The FCC has frequently advocated for competition in the provision and availability of inmate communications services (ICS) in prisons and jails.

In its Second Report And Order And Third Further Notice Of Proposed Rulemaking (NPRM) adopted on 10/22/15, it wrote, “While we adopt regulations in this Order to correct failures in the ICS market, the Commission generally prefers to rely on competition over regulation. We seek additional comment on whether there are ways to promote competition within the ICS market to enable the Commission to sunset or eliminate our regulations adopted herein in the future. In the 2012 NPRM, the Commission noted that the First Wright Petition asked the Commission to “mandate the opening of the ICS market to competition.”

“In the First Wright Petition, the Petitioners further requested that the Commission address high ICS rates by prohibiting exclusive ICS contracts and collect-call-only restrictions at privately administered prisons, and requiring such facilities to permit multiple long-distance carriers to interconnect with prison telephone systems…The Commission sought comment on whether security issues were still a legitimate reason for limiting competition within correctional facilities, and whether any technological advances had changed the justification for such exclusive use.”

The Human Rights Defense Center (HRDC) commented, “The ICS commission issue also illustrates the fundamental problem with the existing status quo; specifically, the lack of competition in the ICS industry, in which, in exchange for commission payments, local jails and 42 state prison systems provide ICS providers with monopoly phone service contracts.”

The American Bar Association commented, “The ABA recommends that the FCC use its statutory authority under section 253(d) of the Act to preempt states from entering into exclusive provider agreements, and open up the ICS market to fair and widespread competition.”

And the Wright Petitioners wrote, “The FCC correctly notes that the Petitioners have been calling for the introduction of competition in the ICS market for more than 15 years, and in fact, this goal served as the basis for Martha Wright and the Petitioners to file the original lawsuit.”

Some of the solutions put forth to achieve this goal include an “equal access” approach similar to that which was put in place to open up local and long distance services to competition wherein consumers picked their local and long distance providers. Others have suggested a “wholesale/retail” bifurcation of the industry providers.

We believe, like the FCC, ABA, HRDC and the Wright Petitioners, that competition is an essential ingredient in breaking the ICS providers’ monopolies in prisons and jails in order to drive market-based pricing.

However, like the consumer market, unfettered and robust choice is what drives real competition. Completely bypassing the monopolists is the best way to ensure this choice. The consumer telecommunications market, while initially cracked open by regulatory schemes such as equal access, was fully emancipated by the introduction and widespread adoption of cellular phones.

An individual “wireless prison payphone” in the form of a secure cellular service offered to any detainee who wants it, without requiring interconnection to the monopolist’s infrastructure or the forced bifurcation of the industry into wholesale/retail providers, will offer true choice and therefore real competition in an industry that has for so long thrown up barriers to any meaningful competition.

By using commercial cellular networks to bypass the monopolists, no infrastructure, such as WiFi, is required in a facility and therefore there is no capital cost to the prison facility as well as no risk of interconnection hurdles and artificial costs imposed by the incumbent ICS provider.

The current prison payphones already installed will remain in place, thereby giving inmates and their families a choice.

If desired, the inmate can stand in line, waiting for his 15 minute call in a public area on the traditional payphone. Or he can make a wireless call of unlimited length in the relative privacy of his cell.

In this way, real market forces will be introduced into the ICS arena thereby fulfilling the stated goals of the FCC, the ABA, the HDRC and the Wright Petitioners as well as the families of prisoners throughout the United States.

The post Introducing Choice And Competition Into The Prison Payphone Industry appeared first on meshDETECT® Blog.

On March 7, 2016, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) stayed two provisions of the FCC’s ICS rules: 47 CFR § 64.6010 (setting caps on ICS calling rates that vary based on the size and type of facility being served) and 47 CFR § 64.6020(b)(2) (setting caps for single-call services). The D.C. Circuit’s March 7 Order denied motions for stay of the FCC’s ICS rules “in all other respects.” On March 23, 2016, the D.C. Circuit modified the stay imposed in the March 7 Order to provide that “47 CFR § 64.6030 (imposing interim rate caps)” be stayed as applied to “intrastate calling services.”

In accordance with the 2015 ICS Order, the rules limiting charges for ancillary services—other than the rule related to single-call services, which the D.C. Circuit stayed—took effect on March 17, 2016 for all ICS calls from prisons, and will take effect on June 20, 2016 for all ICS calls from jails (see chart below). Those same effective dates also apply to the rates for ICS calls involving TTY devices, the rule governing the treatment of taxes and fees, the rule prohibiting per-call or per-connection charges, the rule prohibiting flat-rate calling, and the rules governing minimum and maximum calling account balances.

In addition, the interim rate caps – $0.21 per-minute for debit and prepaid ICS calls and $0.25 per-minute for collect ICS calls – set forth in the FCC’s rules are in effect for all interstate ICS calls.

Despite the legal fight over these rates between the FCC and ICS providers such as Securus Technologies and Global Tel*Link, the elephant in the room, commissions paid to correctional facilities by the ICS vendors, has not been fundamentally addressed in this rule-making process.

