Tag Archives: correctional facilities

FCC Releases Order (FCC 13-113) Regulating Prison Payphone Costs and Commissions

FCC cuts prison LD payhone rates FCC Releases Order (FCC 13 113) Regulating Prison Payphone Costs and CommissionsThe FCC has released its order (FCC 13-113) detailing the rules associated with the regulating of prison payphone interstate calling rates. This is the culmination of FCC Proposed Rule Making 12-375 (The Wright Petition – follow the link for to see the new proposed rates) in which the Federal Communications Commission proposed to lower rates charged to prison inmates for long distance telephone calls by considering changes to its regulations governing rates for interstate inter-exchange inmate calling services (ICS), after studying the issue for nine years.

The ruling effectively guts the per minute LD rates and one-time per call fees companies such as Global Tel*Link and Securus Technologies can charge imates and their families as well as the commissions paid to Federal, State and County prisons.

The FCC claims that commissions are “not recoverable through interstate ICS rates because the record makes clear that they are not a direct cost of providing interstate ICS.”

It also sets the ground work for a similar action on intrastate rates. Relevant excerpts from the ruling relating to one time fees and to the payment of commissions to jails and prisons by the prison payphone providers are below. Securus has previously stated that it will go to court to stop the implementation of these rules.

As the prison payphone companies and prisons grapple with the challenge of recovering the revenues associated with this order, we suggest they consider meshDETECT Secure Prison Cell Phone Solutions™ as a potential new service offering that also reduces the demand for contraband cell phones while reducing recidivism.

Commissions

The Commission has previously held that site commissions are-for purposes of considering ICS rates under section 276—an apportionment of profit, not a cost of providing ICS.In the 2012 ICS NPRM, the Commission sought comment on its prior conclusion that site commission payments, or “location rents are not a cost of payphones, but should be treated as profit.” Site commission payments are not costs that are reasonably and directly related to the provision of ICS because they are payments made to correctional facilities or departments of corrections for a wide range of purposes, most or all of which have no reasonable and direct relation to the provision of ICS. After carefully considering the record, we reaffirm the Commission’s previous holding and conclude that site commission payments are not part of the cost of providing ICS and therefore not compensable in interstate ICS rates.

In this Order we find that site commissions are not recoverable through interstate ICS rates because the record makes clear that they are not a direct cost of providing interstate ICS. If commissions or other payments from ICS providers to correctional facilities reflect costs of providing ICS, providers have several avenues available to them.

Although it is clear that site commissions are a revenue stream to the correctional facility, we cannot foreclose the possibility that some portion of payments from ICS providers to some correctional facilities may, in certain circumstances, reimburse correctional facilities for their costs of providing ICS. As a result, we provide several avenues for exploring this issue further. First, we set the interim safe harbors and interim rate caps at conservative levels above costs in our record. Second, any ICS provider seeking a waiver of the rate cap or seeking to justify costs between the safe harbor and the interim rate cap may provide specific details about payments to correctional facilities that it contends are compensable for costs meeting our cost standards through interstate ICS rates as articulated in this Order. Third, as part of the mandatory data collection we initiate below, we will seek further information on payments to correctional facilities and whether they cover any costs of service. Finally, in our accompanying Further Notice, we seek comment on whether we should categorically find that payments to correctional facilities are not compensable costs, or whether there are certain compensable costs that those payments can legitimately address. In his Dissent, Commissioner Pai notes that this Order recognizes that excluding sitecommissions from cost data used to develop our safe harbor benchmark and rate cap may be an “underinclusive approach given that correctional institutions themselves often incur costs to provide ICS and those costs may need to be included in any costs-of-service estimates.” While it is correct that the rates and cost studies that the Commission used as a basis for the safe harbor benchmarks and the interim rate caps do not includesite commission payments, the Commission did not exclude them. Rather, the rates used to establish the safe-harbor benchmarks are rates for service in states that have prohibited site commission payments. Also, the ICS provider cost studies that we use as a basis for the interim rate caps adopted in the Order were prepared by the ICS providers to show costs of service excluding site commission payments. Furthermore, we do not remove costs or adjust inputs from the data used to establish the interim rate caps. For example, both cost studies used to establish the interim rate caps use an 11.25% rate of return to determine the cost of capital. We do not opine on whether this input is appropriate in this context. Instead, we accepted the figures in the cost study, as asserted, without considering whether they represent accurate levels of costs that are reasonably and directly related to provision of interstate ICS and, therefore, are appropriately recoverable thought interstate ICS rates. Consequently, it is likely that these cost figures are overstated, but we accept that possibility as part of our decision to set conservative interim rate cap levels.

