TracFone concerns still run high for consumer groups

Correspondence at the Federal Communications Commission (FCC) over the past week underscores that consumer groups are still very much concerned about what happens if TracFone gets acquired by Verizon even though the operator promises to serve the public interest.

Verizon is in the process of acquiring TracFone, currently the largest MVNO in the U.S., from América Móvil for nearly $7 billion. The proposed transaction triggered concerns from consumer groups about its impact on TracFone’s Lifeline customers, as well as competition overall in the prepaid environment.

About two weeks ago, several groups, including the Communications Workers of America (CWA) union, Public Knowledge, Benton Institute for Broadband & Society, Access Humboldt, and the California Center for Rural Policy – announced they were withdrawing their objections because Verizon agreed to a set of commitments.

Among those commitments: Verizon will continue offering TracFone’s current Lifeline-supported services for at least three years after the close of the transaction. Verizon also said it will honor the rates and terms of the agreements that it’s assuming from TracFone for at least two years, and it will offer 5G plans to TracFone prepaid customers.

Push for strict enforcement

During a meeting last week with the staff of FCC Acting Chairwoman Jessica Rosenworcel, OTI and Common Cause repeated their concerns about the transaction’s potential to undermine the Lifeline program and raise prices for low-income consumers.

OTI and Common Cause emphasized that Verizon has a burden to demonstrate that the merger will benefit the public interest — not merely that it would avoid harm, according to an ex parte filing.

“At a minimum, the proposed conditions should be seen as the floor, not the ceiling, for any potential remedy the Commission might be considering,” they wrote.

The consumer groups said any conditions must be strictly enforced, and behavioral conditions are “notoriously difficult” to monitor. In past transactions, violations have been detected often because an aggrieved third-party business raised concerns, and given that the affected parties here are mostly low-income consumers, there needs to be an ombudsman or compliance officer to monitor the conditions so that low-income consumers aren’t harmed, they suggested.

They also take issue with the three-year duration of Verizon’s Lifeline commitment, saying that’s not enough time; TracFone is one of the few major providers left that focuses on the low-income segment.

OTI also raised concerns about whether AT&T and T-Mobile would continue supporting TracFone service on their networks if the company came under Verizon ownership. As an MVNO, TracFone has been using the networks of several wireless facilities-based providers, although the majority of its traffic is on Verizon’s network.

In their filings earlier this month, the other public interest groups that withdrew their objections also said they’d remain active in any relevant state proceedings. At that time, CWA senior researcher Brian Thorn told Fierce that CWA considers their recommendations and Verizon’s commitments as a floor.

FCC staff has been reviewing “thousands and thousands” of pages of documents, and “I’m sure they have their own concerns too,” beyond what’s addressed by the public interest groups. “If the FCC wants to add more conditions based on the evidence that’s in the record, they are empowered to do that, and we’d encourage them to do that,” he said.