Fairbanks-based company defends venture with Dish Network that earned $3 billion in credits

A small Alaska-based firm is defending itself against criticism that it helped the much bigger Dish Network claim more than $3 billion in federal credits through a regulatory loophole involving a company jointly formed by the two entities.

Northstar Wireless — the joint company owned by Doyon Ltd., which is headquartered in Fairbanks, Alaska, and Dish Network — successfully bid $7.8 billion in a federal auction of wireless spectrum in January. Northstar Wireless qualified for $3.25 billion in federal credits because it has a small-business designation from Federal Communications Commission, the Fairbanks Daily News-Miner (http://is.gd/7c6oUD) reported.

Doyon, a regional Native corporation, owns only 15 percent of Northstar Wireless. But it manages the company, so it is allowed to claim the small-business designation despite the majority owner being an industry giant.

Only Doyon revenue is counted when determining small-business status, under rules established by the Alaska Native Claims Settlement Act of 1971.

The auction maneuvers have been slammed by critics, including Dish's competitors, which have complained to the FCC about the auction.

Doyon officials defend the partnership, saying it accomplished the additional competition sought by the FCC.

Doyon attorney Allen Todd said the corporation needed to join forces with a deep-pocketed company to "reach the scale of investment that is required in today's wireless industry." The auction results haven't yet been finalized, he said.

Additional competition has lowered wireless prices to 7 cents a minute in 2010 from an average of 47 cents per minute in 1994, Todd said.

A company that is actually small has no chance of playing a significant role in the sector, he said. That's why federal regulators allow partnerships — call designated entities — between large companies and smaller markets, he said.

"The idea that a small company buying a few wireless licenses in a small market can meaningfully impact competition is simply uninformed," Todd said in a company statement.

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Information from: Fairbanks (Alaska) Daily News-Miner, http://www.newsminer.com