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HomeDAS & In Building WirelessVerizon calms concerns of TracFone deal’s critics

Verizon calms concerns of TracFone deal’s critics

Verizon’s quest to acquire wireless reseller TracFone recently took a positive step forward as the carrier addressed some of the proposed deal’s critics, Inside Towers reports. Verizon’s acquisition of TracFone left some worried that the latter’s low income customers would be without wireless phone service. However, advocacy groups Public Knowledge, Access Humboldt the Benton Institute for Broadband and Society, the California Center for Rural Policy and the Communications Workers of America (CWA) have now all ended their opposition to the deal.

The advocacy groups changed their mind about the deal after Verizon noted some new public commitments that will help protect low-income customers regarding this proposed deal. The carrier pledged to continue to provide TracFone’s Lifeline subsidy programs for at least three years after the acquisition is finalized. Additionally, Verizon promised to offer a subsidized 5G program for low income TracFone users. More than 1.7 million TracFone customers depend on Lifeline, according to CWA. Verizon will also be responsible for submitting quarterly reports to the Federal Communications Commission (FCC) for three years that provide details about Lifeline customers and its service offerings.

“These commitments ensure TracFone customers will continue to have access to Lifeline, an essential program for millions of families,” senior CWA researcher Brian Thorn said in a statement. “(The success) would not have been possible without the support of our allies and an FCC interested in protecting the interests of customers over corporations.”

“After nearly a year of advocating for TracFone’s Lifeline subscribers, we believe that Verizon’s commitments are a win for consumers and serve the public interest,” Public Knowledge policy counsel Kathleen Burke told Politico. “The proposed conditions represent the federal floor of what we believe is necessary.”

Verizon announced its plans to acquire TracFone last September for $3.125 billion in cash and an additional $3.125 billion in Verizon stock stares, Inside Towers reports. America Movil, TracFone’s current owner, would receive another $650 million if the company hit certain performance goals.

TracFone currently has 21 million subscribers and 90,000 retail locations in the United States. Verizon believes TracFone would help the carrier expand its business in the value arena, according to Inside Towers. TracFone operates a number of brands including StraightTalk Wireless, SIMPLE Mobile and Total Wireless. It also contracts for wireless services from the U.S.’s major wireless carrier and generated $8.1 billion in revenue in 2020. Verizon would gain more than 20 million new subscribers and become more formidable in the low-income wireless and value phone market if the acquisition is successful. The carrier hopes to finalize the deal before the end of 2021, but it’s currently under FCC review.

“These commitments should now be a floor and a starting place for the FCC’s review of the acquisition and negotiations with Verizon,” a group of Senate Democrats said in a statement. “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.”

With the condition agreements in place, Verizon hopes the TracFone deal will be easier to close. Carrier spokesperson Richard Young noted that the advocates’ letter showed how the acquisition’s focus is on, “providing great service to value-conscious consumers, including Lifeline customers.” Young also said Verizon wants to talk about the pledges with the FCC “so that we can bring the benefits of the transaction to value-conscious prepaid consumers as soon as possible.”

Joe Dyton can be reached at joed@fifthgenmedia.com.

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