[00:00:06] Speaker 00:
This case presents a very novel situation that I've never seen in my

[00:00:35] Speaker 00:
40-some years of practicing communications law.

[00:00:39] Speaker 00:
And there's two basic issues that we have to look at.

[00:00:42] Speaker 00:
One is the substance, the substantive error of the commission basically accepting cash for benefits.

[00:00:50] Speaker 00:
I mean to me that seems like a huge corruption of the administrative process that just cannot be allowed to stand.

[00:00:56] Speaker 00:
And if I have time I'll run through how that, how that corruptive

[00:01:01] Speaker 00:
effect spread its way through this entire proceeding and even spilled over to the proceeding that we just talked about where the commission did something that affected the earlier license decision.

[00:01:12] Speaker 00:
So we have the substance of the commission's error, which is very, very fundamental, and then we have the question that the commission has raised as to whether we have standing to challenge that.

[00:01:24] Speaker 00:
I want to start by just

[00:01:26] Speaker 00:
Just quoting, I don't usually do this, but we put in our brief a quote from the HBO case, which basically says that when an administrative agency tries to justify its actions by referring to what's in the public record but not revealing things that are not in the public record, which it in fact relied upon,

[00:01:45] Speaker 00:
that a reviewing court, and I'm quoting, cannot presume that the agency has acted properly, but must treat the agency's justifications as a fictional account of the actual decision-making process and must perforce finance actions arbitrary.

[00:02:00] Speaker 00:
This is the epitome of a situation where the agency has created a fictional account of its decision-making process.

[00:02:08] Speaker 00:
From the very beginning, the FCC

[00:02:10] Speaker 00:
dissembled and concealed what it was doing in this contract or agreement.

[00:02:15] Speaker 01:
Wasn't the information about the reserve price and the waiver in the public record, but not in the public record that you think it should be in?

[00:02:27] Speaker 00:
It was sort of in the public record.

[00:02:28] Speaker 00:
The quid pro quo was in the record of the— No, this is not like HBO at all, because HBO wasn't in any record.

[00:02:38] Speaker 01:
There was no record?

[00:02:40] Speaker 01:
Well, the quotation and my recollection of the case is that it was not public.

[00:02:45] Speaker 01:
This is public.

[00:02:47] Speaker 01:
Your argument here is just that it was in a different public record.

[00:02:50] Speaker 00:
Well, but my point is HBO talks about the information in the public file.

[00:02:55] Speaker 00:
The FCC has a thousand public files.

[00:02:57] Speaker 01:
But you knew about this one, right?

[00:02:59] Speaker 01:
In fact, you made, I don't mean you personally, but your client and made filings.

[00:03:06] Speaker 01:
So for whatever argument you want to make about the public at large, your standing depends on an argument you yourself can make and you yourself as your client knew.

[00:03:19] Speaker 00:
Well, I'm not basing my standing on the fact that the Commission concealed it.

[00:03:23] Speaker 00:
To me, that's part of the corruptive effect of this year.

[00:03:27] Speaker 03:
I thought that's what you told us when you stood up.

[00:03:30] Speaker 03:
I thought that's what you said.

[00:03:32] Speaker 00:
No.

[00:03:33] Speaker 00:
What I'm saying is we were able to find out about it, and that's why we objected to what the Commission was doing.

[00:03:39] Speaker 00:
But in the context of the auction 96 proceeding, there were a lot of people that were interested in that.

[00:03:46] Speaker 00:
I don't know that all of them found out about it, because they happened not to look into a completely separate and distinct file that had nothing to do with auctioneering.

[00:03:53] Speaker 01:
So your argument is based on injury to somebody other than you?

[00:03:57] Speaker 00:
No.

[00:03:58] Speaker 00:
The injury is to us, because once we found out about it, or actually... It's not like you secretly found out about it.

[00:04:06] Speaker 01:
It was filed in the public file in the waiver proceeding.

[00:04:10] Speaker 00:
Well, but that was in a completely different case.

[00:04:13] Speaker 00:
The commission says, well, they were obligated under their due diligence obligation to look, I guess, in every other single proceeding of the FCC.

[00:04:21] Speaker 01:
Regardless of whether you were obligated or not, you actually did find out about it.

[00:04:27] Speaker 00:
We did find out about it.

[00:04:29] Speaker 00:
But that's not the basis for our standing.

[00:04:32] Speaker 00:
The basis for our standing is once we found out about it, that's when we realized that the auction process had basically been rigged in favor of Dish.

[00:04:40] Speaker 00:
That's why we decided not to go forward with the, to participate in the auction.

[00:04:46] Speaker 00:
And interestingly, the other major commenters who had been extremely interested in this also decided not to go forward and participate in the auction.

[00:04:54] Speaker 00:
I don't know their thinking, but Sprint, for example, was the licensee of the spectrum directly adjacent to the H block.

[00:05:02] Speaker 00:
They were extremely interested in the process and in participating, and they ended up not participating in the auction, just like we did.

[00:05:12] Speaker 00:
I think everybody that was aware of what was going on realized that the auction was going to be skewed.

[00:05:18] Speaker 01:
Can you say something about your standing in the waiver matter?

[00:05:22] Speaker 00:
Well, in the waiver matter, I think the commission's position that the waiver is distinct from what was happening in auction 96.

[00:05:30] Speaker 00:
Our position, it was part and parcel of what was happening in auction 96 because that was the quid for the pro of Dish bidding the 1.5 billion in the auction.

[00:05:42] Speaker 00:
So you can't treat the two separately.

[00:05:45] Speaker 00:
You can't say that the waiver could be granted

[00:05:50] Speaker 00:
without understanding that there was a corrupt monetary influence on that.

