CWA opposes Verizon’s attempt to avoid thorough public review of TracFone acquisition

CWA filed FCC comments today urging the Commission to deny Verizon’s request to give its proposed acquisition of TracFone "streamlined" review. CWA’s filing shows that Verizon’s request is an attempt to avoid the thorough public review process at the FCC that most transactions in the telecom sector are subject to -- despite serious procedural, public interest, and antitrust issues involved with the potential transaction. 

The proposed Verizon acquisition of TracFone is a $7 billion transaction under which the largest facilities-based provider of mobile wireless services in the United States would acquire the fourth largest provider of wireless services by subscribership. Long a supporter of the Commission’s Lifeline program, which helps low-income households afford modern communications services, CWA has serious concerns that this transaction could curtail service availability from TracFone, one of the largest providers of Lifeline services in the country. In addition, the transaction raises significant antitrust concerns, which could negatively affect consumer prices and workers’ wages in the wireless industry.

“This request from Verizon is an obvious attempt to avoid the FCC’s public review process, and the Commission should reject it,” said CWA District 1 Vice President Dennis Trainor. “During the pandemic, the Lifeline program for low-income consumers is particularly critical. Any proposed transaction that could affect that program or alter competition in the wireless industry must face full scrutiny from regulators at the FCC.”

In its FCC comments, which can be viewed here, CWA lays out three areas of concern:

• The Verizon-TracFone request for streamlined review fails to meet the Commission’s regulatory requirements for that process because it lacks essential details including a description of TracFone’s federal Eligible Telecommunications Carrier designation, the proposed transaction involves a dominant foreign carrier, and it is unclear whether TracFone holds a domestic Section 214 license. As a result, the Commission should deny Verizon’s request for streamlined review.

• The proposed Verizon-TracFone transaction could severely curtail availability of the Lifeline program for low-income consumers from TracFone, which is one of the largest providers of Lifeline services in the country – and the only remaining independent Mobile Virtual Network Operator (“MVNO”) of substantial size – negatively affecting more than a million low-income subscribers. 

• The proposed Verizon-TracFone transaction may substantially lessen competition in the wireless industry. For example, in acquiring the leading MVNO, Verizon could have the incentive to disadvantage other MVNOs that currently rely on its services; the transaction could diminish competition by increasing entry barriers to the MVNO market; the transaction could soften competition as Verizon would now have access to competitively sensitive information; and the transaction, in eliminating a maverick MVNO, could soften competition for mobile wireless services. For these reasons, the proposed transaction warrants a thorough and public review proceeding from the Commission.
  

CWA’s filing follows another petition to deny Verizon’s request for streamlined review filed by public interest groups Public Knowledge, the Open Technology Institute at New America, and the Benton Institute for Broadband and Society.

“The acquisition of the largest wireless Lifeline provider, which is also the largest mobile virtual network operator, by the largest facilities-based mobile carrier hardly qualifies as ‘routine,’” the groups wrote in their petition. “This is especially true here, where Verizon has generally avoided participation in Lifeline and the pre-paid market. Whatever Verizon’s business intentions at the moment, the Commission must consider what safeguards may be necessary to protect Lifeline and other low-income subscribers should Verizon decide to abandon its attempt to enter into the pre-paid market.”

Links:

CWA opposes Verizon’s attempt to avoid thorough public review of TracFone acquisition (CWA, Nov. 16, 2020)