We also disagree with ICS providers’ assertion that the Commission must defer to states on any decisions about site commission payments, their amount, and how such revenues are spent. We do not conclude that ICS providers and correctional facilities cannot have arrangements that include site commissions. We conclude only that, under the Act, such commission payments are not costs that can be recovered through interstate ICS rates. Our statutory obligations relate to the rates charged to end users— the inmates and the parties whom they call. We say nothing in this Order about how correctional facilities spend their funds or from where they derive. We state only that site commission payments as a category are not a compensable component of interstate ICS rates. We note that we would similarly treat “in-kind” payment requirements that replace site commission payments in ICS contracts.

Per Call Fees

We are concerned about the evidence regarding current per-call rates and associated practices. In particular, we are concerned that a rate structure with a per-call charge can impact the cost of calls of short duration, potentially rendering such charges unjust, unreasonable and unfair. We have particular concerns when calls are dropped without regard to whether there is a potential security or technical issue, and a per-call charge is imposed on the initial call and each successive call. As a result, we conclude that unreasonably high per-call charges and/or unnecessarily dropped calls that incur multiple per-call charges are not just and reasonable

Our interim rate structure will help address concerns raised about unreasonable per-call charges while we consider further reforms in the Further Notice. As described above, we adopt interim safe harbor rate levels and interim rate caps to ensure the overall cost of a 15-minute call is just, reasonable, and fair. ICS providers have the flexibility to satisfy the safe harbor either through a certification that the per-minute rate is at or below the safe harbor, or by demonstrating that the cost of a 15-minute call (including any per-connection charges) is at or below the safe harbor per-minute rate times 15.Thus, where an ICS provider elects to take advantage of the interim safe harbor rate levels described above, we allow the provider flexibility to determine whether its rate structure should include per-call charges. Specifically, we allow ICS providers to calculate whether their rates are at or below the interim safe harbor levels or the interim rate caps by calculating their compliance on the basis of a 15-minute call. Because our interim safe harbors constrain the cost of a 15-minute conversation to a level we find to be just, reasonable, and fair, we find it is appropriate to afford ICS providers such flexibility

Although we are unable to find ancillary charges per se unreasonable based on the record,
we have sufficient information and authority to reach several conclusions regarding ancillary charges. First, as stated earlier, interstate ICS rates must be cost-based, and to be compensable costs must be reasonably and directly related to provision of ICS. Ancillary service charges are no exception; they also fall within this standard and the Commission has the jurisdiction and authority to regulate them. Section 201(b) of the Act requires that “all charges, practices, classifications, and regulations for and in connection with” communications services be just and reasonable. Section 276 of the Act defines “payphone service” to encompass “the provision of inmate telephone service in correctional institutions, and any ancillary services,” and requires that providers be “fairly compensated.” The services associated with these ancillary charges are “in connection with” the inmate payphone services for purposes of section 201(b) and “ancillary” for purposes of section 276. As such, they fall within the standards we articulate above for determining which costs are compensable through interstate ICS rates. Therefore, even if a provider’s interstate ICS rates are otherwise in compliance with the requirements of this Order, the provider may still be found in violation of the Act and our rules if its ancillary service charges are not cost-based.

