10/16 FCC Opposition to Streamlined Approval of Verizon Acquisition of Tracfone

New America's Open Technology Institute, Public Knowledge and the Benton Institute for Broadband & Society filed with the Federal Communications Commission (Commission) arguing that the Commission should reject a request to streamline its review of Verizon's proposed acquisition of TracFone. In the Opposition to Petition for Streamlining, the public interest organizations stressed the importance of the proceeding in the context of the Commission's Lifeline program which offers low-income consumers a subsidy for landline and wireless phone and broadband services and argued that the facts behind the proposed merger and its application do not allow for streamlined consideration. The introduction and summary:

On September 30, 2020, the International Bureau received the above-referenced Application and request for streamlining. Notably absent from the Application was any substantive discussion of TracFone’s status as an Eligible Telecommunications Carrier (“ETC”) administered by the Commission, in addition to TracFone’s state ETC certifications. To the contrary, the Application states that, at some undetermined time after the approval of the Section 214, “Verizon will seek to transfer TracFone’s Eligible Telecommunications Carrier (ETC) designation for Lifeline.” Because all wireless ETC certifications must be approved prior to (or simultaneous with) Section 214 transfers, the Commission cannot grant the request for streamlining. In addition, the Application does not comply with Section 63.18(e)(3) of the Commission’s Rules, which requires an applicant to provide “a description of the facilities and services for which it seeks authorization” for those services not covered in 63.18(e)(1) (global facilities based authority) and 63.18(e)(2) (global resale authority). The disclosure must include “any additional information the Commission shall have specified previously in an order, public notice or other official action as necessary for authorization.” The Application violates 63.18(e)(3) because it does not include Tracfone’s federal ETC designation, which is a “service” for which the applicant seeks authorization.

Furthermore, for reasons of policy, the Commission should require Verizon to submit its ETC certification plan before accepting the Application for filing. TracFone is the largest provider of wireless Lifeline service. The question of protecting Lifeline subscribers from possible harms, and securing for them the benefits promised by Verizon in the Application, should be central concerns to the Commission in considering whether the Application serves the public interest, convenience, and necessity. Verizon should not be allowed to apply for Commission approvals seriatim, leveraging streamlined transfers for one set of Commission approvals against those requiring more searching inquiry. As the Commission stressed when it adopted the streamlined international 214 transfer procedures, streamlining is not meant to change the general public interest standard applicable to all Section 214 transfers. Rather, it is meant to ease the burden on both applicants and Commission staff for routine applications that genuinely raise no public interest concerns. The acquisition of the largest wireless Lifeline provider, which is also the largest mobile virtual network operator (“MVNO”), by the largest facilities-based mobile carrier hardly qualifies as “routine.” This is especially true here, where Verizon has generally avoided participation in Lifeline and the pre-paid market. Whatever Verizon’s business intentions at the moment, the Commission must consider what safeguards may be necessary to protect Lifeline and other low-income subscribers should Verizon decide to abandon its attempt to enter into the pre-paid market.

Other reasons exist to deny streamlined treatment. As noted by T-Mobile, this transaction creates a fundamental change in the structure of the industry by eliminating the last substantial MVNO. Following this transaction, all significant MVNOs will be integrated with a national facilities-based provider (or would-be facilities-based provider). The Commission must carefully study the implications of this significant change. Furthermore the affiliation of TracFone with America Movil both violates the plain language of the Commission’s rules8 and gives rise to potential competitive (and national security) concerns. Finally, Public Knowledge (PK), et al. notes that TracFone, as part of its acquisition of Page Plus Cellular, acknowledged in 2013 that it holds a domestic 214 license. Applicants should be required to account for this domestic 214 license. If TracFone still holds this domestic 214 license, the Commission should require Applicants to amend the Application before accepting the Application as complete.