[00:05:56] Speaker 00:
The two are tied together.

[00:05:57] Speaker 00:
That's what establishes our standing.

[00:05:59] Speaker 00:
In other words, you couldn't say that it was wrong to allow the 1.5 billion to be committed to, but it was okay for the Commission to give them what the 1.5 billion was purchasing.

[00:06:09] Speaker 00:
That's our position.

[00:06:11] Speaker 04:
continue on the Judge Garland's question on the standing question.

[00:06:15] Speaker 04:
If we think you do have standing on that, the Commission says that we should remand it because the Commission hasn't really responded on the merits and you didn't say anything about that in your reply brief.

[00:06:27] Speaker 04:
What do you think about that?

[00:06:29] Speaker 00:
I think you need to vacate the option 96 auction.

[00:06:35] Speaker 04:
But the commission says it hasn't addressed the merits of your arguments.

[00:06:42] Speaker 01:
That's on the waiver question.

[00:06:43] Speaker 04:
Yeah, I'm talking about the waiver issue.

[00:06:50] Speaker 00:
Okay, I mean, I guess if you're going to say that the waiver issue could be remanded, that would be right.

[00:06:55] Speaker 04:
Well, okay, great.

[00:06:57] Speaker 04:
I only asked you that because that's what the commission says in its brief.

[00:07:00] Speaker 04:
So that would be okay with you.

[00:07:01] Speaker 00:
Well, I thought that they were complaining that you shouldn't order the auction to be redone because Dish had invested millions of dollars.

[00:07:08] Speaker 00:
There are two separate arguments.

[00:07:10] Speaker 01:
Two separate arguments.

[00:07:11] Speaker 01:
One is that they only address standing in resolving the waiver, and as Judge Tatel points out.

[00:07:19] Speaker 01:
appropriate remedy appears to be remand, and you appear to agree to that.

[00:07:24] Speaker 01:
A separate question is about the auction, because they did address the merits of your argument, regardless of what they thought about waiver.

[00:07:33] Speaker 00:
Yeah, I think that's right, and I suppose in the context of a remand to consider the waiver, the Commission would have to actually acknowledge that it did have this deal.

[00:07:44] Speaker 00:
Which it didn't acknowledge.

[00:07:46] Speaker 02:
Do you have standing to challenge the waiver separate and apart from your argument that the process was tainted by this backroom deal?

[00:07:56] Speaker 02:
It sounds to me like you've suggested that your standing to challenge the waivers is inextricably intertwined with your argument that there was a backroom deal.

[00:08:06] Speaker 00:
Yes, I would say it is.

[00:08:08] Speaker 02:
So if for whatever reason we rejected your argument on the merits regarding the backroom deal, would you have standing to challenge the waiver on any other grounds?

[00:08:21] Speaker 00:
Well, I mean, the commission sought

[00:08:24] Speaker 00:
You know, comments on the waiver.

[00:08:26] Speaker 00:
We did mention that because we wanted to be an applicant in the end of this for auction, the one that the waiver dealt with actually, the one that we dealt with earlier this morning, that if the commission granted a waiver, that would impede our ability to more quickly have the auction and have our chance to apply for a license.

[00:08:51] Speaker 00:
I'll admit that that's a bit thin, but that is the reality because if the Commission, for example, if the Commission had not granted the waiver that it granted here and extended the deadline for DISH to complete its build out, they wouldn't have a license as of March, March of 2020.

[00:09:06] Speaker 00:
And then presumably the Commission would have to come up with some new way to deal with the spectrum that's now available.

[00:09:16] Speaker 00:
And then we would have a new opportunity to go in and say, well, now you can give it to us.

[00:09:20] Speaker 00:
None of the considerations that you were concerned about before are there.

[00:09:24] Speaker 00:
You can hold a fair auction, you know, uncorrupted by the $1.5 billion.

[00:09:37] Speaker 04:
So I have a technical question while you're thinking about next person.

[00:09:46] Speaker 04:
This relates to your challenge to the reserve price and how that was set.

[00:09:53] Speaker 04:
Your theory is that DISH's control of the AWS 4 spectrum can affect the value of the HBOK, right?

[00:10:03] Speaker 04:
Could you just explain that to me?

[00:10:05] Speaker 04:
How does that work?

[00:10:06] Speaker 00:
Well, everybody agreed to this.

[00:10:09] Speaker 00:
Everybody agreed, including DISH and the Commission, that if the

[00:10:13] Speaker 00:
uplink downlink portion of the AWS-4 spectrum that was adjacent to the H-Block was flipped, then it would increase if they moved it to a downlink band limit.

[00:10:23] Speaker 00:
It would do what?

[00:10:24] Speaker 00:
If they switched it from being uplink spectrum in the AWS-4 band to downlink spectrum in the AWS-4 band.

[00:10:31] Speaker 00:
That would make the H block more valuable.

[00:10:33] Speaker 04:
I was just asking why.

[00:10:36] Speaker 04:
That's all.

[00:10:37] Speaker 00:
Just explain it to me.

[00:10:38] Speaker 00:
Because it eliminates some of the technical difficulties that would have been inherent in having the two spectrum blocks be right next to each other.

[00:10:46] Speaker 00:
In the AWS 4 order, the Commission spent probably 10 pages dealing with how are we going to deal with the uplink, downlink.

[00:10:55] Speaker 00:
And after all that time and a year of consideration, they decided it should be uplinked.

[00:11:00] Speaker 00:
That's what we decided.

[00:11:01] Speaker 00:
That's what's in the public interest after looking at the total record.

