Saving $3.25 billion can be a bad thing.
A few years ago, Dish Network — the satellite TV provider — bid $7.8 billion for the rights to bits of the wireless spectrum. (Wonder how radio stations keep from broadcasting on the same channel? The federal government issues licenses to keep companies separated on the radio spectrum.)
The spectrum is supposed to be public property, just as much as a national park or the air we breathe. If it’s carved up and sold, the federal government gets the proceeds, and it uses those proceeds for the public good. If the federal government gets more in the sale, citizens benefit.
Thanks to the Wall Street Journal, New York Times and other investigative journalists at other organizations, we have learned that Dish partnered with Doyon Ltd., the regional Native corporation for Interior Alaska, when it bid on the spectrum. Together, the two companies created a shell, Northstar Wireless. That shell did the actual bidding.
The Federal Communications Commission, which ran the spectrum auction, has an obscure rule that gives a 25 percent discount to “very small business(es),” those with less than $15 million in revenue for the preceding three years.
There’s an even smaller rule that says if an Alaska Native corporation participates, the FCC will judge its revenue only by looking at the parent company and not include any of its subsidiaries. Thus Doyon, an organization that owns drilling rigs and construction companies — through subsidiaries — was considered “very small.”
Doyon controlled the shell company, and Dish Network stood back while it reaped the profits.
Doyon spent $120 million for a 15 percent sale in Northstar Wireless. It now owns a significant stake in an entity worth almost $8 billion, and its shareholders will surely benefit. Dish Network and its shareholders will benefit, too. They’ve just saved $3.25 billion.
The price falls on the rest of us. How many schools could $3.25 billion buy? How many miles of road could it pave? The auction of the spectrum — a public resource — was supposed to benefit the public. It will still do that, but not as much as it could have.
More than that, this audacious move may cost other Alaska Native corporations dearly.
Thanks to the efforts of Alaska’s Congressional delegation, Alaska Native corporations may take advantage of a wide variety of preferential rules in government contracting and purchasing. These preferential rules have helped corporations and their shareholders, but in recent years they’ve come under increasing attack.
Sen. Claire McCaskill of Missouri, in particular, has been aggressive about limiting the federal preference for contracts signed with Native corporations. Doyon’s deal has just handed McCaskill ammunition in her fight against Native corporations.
Dish Network’s deal with one Native corporation may hurt all the others if they come under attack for the gluttony of Dish Network. Alaska’s Native corporations directly and indirectly support business across this state.
We fear that Doyon’s success will harm the ability of other Native corporations to do business with the federal government. Doyon and its shareholders will take home a windfall, but other Alaskans — Native and not — may be left with the bill.
— Juneau Empire,
Feb. 27
