FCC Should Finally Make a Decision on Verizon/TracFone Merger

Verizon has stepped up its commitments regarding its proposed acquisition of TracFone, and the FCC should finally make a decision on the merger. In an ex parte filing dated November 18, Verizon strengthened its pledge to participate in the Lifeline program for several years as a condition for the Commission's approval of the transaction. If approved, the Verizon/TracFone merger likely would make the wireless market more competitive. And there appears to be no drawbacks because the deal would not result in the loss of a facilities-based provider.  

Verizon first applied to the FCC for consent to acquire TracFone on September 30, 2020. But the parties have been left hanging during the Commission's slow-motion review process. The proposed merger is not a hard call, and there is no good reason for the Commission to further delay its decision.

My blog post from August 17 of this year called attention to Verizon's pledge to continue providing low-income consumers with service through the Lifeline program after its acquisition of TracFone is approved. Verizon's ex parte from November 18 actually expanded on that pledge by offering to participate in the Lifeline program for at least seven years instead of three years. Among other proposed commitments, Verizon will continue existing TracFone rate plans for at least three years after the close of the deal. And for TracFone subscribers who are required to transition to Verizon's Network, Verizon will offer them devices with comparable functionality or SIM card replacements at no cost. 

 

Verizon is a facilities-based wireless service provider, and TracFone is a popular pre-paid mobile virtual network operator (MVNO) that relies on other providers' facilities. Thus, the merger would not cause any U.S. wireless consumer to lose a choice among facilities-based providers. Instead, by carrying wireless traffic for TracFone's pre-paid service on Verizon's network, the merger likely would save costs and make Verizon a stronger competitor with AT&T, T-Mobile, and other wireless providers that cater to the pre-paid market segment. 

 

In all, the public benefits of Verizon/TracFone clearly appear to outweigh any potential downsides. It is past time for the FCC to conclude its review and vote on the merger.  

The United States Should Not Nationalize 5G

On Tuesday, Brad Parscale, President Trump's Campaign Manager for his 2020 reelection campaign, tweeted in favor of a nationalized 5G network:

It is time for America to have a single 5G network for all carriers. The days of dropped calls, slow speeds, and no service need to end. It is time for the U.S. to have the world’s best cell service.

— Brad Parscale (@parscale) June 5, 2018

FSF scholars have contended that the most efficient way to deploy a nationwide broadband network is through facilities-based competition, where multiple providers are building infrastructure and offering next-generation broadband services over the last mile. With facilities-based competition, providers constantly are competing to upgrade their networks and to deploy broadband in underserved areas. With a nationalized 5G network, even if multiple providers are offering services, consumers would be stuck with a failing broadband network because there is no incentive for providers to invest in technological improvements when they do not own the network.

In January 2018, FCC Chairman Ajit Pai announced his opposition to a nationalized 5G network:

I oppose any proposal for the federal government to build and operate a nationwide 5G network. The main lesson to draw from the wireless sector’s development over the past three decades—including American leadership in 4G—is that the market, not government, is best positioned to drive innovation and investment. What government can and should do is to push spectrum into the commercial marketplace and set rules that encourage the private sector to develop and deploy next-generation infrastructure. Any federal effort to construct a nationalized 5G network would be a costly and counterproductive distraction from the policies we need to help the United States win the 5G future.