Inmate Calling Service Providers Seek Stay of Prison Calling Order
The nation’s two largest inmate calling service (ICS) providers asked the FCC to delay implementation of the prison calling order until they can seek judicial review. Global Tel*Link and Securus argued that in requiring ICS rates to be cost-based, the order imposes what is essentially rate-of-return regulation without warning. That’s contrary to administrative rules that require public notice and comment, they say. Reducing high per-minute calling rates to and from prisons was a major priority for acting Chairwoman Mignon Clyburn, who had been pushing for action since long before she became interim head of the agency.
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The order doesn’t give adequate guidance on how ICS providers can comply with the new rules, GTL said in its petition for stay, filed Wednesday (http://bit.ly/1b0jNBC). “What rate of return is permissible, for example, and which costs count,” asked GTL. The commission’s prohibition on “ancillary charges” that aren’t cost-based magnifies the problem, GTL said. There was no prior notice of that possibility, it said, nor guidance about what costs an ancillary charge can include.
"Absent a stay to preserve the status quo, the Commission’s poorly conceived rate-of-return regulation will impose on GTL millions of dollars in unrecoverable losses and create substantial disruption and uncertainty in the industry,” GTL said. “Rate-of-return regulation would jeopardize ICS at high-cost facilities that are no longer economical to serve, and it would slash site commission revenues on which cash-strapped state and local governments depend to fund inmate welfare services.” GTL said the public would benefit from a stay, which would “defer these significant harms pending review.” Nor would there be any harm to the petitioners, who did not request rate-of-return regulation, GTL said.
"It’s almost laughable that there would be no harm to” prisoners and their families, responded Lee Petro of Drinker Biddle, representing Martha Wright, the grandmother who first asked the FCC to get involved in high prison phone rates. Prisoners and their families would continue to be charged excessive rates the entire time the rules are stayed, he said. For the ICS providers, “what this is all about is maintaining the bottom line as long as they can,” Petro told us. “The FCC is there to protect the public interest, not to protect a company’s bottom line."
Securus was the first ICS provider to seek a stay of the order. In addition to adopting cost-based rate review without providing any notice that such regulation was under consideration, the order is “fatally vague” on the rate regime inmate communications will be subject to, Securus said (http://bit.ly/Hznre8). “Protestations to the contrary, the Commission is in fact abrogating existing service contracts by imposing a flash-cut rate decrease and preventing inmate service providers from paying site commissions."
"They've tagged this rate-of-return, but it’s not rate-of-return,” Petro said. Even Commissioner Ajit Pai, who voted against the order, used terms like “rate-of-return like” or “de facto” to describe the rules, he said. The rules simply require ICS providers to provide evidence of their cost if they want to exceed a certain rate; rate-of-return regulation would have a calculation of what ICS profit could be, he said. “All the FCC’s doing is requiring the ICS providers to show their math. Provide the evidence that your costs are higher than the safe harbor and you can charge higher rates.”
Neither Securus nor GTL have challenged the order in court; the rules prohibit that until the order has been published in the Federal Register. Petro argued that the petitions are premature. “What the Petition seeks to ‘hold in abeyance’ has yet to occur,” he told the FCC in opposition to the Securus filing (http://bit.ly/1aOlljH). There’s “no public interest justification” for the FCC to stay the rules, he said. “Any party opposing further reform will have every opportunity to participate in the next phase of this proceeding, and influence the rules eventually adopted by the FCC. The appropriate approach is not, however, for this important proceeding to grind to a halt before even the FNPRM is published in the Federal Register, and a court appeal is filed.”