Verizon’s acquisition of TracFone gets additional review time

The FCC is taking additional time to consider Verizon’s proposed acquisition of TracFone Wireless, denying Verizon’s request for an expedited review of the deal.

“The Commission has not yet issued an order acting on this application for international section 214 authority because it raises issues of extraordinary complexity and thus an additional 90-day period for review is needed,” the FCC said in its public notice last week.

The announcement comes after the attorneys general from 16 states and the District of Columbia asked the FCC to request additional information from Verizon about its planned acquisition of TracFone, one of the largest providers of Lifeline. The AGs want the FCC to attach conditions so that Lifeline customers are protected.

RELATED: States push for Lifeline protections in Verizon/TracFone deal

Verizon announced last fall that it plans to acquire TracFone from Mexico-based América Móvil in a deal worth up to $6.9 billion and it asked the FCC for streamlined treatment of its application. As an MVNO, TracFone uses the network of Verizon and other carriers but most of its traffic is on Verizon’s LTE network.

The Communications Workers of America (CWA) union also has raised questions about the transaction, saying the FCC should demand a commitment from Verizon to participate in the Lifeline program for a minimum of five years.  

RELATED: Communications Workers challenge Verizon’s purchase of Tracfone

T-Mobile was among those that had argued against streamlining the application, suggesting the transaction warrants the same level of scrutiny and review as T-Mobile’s acquisition of Sprint. “Given the size, scale and significance of the proposed transaction, streamline review is wholly inappropriate,” T-Mobile told the FCC last year.  

Verizon basically said that argument was hogwash, noting the T-Mobile/Sprint transaction involved the elimination of a nationwide facilities-based provider and thousands of wireless licenses and triggered the FCC’s spectrum screen in about half of the nation’s markets. By contrast, TracFone is an MVNO that doesn’t hold a lot of spectrum licenses and the majority of its nearly 21 million customers already are on Verizon’s network.

Public Knowledge also urged the commission to take its time in the review process, saying the acquisition of the wireless Lifeline provider, which is also the largest MVNO, by the largest facilities-based mobile carrier hardly qualifies as “routine.” That’s especially true here, where Verizon has generally avoided participation in Lifeline and the prepaid market, it said. 

The public interest group and others also have noted that the deal will create a fundamental change in the structure of the industry by eliminating the last substantial MVNO. After the transaction, all significant MVNOs in the U.S. will be integrated with a national facilities-based provider or, in the case of Dish Network and Boost Mobile, an up-and-coming facilities-based provider.

For its part, Verizon has said it plans to continue offering Lifeline service through TracFone and will further develop its core brands, products and distribution channels. TracFone operates several different brands, including Straight Talk, Total Wireless and Net10 Wireless.

As of its first-quarter earnings call, Verizon still expected the deal to close in the second half of 2021. The Federal Trade Commission (FTC) gave the green light to the transaction in November. The Department of Justice (DoJ) has not yet weighed in.