FCC OK Clears Verizon/Tracfone to Close This Week
Verizon expects to close on buying Tracfone this week following FCC OK Monday, the carrier’s spokesperson said. Three commissioners approved and Commissioner Brendan Carr concurred with the order clearing the wireless deal with consumer protection conditions. The California Public Utilities Commission last week conditionally approved the takeover (see 2111180068).
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“The transaction will lower TracFone’s costs to provide service and improve its ability to offer prepaid and Lifeline services,” said the FCC. “These benefits, combined with Verizon’s robust commitments, which we accept as conditions of our approval, ensure that the proposed transaction will serve the public interest, convenience, and necessity.” Carr agreed approval “promotes the public interest” but concurred due to “concerns with the standards and frameworks that the agency applies in transaction reviews.”
“Customers will benefit with enhancements in devices, network performance and innovative products and services -- as well as a continued commitment to Lifeline,” said Verizon Senior Vice President-Public Policy Kathleen Grillo in a statement. “We will work hard to serve TracFone’s current customers and look forward to serving new ones.”
The proposed deal had “potential to cause some public interest harms,” the order said. “TracFone is one of the most significant participants in the Lifeline program, and the evidence points to potential harm to TracFone’s Lifeline-eligible and other low-income customers, especially in geographic markets outside Verizon’s coverage area.” Verizon “may have an increased incentive to raise the costs of mobile virtual network operators (MVNOs) that compete directly against TracFone for Lifeline and other low-cost prepaid customers and for which Verizon is their wholesale provider.” The FCC said it remedied those possible issues with “strong conditions to protect low-income consumers from price increases and to ensure that TracFone remains a supportive Lifeline participant.”
Conditions include requiring Verizon to keep Tracfone’s Lifeline plans in the same areas for at least seven years and to maintain existing Tracfone rate plans for three years. Other conditions aim to ensure a problem-free customer migration, such as requiring Verizon to offer free, compatible devices or SIM cards to Lifeline customers forced to transition from other networks. The combined company must sell a 5G plan and devices to Lifeline customers. Another condition requires Verizon to maintain Tracfone’s existing MVNO agreements for customers outside Verizon’s network coverage, including Puerto Rico. Verizon for three years must provide MVNOs with an option to extend, with certain limits, their existing wholesale agreements with the same terms and conditions on a month-to-month basis.
The FCC included an enforcement mechanism with internal and independent compliance officers, paid for by Verizon, which for seven-and-a-half years will monitor conditions, ensure no harm to low-income consumers and handle consumer complaints about possible violations. The order requires semi-annual compliance reports.
The conditions made with Jessica Rosenworcel as FCC chairwoman go "above and beyond what we originally believed was possible when this merger was first proposed under a different administration," emailed Public Knowledge Policy Counsel Kathleen Burke. "With these commitments, a merged Verizon/Tracfone should provide better prepaid and Lifeline services to the benefit of low-income and price-conscious consumers."