CPUC OKs Verizon/Tracfone; Eyes on FCC
The California Public Utilities Commission unanimously cleared Verizon buying Tracfone (see our report here), leaving the FCC as the final regulatory approval needed for the acquisition that would affect many low-income customers. CPUC commissioners voted 5-0 at a virtual meeting Thursday to allow the deal. FCC officials told us they expect the agency to move forward in coming weeks, following the CPUC action.
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California commissioners agreed to the conditions that were recently proposed by a CPUC administrative law judge, including a 20-year commitment to California LifeLine (see 2111170062). Verizon didn't comment Thursday.
Consumer protection conditions make this in the public interest and add benefits for low-income customers, said Commissioner Cliff Rechtschaffen, assigned to docket A.20-11-001. It's important to ensure a “seamless” customer migration without service interruptions, he said. The commission's Herfindahl-Hirschman Index antitrust analysis found it could reduce competition, he said. The CPUC concluded the companies' proposal “did not provide sufficient mitigation measures to protect consumers,” so the agency added conditions.
Commissioner Martha Guzman Aceves supports the order mainly due to the enforceable requirement that the new company participate in state LifeLine for 20 years, she said. Verizon raised concerns with the CPUC’s earlier proposal to make that required commitment perpetual (see 2111050039).
Verizon would have to complete migration of all Tracfone customers currently on other networks in two years, and keep existing Tracfone plans at the same or better price for five years, under other conditions from the revised draft. The new company would be required to have at least 200,000 LifeLine subscribers by Dec. 30, 2025. The proposed order also included reporting requirements and an enforcement program like the one the commission adopted in its T-Mobile/Sprint order.
Verizon representatives spoke Monday with FCC Wireless Bureau staff. “Verizon discussed the benefits of the transaction and responded to concerns raised in the record,” said a filing posted Thursday in docket 21-112.
MoffettNathanson’s Craig Moffett told us prompt FCC action is likely now that the CPUC has acted. “This has taken longer than we ever imagined it would, but it looks like we’re finally close to the finish line,” he said. LightShed’s Walter Piecyk assumed FCC Chairwoman Jessica Rosenworcel “would wait until after her confirmation before proceeding, but perhaps those timelines are aligning,” he said.
“The CPUC has been making a lot of noise lately, even issuing a proposal earlier this week on consumer protections it would like to see,” said Digital Progress Institute President Joel Thayer. “By CPUC planting its flag, it makes this process relatively easy for the FCC to move forward.”
The CPUC's independent Public Advocates Office appreciates the commission "thoroughly examining the anticompetitive harms of the merger" and requiring "Verizon to participate in the LifeLine program for 20 years, and meet other customer protections," a spokesperson emailed. "This was truly a victory for many customers."
Earlier in the CPUC meeting, Guzman Aceves urged the legislature to update the state’s 2006 Digital Infrastructure and Video Competition Act to require cable companies to serve all households in their territory. "We have no current authority to fill these donut holes,” she said. All it can do is urge companies or use public funding to subsidize them -- and not all are willing to take the money, said the commissioner, noting the CPUC is investigating digital redlining in its broadband proceeding. The California Cable and Telecommunications Association declined to comment.