[00:11:04] Speaker 00:
And what's sort of weird here is that Dish comes in a few months later and says, no, no, it should be downlinked.

[00:11:11] Speaker 00:
And the commission totally agrees.

[00:11:15] Speaker 00:
The other thing about the uplink downlink business is that the Commission actually conceded, this is a little surprising, they conceded that by making the AWS four block downlink, it effectively made a whole expanded block if it went into the H block as well, which was downlink.

[00:11:31] Speaker 00:
And it said that would be a benefit, but it would only be a benefit to Dish.

[00:11:36] Speaker 00:
The assumption was that Dish would get the H-block, which of course was correct, since it had basically rigged the auction so that Dish would be the winner.

[00:11:47] Speaker 04:
Commission, I'm curious about another aspect.

[00:11:51] Speaker 04:
This commission says your arguments about the reserve price are procedurally barred because you failed to, quote, specify with particularity the factors which warrant consideration.

[00:12:01] Speaker 04:
That's a quote from their regulation.

[00:12:03] Speaker 04:
And you respond to that by saying that these rules just require you to identify briefly what the issues are from that list of five.

[00:12:15] Speaker 04:
But number one, you don't cite anything for that, at least not in your brief.

[00:12:19] Speaker 04:
And number two, we defer to the commission's interpretation of its own regulation, and it's telling us that particularity means particularity, which you haven't done.

[00:12:31] Speaker 04:
So sort of echoing the argument I made in our first case, for you to prevail on this issue, you have to make your case in the context

[00:12:43] Speaker 04:
of that very deferential standard review.

[00:12:46] Speaker 04:
How do you convince this court?

[00:12:48] Speaker 04:
What's your best argument that this court should decide, notwithstanding what the commission says, that you did make these bases for your objections known, quote, with particularity?

[00:13:03] Speaker 04:
How do we do that?

[00:13:03] Speaker 00:
My best argument is that we complied with the text of the rule.

[00:13:08] Speaker 04:
Well, but the commission interprets

[00:13:12] Speaker 04:
particularity, not a brief identification of which one.

[00:13:17] Speaker 00:
Well, remember, what the rule calls for is you to specify the categories.

[00:13:21] Speaker 04:
With particularity.

[00:13:23] Speaker 00:
Well, we specify the categories with particularity.

[00:13:26] Speaker 04:
But don't you not, my question is, commission is saying here that particularity means something more than identifying which of the five categories you're raising.

[00:13:39] Speaker 00:
Well, what we did, the way the rule is set up, you're supposed to identify questions presented, for example, and the categories of error.

[00:13:50] Speaker 00:
Let me just give you an example.

[00:13:53] Speaker 04:
You say adopting a reserve price based on a deal with a potential auctioneer is, quote, unprecedented.

[00:14:04] Speaker 04:
That's one of your arguments.

[00:14:07] Speaker 04:
The commission particularly would require, I mean, number one, how do you know that?

[00:14:12] Speaker 04:
And what's your authority for it?

[00:14:14] Speaker 04:
In other words, here's another example.

[00:14:18] Speaker 04:
You say that the reserve price is contrary to precedent.

[00:14:20] Speaker 04:
What precedent?

[00:14:23] Speaker 04:
That's the point I think the commission is making.

[00:14:26] Speaker 00:
Well, that's what we included in the main text of our application.

[00:14:30] Speaker 04:
OK, what precedent?

[00:14:32] Speaker 00:
Pardon me?

[00:14:32] Speaker 04:
What precedent?

[00:14:36] Speaker 00:
What precedent?

[00:14:39] Speaker 04:
You say that the reserve price is contrary to precedent.

[00:14:45] Speaker 04:
That's what you said in your petition.

[00:14:47] Speaker 04:
What precedent?

[00:14:48] Speaker 04:
I didn't see anything there.

[00:14:50] Speaker 04:
Maybe I missed it.

[00:14:51] Speaker 00:
In the application for review?

[00:14:53] Speaker 00:
Yeah.

[00:14:54] Speaker 00:
Well, what we refer to was the

[00:15:00] Speaker 00:
was the way the commission usually sets the reserve price.

[00:15:03] Speaker 00:
And in this case, the commission looked at, I don't think we stated this in particular, but we stated that it was not the way the commission usually sets the reserve price.

[00:15:13] Speaker 00:
For one thing, the commission here looked at secondary market prices that people had gotten per spectrum, which is not what the commission would use that of.

[00:15:21] Speaker 00:
Secondary market spectrum is obviously always going to be higher priced than what the price paid in the auction was.

[00:15:27] Speaker 00:
because people sell their spectrum in order to make a profit.

[00:15:30] Speaker 00:
So that was a completely improper basis for comparison.

[00:15:34] Speaker 00:
But more importantly, the reserve price setting was corrupted by the 1.5 billion.

[00:15:40] Speaker 00:
That was what drove exactly the 50 cents per megahertz pop that the commission set.

[00:15:45] Speaker 00:
that even though there was nothing else in the record that supported that particular price, that's what the price became.

[00:15:52] Speaker 00:
And that's what I'm saying is the corruptive effect of this $1.5 billion offer.

[00:15:57] Speaker 00:
It tainted every single thing that the Commission did.

[00:16:01] Speaker 02:
Mr. Evans, you started the oral argument with us by citing the Supreme Court's case in HBO.

[00:16:07] Speaker 02:
I was surprised that you haven't spoken about the Supreme Court's recent case, the census case, because it seems to me that that case is a little much closer to our case than

[00:16:19] Speaker 02:
than the HBO case.

