Inmate Calling Service Providers Warn FCC About Draft Order To Restrict Charges

Securus called the FCC's attention to the S&P report and urged changes to its draft order. "Specifically, Securus asks that (1) the draft rate caps be increased to cover the industry’s reported, average cost of service, and (2) the order include a cost recovery mechanism for correctional facilities that is additive to the per-minute rate caps," the company said in a filing in docket 12-375. "As Securus showed in its Second Ex Parte Submission, which was filed today and provided to you, the record strongly supports these rates and rules with both compelling legal precedent and concrete data."

Global Tel*Link also noted the S&P report and said the FCC draft's proposal "to reduce all rates to levels that are not supported by the record cost data, will not ensure fair compensation for ICS providers, and do not reflect the FCC’s well-established position that any effective new ICS policy must address ICS rates, ancillary charges, and site commissions to achieve a market-based result." In a filing, GTL also criticized "the apparent disregard for a rational implementation schedule that reflects the reality of the commercial marketplace and the need for carriers to renegotiate hundreds of contracts to accommodate the new rate regime." It also suggested "the FCC’s abandonment of a market-based approach to ICS radically will reduce or eliminate the availability of security features and GTL’s ability to offer new technologies in direct conflict with the FCC’s legislative mandates." GTL suggested the FCC adopt an ICS provider proposal from September 2014.

Pay-Tel backed some FCC draft actions but said others would jeopardize its service. A Pay-Tel filing on a meeting with FCC officials noted its general belief that an agency Fact Sheet "proposes regulations that will advance the public interest through the regulation of ancillary fees, establishment of a tiered rate structure, and application of the rules to intrastate ICS. However, Pay Tel also stated its concern that the Fact Sheet stops short of articulating a comprehensive, rational and sustainable approach to reform of ICS."

"Pay Tel discussed two primary substantive concerns with the Fact Sheet: first, the Fact Sheet suggests that the FCC intends to exclude the costs of site commissions in establishing rate caps but does not intend to restrict ICS providers’ sharing of 'profits' 'if such payments fit within the rate caps'; and, second, the proposed rate caps for jails would prescribe caps which are below Pay Tel’s demonstrated costs for the 350-999 and 1000+ tiers," the filing said. "Pay Tel explained that the second concern is exacerbated by the first; that is, the below-cost price caps are made even more problematic in an environment where Pay Tel, apparently, would be expected to pay a percentage of its revenues to confinement facilities. Such a regulatory environment would not be sustainable for companies like Pay Tel that are committed to ethical business practices."

Morgan Lewis attorney Andrew Lipman again criticized the FCC draft's refusal "to rein in excessive site commissions." In a filing submitted on behalf of unnamed clients with an interest in ICS, Lipman said: "Parties in this proceeding have argued that the Commission lacks statutory authority to regulate site commissions and that an ICS Order attempting such regulation would be unlikely to survive judicial review. But the opposite is true; the FCC squarely possesses the requisite authority and its failure to comprehensively regulate carrier payment of site commissions dooms its latest attempt at ICS reform to rebuke from the courts and failure in the marketplace."