3/12 FCC Comments Urging Scrutiny of Verizon and TracFone Merger

New America's Open Technology Institute filed comments with the Federal Communications Commission (Commission) urging the agency to scrutinize Verizon's proposed acquisition of TracFone alongside Public Knowledge, Access Humboldt, Benton Institute for Internet and Society, and Next Century Cities. The public interest organizations called for the Commission to seek further information from the two companies due to the significant risk the merger poses for the Lifeline market, and requested the Commission open up a docket to streamline the process of input from the public. The introduction is available below:

Public Knowledge, Access Humboldt, Benton Institute for Internet and Society, Next Century Cities, and the Open Technology Institute at New America (collectively “Public Interest Parties”), file these comments in response to the Public Notice released by the Commission seeking comment on the Section 214 applications filed by Verizon and Tracfone (collectively “Applicants”). As the Public Notice stated, this transaction “raises issues of enormous complexity.” To resolve this complexity, the Commission must take the steps that it takes with every significant and complex transaction—request necessary documents and information to resolve the issues and ensure that their resolution serves the public interest.

Contrary to the position Applicants now take in their ex partes, the questions here go beyond those considered by the Department of Justice. Rather, as Applicants themselves acknowledged in their Application, the Commission must determine whether the transfer of the 214 license would serve the public interest. Further, as Applicants have previously acknowledged, while the government bears the burden of proof under the narrower antitrust standard, it is the Applicants who must prove that the transfer will result in positive benefits consistent with the goals of the Communications Act.

Public Interest Parties have set forth in previous filings the real, concrete concerns arising out of this transaction. Commenters have repeatedly drawn the Commission’s attention to the incentives of Applicants to reduce service to Lifeline customers and pre-paid low-income customers. Even setting aside these incentives, the fact that Verizon could simply abandon Tracfone’s Lifeline customers if it loses interest in this market segment warrants conditions to prevent this possibility. This transaction will fundamentally restructure the industry by removing the largest remaining independent MVNO. Verizon has addressed these concerns with vague reassurances but no enforceable commitments. Indeed, when asked directly by the California Administrative Law Judge assigned to this matter if Verizon’s “intent” to offer Lifeline post transaction could be read as a “commitment,” Verizon declined to answer affirmatively. Indeed, Applicants’ repeated refusal to provide further information or make commitments which could address the concerns raised by Public Interest Parties have only served to increase these concerns and the level of scrutiny the Commission should apply.

Nor are these concerns limited to Public Interest Parties. The State of California Public Utilities Commission (CPUC) has designated this matter for a full investigation, including discovery, submission of expert testimony, and a hearing before an administrative law judge. Thirteen state Attorneys General have expressed similar concerns in a letter filed in this proceeding. And the Commission has apparently found these concerns sufficiently serious to remove this proceeding from streamlined consideration.

Only the Commission can compel Applicants to provide more detailed answers and supporting documentation to resolve these concerns. Public Interest Parties cannot do more at this point than urge the Commission to request the materials from the Applicants and propound formal interrogatories to address the concerns raised multiple times already in the record. In addition, it would greatly assist matters—and be consistent with Commission past practice—to designate this matter with an ECFS docket number and an entry on the FCC’s official transaction page. The International Bureau’s Filing System (IBFS) is difficult to use for non-practitioners, and this creates barriers to public participation in the docket.