategy “makes a mockery” of auction procedure. 

Ergen’s maneuvers on behalf of DISH shouldn’t come as a surprise. In 2014 Ergen was involved in bankruptcy battle over the troubled company LightSquared and its wireless spectrum, where Judge Shelly Chapman found that Ergen’s acquisition of LightSquared debt breached the implied covenant of good faith and fair dealing. In a damning indictment of his character, Judge Chapman stated that parts of Ergen’s testimony were “not credible,” found “a striking lack of candor between Mr. Ergen and members of DISH’s board of directors and senior management,” and described his actions as “part of a troubling pattern of non-credible testimony.”

If Ergen lied in legal proceedings then we should be skeptical of anything he has said to the FCC or the public. So far the FCC’s stance toward Ergen has been a model of suspiciously accommodating inaction.

The FCC is currently considering action on Ergen’s use of Designated Entities. Given the massive character indictment against Ergen leveled by Judge Chapman last year, and his major interest in the outcome of any ultimate decision, FCC commissioners must be held to account during their deliberations on this matter.

As we saw when Google successfully pushed for last minute revisions to the FCC’s net neutrality rules, the agency can’t be trusted to police itself to ensure it makes objective decisions. A much better guard to keep self-interested operatives like Ergen from working the bureaucratic system is oversight from officials that are directly accountable to American voters: namely, our representatives in Congress.

Telford is the president of the Franklin Center for the Government & Public Integrity.