FCC Votes 2-1 to Cap Interstate Prison Phone Rates as Pai Dissents

Clyburn’s voice was strong and trembling with emotion as she looked at Ulandis Forte, the grandson of Martha Wright. Ten years ago, Forte’s grandmother asked the commission to take on the problem of high prison calling rates. Wright, who spent more than $100 a month to talk to Forte while he was incarcerated, “spoke the truth to power, and reminded us that one voice can still spur a movement and drive meaningful change,” Clyburn said at the commission meeting Friday.

"To be able to actually hear your loved ones helps to strengthen the relationship unlike any letter one could write,” Clyburn said, as a crowd gathered at the door of the packed meeting room to listen. A sustained round of applause followed her remarks, as petitioners and their supporters celebrated an order they believe will have societal benefits and reduce recidivism now that inmates will be able to communicate with their families for less money. Commissioner Jessica Rosenworcel said this was “not just an issue of markets and rates” but “a broader issue of social justice” that has her “unequivocal support."

"With a heavy heart,” Pai dissented, calling the order a “serious mistake.” The commission lacks the resources to review the rates of inmate calling service providers and sort out legitimate costs from illegitimate costs in each of the thousands of correctional institutions in America, he said. Although crafted with the best of intentions, “I do not believe that it is within the commission’s competence to micromanage the prices of inmate calling services,” he said. Pai warned that the order might not withstand a court challenge.

"I prefer to concentrate on where we can agree,” Clyburn told reporters after the meeting. “We might not be able to agree on every footnote or every line,” but she and Pai agree that “these individuals are deserving of a just, reasonable and fair structure,” Clyburn said. “And this item puts that forth."

The order sets up a “safe harbor,” as was expected (CD Aug 2 p4), presuming that debit and prepaid call charges of up to 12 cents a minute, and collect call charges of up to 14 cents a minute are cost-based and reasonable. Still, those benchmark rates can be challenged, said a Wireline Bureau spokesman. If the commission investigates and finds that the rate is not cost-based, the inmate calling services (ICS) company wouldn’t be required to refund any money, but would have to change the rate going forward. Rates above the safe harbor wouldn’t automatically trigger an investigation, but if a challenge finds that the rate isn’t cost-based, then the ICS companies would have to issue refunds, said the bureau spokesman. ICS companies can charge above the adopted rate cap if they get a waiver from the commission, he said. ICS providers will have 90 days after publication of the order in the Federal Register to comply with the new rate requirements.

"We think we set them generously,” said Wireline Bureau Chief Julie Veach of the rate caps. Based on the data in the record, the “vast majority of providers” will find they can be in compliance with those rates, and Veach hopes there will be no extraneous proceedings on individual cases. “To be safe,” the bureau wanted to ensure that providers have opportunities to make individual showings to get a different rate cap, but “we don’t anticipate that the flood gates will burst with these rates,” she said.

The adopted rates aren’t set in stone. The order requires a mandatory data collection for ICS providers to offer data about their actual costs. Veach expects that will take place sometime next year, after the Office of Management and Budget gives Paperwork Reduction Act approval. The bureau modeled the rates on a series of cost studies in the record, but it could adjust the rates based on the data it collects, said the bureau spokesman. “We know what we saw. We don’t know what’s going to come in."

Pai cautioned that the lack of sufficient data could provide grounds for a court challenge. “The notice of proposed rulemaking teed up a per-minute rate cap and other discrete proposals, but the order codifies de facto rate-of-return regulation,” Pai said. “The record evidence simply does not support the commission’s approach. Indeed, the order recognizes that we do not have the data to establish long-term rates, and accordingly commences a mandatory data collection -- which underscores that the cart is before the horse."

"This is just the latest example of the FCC’s M.O. of ‘Ready, Fire, Aim,'” said TechFreedom President Berin Szoka in a news release. “The FCC consistently dawdles, then suddenly works itself up into a rush to regulate in ways that are either illegal or unwise -- and usually both.” Instead of going with one of the other options on the table, such as the Wright petition’s original request to end exclusivity and kickbacks, Clyburn “came up with this contorted system of rate-of-return price controls” that weren’t discussed in the NPRM, Szoka told us. Szoka expects the order to be struck down in court for lack of notice and lack of adequacy in the record.

Several groups released statements supporting the order, while Rep. Henry Waxman, D-Calif., said the order was “long overdue.” It’s been the FCC’s “core responsibility in its 75 years of existence to make sure that phone rates are just and affordable for everyone,” said Public Knowledge President Gigi Sohn. “We applaud Chairwoman Clyburn for showing that the word ‘everyone’ includes inmates and their families who have been mistreated by private phone companies.” Free Press is “thrilled” by the order, said President Craig Aaron, who commended Clyburn for bringing it to a vote and Rosenworcel for supporting it. A phone call home “can be a powerful tool to reduce recidivism and keep families connected,” said Aaron. NARUC Telecom Committee Chairman John Burke said that while intrastate toll service “clearly remains subject to exclusive State jurisdiction,” the order will hopefully “spur States that have not yet taken similar steps to consider making reforms.”

The order concludes that “site commissions” payments from providers to correctional facilities may not be included in any interstate rate or charge, said a bureau news release. It said the order clarifies that inmates or their family members with hearing and speech difficulties may not be charged higher rates to use the Telecommunications Relay Service. In addition to the mandatory data collection, the order imposes an annual recertification requirement and enforcement procedures. The order states that ancillary fees, such as charges to add money to a debit card, must be cost-based. A further notice seeks comment on reforming rates and practices affecting calls within a state, bureau officials said. It also seeks comment on fostering competition to reduce rates.

The bureau’s presentation began with testimony from Bethany Fraser, a 36-year-old mother of two whose father has been incarcerated for the last 2 1/2 years. “I would do anything, and pay any amount, to keep my children connected to their father,” Fraser said, choking back tears. “But choosing between essential needs and keeping kids connected to their parents is a choice no family should have to make.” Asked afterward whether she is concerned by Pai’s dissent or his concerns about security, Fraser said she’s “just happy to have the costs down. We'll cross those bridges when we get there, I guess.”