In a submission to the FCC responding to objections to his petition to reconsider the latest FCC rule-making on ICS rates, lawyer Michael S. Hamden distills the issues and risks succinctly. He states, “But, as set forth in the Petition, the Second ICS Order fell short of the comprehensive reform necessary because the Commission failed to address the primary cause of ICS marketplace dysfunction—site commission payments.”

“In granting a stay of the implementation of permanent ICS rates, the appellate court necessarily concluded that appellants are likely to succeed as to one or more of their challenges to the Second ICS Order. Should appellants ultimately prevail, the foundation upon which the Second ICS Order rests may well collapse. From a practical perspective, such an outcome would be destructive of the investment of time and resources of all parties over two decades, as well as the considerable time, energy, and political capital expended by the Commission in its effort to ensure just and reasonable charges and practices by ICS providers, while taking care to set rates that provide fair compensation for “each and every completed intrastate and interstate call . . ..”

His analysis of the situation continues, “The Commission declined to regulate site commissions or mandate any sort of facility cost recovery, at least in part because the record before it “contain[ed] a wide range of conflicting views regarding whether correctional facilities incur any costs that are directly reasonably related to making ICS available and that must be recovered through ICS rates.” The Commission did not require ICS providers or correctional facilities to report data regarding facility costs, and, consequently, it did not receive “sufficiently detail[ed]” data demonstrating facility costs from which to determine an appropriate level of facility compensation. The Wright Petitioners argue the Commission was correct to decline to establish rules that would have created a facility cost recovery fee additive because it did not have “concrete evidence in the record of the actual costs incurred by correctional facilities.” That lack of data, however, is exactly why the Commission cannot have fully analyzed and ruled on a facility cost recovery mechanism.”

He concludes with, “Comprehensive ICS reform has been a long time coming. This proceeding and its predecessor have been pending for twenty years. The threat is real that the persistent efforts of so many may end in a cataclysmic unraveling of reform measures painstakingly fashioned to provide certainty with regard to just and reasonable ICS charges and practices, as well as fair compensation for all ICS calls.

There is still time for the various parties to come together and work toward an ICS regulatory scheme in which rates and fees are capped at just levels, site commissions are prohibited, and facilities are modestly compensated for their ICS expenses through a fair cost recovery mechanism.”

Whether this happens or not, remains to be seen.

The post FCC Inmate Phone Rate Ruling At Risk appeared first on meshDETECT® Blog.

The inmate communication services industry is being fundamentally reshaped by the FCC. Potentially more significant than its predecessor initiative, which significantly reduced prison payphone long-distance rates, the recently issued Further Notice of Proposed Rulemaking seeks comment on key drivers of revenue and profit for these prison payphone providers and the prisons themselves.

With the two largest providers of payphone services owned by private equity firms, not usually known for embracing a shrinking profit model, it will be interesting to see how they push their investments to respond – both at the FCC and in the market. One potential bright spot is the increase in call volume achieved post LD rate reduction mentioned below by Commissioner Clyburn. However, with a limited number of payphones per prison facility and call length typically limited to 15 minutes per day, there is a natural cap on the call volume increase that can be hoped for to offset reduced rates and fees. (We do know of one way to provide enhanced access to communications and unlimited calling…)

The Further Notice of Proposed Rulemaking seeks comment on the following:

• Permanent rate caps on local, intrastate and interstate calling
• What level of cap would ensure coverage of the enhanced security requirements of inmate calling
• The elimination of per-call connection fees
• Prohibiting site commissions as a category for all interstate and intrastate services but permitting facilities to recover any legitimate costs of provisioning inmate calling services
• Capping and restricting ancillary fees, such as fees to open and maintain calling card accounts
• Phasing in these changes, with rate caps being effective in 90 days and a 2-year transition away from site commissions.
• Ensuring that inmate calling services are accessible for all Americans, including inmates and families with disabilities.
• Effective methods of enforcing inmate calling rate rules and reviewing their effect.

According to FCC Chairman Tom Wheeler this second rulemaking on prison payphone calls is being undertaken because, “Despite positive steps forward on interstate rates, it is clear that a more comprehensive approach to reform is necessary to address problems that continue to drive up rates. Namely, charges for “ancillary services” for an increasing array of services are on the rise; intrastate rates, which encompass the vast majority of calls from correctional facilities, remain very high in many states; and, most importantly, site commissions – payments required by correctional institutions from ICS providers for the privilege of serving those facilities – continue to be demanded and appear to be the driving force behind increased rates and ancillary fees. There are some positive signs that reform of interstate rates has resulted in reduced rates and increased calling, but absent a comprehensive solution to the problem we will continue to find ourselves in a never ending game of ICS rate whack-a-mole.”

Commissioner Mignon Clyburn stated, “The impact of the first phase of reform of our nation’s inmate calling regime has been tremendous. Our decision shows that doing the right thing can have reverberating benefits. Since February, when the interstate rate caps of $0.21 for debit/prepaid calls and $0.25 for collect calls went into effect, call volumes across state lines have increased nearly 70% in some facilities, and over 300% at one state department of corrections.

