10/30 FCC Reply Reiterating 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) responding to arguments made by Verizon asking the Commission to streamline its review of Verizon's proposed merger with TracFone. In the Reply, OTI, PK, and Benton argue that Verizon fails to argue why it should avoid added scrutiny for the acquisition's impact on the Lifeline program. Further, Verizon does not address other key opposition raised by public interest advocates regarding streamlined approval of the merger that OTI and allies believe warrant a thorough review. OTI, Public Knowledge, and Benton filed an Opposition to Petition for Streamlining earlier in October. A full summary is available below:

Applicants fail to substantively address the concerns raised by Public Interest Parties, or by T-Mobile. To the contrary, Applicants’ Response raises new questions. Even if Applicants were right in their assertions with regard to applicable law (which they are not), important policy concerns alone continue to warrant denial of the request for streamlined treatment.

Most importantly, Applicants utterly fail to rebut the fundamental flaw in their request. Because the Commission requires approval of the Eligible Telecommunications Carrier (“ETC”) compliance plan previous to (or simultaneous with) the approval of any Section 214 transfer, the Bureau cannot grant the request for streamlined treatment because the Application is not grantable within 14 days. Even if one agreed that the Bureau could grant the request for streamlined treatment, it would have no choice but to remove the Application from streamlining at the end of the 14-day period because, without the transfer of the ETC status, the Bureau has no authority to grant the Application. Applicants’ reliance on the single precedent cited, Allied Wireless Communications, predates the relevant Bureau Order by four years. Accordingly, any precedential value is mooted by subsequent Commission action. Rather, this case is controlled by the more recent TerraCom denial of streamlined treatment, which the Applicants fail to distinguish.

Applicants urge the Bureau to apply an unsupported hyper-technical interpretation of the Commission’s rules which would prohibit the Commission from considering the significant policy concerns raised with regard to this transaction if the Application appears to conform to the Rules on its face. Again, even if it were true that the Application is not facially deficient, this interpretation is contrary both to the burden of proof (which lies with the Applicant) and the rationale for streamlining discussed in the 1998 Streamlining Order. Indeed, the processing of applications, streamlined or otherwise, is merely about the administration of such applications, and does not change the core obligation of the Commission to determine that an applicant has met its burden of establishing that grant is in the public interest, or for the Commission to make the requisite finding based on the information before it.

Not only should the Bureau reject efforts to minimize the concerns raised by the Application, but the Applicants’ Response itself raises new questions. Applicants apparently concede that Verizon has little experience with, and historically little interest in, administering the Lifeline program. Applicants elide questions about TracFone’s unaccounted for domestic Section 214 authorization. Applicants do nothing to rebut Verizon’s incentives post transaction to deny better services and equipment to Lifeline and prepaid customers to push them to upgrade to more expensive post-paid services. In an apparent concession to this possibility, Applicants argue that such an event—and its subsequent effects on the market as a whole—would be the result of industry trends that are “not specific to the transaction.” This ignores the obvious point that combining the single largest facilities-based provider and the single largest independent mobile virtual network operator (“MVNO”) would be the cause of these changes, not the outcome of these changes.