[00:16:20] Speaker 02:
And in that case, the court made clear that we're not supposed to look beyond the stated reasons that an agency gives for its action unless, and I quote, there's a strong showing of bad faith or improper behavior.

[00:16:35] Speaker 02:
You need to make a strong showing of bad faith or improper behavior.

[00:16:41] Speaker 02:
And so what is that?

[00:16:42] Speaker 02:
And here, as I take it, you've argued that it was the lack of disclosure of the agreement.

[00:16:48] Speaker 02:
But we already stated that that was actually in the public record.

[00:16:52] Speaker 02:
Isn't that much different than?

[00:16:54] Speaker 00:
Well, no, it's not just the lack of disclosure.

[00:16:56] Speaker 00:
It's the fact of this unholy agreement between one potential participant in the auction that gave it a benefit.

[00:17:05] Speaker 00:
And it was going to get an extra benefit beyond what it was bidding for in the auction that no other participants in the auction had.

[00:17:12] Speaker 00:
So it's the substance of that.

[00:17:13] Speaker 00:
And then it was concealed, which makes it worse.

[00:17:15] Speaker 00:
But it's the substance of that agreement, which is the bad behavior, if you want to put it in the context.

[00:17:20] Speaker 02:
But the court also said that you can only take advantage, you can only get around the stated reason for what the agency is saying if that reason seems to have been contrived.

[00:17:33] Speaker 02:
There's no basis for that reason.

[00:17:35] Speaker 02:
And yet here we have ample basis for the reason.

[00:17:40] Speaker 00:
We don't have ample basis, at least on the reserve price.

[00:17:43] Speaker 00:
There was very little that was put in on the reserve price.

[00:17:48] Speaker 00:
Dish put in an ex parte letter at the last minute, and they said, oh, it's been estimated to be 50 megahertz per pop.

[00:17:54] Speaker 00:
But they didn't say how they came up with that number.

[00:17:57] Speaker 00:
They had other figures that were pulled from here and there, but none of them were 50 megahertz per pop.

[00:18:03] Speaker 00:
But it so happened, of course, that that was the amount that they had said that they were willing to bid.

[00:18:10] Speaker 00:
And that has to be what drove the Commission's decision, because once it set that as the reserve price, it was tied, it was hitched to Dish's wagon.

[00:18:23] Speaker 00:
Then it basically had to grant the petition for waiver,

[00:18:26] Speaker 00:
By that point, Sprint and the other big players had dropped out and the commissions basically had to be thinking, we're not going to get enough in this auction unless we accept dishes deal, which they did.

[00:18:37] Speaker 00:
So you could see that

[00:18:38] Speaker 00:
At the time we were trying to decide what to do and the other potential participants were trying to decide what to do, you could see that you had to, you know, look at the commissions at acceptance of the 50 megahertz, 50 cents per megahertz price as an indication that it was already committed to the deal.

[00:18:55] Speaker 00:
And of course it was.

[00:18:58] Speaker 00:
And, you know, the other people who were more in the know than we were, we weren't in that back room where this deal was stuck.

[00:19:04] Speaker 00:
AT&T was, Grant was, T-Mobile was.

[00:19:07] Speaker 00:
Maybe they all knew about this because they were in the back room.

[00:19:10] Speaker 00:
We had to kind of figure it out by looking at the little hints that were dropped here and there.

[00:19:15] Speaker 00:
The commission itself never said that there's a deal.

[00:19:17] Speaker 01:
Can you just explain to me again, without words like corrupt and back room, what exactly is the deal that

[00:19:27] Speaker 01:
Is the objection that the waiver was granted in exchange for an agreement to bid a higher reserve price?

[00:19:37] Speaker 01:
Is that the nub of the argument?

[00:19:42] Speaker 00:
It's not just that it was the higher reserve price.

[00:19:44] Speaker 00:
It was that they agreed to bid a certain price.

[00:19:47] Speaker 00:
And the mechanism that they used to do that was to set a reserve price at a certain level.

[00:19:51] Speaker 01:
And your argument is that waivers shouldn't be granted, they should only be granted based on the merits of the waiver itself without reference to an agreement to bid a reserve.

[00:20:06] Speaker 01:
Is that right?

[00:20:08] Speaker 01:
Yes.

[00:20:08] Speaker 01:
That's the whole, that's your whole argument.

[00:20:11] Speaker 00:
Yes, I'm saying that it was a cash for waiver deal.

[00:20:14] Speaker 01:
And I'm asking you to leave aside the

[00:20:18] Speaker 01:
negative connotation language, I just want to know exactly what the exchange was that we're talking about.

[00:20:24] Speaker 01:
And what you're saying, if I understand it, the nub of the argument is the waiver was granted not only or maybe not at all because of the technical requirements, but because at least in addition to an agreement to provide the reserve, right?

[00:20:46] Speaker 00:
Yes.

[00:20:46] Speaker 01:
Okay.

[00:20:46] Speaker 01:
And that was described in the file, public file, with respect to the waiver.

[00:20:54] Speaker 00:
Dish said that in its public file.

[00:20:56] Speaker 00:
Yeah.

[00:20:57] Speaker 00:
The FCC itself, the commission, the full commission has never said that it actually did.

[00:21:01] Speaker 01:
Well, the FCC said that you didn't have standing, so they will have to address that question if you do have standing, right?

[00:21:09] Speaker 01:
That's where we were before with respect to the waiver.

[00:21:11] Speaker 01:
Okay.

[00:21:14] Speaker 01:
Further questions?

[00:21:24] Speaker 05:
May it please the court, Maureen Flood for the Federal Communications Commission.