These are not just empty statistics. More affordable rates can help bring about increased and regular contact between inmates and their families. Studies show that having meaningful communication beyond prison walls can make a real difference when it comes to maintaining community ties, promoting rehabilitation, and reducing recidivism.”

The post FCC Seeks To Kill Prison Payphone Site Commissions appeared first on meshDETECT® Blog.

The 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.

The post FCC Releases Order (FCC 13-113) Regulating Prison Payphone Costs and Commissions appeared first on meshDETECT® Blog.

Update (8/9/13): Today the FCC, led by interim Chairwoman Mignon Clyburn, voted to limit how much companies can charge for phone calls from behind bars.

A decade after families of prison inmates asked for action, the Federal Communications Commission voted on a proposal to cap interstate phone rates at 21 cents a minute for debit or prepaid calls and 25 cents a minute for collect calls. Companies wanting to set higher rates would have to file a waiver and could not charge more until that waiver was granted.

Phone rates now fluctuate depending on the provider, the type of call and size of prison facility.

The proposal also calls for requiring the phone service providers to set rates based on their costs. Charges up to 12 cents a minute for debit or prepaid calls and up to 14 cents a minute for collect calls would be considered to be “just and reasonable” rates.

The mechanics of compliance and implementation as well as court challenges to the order will now become the focus of the ICS industry.

It also laid the groundwork for a similair action for intrastate rates…

Statement from the FCC on this vote:

The Federal Communications Commission today took long-overdue steps to ensure that the rates for interstate long-distance calls made by prison inmates are just, reasonable and fair.

Studies make clear that inmates who maintain contact with family and community while in prison have reduced rate of recidivism and are more likely to become productive citizens upon their release. Lower rates of recidivism also benefit society by reducing crime, the need for additional prisons, and other costs.

In addition, an estimated 2.7 million children would benefit from increased communication with an
incarcerated parent. Many of these children face challenges that are manifested in higher rates of truancy,homelessness, depression and other ills.

But the exorbitant price of interstate long-distance calls from correctional facilities today actually
discourages such communication because it is too expensive (over $17 for one 15-minute call),
particularly for families facing economic hardship. The Order takes immediate action to change this and provide an affordable means to encourage such communication.

The Commission’s reforms adopt a simple and balanced approach that protects security and public safety needs, ensures providers receive fair compensation while providing reasonable rates to consumers as follows:

Requires that all interstate inmate calling rates, including ancillary charges, be based on the cost
of providing the inmate calling service

Provides immediate relief to exorbitant rates:
o Adopts an interim rate cap of $0.21 per minute for debit and pre-paid calls and $0.25 per
minute for collect calls, dramatically decreasing rates of over $17 for a 15-minute call to no more than $3.75 or $3.15 a call

o Presumes that rates of $0.12 per minute for debit and prepaid calls ($1.80 for a 15-minute
call) and $0.14 cents per minute for collect calls ($2.10 for a 15-minute call) are just, reasonable and cost-based (safe-harbor rates)

o These rates include the costs of modern security features such as advanced mechanisms
that block calls to victims, witnesses, prosecutors and other prohibited parties; biometric caller verification; real-time recording systems; and monitoring to prevent evasion of restrictions on call-forwarding or three-way calling

Concludes that “site commissions” payments from providers to correctional facilities may not be
included in any interstate rate or charge

Clarifies that inmates or their loved ones who use Telecommunications Relay Services because of
hearing and speech disabilities may not be charged higher rates

Requires a mandatory data collection, annual certification requirement, and enforcement provision to ensure compliance with this Order

Seeks comment on reforming rates and practices affecting calls within a state

Seeks comment on fostering competition to reduce rates

Building on state reforms, the Commission’s action addresses a petition filed nearly a decade ago by Martha Wright, a Washington, D.C. grandmother who sought relief from exorbitant inmate calling rates. Since then, tens of thousands have urged the FCC to make it possible for them to stay in touch with loved ones in jail.

Action by the Commission August 9, 2013, by Report and Order and Further Notice of Proposed
Rulemaking (FCC 13-113). Acting Chairwoman Clyburn and Commissioner Rosenworcel with
Commissioner Pai dissenting. Acting Chairwoman Clyburn, Commissioners Rosenworcel and Pai
issuing statements.

<end of update>

The Federal Communications Commission today said it will propose rules to lower rates charged to prison inmates for long distance telephone calls by considering changes to its regulations governing rates for interstate interexchange inmate calling services (ICS), after studying the issue for nine years. We have printed the key portions of the Proposed Rule Making below.

Given the scope of the request, the high profile parties on both sides of the issue, and the potential negative impact on the revenue of the prison payphone providers and the budgets of state departments of correction; this will be a highly contested rule making. It seems inevitable however that public pressure will force some sort of compromise on the prisons and their inmate communications service providers.

The question then becomes how do the prisons make up the revenue lost through the inevitable reduction in prison phone call commissions? We suggest that they consider deploying the meshDETECT Secure Prison Cell Phone Solutions™ to offset the lost revenue and reduce contraband cell phone smuggling.

