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FCC Approves Verizon’s Acquisition of Lifeline Service Provider Tracfone with Conditions

A city with arcs drawn representing connectedness.

On Monday, the Federal Communications Commission (FCC) voted to approve asset transfer of Tracfone from Mexican telecommunications company América Móvil S.A.B. de C.V. to Verizon Communications Inc. The opinion and order imposed certain consumer protections, but said that Verizon’s acquisition of TracFone Wireless Inc. will improve prepaid and Lifeline services, an FCC program designed to help low-income consumers obtain communications services.

The opinion reported that Tracfone is Miami, Florida-based corporation that offers prepaid services to more than 20 million customers, including Lifeline services to approximately 1.7 million. For its part, Verizon “provides nationwide voice and data services to nearly 120 million total wireless connections, including nearly 94 million consumer wireless customers,” the opinion said.

In approving the transaction, the FCC reportedly “conducted an exhaustive review of the record filings in this proceeding, including reviewing thousands of pages of pleadings, documents, and information request responses, as well as conducting a thorough economic analysis of the potential harms and benefits.” The commission identified several potential harms that could result from the transaction, including to TracFone’s Lifeline-eligible and other low-income customers, particularly in geographic markets outside Verizon’s coverage area.

The FCC also cited concerns that post-acquisition Verizon “may have an increased incentive to raise the costs of mobile virtual network operators (MVNOs) that compete directly against TracFone for Lifeline and other low-cost prepaid customers and for which Verizon is their wholesale provider.”

Accordingly, the commission adopted a number of strictures to address these harms and ensure the realization of certain benefits. The order said that TracFone must remain a supportive Lifeline participant, and thus erected several protections for low-income consumers to prevent price hikes and service losses. 

The FCC explained that because these measures are crucial to the low-income sector, they will be enforced for more than seven years. To ensure complaince, the FCC also crafted an independent enforcement scheme to be implemented by both an internal and an independent compliance officer.

“We find that these and the other conditions imposed herein adequately address the concerns and potential harms identified in the record such that, considering that the transaction also will yield some benefits (in the form of lower marginal costs) for TracFone, on balance, we are able to find that the proposed transaction serves the public interest,” the opinion concluded.

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