Securus Warns of Inmate Calling Provider Appeal if Site Commissions not Fixed
Securus said it and others would appeal an FCC inmate calling service order unless changes are made to a draft, particularly to a section on “site commissions” that service providers pay to correctional authorities. Numerous sheriffs’ groups also voiced concern Thursday that the draft language wouldn't allow for adequate cost recovery and could cause inmate calling services to be curtailed. The National Sheriffs’ Association urged the FCC at least to provide for a one-year transition to a new regime. The draft order would cap all ICS rates, restrict ancillary fees, strongly discourage -- but not ban -- site commissions, and take effect after 90 days (see 1509300067). The agency plans to vote Oct. 22.
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But Democratic senators wrote FCC Chairman Tom Wheeler to back the plan. “The current proposal is a critical step forward in ensuring fair and just calling rates for incarcerated individuals,” said Sen. Cory Booker of New Jersey and 13 other Democrats, plus Democratic presidential candidate Bernie Sanders, I-Vt. “Unfortunately, in many cases state prisons can receive a commission or ‘kick-back’ from contracts with phone service providers, thus incentivizing a regime in which prisons profit from charging inmates higher rates. … For these reasons, it is of utmost importance that the FCC move forward with its proposal to curb intrastate calling rates for inmates. We applaud the FCC’s discouragement of commissions paid by phone providers to institutions and continued oversight of this matter.”
Securus said FCC proposals in an FCC fact sheet could be “a business-ending event” for the company. “Under the rate caps listed in the Fact Sheet, there being no rules in the draft order that address site commissions, Securus may be forced to continue paying site commissions on all existing contracts, even though the draft rate caps are significantly below Securus’s cost to provide service,” the ICS provider said in a Thursday filing in docket 12-375. “Securus currently pays approximately $140 million of site commissions on local and intrastate ICS.”
Securus said the revenue squeeze wouldn't be reasonable and it urged the commission to add a “site commission recovery mechanism,” which it said “would be the most crucial part of the forthcoming order.” Securus said it would appeal the order in full if the FCC doesn’t include a “capped, per-minute additive rate mechanism for site commission recovery” along the lines of one proposed by Morgan Lewis attorney Andrew Lipman on behalf of clients with an ICS interest. “Many other ICS providers will appeal as well,” Securus said.
Drinker Biddle attorney Lee Petro criticized the ICS provider campaign. “The last ditch effort by the ICS providers is to have the FCC ban site commissions and shift the cost of incarceration onto the families of those who are incarcerated,” said Petro, counsel for Martha Wright petitioners, who have pressed the FCC to drive down ICS charges to users. “By eliminating commissions, the ICS providers will wipe more than $400 million from their ledgers, and instead impose an additional $60 million penalty on ICS customers. Since ICS customers do not have a seat at the table when the providers and correctional authorities negotiate their single-source, monopoly contracts, it is unconscionable that this additional burden would be imposed on those who are least able to afford the cost.”
Global Tel*Link would be “severely impacted” by the FCC order without a significant reduction or elimination of site commissions, said GTL President Jeff Haidinger, who told us he didn’t know how Petro arrived at his calculations. Haidinger said FCC action on site commissions was one leg of a three-legged stool for comprehensive ICS reform, the other two being rates and ancillary fees. The FCC had deviated from a balanced approach by only proposing to act on two legs of the stool, he said. He said he was hopeful the agency would make changes, but he didn’t want to handicap the prospects. “We’ve made our case individually and collectively,” he added. “Hopefully, they’re listening. We’re in a more wait-and-see mode.”