There are multiple proposals to address ICS rates in the record. We seek to balance the goal of ensuring reasonable ICS rates for end users with the security concerns and expense inherent to ICS within the statutory guidelines of sections 201(b) and 276 of the Act. Ensuring just and reasonable ICS rates may be accomplished through incentives or regulations, or a combination of both; we seek comment on these proposals below.

A.     Rate Caps in the ICS Market

17.    In the Alternative Wright Petition, Petitioners requested that the Commission set rate caps for interstate long distance ICS. Specifically, Petitioners requested that the Commission “establish a benchmark rate for domestic interstate interexchange inmate debit calling service of $0.20 per minute and a benchmark rate for domestic interstate interexchange inmate collect calling service of $0.25 per minute, with no set-up or other per-call charge.” The Petitioners used 15 and 20 minute call durations to calculate the rate caps and based their proposed rate caps on then current Federal Bureau of Prison and several individual states’ ICS rates. We seek comment on the elements of the rate cap proposal and whether the criteria used to develop the proposed caps are appropriate.

18.      Per-Call Charge. Each time an inmate places a payphone call there are typically two elements that make up its cost – a per-call set up charge and a per-minute charge.  We first seek comment on the per-call charge.  Petitioners propose eliminating the call set up or per-call charge, which can be as much as $3.95, and allowing only per-minute charges.  We seek comment on this proposal.  What costs are associated with the per-call charge?  Would the elimination of the per-call charge help ensure just and reasonable ICS rates?  Would a prohibition on per-call charges result in below-cost service?

19.       Petitioners note that inmates often incur multiple per-call charges when calls are dropped after a pause in conversation.  We seek data on the average number of dropped calls that inmates experience.  We request that commenters suggest ways to prevent multiple per-call charges for a single conversation that is disconnected by security triggers and subsequently allowed to continue while maintaining appropriate security measures.  For example, if the per-call charge is maintained, Petitioners suggest that if a disconnected call is reinitiated within two minutes, it should not incur another per-call charge. Should the Commission require such a measure?  What other steps could be taken to prevent inmates from being charged multiple per-call charges for what amounts to one conversation?  What are the costs associated with call security and are they incurred on a fixed or per-call basis?

20.       Per-Minute Rate Caps.  Would the per-minute rate cap approach proposed by the Petitioners ensure just and reasonable rates?  Are the proposed rate caps just and reasonable consistent with sections 201 and 276 of the Act?  If not, would different rate caps be appropriate?  What factors should the Commission consider in determining an appropriate per-minute rate cap?  Commenters advocating an alternative per-minute rate cap should provide specific, detailed cost information and other relevant data to support their proposed per-minute rate caps. Should the domestic interstate interexchange ICS per-minute rate cap proposed above apply to both publicly- and privately-administered correctional facilities?

21.       Some commenters argue that the proposed per-minute rate caps are arbitrary and capricious because they would preclude providers from recovering their legitimate costs of providing service.  Others argue that the Alternative Wright Petition proposal is confiscatory or may otherwise put ICS providers out of business.  We seek evidence in support of or disproving such arguments.  Commenters also argue that the adoption of per-minute rate caps would chill innovation and ultimately result in reductions in service levels because the proposed caps will not adequately compensate the providers, thus making ICS a less attractive service to offer.  Others note that new providers are entering the ICS market.  Commenters supporting such assertions are asked to provide specific, detailed information about the ICS market to support their positions and describe how market trends influence ICS rates.

22.       In the Alternative Wright Petition, Petitioners argue that several benefits would accrue from setting per-minute rate caps, such as administrative ease and the absence of jurisdictional challenges. We seek comment on this argument.  Can commenters identify any other benefits to introducing per-minute rate caps?  What are the perceived problems or challenges associated with introducing per-minute rate caps?  For example, parties argue that differences between correctional facilities including size, location, security levels, facility age and staffing levels will not allow a one size fits all solution, such as per-minute rate caps.  Is this accurate?  How can the Commission establish a solution that addresses the many variations among confinement facilities?

23.       If the Commission decides to implement rate caps in the ICS market how should we?  What additional data, if any, does the Commission require to set rates?  Would a rate cap approach require the Commission to conduct rate cases, as some commenters suggest?  We seek comment on the best ways to determine just and reasonable caps for ICS rates.

24.       Marginal Location Methodology.  In 2008, ICS providers submitted the ICS Provider Proposal for ICS rates.  The ICS Provider Proposal uses the “marginal location” methodology, previously adopted by the Commission to calculate public payphone rates, to calculate proposed ICS rates.  The ICS providers believe the “marginal location” methodology provides a “basis for rates that represent ‘fair compensation’ as set forth in § 276(b)(1)(A).”  The ICS Provider Proposal advocates a two-part rate structure that includes both a fixed per-call charge and a per-minute rate, arguing that per-call charges must be maintained to cover such expenses as equipment costs and monthly line charges.

