Regulatory Review of Verizon's Buy of Tracfone Could Extend Into Fall
FCC action on Verizon’s proposed $7 billion buy of Tracfone likely isn’t imminent, industry and agency officials said. The FCC recently created a new docket on the deal, 21-112, following a recommendation by Public Knowledge, but that could mean further delays rather than a faster approval, officials said. The California Public Utilities Commission is also reviewing the transaction, and its work could push a decision into the fall. The deal was announced in September (see 2009140010).
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PK asked the FCC to create the docket because many of the questions don’t involve “the narrow question of the international license” examined in the original International Bureau docket, Senior Vice President Harold Feld told us. “The real questions involve Lifeline and protecting the low-income customers and, more broadly, the competitive issues that have been raised,” he said. The IB docket also isn’t easy for the public to use, he said.
The move means a broader FCC team, led by the general counsel, will look at the deal, Feld said. “We see this as a step that indicates the commission is certainly taking this very seriously,” he said. PK hopes the FCC will now make a data request of the companies so “it actually has the facts to examine the impact,” he said. Verizon appeared to hope for a quick decision, before the end of the Trump administration, but didn't get one, he said.
"We're pleased that the FCC is continuing its review ,” said Will Johnson, Verizon senior vice president-federal regulatory and legal affairs: “We feel confident that they will recognize that this transaction offers the promise of a strengthened competitor for prepaid customers and a significant boost to facilities-based competition for wireless Lifeline." The FCC declined comment Monday. Telecom analysts told us they're hearing little now on the outlook at the FCC.
The American Antitrust Institute and Communications Workers of America urged the FCC to move with care on Verizon’s proposed buy of Tracfone from America Movil, in reply comments posted Friday and Monday in the FCC's new docket.
“The more this deal is analyzed, the greater the concerns, including the merger’s likely harm to the millions of Lifeline wireless and pre-paid customers reliant on TracFone for what competition remains after the Sprint/T-Mobile merger,” said CWA. Recent data shows average prices for wireless service in U.S. urban markets increased $2 monthly after T-Mobile completed its buy of Sprint, CWA said. A spokesperson declined further comment.
“The acquisition raises significant concerns under the Commission’s standard that the proposed transfer be consistent with the public interest, convenience, and necessity,” AAI said. “The proposed transfer will eliminate the largest standalone rival … in the pre-paid wireless market and put it into the hands of Verizon, one of the ‘Big 3’ facilities-based mobile network operators,” the group said: “Verizon’s share of the pre-paid wireless market will increase substantially, while it continues to control the network access needed by smaller mobile virtual network operators in order to resell pre-paid wireless services to consumers.”
The CPUC expects to issue a proposed decision in September, said a Feb. 24 scoping memo by assigned Commissioner Cliff Rechtschaffen in docket A.20-11-001. That could mean a vote in October, based on usual agency process. Under the schedule, intervenor testimony was due Friday, applicants’ rebuttal testimony is due this Friday, an evidentiary hearing is scheduled May 4-5, opening briefs are due May 28, and replies are due June 11.
California consumer groups seek conditions to assure Verizon’s commitment to state LifeLine. The Utility Reform Network (TURN) and Center for Accessible Technology are “concerned that further consolidation in the marketplace will not only stand in the way of improvement or expansion of the [California] LifeLine program, but, more likely ... will harm the program by weakening TracFone, one of the strongest LifeLine competitors in California today,” wrote TURN Managing Director-San Diego Christine Mailloux in testimony posted Saturday. Verizon Wireless historically hasn’t wanted to participate in the state program, she said.
The proposed deal isn’t in the public interest, the CPUC’s Public Advocates Office said in a filing posted Monday. It “harms TracFone customers and prepaid customers generally” and “will increase market concentration in the prepaid wireless services market and increase prices harming California consumers,” said PAO: Deny it or adopt conditions to protect low-income consumers.
The CPUC review should have taken 90 days and appears it will take much longer, wrote Roslyn Layton, senior vice president at Strand Consult, in Forbes last month. “The acquisition is particularly important for California,” she said. More than a quarter of its residents are foreign-born, “and these consumers adopt pre-paid services at high rates,” she said: “Regulators should welcome this acquisition which expands offerings (including 5G) for lower-income consumers and increases competition.”