Commissions to Prisons Cited as Reason For High Prison Phone Rates, FCC Told

The Telecommunications Law Resource Center is the most comprehensive reference and news platform for communications law, covering broadcasting, cable, broadband, telephony and wireless;...

By Paul Barbagallo  

Commissions paid to prisons by telecommunications carriers for the privilege of being their exclusive provider of inmate calling services is the single biggest contributor to exorbitantly high rates for prisoners and their friends and family members, according to public comments filed with the Federal Communications Commission March 25.

In response to two petitions by Washington resident Martha Wright, the FCC opened a proceeding in December [Docket 12-375, FCC 12-167, 27 FCC Rcd 16629] to consider capping the rates that prisons can charge for such services, citing potentially discriminatory practices.


 

“The mismatch between the entity that selects the ICS [inmate calling service] provider and those who use and pay for the provider's calling services can result in distortions.”  
Comments of Verizon Communications

The agency found that typical collect calls from prisons require a connection fee of roughly $4 and can cost nearly 90 cents per minute, with wide disparities across states. For example, the costs for a 15-minute interstate call are $6.65 in California, $6.45 in Texas, $2.04 in Montana, and $16.55 in Idaho.

Verizon Communications Inc., which had offered inmate calling services until 2007, said the commissions the company had paid to corrections departments tended to range from 40 percent to 50 percent of the amounts billed.

“The calling rates that the bidders will charge the collect-call recipients of the inmates appear to be irrelevant to the process of selecting a provider; the bidder with the lowest calling rates is simply not more likely to win the contract,” Verizon explained in its filing. “And since the contracts are exclusive contracts, the inmates' call recipients--usually the inmates' families who often are economically disadvantaged--have no choice but to fund the large commissions. This mismatch between the entity that selects the ICS [inmate calling service] provider and those who use and pay for the provider's calling services can result in distortions.”

Verizon said competition for an exclusive service contract revolved around the commission percentage that the bidder is willing to pay the Department of Correction.

A coalition of civil rights and public-interest groups led by the NAACP and the Leadership Conference on Civil and Human Rights similarly pointed to a 2007 request for proposals issued by the Alaska Department of Corrections, which stated that “the cost proposal providing the largest percentage of generated revenues to the state will receive the maximum number of points.”

Commissions as High as 60 Percent

Nationally, commissions consist of 42 percent of prison phone revenues, with the highest commissions reaching 60 percent, the coalition said, citing state-specific data.

“Because these contracts generate revenue, state prison systems typically do not select the bidder that offers the lowest rates,” the coalition wrote. “Instead, they reap the greatest return by selecting the provider that offers the highest commission.”

Global Tel-Link Corp., which along with Securus Technologies Inc. service 70 percent of the correctional phone services market in the United States, also blamed the commissions system.

“Mandatory commissions can be a significant amount of the costs associated with the provision of the inmate calling services where they are required,” Global Tel wrote, adding: “The amount of commissions, how they are calculated, and the determination of which programs the funds support are all decisions within the discretion of state and local policymakers, and the FCC must continue to defer to state and local authorities with regard to such determinations.”

Louisiana Defends Commissions

The Louisiana Department of Public Safety and Corrections defended the commissions system as a way to pay for security monitoring of phone calls, operational costs, offender educational programs.

“Many of these programs would be ceased or reduced if the revenue from commissions earned would be lost as no other funding source would be available,” the department wrote. “As the offenders and their families benefit by the provision of these services and as it was the actions of the offenders that caused their incarceration, it is only fair that the cost of providing telephone services to offenders be borne by the offenders and their families and not the tax payers at large.”

For the fiscal year 2012-2013, the department said it received $3,817,051 in commissions; of these funds, $2,819,202 has been dedicated to operations at nine sites and $997,849 to the inmate welfare funds at eight sites.

For the FCC, the commission's final rules will hinge on a determination of whether the current rates are “just and reasonable” under Section 201(b) of the Communications Act.


For filings in docket 12-375, visit http://apps.fcc.gov/ecfs/comment_search/input?z=sfp5a.