The ICS providers determined that the methodology and data yield a requisite fixed per-call charge of $1.56 with a per-minute rate of $0.06 for debit calls, and a fixed per-call charge of $2.49 with a per-minute rate of $0.07 for collect calls, applicable to all ICS providers.  In response, Petitioners point out that the ICS Provider Proposal “largely supports Petitioners’ requested benchmark rates.” Petitioners calculate that the ICS Provider Proposal two-part rate structure equals rate caps of $0.16 per minute for a 15-minute debit call and $0.24 per minute for a 15-minute collect call.

25.       We seek comment on whether the ICS Provider Proposal methodology would result in a just and reasonable rate.  We also encourage commenting parties that disagree with the ICS Provider Proposal or proposed methodology to provide alternative methodologies supported by sufficiently-detailed data. We seek comment on whether the ICS Provider Proposal has provided sufficient cost, demand, and revenue detail to allow the Commission to determine whether the proposed rates are just and reasonable.

26.       We also seek comment on whether the underlying cost and demand factors for public payphones and ICS are similar enough to justify using a cost methodology designed for public payphones to set ICS rates.  In particular, we seek comment on the extent to which ICS rates and call volumes vary among prisons across the country, and how the rates and call volumes compare with the variation that occurs with public payphones.  We seek comment on whether an additional justification exists for adopting this cost methodology.

27.       Impact of Rate Reductions on Call Volumes.  We seek comment on whether call volumes have increased where rates have been lowered, and the resulting impact on ICS providers’ revenues.  We note that the 2011 GAO Report found that only approximately 25 percent of inmates in the Federal Bureau of Prisons use their entire monthly allotted minutes for calls and that if rates were lowered it would encourage greater communications with families, which the Bureau of Prisons “has stated facilitates the reintegration of inmates into society upon release from prison.”  Do other correctional facilities find that incarcerated individuals are not using all their allotted time to make calls?  How much time is allotted, and what is the percentage of individuals who use all their time?

28.       Tiered Pricing.  A recent ex parte filing by Petitioners attached a transcript from a New Mexico Public Service Commission hearing that described the possible use of a tiered, by monthly volume of minutes, pricing structure in the state. Do commenters believe a per-minute rate set by usage volume is a viable option?   Would tiered pricing address concerns over a one size fits all reform approach such as rate caps? What factors should the Commission consider in establishing pricing tiers?  What are potential problems with tiered pricing?

29.       Market Forces.  Petitioners note that telecommunications costs in general, and long distance costs in particular, are decreasing and therefore, they believe, ICS rates should follow the market and decrease as well.  Some participants in this proceeding note that “rates in the largest majority of correctional facilities are moving in a downward trend.” Is this accurate?  Can commenters provide concrete examples of decreases in ICS rates?

30.       Collect Calling v. Debit Calling.  The Alternative Wright Petition suggests two different rate caps:  one for collect calling and one for debit calling.  A collect call is a call in which the called person pays for the call and a debit call deducts the cost of the call from a prepaid account.  Petitioners argue that collect calling is more expensive because its costs include billing costs and uncollectibles, while debit calling is less expensive because it reduces staff responsibilities and uncollectibles.  Do commenters agree that there should be different per-minute rate caps for collect and debit calling?  What are the benefits of debit calling?  For example, do commenters believe that debit calling will exert downward pressure on collect calling rates?

31.       Some commenters have expressed concern about the expense and difficulty of implementing debit calling.  Specifically, they cite difficulty in blocking restricted telephone numbers, the expense of purchasing new equipment and the challenges of establishing new processes and procedures and verifying calling party identities. Parties have also expressed safety concerns related to debit calling.  Some prisons already allow for debit calling.  For example, the Federal Bureau of Prisons allows debit calling in some of its facilities and the state of Iowa offers debit calling only.   What safety concerns are raised by debit calling service, and how have those concerns been addressed where debit calling already is permitted?  Commenters also note the increased administrative workload and cost associated with debit calling caused by such tasks as issuing PINs to each inmate in facilities with high turnover.  Have commenters experienced such challenges, and how have they been overcome?  What are the other pros or cons of debit calling?  We seek comment on ICS providers’ overall experiences with offering debit calling

32.       How many correctional facilities currently offer debit calling?  Has debit calling become more common?  What are the current ratios of debit to collect calling in correctional facilities?  Should the Commission mandate debit calling in privately and publicly-administered correctional facilities?   One commenter says it offers debit calling to all of the facilities it serves, but it is not practical to mandate debit calling because not all correctional facilities want the service.  What are other challenges to mandating debit calling?

33.       Prepaid Calling.  Commenters suggest prepaid calling as an alternative to collect and debit calling.  Prepaid calling allows inmates or their family members to prepay for minutes, usually at a discount.  This is different from debit calls, in which money is deducted from an account, but the minutes are not purchased in advance.  Commenters argue that the benefits of this approach may include administrative ease for the providers, increased safety, controlled costs for call recipients, and eliminating the need to block calls because of a call recipients’ credit standing. However, Petitioners note that there are outstanding questions with prepaid calling such as:  how to handle monthly fees; how to load an inmate’s account; and minimum required account balance. If these issues can be sufficiently addressed, is prepaid calling a viable ICS option?  Do any ICS providers currently offer prepaid calling?  What are some other concerns or considerations with prepaid calling?