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Wireless Carriers Oppose Jammming Contraband Mobile Phones in Prisons

wireless carriers mobile jamming 300x199 Wireless Carriers Oppose Jammming Contraband Mobile Phones in PrisonsWireless carriers rejected proposals to jam wireless signals inside and around U.S. correctional facilities in reply comments filed with the Federal Communications Commission Aug. 23, arguing that jamming wireless signals is unlawful and could prevent legitimate wireless communications.

CTIA – The Wireless Association “strongly opposes” the use of contraband mobile phones in prisons but said any requests by non-federal entities to jam wireless signals would be an illegal violation of the Communications Act. Carriers also noted that the FCC and the National Telecommunications and Information Administration had previously denounced non-federal mobile phone jamming because it could prevent the transmission of 911 calls and hinder law enforcement communications.

Their comments came in response to the FCC’s May 1 notice of proposed rulemaking regarding contraband mobile phone use in prisons.

The carriers sought to deter the FCC from considering other proposals to limit spectrum use, including the establishment of wireless exclusion zones in and around correctional facilities. Requiring such “quiet zones” would “unnecessarily complicate network design” and force carriers to re-engineer their networks “potentially to the detriment of consumers,” said CTIA in its filing. The American Corrections Association said quiet zones would create a “modest diminution of rights” that would be far outweighed by the benefits to the public, according to its FCC filing.

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Securus Technologies Sues Global Tel*Link For Patent Infringment

securus gtl patent fight 300x225 Securus Technologies Sues Global Tel*Link For Patent InfringmentUpdate (10/21/13): Global Tel*Link has responded to Securus Technologies’ patent infringement lawsuit and this case is turning into a barn-burner. In a press release issued today, GTL unsurprisingly denies infringing the Securus patents, but also goes on to claim that “Securus is barred by contract from bringing patent claims against GTL, that Securus’ patents are invalid and were obtained through false statements and that GTL does not use Securus’ patented technology in any event.” It has also responded with filed claims of its own alleging that Securus has systematically infringed on GTL’s patented technology and asked the court to stop Securus’ unauthorized use.

Of particular interest is GTL’s claim that Securus’ patents were obtained by false statements. In its response to the court, GTL states that Securus patent 7,899,167 for Centralized Call Processing was obtained through “a knowing and deliberate misrepresentation” of U.S. Patent No. 7,505,406 in a response to a final rejection of the ’167 patent application by the USPTO as being unpatentable over patent 7,505,406 and that this misrepresentation was made “with the intent to deceive the PTO for the purpose of obtaining allowance of the patent application.” As a result, GTL claims that “the ‘167 patent is unenforceable due to inequitable conduct before the PTO.” The added wrinkle in all this, besides the very serious charge of misrepresentation, is that the ’406 patent is also owned by Securus (via its predecessor company Evercom). It will be interesting to see how this all plays out…

Update (10/4/13): In our original blog post below, we asked the question whether this law suit was filed “to extract royalties from GTL thereby adding to its cost of doing business (and competing against Securus for lucrative prison telecommunications and video visitation business) or if it is intended to hamstring GTL in the deployment of its competing services by forcing them to work around the patents.” We have some additional insight via a press release Securus issued today.

The press release states, “In the lawsuit, Securus also seeks an injunction permanently enjoining GTL from continuing to infringe Securus’s patents. Securus believes that the requested injunction would significantly impede GTL’s ability to exploit its current products and services in order to serve its existing or prospective clients in the inmate corrections industry. Securus intends to pursue the suit aggressively to a successful conclusion.”

Richard A. Smith, President and Chief Executive Officer of Securus Technologies comments, “It is well known that Securus Technologies has by far the largest patent portfolio in the corrections industry and we have spent in excess of $200 million developing sophisticated technology – and we have solid patents. You cannot operate in our industry legally without having a patent license agreement with us and GTL’s license agreement expired in early August, 2013 – they did not renew the license agreement so we had to file this lawsuit.”