[00:21:29] Speaker 05:
NTCH's argument fails because NTCH cannot demonstrate.

[00:21:42] Speaker 05:
NTCH's argument fails and this court lacks jurisdiction over NTCH's petitions for review because NTCH has failed to demonstrate standing.

[00:21:52] Speaker 01:
NTCH's argument is... As to both, either?

[00:21:55] Speaker 01:
Are they tied together in the way that the opposing counsel says?

[00:21:59] Speaker 05:
I believe so, Your Honor.

[00:22:00] Speaker 05:
NTCH's argument seems to be that the auction 96 reserve price was set too high.

[00:22:07] Speaker 05:
That's the basis of its injury.

[00:22:09] Speaker 05:
And that the reserve price was set too high because it was somehow contaminated by Dish's commitment to bid the reserve amount.

[00:22:18] Speaker 05:
if the commission granted its waiver request.

[00:22:20] Speaker 05:
The two are tied together.

[00:22:22] Speaker 05:
From our view and our position before the court is that NTCH lacks standing to challenge the reserve price because it can't demonstrate an injury flowing from the reserve price.

[00:22:34] Speaker 05:
NTCH fundamentally misunderstands the purpose of a reserve price in an auction.

[00:22:39] Speaker 05:
A reserve price is the minimum price for a license.

[00:22:43] Speaker 05:
It's the amount below which the commission will not sell the license.

[00:22:48] Speaker 05:
In auction 96, the Wireless Bureau

[00:22:51] Speaker 05:
announced at the outset of the auction proceeding that it intended to use a reserve price that would be the aggregate of the winning bid amounts in auction 96.

[00:23:01] Speaker 05:
As we point out in our brief and the commission pointed out in its orders, that meant that nothing prevented NTCH from placing the winning bid for any license so long as the sum of the minimum... Their argument is that once DISH was committed to the large reserve price,

[00:23:21] Speaker 01:
and it wanted all the licenses, it would have to bid up as high as necessary against MTCH in order to beat it, if that were the case, and then could bid perhaps less on others, but that the fact of a high reserve price meant that it had more than an incentive.

[00:23:43] Speaker 01:
It had an obligation to win that every license.

[00:23:50] Speaker 05:
Your Honor, the reserve price, wherever it was set, could not have injured NTCH.

[00:23:54] Speaker 05:
And the reason for that is, is that the reserve price does not determine the bidding decisions of the bidders in the auctions.

[00:24:03] Speaker 01:
Now you have to tell me why, because I just explained what their theory is now.

[00:24:06] Speaker 01:
Why is their theory wrong?

[00:24:08] Speaker 05:
Their theory is wrong because the commission could have set a much lower reserve price.

[00:24:12] Speaker 05:
NTCH asserts that we should have set a reserve price based on the sum of the minimum opening bids.

[00:24:18] Speaker 05:
We did that.

[00:24:19] Speaker 01:
The reserve price... I want you to leave all that out of it.

[00:24:21] Speaker 01:
I want you to just respond to their argument that the setting of a very high, what they regard as an unfairly high reserve price

[00:24:28] Speaker 01:
affected how much Dish would it spend on any particular license in competition with NTCH?

[00:24:34] Speaker 05:
We could have thought a lower reserve price and Dish still could have outbid NTCH.

[00:24:38] Speaker 05:
Now going to this argument that the reserve price was so high and only Dish could effectively bid the reserve price, evidence in the record showed that not to be the case.

[00:24:47] Speaker 01:
When you say evidence in the record, those are facts which we get to after we decide standing.

[00:24:54] Speaker 01:
We assume that they are correct

[00:24:56] Speaker 01:
on the law and the facts with respect to their argument, if they would be injured, if the facts sustain it, if they would be injured, if the law sustains it, then we go on to the merits and that's what you're arguing here.

[00:25:10] Speaker 05:
Your Honor, I go back to the point that if the reserve price, the level of the reserve price had no effect whatsoever on NCCH's ability to get a license, if the Commission set the reserve price at $220 million,

[00:25:23] Speaker 05:
any bidder, DISH or any other bidder, could have come into the auction and outbid NTCH and it would be in the same position.

[00:25:31] Speaker 05:
So the level of the reserve price had no effect.

[00:25:34] Speaker 05:
It could have been $1.5 billion, it could have been $2 billion, it could have been $220 million.

[00:25:40] Speaker 05:
NTCH would go into the auction and whether or not NTCH got a license wouldn't be determined by the level of the reserve price.

[00:25:48] Speaker 05:
It would be determined by the decisions of the other bidders in the auction.

[00:25:52] Speaker 01:
If the commission... One of whom, as a result of the arrangement, was committed to making a large reserve price, which under your hypothetical, they wouldn't be committed to making.

[00:26:03] Speaker 05:
Your Honor, DISH might have bid $1.564 billion, but for their commitment to bid.

[00:26:11] Speaker 05:
All they said is if you grant our waiver request, we will commit to bid that amount.

[00:26:15] Speaker 05:
They didn't say we would bid that amount.

[00:26:19] Speaker 01:
If that's your best argument, I don't see how you can win.

[00:26:23] Speaker 01:
They made an agreement that if you granted the waiver, they would bid a certain price.

[00:26:29] Speaker 01:
Now, you could say, well, maybe they wouldn't have, and maybe they didn't need the agreement.

[00:26:33] Speaker 01:
But the offer, I'm not saying there's anything wrong with the offer.

[00:26:36] Speaker 01:
That seems to me a different issue.

[00:26:39] Speaker 01:
But for the standing question, the fact that they make an offer makes a pretty good sufficient causal relationship for the standing requirement.