34.       Intrastate-Interstate Parity.  Another alternative would be to adopt an intrastate-interstate parity principle that would require that rates for interstate, long-distance calls not exceed rates for intrastate, long-distance calls.  Rates for intrastate, long-distance calls are typically set by state public utility commissions, and those commissions may set rates that take into account the varying cost of providing inmate calling services within each state given the security and other features required by state law. To the extent that interstate rates for inmate calling services are significantly higher than intrastate rates, how would a requirement that ICS providers set interstate rates at a level no higher than intrastate, long-distance rates affect the justness and reasonableness of those rates?  How many states set rates specifically for ICS?  What is the rate structure for ICS calls in those states, and what are the rates for intrastate, long-distance calls?  How do states that set specific ICS rates ensure that ICS providers are “fairly compensated?”  How do intrastate, long-distance rates differ between states that establish general rate caps and those that set specific caps for ICS?  If the Commission adopts a parity principle, should there be any exceptions to that principle.

C.        Additional Proposals in the Record

35.       There are multiple other proposals in the record that do not directly address per-call and per-minute ICS rates.  We seek comment on any other proposals parties contend address the concerns raised in this proceeding, including any proposals in the record that are not addressed below.

36.       Competition in the ICS Market.  The First Wright Petition requested that the Commission mandate the opening of the ICS market to competition and prohibit collect call only restrictions in privately-administered correctional facilities.  ICS contracts are typically exclusive; competition appears to exist in winning an ICS contract but once an ICS provider wins a contract it becomes the sole provider. How do exclusive contracts influence ICS rates?  How would competitive ICS services be provided?  The First Wright Petition also argued that the collect calling-only limitations imposed by many confinement facilities increase costs to both ICS providers and inmates that are not outweighed by corresponding benefits and that such limitations should therefore be prohibited. To the extent ICS is still limited to collect calling in some correctional facilities, we seek comment on the rationale behind this restriction.

37.       Site Commissions.  ICS contracts frequently include a site commission or location rent which is paid to the facility and in some instances may go to fund inmate services at the facility. What types of inmate services or other services do site commissions fund?  How do site commissions in ICS contracts vary by facility?  Petitioners argue that ICS rates are inflated to cover commissions, which can be as much as 65 percent of gross revenues, causing the rates to be unreasonable in violation of section 201(b).   Is this accurate?  We seek updated data on how much these site commissions are and how much they add to per-call costs.  The FCC has previously found that “under most contracts, the commission is the single largest component affecting the rates for inmate calling service” and “because the bidder who charges the highest rates can afford to offer the confinement facilities the largest location commissions, the competitive bidding process may result in higher rates.”  Do commenters believe this is still accurate?  The Commission has also found that “location rents are not a cost of payphones, but should be treated as profit.” Do commenters agree with that conclusion?

38.       Some site commissions are mandated by state statute, while several states have reduced or eliminated commissions in ICS contracts.  If a state has reduced or eliminated site commissions, how has any resulting rate transition been handled?  How has the lowering or elimination of site commissions impacted rates?  Is this evidence that site commissions are not necessary, or is it evidence that the market is working and the Commission need not intervene?  Must the Commission address site commissions and the effect they have on ICS rates in order to ensure just and reasonable ICS rates?

39.      Offer No-Cost Calling.  In the Alternative Wright Petition, Petitioners include a suggestion they contend will advance the Commission’s universal service goals and provide all inmates valuable contact with the outside world.   Specifically, Petitioners suggest that ICS providers provide a certain amount of no-cost calling per inmate per month in each of the facilities they serve in exchange for the right to charge a higher per-minute rate. Petitioners suggest implementing rate caps of $0.22 per minute for debit calling and $0.275 per minute for collect calling if ICS providers offer 20 minutes of free calling per inmate per month. Can or should the Commission mandate a certain amount of free calling per inmate per month, or should this be offered at the providers’ discretion?  What legal questions are raised by this proposal?  What other considerations are raised by this proposal?

40.       Billing-Related Call Blocking.  Petitioners also express concern over billing-related call blocking in correctional facilities.   Specifically, Petitioners note that ICS providers are increasingly unable or unwilling to enter into agreements with LECs to provide for ICS providers’ billing the LECs’ customers receiving collect calls from inmates.  As a result, ICS providers cannot bill for an increasing percentage of inmate calls and thus “block inmate collect calls to numbers served by LECs with which the service providers have no billing arrangements.” Petitioners argue that in facilities where collect calling is the only option, this practice may ultimately prevent inmates from being able to make any telephone calls.  Commenters note that many ICS providers have solutions to “ensure that inmates can contact customers served by these CLECs that refuse to bill for collect calls.” Does this practice continue?  Petitioners argue that debit calling, which requires pre-payment, may prevent the need to block calls when the ICS provider does not have a billing arrangement with the terminating LEC. Is this accurate?  Do commenters have experience with billing-related call blocking?  Can commenters provide data on the average number of calls that are blocked per month and the reason for the blocking?  Are there ways, other than mandating debit calling, to deter or prevent billing-related call blocking?

