Verizon Communications (NYSE: VZ) late last week became the latest telecommunications company to publicly object to Dish Network's (NASDAQ: DISH) strategy for obtaining deep discounts on winning bids in the FCC's recently completed AWS-3 spectrum auction.
Verizon made a regulatory filing to the FCC on Feb. 27, accusing Dish of using several much smaller companies it invests in to trump up artificial demand and drive rival bidders away.
Dish's partners ended up winning $13.3 billion in bids, but ended up paying only 75 percent of that amount based on discounts aimed at small business. Dish's partners finished second only to AT&T in winning bids.
"The bidding data suggest that Dish and its [designated entities, or 'DEs'] engaged in concerted conduct that went beyond the activity that occurs during typical bidding agreements or bidding consortia, in which two or more small bidders pool their money and form a single entity to buy spectrum," wrote Tamara Preiss, VP of federal regulatory affairs for Verizon. "Instead, the auction data show that Dish and its DEs frequently submitted two or three bids for the same amount on the same licenses in the same round."
Preiss' letter follows a Feb. 20 blog post written by her peer at AT&T (NYSE: T), VP of Federal Regulatory Joan Marsh, which accused Dish of the same misdeeds.
At Dish's Feb. 23 earnings call with investors, Chairman Charlie Ergen said such intentional manipulation of the auction wasn't feasible.
"Anyone who's been in auctions knows that's impossible to do," Ergen said. "There was nothing artificial about it. We wanted to win the licenses. We were disappointed we didn't win all the licenses."
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