[00:26:48] Speaker 05:
No, it doesn't, Your Honor, and I will turn to the merits in a second, but because NTCH's argument also fails on the merits, but on that one, DISH could have, if DISH hadn't made that commitment and the Commission had set the reserve price at $1.564 billion without the commitment... Would they have made, if DISH had not made any commitment at all with respect to the reserve price?

[00:27:10] Speaker 01:
Can you tell me for a certainty that the Commission would have made the same reserve price?

[00:27:15] Speaker 05:
Yes, Your Honor.

[00:27:17] Speaker 05:
The Commission could have done that.

[00:27:20] Speaker 05:
The wireless area at the outset of the proceeding announced that it intended to use an aggregate reserve amount.

[00:27:26] Speaker 05:
Dish was the only party that put an actual number in the right area.

[00:27:30] Speaker 01:
Right, and in support of its rationale for the reserve price it set, the Commission cited the offer made by Dish, correct?

[00:27:39] Speaker 05:
That's correct, Your Honor.

[00:27:40] Speaker 01:
So on January, we have to assume that if that's wrong for some reason, that

[00:27:49] Speaker 01:
They no longer have the same rationale.

[00:27:51] Speaker 01:
We have to send it back for a different rationale.

[00:27:53] Speaker 05:
But Your Honor, the price proposed by Ditch was supported, and this is the Ditch ex parte, the September 9th, 2013 ex parte, which you can find at Joint Appendix 50 and 51.

[00:28:05] Speaker 05:
The Ditch ex parte was supported by three data points, and the Wireless Bureau in adopting

[00:28:10] Speaker 05:
the Reserve noted that.

[00:28:11] Speaker 05:
There are three data points in the record.

[00:28:13] Speaker 05:
The first was the sale of similar spectrum in recent FCC options.

[00:28:18] Speaker 05:
The second was secondary market sales.

[00:28:20] Speaker 05:
And then the third was two reports by investment banks that had been previously filed with the Commission.

[00:28:27] Speaker 05:
Those

[00:28:28] Speaker 05:
The recent spectrum sales and then also the secondary market sales and the results of recent auctions demonstrated that the price of the H-block spectrums were... Your position is that these theoretical arguments were sufficient without the...

[00:28:43] Speaker 01:
actual offer made by DISH.

[00:28:45] Speaker 01:
Does the Commission say anywhere in its opinions that it would have done the same if DISH had not made this reserve price offer?

[00:28:53] Speaker 05:
If we would have adopted the same reserve price if DISH hadn't adopted.

[00:28:57] Speaker 05:
No, Your Honor, because the Wireless Bureau explained when it denied

[00:29:02] Speaker 05:
and TCH's application for review, that it decided to adopt the reserve price because it was reasonable standing alone.

[00:29:10] Speaker 05:
And it cited the three data points in the DISH ex parte letter.

[00:29:14] Speaker 05:
What the letter showed, based on evidence that had been filed with the commission, is that the commission could have actually set a much higher reserve price.

[00:29:22] Speaker 05:
that the age block spectrum was valued at 60 cents to $1 per megahertz top, which would have allowed the commission to set a reserve price at $2 to $3 billion.

[00:29:33] Speaker 05:
It was the commission's predictive judgment, and the decision was reasonable at the time to look at the data in the DGX part-take letter.

[00:29:40] Speaker 05:
Again, it was the only number that had been filed in the record and say, well, looking at this evidence, we can predict that

[00:29:49] Speaker 05:
If we set the reserve at this amount, pH block licenses won't sell for below market values, and we also will satisfy our statutory objective to raise enough money for first nat.

[00:30:01] Speaker 05:
Now, I want to transition to petitioner's argument that only DISH could have been

[00:30:09] Speaker 05:
bid $1.564 billion for those licenses, and that somehow the waiver grant therefore infected the reserve price.

[00:30:17] Speaker 05:
The problem with that is that the evidence in the record, and the petitioner even acknowledged this in his comments before the agency,

[00:30:24] Speaker 05:
The record showed that Dish likely wouldn't be the biggest winner in auction 96.

[00:30:30] Speaker 05:
Going back to the Dish-Arquiparte letter, if you look at footnotes four and five, those cite two reports that have been prepared by J.P.

[00:30:39] Speaker 05:
Morgan and Deutsche Bank.

[00:30:40] Speaker 05:
They've been previously filed with the Commission.

[00:30:43] Speaker 05:
And what they predicted is that Sprint would be the big winner in auction 96, that Sprint would be... Just goes to show you how good those reports were.

[00:30:52] Speaker 01:
So I don't understand, citing a report that made the wrong prediction doesn't really support your proposition.

[00:30:58] Speaker 05:
Well, it does, Your Honor, because the reasonableness of the Commission's decision-making is ex ante.

[00:31:02] Speaker 05:
And so when the Wireless Bureau adopted the auction 96 reserve price, the evidence in the record showed that it could have set a higher reserve price, a reserve price that exceeded 50 cents per megahertz pop, or $1.5 billion.

[00:31:16] Speaker 05:
And then if it adopted that amount, not only would you have Dish, one large player, bidding in auction 96, you would have another large player, which was Sprint.

[00:31:25] Speaker 05:
And so NGCH's argument here is that if we hadn't adopted, if we had set a lower reserve amount, it would have had a better shot at getting licenses in auction 96, because when we set the reserve at that amount, it was more than enough.

[00:31:38] Speaker 01:
You only have four minutes left.

[00:31:38] Speaker 01:
You better address the merits.

[00:31:40] Speaker 05:
OK.

