Communications Workers challenge Verizon’s purchase of Tracfone

Lawyers reviewing paperwork
The CWA says that at the least, the proposed transaction warrants a thorough and public review proceeding from the FCC.(Getty Images: Audtakorn Sutarmjam / EyeEm)

The Communications Workers of America (CWA) is taking issue with Verizon’s proposed acquisition of Tracfone. The trade union says Tracfone is one of the largest providers of Lifeline services in the United States, and it fears those services could be jeopardized if Tracfone is acquired by Verizon. CWA also says the prospect of the acquisition raises significant antitrust concerns, which could negatively affect consumer prices and workers’ wages in the wireless industry.

CWA spelled out its objections in a 24-page filing with the Federal Communications Commission (FCC).

Verizon is trying to buy the mobile virtual network operator (MVNO) Tracfone for $6.9 billion. The trade union doesn’t like that the transaction would bring together Verizon, the nation’s largest facilities-based mobile wireless provider, with Tracfone, the largest mobile virtual network operator (MVNO) and prepaid wireless provider in the U.S.

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It says Tracfone has been a long-time supporter of the FCC’s Lifeline program, which helps low-income households afford wireless 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,” states the labor union. And the union points out that Verizon “has generally avoided participation in Lifeline and the pre-paid market.”

The union is specifically asking the FCC to deny Verizon’s request for a "streamlined" review. It claims Verizon’s request is an attempt to avoid a thorough public review process at the FCC that most transactions in the telecom sector are subject to.

In addition to potentially limiting availability of the Lifeline program for low-income consumers, CWA says the proposed Verizon-Tracfone transaction may substantially lessen competition in the wireless industry. “In acquiring the leading MVNO, Verizon could have the incentive to disadvantage other MVNOs that currently rely on its services,” states CWA.

Both Comcast and Charter lease Verizon’s network to run their MVNO services.

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As the largest U.S. wireless prepaid seller Tracfone has around 21 million customers across multiple brands, but 13 million of them already ride on Verizon’s network. The remainder use rival networks under wholesale agreements with the likes of AT&T and T-Mobile.

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