FCC Votes 3-2 To Cap ICS Rates, Restrict Fees, Discourage Site Commissions

Securus said it would join with other ICS providers in seeking a court stay of the order pending judicial review. Advocates for inmates and their families and some lawmakers applauded the agency action. While the FCC Democrats were expected to approve, the Republican votes were hard to gauge in the runup to the meeting (see 1510160053).

The ICS item appeared to closely track a draft that FCC Chairman Tom Wheeler and Commissioner Mignon Clyburn, who spearheaded the effort, circulated three weeks ago (see 1509300067). After setting an interim interstate rate cap of 21 cents per minute for debit and prepaid calls in 2013, the FCC Thursday capped both interstate and intrastate rates for such calls in four tiers, said an agency release. Most inmates reside in state or federal prisons or in larger jails, where the caps would be 11 cents/minute and 14 cents/minute, respectively, while the caps for medium-size or smaller jails would be 16 cents/minute and 22 cents/minute, respectively, noted the release, which added that collect calls for each tier would be "slightly higher" and then phased down over two years.

The agency capped three types of ancillary fees while banning all the rest, and it banned flat-rate calls. But the FCC allowed ICS providers to continue paying site commissions to correctional facilities for contracts as long as their end-user rates stay within the caps. The FCC said the rates would take effect for prisons 90 days after publication of the order in the Federal Register, and for jails six months after publication. The Further NPRM seeks more comment on various issues, including possible rate caps for international ICS.

Clyburn said the actions were long overdue and “will eliminate the most egregious case of market failure” she had seen in 17 years as a state and federal regulator. “The system is inequitable, it has preyed on our most vulnerable for too long, families are being further torn apart, and the cycle of poverty is being perpetuated,” she said. “Studies consistently show that meaningful communication beyond prison walls helps to promote rehabilitation and reduce recidivism." Commissioner Jessica Rosenworcel said many current ICS rates were “outrageous,” with a single call sometimes costing as much as consumer monthly unlimited calling plans.

Dissenting Commissioners Ajit Pai and Mike O’Rielly said the FCC lacked authority for its actions. Pai said the agency’s decision was “well-intentioned” and he commended “the efforts of those working to reduce” ICS rates, but he said he couldn’t support an “unlawful” order that also failed to comply with administrative procedures.

Pai also voiced concern about inmate use of contraband cellphones for illegal activities and criticized the lack of FCC action (see 1510220047). Wheeler responded curtly, saying one incentive for inmate contraband cellphone use is the “absurdly high prices” their families pay for ICS calls. “Today the majority is dealing with that challenge,” he said. At a news conference, Wheeler said that two words best explained the FCC action. “Mignon Clyburn," he said. "She came, she saw, she did.”

Two of the largest ICS providers blasted the decision and vowed legal action. “The FCC made a colossal error in judgment, law, and public safety and policy,” said Securus CEO Richard Smith in a release that called the order “patently wrong” and “beyond belief given the record.” He said the caps set rates and fees below costs, and criticized the absence of an “additive per-minute” mechanism to recover site-commission costs. If implemented, the order “will cause smaller and medium-sized prisons and jails to lose the ability for inmates to communicate with friends and family,” he said. “The lives of witnesses, judges, victims and others will be lost due to the inability to provide the technology that prisons and jails need to keep us safe.” The “financial stability” of the ICS sector “is clearly threatened,” he said, promising to seek with others a stay from the U.S. Court of Appeals for the D.C. Circuit, which partially stayed the agency’s 2013 interstate rate order.

Global Tel*Link also worried about “instability in the industry” and a “threat to service at many of the nation’s smaller jails.” The order “creates a financial tsunami for the ICS industry,” it said in a release that encouraged all stakeholders to challenge this "well-intended yet disastrously short-sighted plan.” The order “may ultimately hurt inmates and their families -- the very people they set out to help. While they might see lower per-minute rates, they could be left with either the lowest quality of phone service or no phone service at all," said GTL CEO Brian Oliver. "Indeed, telling the world that technology, security, and commissions can all be provided under the proposed caps is profoundly naïve, ignores the FCC's own record and defies common sense.” Representatives of CenturyLink and Pay-Tel Communications had no comment, but the companies previously voiced concern about the FCC's direction.

Clyburn said she suffered from “heartburn” about site commissions, but she said the FCC was mindful of its authority and wanted to refrain from regulating where market-based solutions were possible. “We want this to be a viable market,” she said in answer to a reporter’s question about site commissions. “Addressing directly that particular element, we thought, would adversely affect that.” She said the FCC would monitor site commissions but state authorities could take action against the payments. She also urged states to follow the lead of New Jersey, New York, Ohio, West Virginia and others in driving down intrastate ICS rates well below the FCC caps, which she called a “ceiling.”

Advocates for lower ICS rates and charges praised the FCC action. “We are very pleased that after 30 years of abuse and exploitation by the prison phone industry and their government collaborators the FCC has finally taken steps to impose fair and reasonable rates on the amount prisoners and their families must pay to remain in communication with their families,” said Paul Wright, executive director of the Human Rights Defense Center. “It is critical to note the FCC is establishing a ceiling on rates and fees and we hope that states will take the hint and push rates even lower, as New Jersey and Virginia have, to less than 3 cents per minutes with no ancillary fees." The Center for Media Justice, Free Press, Public Knowledge, and Lee Petro, counsel for the Martha Wright Petitioners, also sent laudatory statements. Martha Wright, who died in the last year, was instrumental in pushing the FCC to act.

Some lawmakers also commended the FCC, including Rep. Frank Pallone, D-N.J., Commerce Committee ranking member, Sen. Patrick Leahy, D-Vt., Judiciary Committee ranking member, and Sen. Cory Booker, D-N.J.