Why The Prison Payphone Industry Is Ripe For Disruptive Innovation

A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market.

Characteristics of a Disruptive Innovation:

Its performance attributes meet the unfulfilled needs of an emerging market’s customers. These same attributes are not initially valued by the mainstream market, which instead value different performance attributes and initially see the innovation as substandard.
Emerging market adoption enables the innovation to increase its performance and to begin overlapping with the performance expectations of the mainstream market.
Awareness of the innovation increases as the innovation develops, influencing change in the mainstream market’s perception of what it values.
The change in the mainstream market’s perception of what it values enables the innovation to disrupt and replace the existing offerings in the mainstream market.

In the prison payphone industry, it is clear that the high call prices and low availability of the traditional wall phones in prisons and jails are not meeting the communication desires of detainees and their families. As a result, the demand for contraband cell phones has soared. Prison administrators, and the prison payphone companies themselves, have focused on strategies to reduce the supply of smuggled mobile phones through the deployment of expensive managed access systems, cell phone detection technologies and specially trained K9s.

However, none of these strategies address the fundamental demand (and associated corruption of guards and staff supplying the phones) of detainees seeking lower cost and more frequent access to telephone services.

In mature industries, such as the prison payphone industry, the risk for incumbents is the danger of dematuring. Dematuring happens when a stable industry with known competitors begins to be dynamic and new again. If an industry is dematuring, the chances of getting hit with a disruptive innovation are much greater and established players lose their hegemony while value in the industry can move to entirely new players or parts of the value chain.

An industry is in danger of dematuring if two or more of the following four things happen simultaneously:

customer’s core requirements change;
the core technologies used to produce the product or service change;
the number of large competitors interested in the same market is on the rise;
significant regulation, deregulation, or re-regulation is coming down the pike.

In the prison payphone industry we see commissary companies such as Keefe entering the market as well as new initiatives by the FCC and state regulatory commissions to lower the high cost of prison phone calls.

We are also seeing the adoption of mobility technologies such as RFID, GPS and handheld devices. The very first payphone was installed in a bank in 1889 (and probably in a jail not too long after). Yet the inmate communications service providers such as Global Tel*Link and Securus Technologies are still using this basic device (admittedly with very sophisticated back-end controls) over 120 years later!

There is no denying the pervasive and rapid adoption of wireless technologies in the the consumer market has begun to seep into prisons and jails. Add to this the desire of prison administrators to deploy on-line forms, books, MP3 players and commissary access and one quickly comes to the realization that voice communications can be an important component of this move to individualized, utilitarian and portable access devices to educate, rehabilitate and manage detainees.

With meshDETECT, we are leading the charge to disrupt the prison payphone industry by providing a secure prison cell phone solution that provides the controls and security required by prison administrators while offering enhanced communications opportunities to detainees and their families thereby reducing recidivism and the demand for contraband cell phones.

–

Author
Recent Posts

Brian

Managing Partner at meshIP, LLC

Brian Byrne is the founder and Managing Partner of Dallas based meshIP, a technology services firm offering cloud computing strategies and services. He is an accomplished executive with senior management experience in all facets of the technology, telecom, cloud computing, and SaaS industries. He has proven success in developing, financing and executing strategic plans as well as launching new ventures. His background includes a record of significant achievement in international business development and his credentials include a MBA in Marketing and Management Strategy from the J.L. Kellogg Graduate School of Management at Northwestern University, a MS from the School of Computer Science at DePaul University, and a BBA in Finance from the University of Notre Dame.

He is also the inventor of the patented meshDETECT, Secure Prison Cell Phone Solutions.

Linkedin Profile