After Exploiting Covid Broadband Program, Verizon Faces Unsurprising Opposition To Tracfone Merger

from the surely-they'll-behave-THIS-time dept

When last we checked in with Verizon, the company had just been caught exploiting the government's Covid broadband relief program to upsell struggling Americans to more expensive plans. Now, as Verizon tries to gain regulatory approval for its $6.2 billion acquisition of Tracfone, consumer groups and a small cadre of Senators are wondering if a company that thinks nothing of exploiting struggling Americans in need is a good steward for a discount phone company whose client base is predominantly comprised of low-income Americans.

Five U.S. Senators recently wrote the FCC, rather timidly wondering if Verizon would use the acquisition to simply upsell these lower-income Americans to more expensive plans (spoiler: yes):

"Senators Richard Blumenthal, Sheldon Whitehouse, Dianne Feinstein, Ron Wyden and Ed Markey said in a letter "Verizon would have significant incentives and opportunities to push subscribers from Lifeline and inexpensive prepaid services to higher revenue plans."

The amusing part here is that there's 40 years of documented history showing how Verizon and AT&T's overall strategy is to acquire everyone, then use that consolidation and reduced competition to relentlessly nickel and dime their subscribers. This is just a factual reality and the way publicly-traded companies are structured to take full tactical advantage of the market and weak regulatory environments to the benefit of investors. It's not some errant opinion that this will happen again in the wake of yet another industry merger, it's the likely outcome based on decades of history.

Yet the concern that they'd do so again here (spoiler: they will) is framed as some kind of radical theoretical or -- as is the preference of the DC Beltway "he said, she said" reporting set -- purely a partisan concern expressed only by Democrats. But the fact Congress could only cobble together five Democratic Senators interested in giving a shit shows you pretty clearly that apathy to this kind of mindless consolidation is very much a bipartisan sport.

1.7 million of Tracfone's customers currently enroll in the FCC's Lifeline program. Started under Reagan and expanded by Bush, the program doles out a measly $9.25 monthly credit that struggling Americans can use to get a discount off of their phone, wireless, or broadband bill (they have to choose one). It's literally the very least the government can do to help poor people afford telecom services, but it's been endlessly demonized by folks like Trump FCC boss Ajit Pai, who think even this half-assed effort is a bridge too far.

If this telecom merger follows the pattern of other U.S. telecom mergers, a bipartisan coagulation of lawmakers will trip over themselves to ignore warnings and approve the deal. They'll then sign off on a bunch of flimsy conditions -- most likely crafted by Verizon -- that not only won't really do all that much, but won't be enforced or adhered to. Meanwhile, Verizon gets way with rather nebulous claims that this deal creates amazing synergies and benefits that you just can't get without greater industry consolidation:

"The company said the proposed deal "will bring value and benefits to value-conscious consumers in a myriad of ways."

Then in two to three years, when policymakers and the press have forgotten all about the deal, Verizon will exploit the consolidation to steadily raise rates. The very same policymakers who signed off on yet more consolidation in the space will then stand around with their hands on their hips and a dumb look on their face wondering how we got here. Right before signing off on yet another "growth for growth's sake" telecom megamerger that benefits absolutely nobody outside of the Hamptons set. Rinse, wash, and repeat, with absolutely nobody learning anything from the experience.

Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: acquisitions, consolidation, fcc, lifeline, mergers, raising rates
Companies: tracfone, verizon


Reader Comments

Subscribe: RSS

View by: Time | Thread


  • icon
    smbryant (profile), 2 Aug 2021 @ 6:05am

    To paraphrase Upton Sinclair, “It is difficult to get a man to understand something, when his campaign contributions depends on his not understanding it.”

    reply to this | link to this | view in chronology ]

  • identicon
    David, 2 Aug 2021 @ 6:30am

    You are misunderstanding something here

    The very same policymakers who signed off on yet more consolidation in the space will then stand around with their hands on their hips and a dumb look on their face wondering how we got here.

    The hands are not on their hips because they are flabbergasted but because their pockets have been stuffed full and the hands don't fit. The dumb look on their face is just the well-rehearsed default for the "how could we ever have suspected that this would end just like every single previous time?" routine.

    reply to this | link to this | view in chronology ]

  • icon
    Nathan F (profile), 2 Aug 2021 @ 7:08am

    You know. I have to wonder if Big Telecom all got together and set up a rotation of who is going to file for acquisition of someone in year X.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 2 Aug 2021 @ 8:21am

      Re:

      Don't need to.

