Verizon Commits To Protecting TracFone’s Low-Income Customers as Part of Acquisition

Image source: Tracfone

Verizon Communications Inc (NYSE: VZ ) unveiled a range of steps it plans to take in order to protect low-income consumers in connection with the proposed $6.25 billion acquisition of TracFone Wireless Inc.

Public interest groups that had previously raised concerns to the Federal Communications Commission (FCC) regarding the deal withdrew their objections after Verizon's announcement.

Following Verizon’s announcement last fall that it agreed to buy low-cost, prepaid phone carrier TracFone, concerns arose over how the acquisition would impact Americans enrolled in the FCC’s Lifeline program, which provides discounts on phone service to low-income subscribers. 

When the TracFone deal was first announced, Verizon only offered Lifeline to parts of four states. 

Verizon pledged Wednesday to continue marketing Lifeline options throughout the TracFone service area, to provide service with no additional co-pays to TracFone’s Lifeline subscribers for a minimum of three years after the merger and to provide a subsidized 5G service to low-income TracFone users within six months after the merger closes.

TracFone, a subsidiary of Mexico's largest telecommunications company, América Móvil, has more than 1.7 million customers in 43 states across the US who use Lifeline, according to Axios.

The measures announced Wednesday are part of a deal Verizon reached with its objectors, which included the Communications Workers of America union and advocacy groups Public Knowledge and the Benton Institute for Broadband & Society. 

In a statement, CWA senior researcher Brian Thorn said, “Verizon’s attempts to shirk public accountability threatened 1.7 million TracFone customers who depend on Lifeline, but these attempts were unsuccessful.” 

“These commitments ensure TracFone customers will continue to have access to Lifeline, an essential program for millions of families. Today’s success would not have been possible without the support of our allies and an FCC interested in protecting the interests of customers over corporations,” Thorn said.

Kathleen Burke, policy counsel at advocacy group Public Knowledge stated, “We applaud the FCC for its efforts to ensure that this merger meets the necessary public interest standard. These commitments represent the federal floor of what we believe is necessary to ensure that TracFone’s Lifeline subscribers do not get left behind.” 

In February, the FCC said the proposed acquisition raised “extraordinary complexity” and required an additional 90-day review.  

Soon after that, attorney generals from 16 states, as well as Washington, DC, asked the agency to examine “whether the acquisition of TracFone by Verizon could significantly reduce millions of Americans’ access to affordable communications services” and to impose conditions to “protect and ensure the public interest” before any approval. 

Several Democratic Senators also urged the FCC last month to “thoroughly review” the proposed purchase to ensure Verizon’s acquisition does not raise prices or impact government programs to provide access to mobile phones for low-income Americans. 

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Source: Equities News