Verizon satisfies groups opposed to TracFone deal

The Communications Workers of America (CWA) declared a victory today, saying Verizon has made critical commitments to the Lifeline program as part of its acquisition of TracFone, and CWA is now on board with the deal.

The CWA union had criticized the $6.9 billion deal since it was announced last fall, saying it was putting 1.7 million Lifeline customers at risk who rely on subsidized cell phone service. Lifeline, itself the target of fraud over the years, is a program offered by the FCC to low-income Americans. When the TracFone deal was first announced, Verizon offered Lifeline to parts of only four states, and the merger raised the real possibility, in CWA’s eyes, of deteriorating that service or raising prices.

Verizon initially sought streamlined processing for its application to acquire TracFone from América Móvil, but public interest groups pushed back. CWA and its public interest allies, through multiple FCC filings, recommended conditions be attached to the deal.

With new commitments from Verizon, the groups — CWA, Public Knowledge, Benton Institute for Broadband & Society, Access Humboldt, and the California Center for Rural Policy — have withdrawn their objections to the deal with the FCC. 

“Verizon’s attempts to shirk public accountability threatened 1.7 million TracFone customers who depend on Lifeline, but these attempts were unsuccessful,” said CWA senior researcher Brian Thorn in a statement. “These commitments ensure TracFone customers will continue to have access to Lifeline, an essential program for millions of families. Today’s success would not have been possible without the support of our allies and an FCC interested in protecting the interests of customers over corporations.”

RELATED: Verizon bent on TracFone buy even as prepaid brand loses subs

Earlier this year, the FCC said the deal raised “extraordinary complexity” and required an additional 90-day review. 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 transaction. A group of Democratic senators also jumped on board, demanding that a host of issues be addressed.

Verizon said it worked with public interest groups that had raised questions about the consumer impact of the TracFone transaction.

“Today, we filed a letter at the FCC reflecting Verizon’s commitments resolving those concerns. Our letter sets out enforceable commitments that will ensure that consumers benefit from the stronger prepaid competition that this transaction will bring,” Verizon said in a statement. “We’ve said all along that providing great service to value-conscious consumers, including Lifeline customers, is what this deal is all about, and today’s letter reflects that commitment… We look forward to discussing these commitments with the FCC, so that we can bring the benefits of the transaction to value-conscious prepaid consumers as soon as possible."

While it’s still up to regulators, here are some of the commitments that Verizon intends to make, according to the company:

  • TracFone will offer Lifeline services for at least three years.
  • TracFone will continue to offer a Lifeline plan at no charge to the consumer.
  • Verizon will actively market and advertise Lifeline services.
  • The reseller agreements Verizon is assuming from TracFone will be honored.
  • Within six months after the transaction closes, Verizon offer a TracFone service plan for Lifeline prepaid customers that includes 5G. In addition, Verizon will increase the range of 5G devices available to TracFone customers.
  • Verizon will provide quarterly reports so the FCC can monitor Verizon’s compliance with these commitments.

Where it goes from here

While significant, the withdrawal of the objections and submission of the commitments are just part of the process. The FCC will decide whether it wants to approve the transaction, include these commitments and/or any other conditions beyond what’s being made by Verizon.  

When the transaction first started, it was proposed under a previous administration. Since then, a lot has transpired with the new administration. Verizon’s commitments to help TracFone’s Lifeline customers is a real win for consumers, and one that “I don’t think many people would have predicted when the deal was first announced,” CWA’s Thorn told Fierce.

The California PUC’s review is ongoing and that’s a separate process, he noted. “While this is progress on one hand, there are still other review processes in place,” to which CWA and Public Knowledge are parties, Thorn said. That said, “I do see it as a victory for consumers.”