California Public Utilities Commission Proposal Requires Consumer Protection Measures for Verizon’s Acquisition of TracFone

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By Andrew D. Kent

On October 15, 2021, the California Public Utilities Commission (CPUC) announced the issuance of proposed decision A.20-11-001. This decision, if adopted, would approve Verizon Communications’ acquisition of TracFone Wireless, with certain conditions for consumer protection.

The proposed decision finds that Verizon and TracFone do not meet the burden of proving their proposed acquisition is in the public interest unless the companies adopt a number of specific measures to protect consumers from price increases or service disruptions. Under the proposal, the consumer protection measures include a series of requirements that should enhance service quality and benefits for impacted customers, including those participating in the California LifeLine Program.

The consumer protection measures include the following requirements for the proposed transfer of TracFone from América Móvil to Verizon. In order to mitigate the harm to current TracFone customers with handsets that are incompatible with Verizon’s network, Verizon will have to provide all current TracFone customers, a new handset, free of charge. Additionally, replacement of handsets for LifeLine customers with incompatible handsets will be provided at no cost to the California LifeLine Program. To facilitate an effective and predictable transition period for customers, Verizon and TracFone must migrate all TracFone customers currently not using Verizon’s network to Verizon’s network within six months following the close of the transaction. The migration plan must prioritize TracFone’s current California LifeLine customers. Also, to ensure that the transaction does not adversely impact the California LifeLine Program itself, Verizon or TracFone must participate in California LifeLine on terms and conditions that are comparable to (or superior to)  those currently offered by TracFone, and must comply with California LifeLine rules for as long as Verizon or TracFone operate in California. Verizon must also exercise good faith to offer mobile virtual network operator (MVNO) contracts in California to non-affiliates, to the extent the company has the capacity. The proposal also establishes a reporting process as well as a mitigation enforcement program, with penalties if specific performance requirements are not met.

The proponents of these conditions contend that they are in the public interest. The joint applicants earlier requested that the CPUC approve the transfer of TracFone to Verizon on November 5, 2020. [26:2 CRLR 223]

The CPUC’s Commissioners are scheduled to vote whether to approve the proposed decision at the CPUC’s November 18, 2021, voting meeting. Comments from the public may still be submitted to the “public comments” section of the proceeding’s Docket Card. As of this writing, there have been no public comments submitted for the proceeding. The proposed decision has no legal effect until and unless the Commission hears the item and votes to approve it.

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