Gift rapped

EchoStar L.L.C. could be forgiven for being less than merry the day after Christmas, the day the Federal Communications Commission told the satellite TV company that it must pony up a down payment 50% higher than normal if it wants to participate in the 700 MHz auction set to begin Jan. 24.
The FCC has labeled EchoStar a “former defaulter,” a moniker with auction financial implications that sting worse than the dubious distinction itself. In its 700 MHz short-form application, filed under the name Frontier Wireless L.L.C., EchoStar asked the FCC to waive the delinquent debtor rule. When parent company EchoStar Communications Corp. acquired a paging company in 2004, there was a mixup resulting in late universal service fund payments of more than $75,000. EchoStar eventually made good on the USF payments along with late fees. It argued having to fork over potentially tens of millions of dollars more for an upfront payment – in an auction that could generate up to $15 billion in bids – constituted a penalty far out of balance with its past mistake.
“Imposing former defaulter status under circumstances like those presented here may significantly deter applicants from fully participating in Auctions 73 and 76, and would not serve the public-interest purpose for which these rules were intended,” EchoStar told the FCC. The fear card. FCC Chairman Kevin Martin has a lot riding on the success of the 700 MHz auction, measured in terms of revenue extracted from wireless bidders and the emergence of a national commercial/public-safety broadband service provider.
But here’s the punch line: The FCC didn’t have to rule on the merits of EchoStar’s waiver request. The agency found EchoStar was also delinquent in making a separate $27,295 USF payment in 2007, but the company failed to flag it in its 700 MHz application waiver request. The FCC said EchoStar should have known better. End of story, at least insofar as EchoStar catching a break on its upfront payment due along with those of other applicants on Jan. 4. An EchoStar official would not say if the wayward waiver episode will change its plans to bid on 700 MHz licenses. All things considered, an inauspicious start to the new year.