41.       Non-Geographic Numbers.  ICS providers have argued that lowering interstate calling rates may create an incentive for call recipients to obtain telephone numbers from other states, perhaps from wireless or VoIP providers, to take advantage of the lowered interstate rates.  Petitioners counter that the opposite is currently happening; call recipients are obtaining telephone numbers, from wireless or VoIP providers, that are local to the prison to take advantage of lower local calling rates.  Have commenters experienced either of these practices?  Do these practices raise any security concerns and if so what are those concerns?

42.       Disabilities Access.  There is evidence in the record to indicate that inmates with hearing disabilities may not have access to ICS at reasonable rates using TTYs. The record suggests that because the average length of a telephone conversation using a TTY is approximately four times longer than a voice telephone conversation, deaf and hard of hearing inmates who use TTYs have to pay more than their hearing counterparts.  The record also suggests that TTY users have had to pay additional fees for connecting to a TTY relay operator.  We seek comment on the types of ICS access that individuals who are deaf or hard of hearing experience during their incarceration.  Where such access to ICS is provided, are the rates the same as those available to those without a disability?  If the rates differ, what is that difference and what are the explanations for such difference?  We note that section 276(b)(1)(A) specifically exempts “telecommunications relay service calls for hearing disabled individuals” from the Commission-established “per call compensation plan” ensuring that ICS providers are “fairly compensated.”  How should the Commission take this exemption into account in examining rates?

43.      Updated Data.  We seek updated data from all interested parties and the public, but especially from ICS providers.  Commenters note that the record regarding nationwide interstate ICS rates is limited to an “analysis of prison phone contracts nationwide” that was conducted by Prison Legal News in April 2011. As such, we seek comment on the accuracy and reliability of the study.  In addition, from independent research we have found more-current state rates, which continue to demonstrate a range of prices for ICS calls among states.  For example, for a 15-minute interstate call, we found the following rates:  $6.65 in California; $2.04 in Montana; $6.45 in Texas; and $16.55 in Idaho. We encourage commenters to submit the most up-to-date information available regarding interstate ICS rates to aid us in developing a clearer understanding of the ICS market.  This includes per-call and per-minute rates, information on commissions and what percentage of a rate they comprise, the number of disconnected calls, the average length of calls, and how calls break out by type, i.e., collect, prepaid and debit.

44.       We also seek comment on whether the Alternative Wright Petition and ICS Provider Proposal are grounded in sufficiently-reliable data.  For example, the ICS Provider Proposal contains data for less than 30 correctional facilities, none of which impose site commissions.  Is this too small a sample, or a non-representative sample, on which to base a nationwide solution?  ICS providers argue that in calculating their proposed rate caps the Petitioners relied on data from facilities with low cost calling.  We therefore invite parties to comment on whether the data supporting the First Wright Petition, the Alternative Wright Petition and the ICS Provider Proposal is representative of correctional facilities across the country.

45.      Existing Contracts.  Petitioners suggest that if the Commission implements a rate cap it should also mandate a one-year fresh look, transition period for existing ICS contracts Petitioners envision that this transition period would allow for any necessary review and termination or renegotiation of existing ICS contracts in order to introduce rate caps which would be effective by the end of the transition period  Commenters argue that the Commission cannot insert itself into the procurement decisions of correctional agencies and that any new ICS-related rules should not be applied to existing contracts but only to contracts entered into after the adoption of new rules

46.     Would it be appropriate to mandate a fresh look period or should any new ICS rules apply only to contracts entered into after the adoption of new rules?  With renegotiated contracts, how long should the transition period last?  What are typical ICS contract terms?  Do such contracts usually have change of law provisions that would be triggered by a Commission order?  How does the length of existing contracts affect the implementation of any of the proposals discussed above?  If commenters provide alternative proposals not discussed above, they should include information on how the contractual process will function with each specific proposal.  After implementing a new ICS regime, should the Commission require a periodic rate review to ensure that the rates remain just and reasonable?

47.     We encourage comment on any new issues that have arisen in the ICS market or issues that have not been addressed above.  We request that commenters provide evidentiary support for their comments and suggestions in this proceeding.

D.                    Cost/Benefit Analysis of Proposals 

48.       Acknowledging the potential difficulty of quantifying costs and benefits, we seek to determine whether the proposals above will provide public benefits that outweigh their costs, and we seek to maximize the net benefits to the public from any proposals we adopt.  For example, commenters have argued that inmate recidivism is decreased with regular family contact.  Accordingly, we seek specific comment on the costs and benefits of the proposals above and any additional proposals received in response to this Notice.  We also seek any information or analysis that would help us to quantify these costs or benefits.  Further, we seek comment on any considerations regarding the manner in which the proposals could be implemented that would increase the number of people who benefit from them, or otherwise increase their net public benefit.  We request that interested parties discuss whether, how and by how much they will be impacted in terms of costs and benefits of the proposals included herein.  We recognize that the costs and benefits may vary based on such things as the correctional facility served and ICS provider.  We request that parties file specific analysis and facts to support any claims of significant costs or benefits associated with the proposals herein.

