Verizon's Tracfone launches free unlimited service via ACP

Up to 50 million US households – or around 40% of Americans – now qualify for a free smartphone and unlimited services from Verizon's SafeLink Wireless brand, part of its TracFone business.

Mike Dano, Editorial Director, 5G & Mobile Strategies

April 17, 2023

5 Min Read
Verizon's Tracfone launches free unlimited service via ACP

Verizon said this week it will offer free unlimited service – data, calling and texting – on its new SafeLink Wireless brand, which it acquired through its $7 billion purchase of prepaid giant TracFone in 2021.

The move is noteworthy considering Verizon has indicated its intention to focus more closely on its TracFone business following its recent leadership reorganization. And it coincides with a growing interest in the prepaid market in general in the US.

"We're here to help our customers take advantage of beneficial programs like the ACP and Lifeline and are proud to now include unlimited data with SafeLink along with the same quality service our customers enjoy across our portfolio of brands," said Angie Klein, president of the company's new Verizon Value division, in a release from the company. The offer also includes a free smartphone.

Klein said SafeLink's new offer stems from the FCC's Affordable Connectivity Program (ACP), which currently provides up to $30 per month in subsidies to around 17 million low-income US households. Verizon noted up to 50 million US households qualify for the benefit – or roughly 40% of all Americans.

ACP is essentially a pandemic-inspired augmentation of the US government's longtime Lifeline program, which offers subsidies of around $10 per month. However, there are widespread worries that the $14 billion ACP program will run out of funding by early next year.

The fine print

Verizon's new SafeLink-branded unlimited ACP plan offers unlimited data, texting and calling alongside 10GB of hotspot data. "At 60 GB, we reserve the right to review your account for usage in violation of SafeLink Wireless Terms and Conditions," the carrier noted in its terms and conditions.

Figure 1: (Source: Kristoffer Tripplaar/Alamy Stock Photo) (Source: Kristoffer Tripplaar/Alamy Stock Photo)

To be clear, Verizon isn't the only wireless network operator offering ACP discounts. For example, T-Mobile continues to offer Lifeline-focused services through the Assurance Wireless brand it acquired through its $26 billion purchase of Sprint that closed in 2020.

The Assurance Wireless ACP plan also offers free unlimited services, although it caps high-speed data at 25GB per month and high-speed hotspot data at 2.5GB per month. "During congestion, heavy data users (>35GB/mo.) and customers choosing Assurance Wireless or similarly prioritized plans (e.g., T-Mobile Essentials, Metro by T-Mobile) may notice lower speeds than other customers due to data prioritization. Full speeds available up to data/tethering allotment; then slowed to up to 600kbps speeds for balance of service period. Video typically streams in SD," T-Mobile added in its terms and conditions.

AT&T and its prepaid Cricket brand also offer ACP discounts. But the company doesn't have a wireless brand specifically targeted toward Lifeline recipients like Verizon's SafeLink Wireless and T-Mobile's Assurance Wireless.

A refocusing on prepaid

As the economy tightens under inflation and the possibility of a looming recession, some financial analysts believe big US wireless providers will focus their attention more carefully on the prepaid market. Prepaid customers pay their bills before receiving services, while postpaid customers – those who pass credit checks – do so after receiving services.

Indeed, many analysts believe T-Mobile's recent purchase of the Mint Mobile MVNO – backed by actor Ryan Reynolds – is in part designed to bolster the operator's existing Metro by T-Mobile prepaid offering.

"The wireless service industry is looking for anything to move the gross and net add [customer] needle. Prepaid will gain greater attention as individuals and families aim to save money and as the cable wireless message expands. With Verizon's acquisition of Tracfone, every major wireless player now has a retail prepaid strategy," wrote analyst Jim Patterson of Patterson Advisory Group in his weekly newsletter.

Interestingly, the financial analysts at KeyBanc Capital Markets recently noted that US operators in general have been losing prepaid customers during the past few quarters. The reason? The operators are working to shift their prepaid customers onto more lucrative postpaid service plans. "Prepaid losses suggest share is just shifting to postpaid," they wrote in a recent note to investors. That shift, they argue, helps explain the historically high number of postpaid customers US operators have been gaining during the past few years.

Verizon's outgoing CFO Matt Ellis acknowledged the trend, and noted that Verizon historically hasn't participated in it because it didn't have a deep prepaid business. But now, with Verizon's recent purchase of TracFone, he said the company does have the ability to keep customers "within the family" and shift them from prepaid to postpaid plans.

"I'd say the integration of TracFone has a little more work to do, a little bit more than we initially anticipated," Ellis said at a recent investor event, according to a Seeking Alpha transcript. He said the situation ought to change during the course of this year. "The team in the value segment today has a plan. They're executing in '23 and they've been good. ... You'll see better performance in the second half of the year than the first half of the year in the value segment."

According to the financial analysts at Wells Fargo, that change won't show up in Verizon's first quarter results. In a recent note to investors, they predicted Verizon will lose 140,000 postpaid wireless customers and 160,000 prepaid customers in the quarter – essentially continuing Verizon's downward trend into 2023. Verizon is scheduled to report its quarterly earnings next week.

Related posts:

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

Read more about:


About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like