FCC OKs Verizon-TracFone Combo

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(Image credit: Verizon)

The Federal Communications Commission on Monday (Nov. 22) approved Verizon Communications’s proposed $6.9 billion purchase of wireless service reseller TracFone Wireless.

TracFone is owned by Mexican telecom company America Movil.

“After rigorous review, the commission found that the transaction, as modified by Verizon’s enforceable commitments, will make Verizon and Tracfone stronger providers of prepaid and Lifeline services,” the FCC said.

Public interest groups, with the backing of Democratic legislators, had agreed to drop their challenge to the deal last August after Verizon agreed to a host of conditions that the FCC has now baked into its approval, plus ones of its own including strong enforcement (see below).

Some top legislators, including Sens. Richard Blumenthal (D-Conn.) and Ed Markey (D-Mass.), had told the FCC that as important as the conditions were, they had to be made “legally binding, vigilantly monitored, and vigorously enforced to ensure the company makes good on these promises.”

“Verizon welcomes the FCC’s approval today of our TracFone acquisition,” senior VP and deputy general counsel of public policy and government affairs Kathy Grillo said. “The deal will provide customers with the best of both worlds: more choices, better services and new features thanks to Verizon’s investment and innovation. Customers will benefit with enhancements in devices, network performance and innovative products and services — as well as a continued commitment to Lifeline. … We will work hard to serve TracFone’s current customers and look forward to serving new ones in this dynamic and fast-growing marketplace.”

According to the FCC, Verizon must:

· “Offer TracFone’s Lifeline-supported services over the same service areas for at least seven years;

· “Offer a free, compatible device or SIM in certain circumstances where Lifeline customers are being required to transition to Verizon’s network;

· “Continue to offer and advertise existing Lifeline plans, with no added co-pays to TracFone’s existing Lifeline plans offered at no cost to prepaid customers for at least three years;

· “Make available to existing and new Lifeline prepaid customers a 5G plan and offer a range of cost-effective 5G devices to existing and new Lifeline customers;

· “Maintain a specified level of marketing and advertising expenditures for Lifeline;

· “Establish and maintain a dedicated website with information about the Lifeline program and a dedicated customer service line for Lifeline customers;

· “Maintain TracFone’s existing MVNO agreements to serve customers outside Verizon’s network coverage (including Puerto Rico, and maintain existing TracFone rate plans for new and existing customers for three years;

· “Maintain an exclusive, toll-free customer service line for customer transition;

· “Conduct outreach, advertise, and display all plans on a dedicated website;

· “Notify customers at least twice before they are transitioned to Verizon’s network;

· “Offer a free, compatible device or SIM in certain circumstances where Lifeline customers are being required to transition to Verizon’s network;

·  “Extend its 60-day unlocking period to all 700 MHz C Block devices purchased from TracFone after closing and activated on the Verizon network;

· “Provide notice to affected TracFone customers of its unlocking policy;

· “Provide MVNOs that have current contracts with Verizon an option to extend, subject to certain limitations specified in the order, their existing MVNO wholesale agreements, on the same terms and conditions, on a month-to-month basis until three years after the transaction closes;

· “Submit publicly available semi-annual reports describing its compliance that includes information regarding Lifeline and non-Lifeline customers for seven years;

· “Pay for and retain both an internal company compliance officer and an independent compliance officer to ensure compliance with these commitments for seven and a half years; and

· “Assume liability for forfeitures, restitution, or other obligations that may be imposed by the commission or the Universal Service Administrative Company (USAC) on TracFone. In addition, Verizon will comply with any agreements with the commission or USAC, including following any compliance plans, or other obligations, agreed to by TracFone, its subsidiaries, or any successors or assigns.”

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.