Concerns grow over Verizon’s acquisition of Tracfone

CWA and Boost Mobile founder Peter Adderton urged the FCC to closely scrutinize the $7 billion acquisition of Tracfone by Verizon. If the deal closes, Verizon will become the largest prepaid provider with about 25 million subscribers. Verizon currently has four million prepaid subscribers, compared to 21 million at Tracfone, 20 million at T-Mobile, and 18 million at AT&T. 

In a meeting with FCC officials, Adderton warned of Verizon’s ability and incentive to disadvantage rival MVNOs through foreclosure and raising their costs, should the deal close. He is concerned that Verizon’s acquisition of TracFone, a maverick MVNO, would likely diminish competition and harm consumers, especially those dependent on the maverick TracFone’s scale to reduce prices. 

CWA recommended the FCC to issue a standard Request for Information (RFI) seeking documents and narrative responses addressing the transaction’s probable harms and to require Verizon and TracFoneto submit their internal analysis of projected employment growth as part of the record. CWA also urged the FCC to examine the transaction’s impact upstream on labor markets.

CWA also urged the FCC to impose protections for Lifeline customers and conditions to mitigate anticompetitive harms in the wireless industry, if the Commission considers approving the transaction. CWA’s recommended conditions include a requirement for Verizon to commit to participate in the Lifeline program for a minimum of 5 years with at least the same level of geographic and service offerings as TracFone currently provides; to commit to make 5G networks and equipment available to Lifeline and pre-paid customers on the same basis as made available to Verizon’s post-paid customers; and to maintain the existing packages available to Lifeline customers for a minimum of 5 years. 

"Verizon's acquisition of TracFone as it stands today could harm millions of low-income families during a pandemic," said CWA Senior Researcher Brian Thorn to Fierce Wireless. "Now is certainly not the time to depend on the generosity of a corporation to continue providing communications services that millions of low-income Americans rely on. The FCC has a responsibility to step in and ask what Verizon will do to protect consumers from further consolidation of the wireless industry."

On February 4, a coalition of 17 attorneys general, led by Virginia Attorney General Mark Herring, urged the FCC to further investigate Verizon’s proposed acquisition of TracFone. In their letter to the FCC, the attorneys general detailed how Verizon's acquisition of TracFone could negatively impact the Lifeline program, which provides a subsidy for communications services to millions of low-income consumers.

Links:

Concerns grow over Verizon’s acquisition of TracFone (Fierce Wireless, Mar. 3, 2021)

CWA-Peter Adderton ex parte letter to FCC (FCC, Mar. 1, 2021)

Attorneys general urge FCC to further investigate Verizon acquisition of TracFone (Speed Matters, Feb. 18, 2021)