FCC Approves New Prison Phone Rate Caps

By Lydia Beyoud

Aug. 4 — The Federal Communications Commission approved slightly higher prison phone call rate caps Aug. 4 by a 3-2 party-line vote.

The agency declined to take action on site commissions, a practice inmate calling service (ICS) providers such as closely-held company Securus Technologies Inc. and criminal justice advocates have decried.

The vote on the order on reconsideration is in response to a petition from attorney and prisoner civil rights advocate Michael S. Hamden to end site commissions. It is the agency’s third effort to curb exorbitant ICS rates and fees. A 2015 FCC effort that capped rates lower than those adopted today is currently under review by a federal court ( Global Tel*Link v. FCC, D.C. Cir., No. 15-01461, petition for review filed 12/18/15 .

Site commissions are contractual obligations between jails or prisons and ICS providers such as CenturyLink Public Communications, Inc., a division of CenturyLink Inc., to return a commission of up to 96 percent of the profits from inmate calls to a facility.

Advocates of revamping prison phone rates hope a judge won’t stay the new rate caps. The FCC says the caps account for legitimate costs facilities incur in offering the phone services, an issue raised in the current litigation before the U.S. Court of Appeals for the District of Columbia Circuit.

The new rate caps will be phased in over the course of three months for prisons and six months for jails after publication in the Federal Register.

An Issue for States, Localities

Democratic FCC Commissioner Mignon Clyburn, who has led the agency’s efforts to restrict the rates and ancillary fees ICS providers charged inmates and their families, said state and local officials would have to tackle site commissions. She added after the commission's meeting that the FCC did not believe it had the authority to address the contractual deals.

Clyburn said that site commissions are a small part of correctional budgets, but have “a massively regressive economic impact on inmates and their families.”

“States and localities should act and act now, to rein in these egregious practices, and those jurisdictions that have already undertaken reform should be applauded,” Clyburn said.

ICS providers are concerned they will be stuck paying high site commissions while being squeezed on profits because of the rate caps and prohibited from charging several ancillary fees the FCC has found exorbitant.

Securus and Pay Tel Communications, Inc. have sought an out from the commission in the form of an explicit statement that the additional cents added to the earlier rate caps are to go toward facilities' costs in lieu of site commissions.

Both of the commission’s Republicans dissented from the order because it did not address site commissions or account for jail and prison facilities’ costs.

GOP Commissioner Ajit Pai said the new rate caps were “confiscatory” because they would set rates below cost. The National Sheriff’s Association estimates annual administration costs of $244 million for jails, while the rate increases adopted by the FCC would yield approximately $136 million in revenue, Pai said.

Clyburn said after the meeting she believed the new rate caps will allow the FCC to move forward on a sound legal footing and that they address the economic needs of the majority of groups that shared their financial data with the agency. “We used and continue to use the information that the providers themselves submitted,” she said.

Hamden, the attorney who brought the petition for reconsideration to the FCC, said he expects ICS providers to shift their business focus to new communications services subject to less regulation, such as software for prison commissary and trust accounts and video visitation services.

“All those services are unregulated and can have any fee at any cost,” Hamden told Bloomberg BNA.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

For More Information

Text of the FCC's press release is at http://src.bna.com/hsk.

Text of Clyburn's prepared remarks is at http://src.bna.com/hsn.

Text of Pai's prepared remarks is at http://src.bna.com/hsl.

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