Verizon, TracFone Deal Gets FCC and California Approval

WASHINGTON, November 23, 2021––The Federal Communications Commission voted Monday to approve Verizon’s purchase of TracFone Wireless.

The transaction is subject to binding conditions to ensure that the deal benefits the public interest. In approving the deal, the FCC imposed requirements to protect consumers from price increases, guarantee affordable 5G services and devices for underserved customers, and ensure that TracFone continues its support as a federal subsidy Lifeline program participant. Specifically, Monday’s order requires TracFone to offer its Lifeline supported services for at least seven years and offer “a range of cost-effective 5G devices” and plans to existing and new Lifeline customers.

The FCC also adopted enforcement measures as a condition of the merger. “Given the likelihood that any violation of these conditions could harm low-income consumers,” the FCC’s press release said, “today’s Order requires regular public reporting and more than seven years of oversight.” The enforcement mechanism includes an internal and an independent compliance officer who are empowered to proactively monitor conditions, ensure that low-income consumers are not being harmed, and facilitate consumer complaints about potential violations.

On Friday, the California Public Utilities Commission also approved Verizon’s acquisition of TracFone Wireless with those similar conditions.

TracFone is the largest prepaid carrier in the U.S. And with TracFone’s 21 million customers, Monday’s merger makes Verizon the largest prepaid service operator in the country.

Kathleen Burke, policy counsel for public interest group Public Knowledge, said Monday that the organization “applaud[s] the FCC for its thorough review of this merger, and its efforts to ensure that this merger meets the necessary public interest standard.” With these commitments, Burke says a merged Verizon/TracFone “should provide better prepaid and Lifeline services to the benefit of low-income and price-conscious consumers.”

The deal was initially criticized for eliminating a strong Verizon competitor and potentially leading to an increase in the barrier to market entry for the communications sector. Policy analyst Daniel Hanley at the Open Markets Institute said in a Broadband Breakfast expert opinion that the merger allows Verizon to neutralize competitors.

“Verizon does not need to acquire TracFone to accomplish its operational goals,” he said. “The FCC should not allow Verizon to use its dominant financial position to acquire a critical competitor and market participant and forgo operational investments and other necessary market research to expand its network.”