Verizon has increased the prospects for clearing its proposed acquisition of wireless reseller TracFone by allaying critics’ worries that Verizon could leave some of TracFone’s low-income customers without service. Advocacy groups Public Knowledge, Access Humboldt, the Benton Institute for Broadband and Society, the California Center for Rural Policy and the Communications Workers of America have dropped their opposition to the transaction.
Verizon pointed to new public commitments to protect low-income consumers in connection with the proposed acquisition Thursday, noted The Verge. For its part of the agreement, Verizon pledges to continue to provide TracFone’s Lifeline subsidy programs for at least three years after the acquisition closes. Verizon also promised to offer a subsidized 5G program for low-income TracFone users.
According to the Communication Workers of America (CWA), over 1.7 million TracFone customers depend on Lifeline. The carrier would have to submit quarterly reports to the FCC for three years sharing details about its Lifeline customers and their service offerings.
“These commitments ensure TracFone customers will continue to have access to Lifeline, an essential program for millions of families,” senior CWA researcher Brian Thorn stated. He said the success “would not have been possible without the support of our allies and an FCC interested in protecting the interests of customers over corporations.”
“After nearly a year of advocating for TracFone’s Lifeline subscribers, we believe that Verizon’s commitments are a win for consumers and serve the public interest,” said Public Knowledge policy counsel Kathleen Burke, who praised the FCC for not expediting the merger review — a move that would have resulted in less scrutiny from agency staff. The proposed conditions “represent the federal floor of what we believe is necessary,” she told Politico.
Last September, Verizon announced its plan to purchase TracFone from Mexico’s America Movil for $3.125 billion in cash and another $3.125 billion in shares of Verizon stock, according to Phone Arena. In addition, another $650 million could be paid out to America Movil depending on whether TracFone achieves certain performance goals.
With approximately 21 million subscribers and 90,000 retail locations in this country, Verizon calls TracFone “the leading prepaid and value mobile provider in the U.S.” and states that the deal now expands Verizon’s business into the value arena. TracFone operates brands like TracFone, StraightTalk Wireless, SIMPLE Mobile, NET10 Wireless, and Total Wireless. TracFone contracts for wireless service from Verizon, AT&T, T-Mobile U.S., and U.S. Cellular, according to Phone Arena. Last year, TracFone generated $8.1 billion in revenue.
The acquisition would give Verizon over 20 million new subscribers and a tighter grasp on the low-income wireless and value phone market. Verizon hopes to close the deal before the end of the year, though the Commission is still reviewing the acquisition.
Earlier this year, several Senate Democrats called on the FCC to add similar conditions to Verizon’s proposed merger to protect low-income subscribers, The Verge reported. On Thursday, Sens. Richard Blumenthal (D-CT), Ron Wyden (D-OR), and Ed Markey (D-MA), among others, applauded the new conditions. “These commitments should now be a floor and a starting place for the FCC’s review of the acquisition and negotiations with Verizon,” the senators said. “As important as the terms of these commitments are, the conditions must be made legally binding, vigilantly monitored, and vigorously enforced to ensure the company makes good on these promises.”
Verizon hopes sorting out these condition agreements will help pave the way for the deal to close. Verizon spokesperson Richard Young said the advocates’ letter reflects how the acquisition has always been about “providing great service to value-conscious consumers, including Lifeline customers” and that the carrier wants to discuss these pledges with the FCC “so that we can bring the benefits of the transaction to value-conscious prepaid consumers as soon as possible.”
By Leslie Stimson, Inside Towers Washington Bureau Chief