      AT&T Comcast and Verizon are effectively the same company.

      In direct violation of anti-trust legislation and anti-cartel rules the heads of those companies have weekly meetings to decide pricing, non-compete areas etc.

      They regularly discuss who will buy out which smaller company, so they don't all bid raising the price. Effectively screwing over the smaller business.

      All very very illegal and tbh the heads of the 3 telecoms companies should be in prison forever.

      reply to this | link to this | view in chronology ]

      • icon
        nasch (profile), 2 Aug 2021 @ 6:33pm

        Re: Re:

        In direct violation of anti-trust legislation and anti-cartel rules the heads of those companies have weekly meetings to decide pricing, non-compete areas etc.

        Got a reference for this? Would love to read about these meetings.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Aug 2021 @ 8:15am

    when are people and senators gonna wise up to and actually admit to what is going on with the main broadband companies? nothing is more important than to keep lying about what they've done to improve the service and what they are doing to improve it further. total bullshit! USA broadband is one of the worst on the planet with shit speeds, crap customer service and pathetic coverage. the sooner this is admitted and congress folk start actually standing up to be counted on behalf of their customers rather than on behalf of the amount in their bank accounts, perhaps then there will be change!

    reply to this | link to this | view in chronology ]

    • icon
      ECA (profile), 2 Aug 2021 @ 12:09pm

      Re:

      most people already know this, but its hard to tell a RICH person(Senator) ANYTHING.
      Exp. when they are not paying for anything. And probably never have since they got into State and gov. services.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Aug 2021 @ 8:19am

    Two to three years?

    They have draft internal plans to TRIPLE prices for the lowest paying consumers due to "unexpected costs" and tell them they have 6months to change to a higher plan or be removed from service.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Aug 2021 @ 10:53am

    You can trust the free market to always find the most cost effective means to deliver the product to the customer. The company that delivers the best priced service will become the largest and most profitable. Those that don't deliver the value to the customer will shrink and become obsolete.

    We will also soon see the trickle down CEO effect. Once highly paid CEOs run out of places to stash their money, they will start spending it. The economic benefit will be much greater then anything FDR or even Trump could imagine. The higher the CEO pays goes, the closer we will get to economic nirvana. We should all support and encourage each and every executive pay raise.

    All we need to do to make this happen is eliminate both the useless rules and the punitive taxes on these great corporations.

    While we are at it, perhaps we should also start a religion to worship the divine treasury?

    reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 2 Aug 2021 @ 10:59am

    Stop treating them like idiots

    Rinse, wash, and repeat, with absolutely nobody learning anything from the experience.

    It is well past time to give the politicians involved the benefit of the doubt in assuming that they simply don't know better, they do.

    Politicians have learned that pandering to telecom companies pays really well and has basically no downsides, the 'press' has been brought to heel and will happily parrot whatever PR statements are given them with no pushback, and those in the regulatory bodies like the FCC are tripping over themselves to secure lucrative 'retirements' by doing whatever will please the telecom companies the most and looking the other way or handing out the smallest wrist-slaps they can when that's not an option.

    None of this is by accident so framing it as them 'simply not knowing better' is grossly underestimating the corruption here and giving them a pass on their actions that they most certainly do not deserve.

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 2 Aug 2021 @ 12:10pm

    I wonder sometimes, is it Cheaper to be rich?

    Is it?
    Is buying 1 thing worth allot,better then buying something cheap and over priced, Multiple times?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Aug 2021 @ 12:40pm

    ma bell need's a timeout

    it is far past time to ma bell all of the telecom giants! a breakup would help in reintroducing competition drop prices! then add some common sense regulation like a profit cap. anything over x dollar goes to the customers as a credit for there next bill.

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Make this the First Word or Last Word. No thanks. (get credits or sign in to see balance)    
  • Remember name/email/url (set a cookie)

Close

Add A Reply

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Make this the First Word or Last Word. No thanks. (get credits or sign in to see balance)    
  • Remember name/email/url (set a cookie)

Follow Techdirt
Sponsored Promotion
Public Money, Public Code - Sign The Open Letter at publiccode.eu
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it
Close

Email This

This feature is only available to registered users. Register or sign in to use it.