Democratic Senators Urge FCC to Carefully Consider Acquisition of Tracfone from Verizon and Secure Commitments to Put Consumers First

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“History has shown that positive promises and good intentions without binding commitments have been insufficient to protect consumers and workers. “

Washington (July 21, 2021) – U.S. Senators Edward J. Markey (D-Mass.), Richard Blumenthal (D-Conn.), Sheldon Whitehouse (DR.I.), Dianne Feinstein (D-Calif.) And Ron Wyden (D-Ore) today called on the Federal Communications Commission (FCC) to investigate Verizon’s proposed acquisition of TracFone and obtain specific commitments from the company to ensure that this acquisition will not harm consumers. In the $ 6.9 billion transaction, Verizon would acquire one of the largest operators in the Lifeline program, which provides free or discounted Internet access and affordable prepaid mobile phone services to low-income Americans. TracFone’s SafeLink wireless brand supports 1.7 million Lifeline subscribers in 43 states and approximately 21 million customers in total.

“We are concerned that Verizon does not have sufficient experience to support Lifeline for its current wireless services and has provided few binding commitments to the FCC in connection with the proposed TracFone transaction.” Senators wrote to FCC Acting President Jessica Rosenworcel.“While we recognize Verizon’s stated goal of maintaining these services, Verizon would have significant incentives and opportunities to push Lifeline and cheap prepaid subscribers towards higher income plans. “

Senators expressed the need for Verizon to maintain services and affordability of offerings for current TracFone subscribers, writing: “We urge the Commission to carefully and carefully consider the impact of the proposed transaction on the tens of millions of TracFone subscribers, all of whom depend on a competitive wireless market. In particular, we encourage the FCC to consider binding long-term commitments to protect Lifeline subscribers and ensure affordable services. “

Lawmakers cited concerns from public interest organizations about transitions between generations of networks used by operators as opportunities to move consumers away from plans and cut Lifeline services, and insufficient advertising of Lifeline services compared to plans. more lucrative for operators. “So that consumers are not aware of subsidized or economic alternatives”.

“In this time of growing inequality and difficulty, it is important that the FCC is long-term and enforceable to ensure that Lifeline and budget plans remain accessible, competitive and responsive to consumer needs.” the senators continued.

Lawmakers urged the FCC to obtain binding commitments from Verizon ahead of the acquisition, including requiring participation in the Lifeline program and making 5G offerings available to Lifeline and prepaid consumers at the same rate as other customers of Verizon.

July 21, 2021

The Honorable Jessica Rosenworcel

Acting President

Federal Communications Commission

45 L Street NE

Washington, DC 20554

Dear Acting President Rosenworcel,

We write to urge the Federal Communications Commission (FCC) to thoroughly examine Verizon’s proposed acquisition of TracFone and take action to ensure the transaction will not increase prices for consumers, damage programs. universal services of the Commission or will not weaken workers.

As part of the proposed $ 6.9 billion transaction, one of the largest facilities-based operators, Verizon, would acquire the largest independent mobile virtual network operator (MVNO), TracFone.[1]
We share the concerns of state attorneys general, public interest organizations and other carriers that the proposed transaction could result in increased costs, reduced competition, or reduced service offerings for consumers.[2] We are particularly concerned about the risk the proposed transaction could pose to the FCC’s Lifeline program and the tens of millions of low-income households who depend on affordable prepaid mobile phones.

Currently, Lifeline provides essential connections to 9.1 million Americans by providing free or low cost voice and broadband services. The COVID-19 pandemic – which has led to telecommuting, distance education, online employment, telehealth, and unprecedented hardship – has clearly demonstrated the importance of Lifeline as broadband is become essential to social and economic life. Recognizing this urgent need as schools and workplaces close, the FCC has taken action to keep Lifeline subscribers connected and Congress has relied on the Lifeline program to bring additional relief to families.[3]

TracFone has become synonymous with Lifeline and affordable phones for many vulnerable Americans, supporting 1.7 million Lifeline subscribers in 43 states and approximately 21 million customers in total.[4]
TracFone offers Lifeline services at no cost to qualifying subscribers under its SafeLink Wireless brand, a business plan that other operators often avoid because it is not as lucrative as the more expensive plans. As the largest Lifeline operator, the importance of TracFone to the program cannot be overstated: when the larger operators reduced their Lifeline offerings, TracFone became all the more essential as a reliable Lifeline partner.