“Without an agreement, GTL cannot legally provide the Securus patented services to prisons and jails – so they cannot run their business and we will ask the Court to stop them,” said Smith. “If I was a GTL customer, I would be very concerned that they may not be able to continue my services – inmate calling is important to facilities and they cannot operate without this method of communication.”

The Original Post:

In a move reminiscent of the patent battle between Apple and Samsung, the two biggest players in the inmate communications services space are squaring off over patents.

Securus Technologies has sued Global Tel*Link (GTL) in the U.S. District Court for the Northern District of Texas for infringing on four of its patents. At this time, it is unclear whether this is a strategy simply intended to extract royalties from GTL thereby adding to its cost of doing business (and competing against Securus for lucrative prison telecommunications and video visitation business) or if it is intended to hamstring GTL in the deployment of its competing services by forcing them to work around the patents. The patents cover services for centralized call processing, analyzing investigative information, identifying members of a gang, and visitation terminal user identification. So Securus is going after GTL for processing detainee phone calls, video visitation services and investigation tools.

The four patents at issue are:

1.) 7,899,167: “Centralized call processing” which includes 21 claims (2 indep.). It was filed 8/15/2003 & granted 3/1/2011.

Systems and methods which provide a centralized architecture for call processing. Embodiments utilize voice over Internet protocols (VoIP) to carry calls from a location at which calling services are provided to a centralized call processing platform providing call processing functionality, such as calling party identification, call validation, call routing, and connection to the public switched telephone network (PSTN). Call processing gateways may be utilized to provide plain old telephone service (POTS) analog line interfaces for use with a plurality of telephone sets disposed for use at a location and at least one wide area network (WAN) interface for providing high speed data communication to a centralized call processing platform. PSTN interfacing by a call processing platform may be provided as a VoIP connection to the PSTN and/or as POTS trunking. Call processing platforms may provide for data sharing, aggregation, and/or analysis across multiple facilities served.

2.) 7,860,222: “Systems and methods for acquiring, accessing, and analyzing investigative information” Includes 36 claims (2 indep.). Granted 12/28/2010.

Disclosed are systems and methods which provide availability of information on a network wide basis, with the network or information technology (IT) fabric spanning a wide range of institutions and other sources of information, including correctional facilities, without regard to which jurisdiction the source of information belongs, e.g. police, courts, federal investigation agencies, public databases etcetera. Embodiments provide an electronic based capability to identify useful information and for locating, collecting, compiling, aggregating, distilling, and/or reporting robust data.

3.) 7,805,457: “System and method for identifying members of a gang or security threat group” Includes 17 claims (4 indep.). Granted 9/28/2010

System and method for monitoring activity of detainees comprising identifying a detainee who is affiliated with a gang, searching one or more databases for information associated with the detainee, and correlating the information to identify individuals who may be affiliated with the gang. The databases may include call record databases, and the information associated with the detainee may include individuals called by the detainee, individuals who visit the detainee, telephone numbers called by the detainee, and sources of funding for the detainee’s calls voice and/or facial biometric identifiers. An alert may be triggered when the detainee calls a specified individual or telephone number.

4.) 8,031,850: “Systems and methods for visitation terminal user identification” Includes 46 claims (3 indep.). Granted 10/4/2011.

Systems and methods which collect information regarding users of controlled environment visitation terminals for identification of one or more parties to a visitation conversation are shown. Identifying information may be provided by various means, such as entry of a PIN, RFID, biometrics, etcetera. Embodiments provide a closed circuit visitation communication system in which a single port of a communication control system is used with respect to a pair of visitation terminals. Embodiments operate to prevent communication between a resident of a controlled environment facility and a visitor while identifying information is collected and verified. Thereafter, the resident and visitor may be placed in communication, whilst the identifying information may be utilized for such purposes as associating a recording of the conversation with the resident and/or visitor, issuing an alert to appropriate individuals that a conversation by one or more parties of interest is being conducted, collect investigative information, etcetera.

