Verizon, Groups Strike Deal on TracFone Deal Conditions

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Public-interest groups have agreed to drop their challenge to Verizon Communication's proposed $6.9 billion purchase of TracFone Wireless after the telecom agreed to a bunch of their conditions.

Those include extending lifeline services for at least three years after the deal closes.

Also Read: Dems Urge FCC to Impose Lifeline Conditions on Verizon-TracFone Deal

Public Knowledge, Access Humboldt, the Benton Institute for Broadband and Society, the California Center for Rural Policy, and Communications Workers of America submitted a letter to the Federal Communications Commission late Wednesday (Aug. 11) withdrawing their objections to the deal contingent on the FCC making Verizon's agreed-upon conditions “enforceable and mandatory.”

The groups reserved the right to remain “active” in relevant state reviews of the deal, saying “but more searching review may be required under the law and policy of each state where the transaction is under review.”

At the same time the groups were pulling their challenge, Verizon sent its own letter to the FCC, noting that "some stakeholders have expressed concern about certain aspects of the transaction, in particular its impact on TracFone’s Lifeline offerings and the introduction of 5G services and devices in the prepaid segment," and saying it had resolved them in discussions with the above parties.

Those conditions are as follows:

1.) "Lifeline Service. Verizon commits to continuing to offer TracFone’s current Lifeline-supported services for a minimum of 3 years following the close of the transaction.

2.) "Lifeline Plans. Verizon will not add new co-pays to TracFone’s existing Lifeline plans offered at no cost to prepaid customers for at least 3 years after the transaction closes, provided that the terms of the Lifeline program do not change in a way that materially increases costs or decreases the subsidy. Nothing in this commitment shall prevent Verizon from pursuing compensation through state or federal device reimbursement programs so long as no unrecovered costs are passed on to Verizon’s Lifeline subscribers.

3.) "Marketing. Verizon commits to maintaining at least the same budget as TracFone did in 2020 for Lifeline Marketing throughout TracFone’s entire service area for at least 3 years following the close of the transaction.

4.) "No Customer Left Behind. Verizon commits to honor the rates, terms and conditions of the MVNO [mobile virtual network operator] agreements that Verizon is assuming from TracFone, and to provide resold voice and data services consistent with the terms of those agreements for at least years after the transaction closes. Verizon also commits to negotiate in good faith with an MNO to extend the terms of TracFone’s existing MVNO agreements for up to 3 years after the transaction closes if doing so would be necessary to avoid service disruption to a significant number of TracFone customers. Nothing in this commitment will require Verizon to modify the rates, terms, or conditions of any agreement it assumes from TracFone.

5.) "5G. Within 6 months after the Transaction closes, Verizon will make available a TracFone service plan to Lifeline prepaid customers that includes 5G service. And Verizon will increase the range of cost-effective 5G devices available to TracFone customers using commercially reasonable subsidy practices supported by regulatory flexibility.

6.) "Enforcement. For a period of 3 years after the close of the transaction, Verizon commits to submitting a quarterly report to the Commission that includes the current number of Lifeline subscribers within the service area Verizon will acquire from TracFone, data regarding its migration of customers from TracFone’s other underlying networks to Verizon’s including the number of devices that have successfully transferred, and the availability of 5G for Lifeline customers, including which geographic service areas have access to Verizon’s 5G network and how many Lifeline customers are receiving 5G service. The report will list all states where TracFone offers a Lifeline-supported service, and will provide a state-by-state breakdown of amounts spent on advertising and other marketing activities associated with Lifeline. Verizon may file proprietary information with the Commission on a confidential basis, making it available only to representatives of parties to the transaction docket who have signed the relevant protective order (either during the pendency of the proceeding or thereafter) provided that Verizon shall also file a public version redacting the proprietary information to be available for review by the public."

"The Public Interest Groups believe that these conditions adequately address their concerns," they said in their letter. 

A group of Democratic senators was taking credit for Verizon's agreement to the conditions, but giving some props to the public interest push as well.

“We are pleased that at our urging, Verizon has made new public commitments regarding Lifeline and budget subscribers as it readies its buy ofTracFone,” said Sens. Richard Blumenthal (D-Conn.), Sheldon Whitehouse (D-R.I.), Dianne Feinstein (D-Calif.), Ron Wyden (D-Ore), and Ed Markey (D-Mass.). “We congratulate the public interest organizations that fought vigorously for these vital protections. These commitments should now be a floor and a starting place for the FCC’s review of the acquisition and negotiations with Verizon. As important as the terms of these commitments are, the conditions must be made legally binding, vigilantly monitored, and vigorously enforced to ensure the company makes good on these promises.”

John Eggerton

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.