The Federal Communications Commission gave its blessing Monday to Verizon’s purchase of Tracfone—subject to rules written to protect customers of the nation’s largest wireless reseller after it becomes a subsidiary of the nation’s largest wireless carrier.
The FCC announced this asterisked approval Monday afternoon, just over 14 months after Verizon announced its plan to buy Tracfone from its Mexican corporate parent América Móvil in a transaction it valued then at $6.9 billion. As a result, Verizon said today it has officially closed the deal.
Tracfone provides service to some 21 million customers in the US under a variety of brands, including its eponymous service as well as Net10, Page Plus, Simple Mobile, Straight Talk, and Walmart Family Wireless, among a great many others.
A common pick for cheap cell phone service, Tracfone resells service from all three major carriers. Verizon’s Sept. 14, 2020, announcement of the deal said 13 million already use Verizon’s network—leaving some 8 million on other carriers who will then eventually need at least new SIM cards if not new phones, as PCMag’s Sascha Segan wrote soon afterwards.
The FCC’s approval notes two groups particularly at risk in this corporate coupling: Tracfone customers who rely on the federal Lifeline broadband-assistance program but don’t live in Verizon coverage areas, and MVNO (“mobile virtual network operator”) resellers that today rely on Verizon but also compete with Tracfone.
A two-page summary of the FCC’s 70-page order ticks off the conditions imposed on Verizon to curb those consequences. Among Verizon’s bigger obligations, it must:
- Offer Lifeline-supported service in the same places for at least seven years;
- Keep existing Lifeline plans for at least three years;
- Provide a free phone or SIM to some Lifeline customers who must switch to its network;
- Offer current and new Lifeline users a 5G plan and “cost-effective” 5G phones;
- Extend its liberal unlocking policy (in which it unlocks phones it sold for use on any carrier 60 days after purchase) to 700MHz C Block phones sold by Tracfone after the deal’s closing;
- Allow MVNOs that today resell Verizon to extend those contracts month-to-month for three years;
- Pay for internal and external compliance officers to ensure these conditions are met.