A Big Dish of Cronyism
By Phil Kerpen
Some companies try to make honest profit by selling goods and services to customers in the marketplace and some find it easier to cozy up to big government with campaign contributions and lobbying to secure special favors. Few are so blatant and shameless about it as Dish Network, whose CEO Charlie Ergen is not only notoriously litigious, but is constantly currying political influence to win special favors, especially from his company’s regulator, the Federal Communications Commission (FCC).
Ergen has made personal political contributions in excess of over $1.2 million – tilted overwhelmingly toward Democrats. And an anonymous whistleblower complaint accused Ergen of requiring high-level executives at Dish to regularly contribute to Democratic candidates. The Federal Elections Commission refused to act on the complaint because the whistleblower was anonymous, but the allegation was corroborated by the fact that these executives all had contributions to the company’s PAC automatically deducted from their payroll for years.
It would be one thing if Dish’s political giving were tied to promoting policies that broadly allowed it to compete successfully in the market. But they seek special favors at taxpayer expense.
Last year Dish cheated at spectrum auctions to the tune of $3.3 billion by setting up fake small business shells to qualify for massive taxpayer subsidies.
Republican FCC Commissioner Ajit Pai led the pushback, saying he was “appalled that a corporate giant which itself does not have a single wireless customer has attempted to use small business discounts to box out the very companies that Congress intended the program to benefit and to rip off American taxpayers to the tune of more than $3 billion.”
It is hard to understand how they thought they could get away with so brazen a scheme other than via political influence -- and ultimately they did not.
There was widespread public outrage after Commissioner Pai sounded the alarm – described by a Watchdog.org investigative report as “something like a riot in which most of the participants wore suits,” and ultimately the FCC reversed its position and denied the discounts, after which Dish defaulted on about 200 licenses rather than pay honest market prices, although they have filed a federal lawsuit to try to get a court to reinstate their scheme.
Ergen, who the New York Post called a “mercurial spectrum hoarder” is buying up wireless spectrum even though Dish does not operate a wireless network.
He may be trying to make Dish – whose isolated satellite TV business he has admitted makes it a “one trick pony” – more attractive as a merger partner to become part of an integrated communications company. In fact Dish has had failed merger talks with T-Mobile, AT&T, Sprint and DirecTV in recent years. Or he may simply be amassing spectrum holdings to create an artificial shortage to re-sell at higher prices, a strategy that could be aided by defaulting on bids and stalling blocks, which would have to be reauctioned, from becoming available.
Now the FCC is getting ready for another big spectrum auction: the 600 MHz spectrum being vacated by TV broadcasters. Legitimate bidders are calling for the FCC to strengthen penalties for default, fearing that Dish -- which intends to participate in the auctions -- may again manipulate rules and then strategically default on winning bids. Specifically, the FCC should prohibit companies that have defaulted on winning bids from bidding on the same spectrum against when it is reauctioned. Not only are billions of dollars at stake for taxpayers, but spectrum is an economic resource too important to be sidelined by Dish’s crony games.