News

CWA raises Lifeline and anticompetitive harm concerns in the proposed Verizon acquisition of TracFone

23 Dec, 2020

CWA filed comments Friday with the FCC raising serious concerns with the proposed acquisition of TracFone by Verizon. The comments urge the Commission to request more information from the companies to adequately review the impacts of the transaction. The comments also urge the FCC to impose specific conditions, if it approves the transaction, to protect Lifeline customers and customers in the MVNO market from anticompetitive harms.

The comments, request more information from the companies on several issues, including Verizon’s ETC certification plan, which the Commission must approve before the transfer of section 214 licenses, and requests that the Applicants answer questions about any side relationships Verizon may have with América Móvil, TracFone’s foreign parent based in Mexico.

The comments also urge the Commission to adopt conditions, if it approves the transaction, to mitigate the transaction’s threat to Lifeline customers. TracFone is now one of the largest providers of Lifeline services with approximately 1.7 million low-income subscribers in 43 states and the District of Columbia, or 22 percent of total Lifeline subscribers. By contrast, Verizon only offers its mobile wireless service to Lifeline customers in parts of four states. Tracfone’s critical role in providing Lifeline could be undermined if Verizon seeks to increase its profits by reducing promotion of Tracfone’s Lifeline services or limiting Tracfone users to basic services rather than making 5G service widely available.

If the Commission approves this transaction, it must impose conditions that will protect Lifeline customers and address potential anticompetitive harms to the MVNO market. According to the CWA filing, conditions for approving the transaction should, at a minimum, include the following:

A commitment by Verizon 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.
A commitment 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.
A commitment to maintain the existing packages available to Lifeline customers for a minimum of 5 years.
A commitment to continue to market to, and provide customer services for, Lifeline and pre-paid customers, including non-English speaking customers, at least at the same level as TracFone provides today.
A commitment by Verizon to assume liability for any forfeitures or restitution that may be imposed by the Commission on TracFone, unless such liability has been resolved by TracFone before the closing of the transaction.
Whatever other conditions the record demonstrates are necessary to protect Lifeline and other low-income pre-paid subscribers.
Require that the Applicants provide additional information and analysis about the impact the merger would have both downstream on consumers as well as upstream in the labor markets, including the effect that reducing the number of independent MVNOs will have on wages in geographic markets where their operations currently overlap.
Require the Applicants to submit their internal analysis of projected employment growth as part of the record in this proceeding so that the Commission and the public can properly evaluate this transaction’s impact on jobs and wages.
Require the Applicants to ensure that the transaction does not cause a reduction in US employment and that no employee of Verizon Wireless or TracFone loses a job or that their benefits and wages are reduced as a result of this transaction.
Require commitments that are similar to the protections in Part VII.A of the Final Judgment entered in United States v. Deutsche Telekom to protect MVNOs that are currently obtaining services from Verizon and that ensure that Verizon’s current MVNO partners remain viable competitive options for the consumers who currently use their wireless services. The Commission should obligate Verizon to extend, at the MVNO’s option, its current MVNO agreement for at least five years.
Require the Applicants to implement and maintain reasonable firewall procedures, similar to the protections in Section XIII of the Deutsche Telekom Final Judgment, to prevent competitively sensitive information from competing MVNOs or MNOs from being disclosed to Verizon and TracFone individuals involved in the marketing, distribution, or sale of competing services or being used for any purpose that could harm competition.