[00:31:40] Speaker 05:
Well, I am pressing the merits, Your Honor.

[00:31:42] Speaker 05:
So their argument is that it was a foregone conclusion that they would not be able to get any licenses, because Dish would have to get up all the licenses.

[00:31:50] Speaker 05:
Well, they can't demonstrate that that was the case.

[00:31:53] Speaker 05:
You can imagine a situation.

[00:31:55] Speaker 05:
where Sprint came into the auction and bid against NTCH, bid up the licenses in the large markets, met the reserve, and left small licenses for smaller carriers like NTCH.

[00:32:06] Speaker 05:
NTCH, if it had gone into the auction, could have been outbid by a non-dish bidder.

[00:32:11] Speaker 05:
The point here is that the reserve, NTCH cannot demonstrate

[00:32:15] Speaker 05:
standing, and it can't demonstrate that the reserve price was unreasonable because the record before the agency justified the reserve price.

[00:32:23] Speaker 02:
But it sure seems like there was a deal here, right?

[00:32:26] Speaker 02:
I mean, there's this flurry of activity all within a couple of days that's related to the waiver, that's related to the bid.

[00:32:35] Speaker 02:
It looks like there's a deal.

[00:32:36] Speaker 02:
Are we supposed to shut our eyes to that?

[00:32:38] Speaker 05:
Well, Your Honor, there's no evidence in the record, you know, as you were discussing with the petitioner, everything was transparent.

[00:32:45] Speaker 05:
I mean, if there was a deal, it was a front-room deal, everything was out there, and NTCH took advantage of the fact that it could comment.

[00:32:53] Speaker 05:
Now, I want to talk about the quick adoption of the reserve price, because I... No, I want to talk about the deal.

[00:32:58] Speaker 02:
What was the deal, and what should we make of that?

[00:33:01] Speaker 05:
Well, Your Honor, again, I go back to the fact that the Commission could have adopted the reserve price even if Dishon never filed its waiver petition because that amount was reasonable, stand alone.

[00:33:10] Speaker 02:
They could have, but they did.

[00:33:12] Speaker 02:
I mean, there seems to have been a deal here.

[00:33:16] Speaker 02:
The waivers are related to the bid that they're going to make.

[00:33:21] Speaker 02:
Now, is there anything amiss with that?

[00:33:24] Speaker 05:
Well, Your Honor, I

[00:33:28] Speaker 05:
That goes in part to grant of the waiver petition.

[00:33:32] Speaker 05:
Fortunately, you don't have to reach the basis for the grant of the waiver petition because MTCH lacks standing to challenge the waiver petition.

[00:33:44] Speaker 02:
Imagine we don't agree with you.

[00:33:45] Speaker 02:
Yeah, I'm bothered by the deal.

[00:33:48] Speaker 02:
Should I be bothered by the deal?

[00:33:49] Speaker 05:
Your honor, even if you accept that there was a deal, you shouldn't be bothered by the deal.

[00:33:53] Speaker 05:
Why not?

[00:33:54] Speaker 05:
Because the reserve price that the commission adopted in auction 96 was reasonable.

[00:33:59] Speaker 05:
So even if the commission took into account, for the sake of argument, and we don't concede this, but let's say the commission took into account Dish's commitment to bid that amount, the amount itself was still reasonable, and that amount

[00:34:14] Speaker 05:
would not have foreclosed NTCH's ability to bid for and win a license in auction 96 because the reserve price structurally could not affect or could not have a negative impact on NTCH's ability to win a license.

[00:34:30] Speaker 05:
Again, I go back to the fact that we could have set a much lower reserve amount and NTCH still could have gotten outbid by Dish.

[00:34:37] Speaker 05:
And that was likely because Dish

[00:34:39] Speaker 05:
had all of the AWS 4 licenses that were adjacent to the H block.

[00:34:44] Speaker 05:
So going into the auction, Dish had a much greater interest in winning those licenses and deeper pockets.

[00:34:51] Speaker 05:
And independent of the bidding commitment in the waiver petition, Dish still might have gone into the auction and outbid NTCH.

[00:34:58] Speaker 05:
And that's why NTCH can't demonstrate standing to challenge the auction 96 reserve price or the waiver petition insofar as it's arguing that the waiver petition

[00:35:09] Speaker 05:
infected the reserve price and somehow injured it.

[00:35:12] Speaker 05:
Also, I want to go to the waiver point.

[00:35:15] Speaker 05:
You asked counsel for petitioner whether or not he has standing to make a stand-alone challenge to the waiver grant.

[00:35:23] Speaker 05:
And what he said is, why have this separate injury?

[00:35:25] Speaker 05:
Grant of the waiver skewed the auction because it gave Dishon informational advantage.

[00:35:30] Speaker 05:
Well, NTCH lacks standing to challenge the waiver grant on that ground, because as we point out in our brief, NTCH elected not to

[00:35:38] Speaker 05:
qualified to bid in auction 96 before the commission granted the waiver request.

[00:35:44] Speaker 05:
So the proximate cause of NTCH's injury is its decision not to bid, not grant the waiver petition.

[00:35:52] Speaker 05:
You know, I'll just go back to the fact on the merits.

[00:35:57] Speaker 05:
You know, here there is ample evidence in the record that the reserve price was reasonable standing alone.

[00:36:02] Speaker 05:
And so the commission, you know, even if the commission considered dishes commitment to bid the reserve amount, the reserve amount was reasonable standing alone.

[00:36:13] Speaker 01:
Can I ask you a question?

[00:36:14] Speaker 01:
Is it lawful in deciding a waiver question to decide based not only on technical requirements,

[00:36:25] Speaker 01:
amount of money an applicant is willing to bid in a different proceeding.

