Some States Review Inmate Calling Rates After DC Circuit Reversal of FCC

High ICS rates leave telecom providers and government partners “free to exploit some of the poorest people in America” who “want to stay in contact with family members who are incarcerated,” said Human Rights Defense Center Director Paul Wright. Wright supported FCC pre-emption because state utility commissions weren’t acting, he said. Deregulation by legislatures meant nearly 20 states might lack authority to control fees even if they wanted to, Wright said. New York and Montana are among states with caps for state prisons, not local jails, he said. The FCC declined to comment.

NARUC, with no position on setting intrastate rates, was glad the D.C. Circuit recognized FCC authority is limited to interstate rates, said General Counsel Brad Ramsay. A 2012 NARUC resolution recommended “state and federal action to consider policies that could lower prison phone rates.” Setting inmate calling rates can be a dilemma for states, said Sherry Lichtenberg, principal for telecom research and policy at the National Regulatory Research Institute. Commissioners must “balance the needs of their constituents that are impacted by the calling rates with those of the public safety infrastructure,” she said.

The Alabama PSC sought comment July 19 on proposed changes, including revising price caps for usage fees so users pay only for minutes used instead of a flat fee based on the cost of a 12-minute call. Comments are due Aug. 14.

Nebraska’s “legislature is conducting an interim study to determine what legislation to address this issue should look like and how to proceed,” PSC Commissioner Crystal Rhoades said. “Our commission is supportive of the effort and looking forward to participating and finding a solution.” The California Public Utilities Commission is “monitoring the issue,” a spokeswoman said. The Texas Public Utility Commission followed the D.C. Circuit case and has authority to set intrastate rates if it wants, a spokesman said.

Montana

The Montana PSC received “more heartfelt comments -- that described the magnitude and the nature of the problem of very high calling rates for detained people -- than I've received on any docket,” Commissioner Travis Kavulla said in an interview last week. “It got my attention. I didn't realize what a problem it was, so we're going to focus on that in the near term.” Kavulla is glad the D.C. Circuit reversed FCC intrastate rate caps because it "was a win for state jurisdiction.”

Montana may revise the cap for intrastate calling rates charged to inmates at city or county correctional facilities. The cap is currently $1.16 per minute; earlier this year the legislature passed a bill capping the rate at 10 cents, only for state prisons. Commissioners voted unanimously at the webcast hearing to open a rulemaking that included a staff recommendation to align intrastate ICS rates with FCC interim rate caps for interstate services, which are 21 cents per minute for debit and prepaid calls and 25 cents a minute for collect calls. Comments are due Sept. 18; the commission may have a hearing in September and could adopt a final rule in early October, said Chief Counsel Justin Kraske.

“There is a very wide disparity within Montana” among county prisons on inmate calling rates, said Commissioner Tony O’Donnell. “That really concerns me. … If this is a revenue source over and above the costs, then I would have a real problem.” Kavulla concurred: “A lot of that disparity owes to the fact that these contracts are profit centers for sheriffs’ departments. They receive oftentimes a generous commission off of the revenues of these providers.” The commissioner wants ICS providers to disclose rates because there’s not reliable information. The PSC doesn’t do much telecom regulation “on the premise that people have a choice,” but inmates “are quite literally the definition of captive customers,” the ex-NARUC president said.

PSC Chairman Brad Johnson isn’t sure of the right price, but rates should be “equitable” and “consistent,” he said. “Some families are paying more for a few moments of contact with a loved one behind bars than they do cellphone services for an entire month.” ICS provider Global Tel*Link referred us Tuesday to a June 13 statement in which CEO Brian Oliver praised the D.C. Circuit decision for ruling that the FCC may not pre-empt state commissions.

Securus Responds

Intrastate rates are cost-based and ICS competition is high, the Securus CEO said. Policymakers could reduce ICS costs by analyzing fees required by some state and local governments, he said. Smith disagreed with those who say it’s wrong that inmates can’t choose their phone service: “Once you get admitted to a prison or jail, in all fairness, that right of choosing your telecom provider goes away.”

Smith didn’t object to state commission reviews of intrastate ICS caps if they base caps on provider costs. The FCC should stick to regulating interstate rates unless Congress decides otherwise, he said. If Congress gave the FCC authority over all ICS rates, Smith wouldn’t object, he said. “As long as the FCC does their job in a rigorous way and just doesn’t make numbers up because they sound politically good, I have no problem.”

Securus intrastate rates range from “a couple pennies” in big facilities to 80 cents a minute in smaller facilities, Smith said: The average intrastate rate across all facilities, big and small, is 19 cents a minute, and the average interstate rate is 17 cents, he said. Securus is subject to intrastate rate caps in 18 states, Smith said. Cap amounts “vary dramatically by state,” but Securus usually charges well below the caps, he said.

Securus' biggest costs are commissions it pays state and local government entities, Smith said. “Of the $600 million I collect, I pay $150 million a year directly back to states and counties in the form of commissions.” The amount is more than salaries, he said.

“If I were relooking at laws in a state, the first thing I would look at … is commissions,” Smith said. The Missouri Department of Corrections doesn’t allow the fees, so Securus charges 3 cents a minute, he said. Securus has seen some states and counties reduce commissions as more recognize their impact is driving up rates, he said. States with intrastate rate caps dropped by 20 from 2005 due to telecom deregulation, Smith said.

Wright doubts the court decision spurs action by regulators that have lacked willpower to go up against state sheriffs that he said profit from high ICS rates. A national solution could overcome states’ lack of interest, but prospects for FCC action don’t look good, he said. “Realistically, it doesn’t seem like the FCC has the interest or the will to do anything about this.”