Equally important, during these tough economic times, TracFone has built a thriving business that caters to subscribers who are particularly focused on their budget, unable to sign up for postpaid plans, or face other hurdles in getting a phone. The proposed acquisition by Verizon could have an impact on whether these households continue to have the convenience and security provided by telephone and Internet access. As it reviews this transaction, the FCC must be especially vigilant to protect these consumers from rising costs or falling services.

We are concerned that Verizon does not have sufficient experience to support Lifeline for its current wireless services and has provided few binding commitments to the FCC in connection with the proposed TracFone transaction. While we recognize Verizon’s stated goal of maintaining these services, Verizon would have significant incentives and opportunities to push Lifeline and cheap prepaid subscribers towards higher income plans. History has shown that positive promises and good intentions without binding commitments have been insufficient to protect consumers and workers.[5]

As Public Knowledge and others have noted, wireless service providers are in the midst of a significant transition between generations of networks, enabling 5G while disabling 3G services. In the past, such transitions have been used by carriers to crush consumers and drive them away from plans, including cutting Lifeline services.[6] In addition, public interest organizations have regularly raised concerns that operators are not advertising Lifeline services enough over more profitable plans, leaving consumers behind. current of subsidized or economical alternatives. If Verizon fails to advertise and promote its Lifeline product as aggressively as TracFone as a stand-alone company, the deal could exacerbate the unfortunate decline in Lifeline adoption. The need for the FCC to scrutinize this transaction is further heightened by the decline in competition in the wireless market and the stagnant set of options for Lifeline-eligible households created by recent mergers and acquisitions.

In this time of growing inequality and hardship, it is important that the FCC is long-term and enforceable to ensure that Lifeline and budget plans remain accessible, competitive, and responsive to consumer needs. The FCC has been tasked by Congress with protecting the public interest and the needs of consumers in its review of communications transactions.[7] We urge the Commission to carefully and carefully consider the impact of the proposed transaction on the tens of millions of TracFone subscribers, all of whom depend on a competitive wireless market. In particular, we encourage the FCC to consider binding long-term commitments to protect Lifeline subscribers and ensure affordable services, including:

1.)
Require participation in the Lifeline program with at least the same level of geographic offerings and services that TracFone currently provides.

2.)
Make 5G networks and equipment available to Lifeline and Prepaid customers on the same basis and on the same schedule as those made available to Verizon postpaid customers.

3.)
Maintain existing packages of TracFone subscribers, including Lifeline products.

4.)
Market and provide customer service to Lifeline and Prepaid customers, including non-English speaking customers, at least to the same level as TracFone offers today.

5.)
Ensuring that Verizon and TracFone employees are not adversely affected by cost reduction measures as companies consolidate operations.

Thank you for your attention to this matter.


[1]

Verizon, “Verizon to Acquire TracFone Wireless, Inc.,” Press Release, September 14, 2020, https://www.verizon.com/about/news/verizon-to-acquire-tracfone; market share as reported in Federal Communications Commission, “2020 Communications Marketplace Report,” https://docs.fcc.gov/public/attachments/FCC-20-188A1.pdf (accessed July 19, 2021).

[2]

Mark Herring at Federal Communications Commission, February 4, 2021, https://portal.ct.gov/-/media/AG/Press_Releases/2019/AG-Ltr—File-No-ITC-TC-20200930-00173. pdf (accessed July 19, 2021).

[3]

Federal Communications Commission, “Lifeline and Link Up Reform and Modernization,” https://www.fcc.gov/document/wcb-extends-covid-related-lifeline-program-waivers-through-feb-2021 (accessed 19 July 2021); “Broadband emergency benefit”, Federal Communications Commission (Washington, DC), https://www.fcc.gov/broadbandbenefit (accessed July 19, 2021).

[4]

Verizon, “Verizon to Acquire TracFone Wireless.”

[5]

Iain Morris, “Despite Promise, T-Mobile Has Cut 5,000 Jobs Since Spring Merger” Light Reading, March 1, 2021, https://www.lightreading.com/aiautomation/despite-pledge-t-mobile-has-cut-5k-jobs-since-sprint-merger/d/d-id/767735.

[6]Mike Dano, “AT & T’s Cricket to Discontinue Lifeline Support,” Fierce Wireless, June 4, 2021, https://www.fiercewireless.com/wireless/at-ts-cricket-to-discontinue-lifeline-support.
[7]

Jon Sallet, “FCC Transaction Review: Competition and the Public Interest,” Federal Communications Commission (Washington, DC), August 12, 2014, https://www.fcc.gov/news-events/blog/2014/08/12 / fcc-transaction-review-competition-and-public-interest.


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