FCC Commissioners late Monday afternoon finished voting to approve the transfer of control of TracFone Wireless from América Móvil to Verizon Communications — with conditions designed to protect consumers. After what it characterized as a “rigorous review,” the agency decided that the transaction, as modified by Verizon’s enforceable commitments, will make Verizon and Tracfone stronger providers of prepaid and Lifeline services.
Verizon (NYSE: VZ) said in September 2020 it would buy pre-paid mobile phones provider TracFone, a unit of Mexican telecom company America Movil (NYSE: AMX), in a cash and stock deal worth up to $6.9 billion. The FCC approval comes after the California Public Utilities Commission last week okayed the deal once the companies agreed to additional consumer protection conditions, Inside Towers reported.
Verizon praised the FCC’s decision. Verizon SVP Public Policy and Government Affairs Kathy Grillo stated Monday: “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.”
Given the communities that Tracfone primarily serves within the U.S., the FCC adopted a number of binding conditions to address potential harms and to ensure the transaction will be in the public interest. These conditions include strong parameters to:
- Protect low-income consumers from price increases;
- Ensure that TracFone remains a supportive Lifeline participant;
- Guarantee the availability of affordable 5G devices and service offerings to underserved consumers;
- Maintain the existing packages of TracFone subscribers;
- Market and provide customer services for Lifeline and prepaid customers, including non-English speaking customers; and
- Make sure that customers are not left behind by the transition onto Verizon’s network.
The Commission also adopted what it called “strong, independent mechanisms” for enforcing the conditions and ensuring that the transaction does not harm low-income or other consumers. These enforcement measures include both 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.
Given the likelihood that any violation of these conditions could harm low-income consumers, Monday’s Order also requires regular public reporting and more than seven years of oversight, according to the agency. The specifics of what Verizon must do are in the 70-page Order.
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