T-Mobile US, Inc., has asked the FCC to reject the joint request of Verizon Communications, Inc., and TracFone Wireless, Inc., to grant streamlined treatment for consideration of Verizon’s proposed acquisition of TracFone from América Móvil S.A.B. de C.V. for at least $6.25 billion.
In a filing in file no. ITC-T/C-20200930-00173, Verizon and TracFone noted that the transaction before the Commission seeks only consent to transfer control of TracFone’s single international section 214 authorization from América Móvil to Verizon (TR Daily, Oct. 7). TracFone is a mobile virtual network operator (MVNO) and holds no spectrum licenses.
"While T-Mobile takes no position on the merits of the Application, a transaction of this magnitude warrants careful scrutiny and the opportunity for public comment—no less than T-Mobile’s recent acquisition of Sprint," T-Mobile said in a filing yesterday. "Given the size, scale, and significance of the proposed transaction, streamlined review is wholly inappropriate. The Commission must ‘fulfill its statutorily imposed duty to determine whether [a] transaction serves the public interest, notwithstanding the legitimate desire of applicants to obtain the most expedited review possible.’ Careful review of the proposed transaction following public input is necessary to determine whether the Applicants have satisfied their burden of demonstrating that the proposed deal serves the public interest. Any other approach for a transaction of this magnitude would be unprecedented."
The FCC should consider a number of issues when reviewing the transaction, including the deal’s impact on mobile wireless services, T-Mobile said.
"As noted above, the proposed transaction would combine the largest facilities-based wireless provider by market share with the fourth largest provider by subscribership. Combining Verizon and TracFone would catapult Verizon even further ahead as the largest mobile wireless carrier," T-Mobile said. "In an attempt to wave away this major issue, the Application repeatedly stresses that Verizon’s network already serves the majority of TracFone customers. But that is misdirection—Verizon does not already own a majority of TracFone. To the contrary, while Verizon provides wholesale wireless network services for TracFone, the latter is under entirely separate control and makes independent business judgments about what wholesale services to buy from competing facilities-based providers and, critically, how to price and market its products to compete with Verizon and others. More than a cursory review is needed before the Commission could determine that this increase in prepaid subscribers and market share in the mobile wireless service market is in the public interest."
Another is how the wholesale mobile wireless market would be impacted, T-Mobile said.
"TracFone is also the largest unaffiliated Mobile Virtual Network Operator (‘MVNO’). As an MVNO, TracFone currently purchases wholesale wireless services from Verizon, T-Mobile, and AT&T, and conversely Verizon provides wholesale services to other MVNOs," T-Mobile noted. "The Commission should inquire into the impact that the transaction could have on other MVNOs to whom Verizon currently supplies wholesale services once it owns and controls their competitor, TracFone. For example, will Verizon have the incentive to dedicate more of its wholesale capacity to supporting TracFone’s prepaid services, and less to unaffiliated MVNOs? Indeed, the Application’s primary public interest argument seems to be that it will do just that."
The impact of the deal on Lifeline services is another important area for review, according to T-Mobile.
"TracFone is currently one of the largest providers of Lifeline services, with approximately 1.7 million low-income subscribers in 42 states. The transaction creates the risk that Verizon, which does not generally offer its mobile wireless service to Lifeline customers, could relinquish TracFone’s ETC designations and eliminate a Lifeline competitor, or at least diminish services relied on by low-income consumers," T-Mobile said. "The Commission should conduct a careful review of the proposed transaction to ensure that low-income consumers will not be harmed and that Lifeline services will not be interrupted, discontinued, or diminished. … Verizon offers almost no information on its Lifeline plans and no commitments in the Application. It vaguely asserts that it ‘intends’ to maintain TracFone’s ETC status, but that bare assertion alone is insufficient to ensure the continuity of these services to existing and future customers."
Another issue involves the international implications of the deal, T-Mobile argued.
"Although the Applicants discuss the status of Verizon’s foreign carrier affiliates, they make no effort at all to address the host of policy questions raised by the relationship between América Móvil and Verizon or between TracFone and América Móvil," it said. "For example, what are the implications, with respect to international roaming or otherwise, of América Móvil’s acquisition of more than $3 billion in Verizon stock as part of this transaction? Would a TracFone controlled by Verizon be able to leverage any legacy relationships that TracFone may maintain with América Móvil in a manner that harms competition in the provision of mobile service between the U.S. and Mexico?" —Paul Kirby, [email protected]
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