[00:36:36] Speaker 05:
Your Honor, there is, that goes to the commission's grant of the waiver, the commission has a public interest standard that it applies when it evaluates a waiver request.

[00:36:50] Speaker 05:
The Bureau, not the Commission, found that the bidding commitment would be in the public interest.

[00:36:57] Speaker 05:
If you disagree with that, there's no reason to reach the merits of the waiver grant, because NTCH lacks standing to challenge the waiver grant.

[00:37:06] Speaker 01:
I know you have a nice fallback argument.

[00:37:08] Speaker 01:
I'm asking you to drop the fallback argument.

[00:37:11] Speaker 01:
That is, soon they have standing to challenge the waiver.

[00:37:15] Speaker 01:
Is the Commission's position that it is permissible, lawful, to make decisions about waiver based on willingness to spend money on a different aspect of the spectrum?

[00:37:27] Speaker 05:
To my knowledge, Your Honor, the Commission has never answered that question.

[00:37:30] Speaker 05:
Not only did it not answer that question, not only did the Bureau not answer that question in the waiver order, to my knowledge, the Commission has never held that.

[00:37:40] Speaker 05:
I'm not aware of any precedent holding that to be the case.

[00:37:45] Speaker 01:
Okay, I just want to correct a couple of things that the Council for the FCC said.

[00:38:05] Speaker 00:
First of all, I want to make clear that our case is not just about the setting of the reserve price.

[00:38:10] Speaker 00:
We argued, once we understood that there was this deal between the commission and DISH, we argued that that affected the integrity of the whole auction, not just the reserve price, although it's quite obvious that none of the, you know, per megahertz pops things that were presented to the commission equated to 50 cents a megahertz pop.

[00:38:29] Speaker 00:
It was definitely related.

[00:38:30] Speaker 01:
How did it affect the entire?

[00:38:32] Speaker 00:
It infected the entire thing because

[00:38:35] Speaker 00:
But unlike the other participants in the auction who were just bidding on the HBlock licenses, effectively Dish was bidding on getting that waiver grant.

[00:38:46] Speaker 00:
That's why there was an inequality between the people here at this meeting.

[00:38:49] Speaker 01:
Here we have another same problem again, which when I heard this argument I was wondering why didn't I see this anywhere in the FCC opinion, which I didn't.

[00:38:59] Speaker 01:
And I thought, well, maybe it's because it wasn't in your application.

[00:39:02] Speaker 01:
I don't see it in your application.

[00:39:04] Speaker 00:
Well, we didn't put it in exactly those terms, but what we said was that it affected it.

[00:39:09] Speaker 01:
My lawyer says we didn't put it in exactly those terms.

[00:39:13] Speaker 01:
I normally think that means we didn't put that in.

[00:39:16] Speaker 00:
Well, what we said was that it affected the integrity of the auction by adding these other elements.

[00:39:21] Speaker 01:
But the argument that you're making

[00:39:23] Speaker 01:
which I would call the Cadillac argument that you made in your brief.

[00:39:26] Speaker 01:
I don't see that anywhere in the application, I'm sorry.

[00:39:29] Speaker 01:
If you want to point me to a page, I'm very happy to look, but very short application, and I didn't see it.

[00:39:37] Speaker 00:
Well, no, we did not.

[00:39:38] Speaker 00:
You don't even have to look.

[00:39:39] Speaker 00:
I'll tell you, we did not make that exact argument.

[00:39:42] Speaker 00:
But the fact of the matter is, it

[00:39:44] Speaker 00:
I mean, one thing that came up in your discussion with FCC Council, DISH had announced just a month before the whole deal was entered into the commission that it did not intend to participate in any meaningful way in the HBlock auction.

[00:40:00] Speaker 00:
A month later, all of a sudden it's completely changed its tune and all of a sudden it's committing to bid a billion and a half dollars in the auction.

[00:40:07] Speaker 00:
So obviously there was a big impact there.

[00:40:09] Speaker 00:
And as far as the reserve price, the whole discussion about whether we were, you know, whether we were diminished in our chances of getting a winning bid by the reserve price, the proof is in the pudding.

[00:40:21] Speaker 00:
I mean, DISH had committed to bid a certain amount.

[00:40:25] Speaker 00:
Yes, theoretically it could have bid a billion and a half dollar on one license, met the reserve, I mean, met its commitment to the FCC, and then let other people bid on the other licenses.

[00:40:36] Speaker 00:
But is that something they would rationally do?

[00:40:38] Speaker 00:
Since they had to bid a billion and a half dollars, they may as well get the licenses, too, that they had to bid on.

[00:40:44] Speaker 00:
And, of course, that's exactly what they did.

[00:40:45] Speaker 00:
They kept bidding and bidding, outbidding everybody.

[00:40:48] Speaker 00:
Finally, they had to bid against themselves to get up to the reserve price.

[00:40:53] Speaker 00:
That tells you right there that the reserve price was probably unreasonable because the commission, but for the fact that it had this commitment from Dish, would have really been taking a huge chance of setting the price that high.

[00:41:05] Speaker 00:
It was much higher than it had been set in other auctions.

[00:41:07] Speaker 00:
that the whole auction would fail, and the record shows that it would have failed, but for the fact that Dish had to get up to that amount.

[00:41:15] Speaker 03:
Other questions?

[00:41:17] Speaker 01:
Thank you both.

[00:41:17] Speaker 01:
Thank you all.

[00:41:18] Speaker 01:
Thank you.

[00:41:18] Speaker 01:
We'll all take this under consideration.