16 States Ask The FCC What The Hell Is The Point Of The Verizon Tracfone Merger

from the do-not-pass-go,-do-not-collect-$200 dept

Late last year, Verizon announced it would be acquiring Tracfone for around $6.2 billion. As we noted when the deal was first announced, it was yet another example of the "growth for growth's sake" mindset that has long infected US industry, particularly the telecom sector. There are really no real benefits to be gleaned from further consolidation in the space (especially in the wake of a T-Mobile Sprint merger that immediately resulted in layoffs and reduced US wireless competition by around 25%). Yet we really adore pretending otherwise as the government rubber stamps deal after deal.

In a letter (pdf) to the FCC, attorneys general from 16 states and the District of Columbia urged the agency to actually, you know, do its job and ask more questions about the deal. TracFone is among the biggest providers of Lifeline, the FCC program that provides services for about 1.7 million low-income subscribers in 43 states. Verizon is a lumbering media and telecom monopoly that views such programs (and the regulators that oversee them) as largely an irritant. Putting the TracFone contributions at risk during an historic economic and health crisis isn't particularly bright.

As such, the states are wondering if the FCC might be able to take a few moments to make sure the deal doesn't harm those relying on the program:

"The potential for Verizon to pursue additional profits by reducing the access and/or quality of Lifeline services could shut out millions of low-income Americans from adequate communications services,” they wrote. “Considering the fundamental role that cellular telephones play in accessing modern society and the modern economy, it is imperative that Lifeline services be protected and maintained if this transaction is approved."

The states also are quick to point out that maybe more consolidation in a telecom sector filled with problems caused by mindless consolidation might not be a great idea:

"Furthermore, a vertical merger of the leading Mobile Network Operator (MNO), and the leading Mobile Virtual Network Operator in an already concentrated mobile wireless market would see the last significant MVNO integrated into a national facilities-based provider. If this resulted in a decrease in the number or quality of Lifeline offerings, that could be contrary to the public interest and could have an adverse impact on consumers and the communications industry."

Notice, however, how even the minority of US states that could be bothered to care about these problems can't be bothered to recommend simply blocking a deal that will benefit nobody other than Verizon executives and shareholders. It's not even something that enters their minds.

Instead such mergers are eagerly rubber stamped, conditions are affixed that are usually largely feckless (or volunteered by the companies themselves), then regulators fail to meaningfully enforce them. Monopolies like Verizon then just double down on the same behavior they've engaged in for the better part of the last forty years. We then stand around with a dumb look on our collective faces wondering why Americans pay some of the highest prices in the world for some of the most mediocre telecom speeds and services in the developed world. Wash, rinse, repeat.

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Filed Under: broadband, competition, fcc, mvno, wireless
Companies: tracfone, verizon

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  1. icon
    Rico R. (profile), 10 Feb 2021 @ 2:34pm

    I can't be the only one...

    Me, a TracFone customer: I know the major telecom players like AT&T and Verizon are notorious for simply being bad to their own customers, but I have TracFone. I'm glad I don't have to deal with those issues directly. (Takes a sip of water)

    Techdirt: Let's report on several state's concerns they shared with the FCC over the proposed merger between Verizon and TracFone.

    Me, spitting out water: Verizon's doing what now? How did I not know about this? I really should have seen this coming!

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