The timing is interesting given that the FCC has recently signaled that it will be moving to reduce the cost of interstate long distance calls in prisons and jails as as a result of Proposed Rule Making 12-375. If the FCC does so, this will potentially significantly reduce both companies margins for the highly lucrative detainee long distance calls thereby dealing GTL a one-two punch in its margins and service offering capabilities.

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Prisoner Phone Rates Increased

Prison Telephone Prisoner Phone Rates IncreasedThis article regarding the rate increase for Michigan’s state prisoner telephone services offers the following insight, “Criminologists report that prisoners with strong social bonds are less likely to re-offend or exhibit anti-social behavior. Prisoners able to talk more with their families display the higher signs of rehabilitation than prisoners who converse less frequently.” A secure prison cell phone service would increase the ability of prisoners to communicate with their families while reducing the contraband value of smuggled prison cell phones. This rate increase, to pay for cell phone signal jammers, may not have been necessary as a result.

Under a new contract, prisoners pay almost double the amount to make phone calls. The increase means more money to Department of Corrections at great cost to prison families, inmates say.

July 1, local calls went from 12 cents per minute to 20 cents per minute. Interstate calls went from 15 cents per minute to 23 cents per minute.

Public Communications Services (PCS) recently acquired the contract for Prisoner Telephone Services. PCS promotes itself as a nationwide Inmate Communications Service provider with “affordable calling options” that are approved by the correctional facilities.

Michigan Department of Corrections spokesperson John Cordell said the price increases reflect the cost of new telecommunications equipment, safety and security features.

“Embarq, which had the contract for 10 years, had not made upgrades. Out-of-date technology equipment had to be replaced,” Cordell said. “The cost of installation of equipment that can detect cell phone usage was also built into the contract.”

Not so, according to a letter received from Dennis Boatwright, imprisoned at Mid-Michigan Correctional Facility.

“A Michigan Department of Corrections (MDOC) memorandum showed that the PCS phone company only charges inmates 3 cents a call,” Boatwright writes. “At the same time, this memo reveals that the MDOC is receiving up to 15 cents a minute kickback.”

According to Cordell, the technology will enhance security and increase the safety of staff, prisoners, visitors and citizens of the state of Michigan.

“The equipment was not available in the past because of the high cost associated with installation,” Cordell said. “The increases in rates will offset that cost and allow the department to implement this much needed security enhancement.”

When the cost of installation is recouped, the phone rates will be reduced, Cordell said.

Security is a false issue, according to Boatwright.

Court evidence has revealed prison staff smuggle in cell phones for bribes, Boatwright says. Furthermore, there are no incident reports of cell phones being brought in by visitors through the visiting rooms.

“Funds for security measures are already accounted for in preexisting corrections budgets. The equipment the MDOC will use to detect prohibited phone calls cost significantly less than the kickbacks the corrections department will pocket,” Boatwright writes. “MDOC is using these kickbacks to prevent more prison closings, and to maintain sweetheart fringe benefits for staff such as unquestioned sick days off and numerous vacation days. To be sure, many correctional facilities are already outfitted with scanner-like devices.”

Cordell indicated the cost per minute with the previous contractor, Embarq, was fifth lowest in nation. With PCS increases, the rates are 11th lowest in nation.

Cordell says installation cost is still being calculated.

“We are still working out what the cost will be after the installation. They would be reduced, but we won’t know how much until we know what specific system we are using and what the maintenance/operational costs will be,” Cordell said. “It is too early to speculate on what the rate would be once it is reduced.

In the meantime, increased phone rates hurt not only prisoners, but also relatives and friends who send money to incarcerated loved ones, according to Boatwright.

“Criminologists report that prisoners with strong social bonds are less likely to re-offend or exhibit anti-social behavior. Prisoners able to talk more with their families display the higher signs of rehabilitation than prisoners who converse less frequently,” Boatwright writes. “Thus outrageous phone rates not only cost society additional money, but may cost even more socially if taxpayers don’t express their disapproval at this unjust business practice.”

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