The FCC is asking Verizon to supply more details about its planned acquisition of prepaid MVNO TracFone, including plans for Lifeline, customer migration, service pricing and devices.
Verizon initially sought a streamlined processing for its application to acquire TracFone from América Móvil, a deal worth up to $6.9 billion. It’s Verizon’s first big foray into prepaid and if approved, would allow Verizon to gain TracFone's more than 20 million prepaid subscribers. It would also eliminate the largest MVNO in the country, although most of TracFone’s customers already use Verizon’s network.
In February, the FCC said the deal raises “extraordinary complexity” and thus an additional 90-day review period was warranted. That came after the attorneys general from 16 states and the District of Columbia asked the FCC to request additional information from Verizon about the deal.
The FCC is now asking Verizon to explain in detail the steps it will take to continue to offer Lifeline services to existing TracFone Lifeline customers, including those currently on other networks, and how those customers will be transitioned to Verizon’s network.
It also wants to know what devices are going to be available for TracFone customers post-transaction, as well as the service plans Verizon expects to offer and Verizon’s plans to market and expand its prepaid service offering in the absence of the TracFone transaction. The FCC is also asking for a complete list of Verizon’s current MVNO partners and what impact the TracFone deal will have on them.
Verizon has promised to bring “its world class vison for 5G” and other technological advances to TracFone customers. The FCC wants Verizon to describe its strategy to do that, as well as whether TracFone subscribers will have access to unlimited 5G data plans.
Earlier this month, Verizon told the FCC that TracFone, as part of Verizon, will become a stronger competitor against the flanker prepaid brands of AT&T and T-Mobile, which are Cricket and Metro, respectively. Having another facilities-based service provider in the mix will make the market more competitive, it argued, bringing owner’s economics into the picture for TracFone.
“We are pleased the FCC's process continues to progress, and are reviewing the FCC's request," Verizon said in a statement on Friday. "We feel confident that the FCC will recognize the consumer benefits of strengthening competition for value-conscious prepaid customers and of bringing facilities-based competition for wireless Lifeline services.“
CWA weighs in
The Communications Workers of America (CWA) union has also been pressing the FCC to impose strict conditions on the transaction to protect Lifeline customers and preserve the wireless reseller market. TracFone is one of the largest providers of Lifeline services, which allow low-income people to get wireless services at more affordable rates.
Verizon has stated several times that it will continue to offer Lifeline service through TracFone, but CWA said it didn’t provide detailed information about how it plans to do that or how it will migrate subscribers who aren’t already on the Verizon network, a number that has been estimated at 7.6 million.
CWA was still reviewing the FCC’s questions to Verizon on Friday, but in general sees it as a good and necessary step in the review process.
“CWA and a growing coalition, including seventeen state attorneys general, have been urging the FCC to more closely scrutinize how Verizon intends to serve TracFone’s millions of low-income families who rely on the Lifeline program,” said Brian Thorn, senior researcher at CWA, in a statement. “We applaud the FCC’s decision this week to seek critical information needed to evaluate this deal and ensure it is in the best interests of consumers.”
Article updated with comment from Verizon.