The post FCC Proposes Cuts In Prisoners’ LD Phone Call Rates appeared first on meshDETECT® Blog.

The American Correction Association has an article on its website summarizing the recent meeting of the newly-formed No Cells in Cells Coalition on Oct. 23, 2012, at the ACA headquarters to discuss the problem of contraband cell phones smuggled into prisons. Attendees included representatives from the Delaware Department of Corrections, the Maryland Department of Public Safety and Correctional Services, the Virginia Department of Corrections, the American Jail Association, the National Organization for Victim Assistance, the National Sheriff’s Association, cell phone companies Sprint and ATT, the Federal Bureau of Prisons and others.

According to the article, the attendees discussed the types of offenders most likely to attempt to smuggle phones. “Members concluded that while phones are more likely to be smuggled by long-term offenders looking to continue their drug or crime operations, witness intimidation within pretrial facilities is common as well. Kristy Dyroff, director of communications for the National Organization for Victim Assistance, commented that witness intimidation through use of cell phones in pretrial facilities is most common in domestic violence cases.

Several methods currently used to combat the issue of contraband cell phones were discussed throughout the meeting, including:

• Dogs trained to sniff out cell phone parts;
• Technologies such as managed access;
• Thorough searches and seizures by correctional staff;
• Metal detectors; and
• Observation and profiling to determine which offenders are most likely to
smuggle phones.

Though each method has its benefits and downsides, according to Judi Garrett, assistant director of the Federal Bureau of Prisons, no single method has been proven significantly more effective than the others.”

We fully support the initiatives recommended by this coalition. Yet what is interesting about this list is that all the measures being contemplated are supply side solutions. There seems to be no thinking on how to address the demand side of this issue however…

Interestingly, another recent blog posting, this one from Marcus Spectrum Solutions, discusses the recent decision by the FCC to take up the Wright Petition on high prison long distance rates and the impact these rates have had on driving the demand for contraband cell phones. The title of the post is “Telecom Policy Lessons from the War on Drugs.”

In the article, the author states, “A key lesson from the War on Drugs is that one must work both the “demand side” and “supply side” of these intractable problems to make progress. Short of having a total police state one just can not eliminate antisocial products that are in high demand.”

Clearly, there is nothing closer to a pure police state than a federal or state correctional facility, yet cell phones remain a significant problem in these facilities. The formation of the No Cells in Cells Coalition is proof of the challenge and size of this issue. And, as the author states, the reduction of the high long distance (interstate) rates common in many states may address some of the demand for contraband cell phones.

We believe however that the problem of demand for smuggled mobile phones in jail goes beyond long-term offenders looking to continue their drug or crime operations, witness intimidation and the avoidance of high LD rates. The demand is also driven by a desire for more communication and more privacy (not secrecy) and as such, any comprehensive solution should address both sides of the equation – supply and demand.

The post Contraband Cell Phone Supply & Demand appeared first on meshDETECT® Blog.

This edition of “Wireless Prison Payphone™ Briefs” focuses on the recent decision by the FCC to take up the ten year old Wright petition addressing the high cost of interstate prison payphone calls. The articles excerpted below provide an in depth look at the issue.

The First Call Is Free; the Rest Are a Fortune: Paying a $4.25 connection fee and then 75 cents per minute thereafter seems costly, unless, perhaps, we’re talking about a phone call from our future Mars colony back to Earth. It is, though, what an operator at the phone company Global Tel*Link says it costs for a call from Pennsylvania’s Carbon County Correctional Facility to anywhere beyond the local calling area. That’s in line with the rates other companies charge for prisoners around the country to make simple long-distance phone calls. To compare, prepaid cell phones on the outside top out at about 20 cents a minute, and a standard residential landline plan at just half that.

If you find it difficult to rally sympathy for prisoners’ hefty monthly phone bills, consider two things. First, we know that contact with the outside world while in prison is tied to better outcomes after prison. Second, those costs are generally borne by families and friends, either through collect charges or the refilling of debit accounts, what the Center for Constitutional Rights’ Annette Dickerson calls “a transfer of punishment.” Source

The price to call home: state-sanctioned monopolization in the prison phone industry: Exorbitant calling rates make the prison telephone industry one of the most lucrative businesses in the United States today. This industry is so profitable because prison phone companies have state-sanctioned monopolistic control over the state prison markets, and the government agency with authority to rein in these rates across the nation has been reluctant to offer meaningful relief.

Prison phone companies are awarded these monopolies through bidding processes in which they submit contract proposals to the state prison systems; in all but eight states, these contracts include promises to pay “commissions” — in effect, kickbacks — to states, in either the form of a percentage of revenue, a fixed up-front payment, or a combination of the two. Thus, state prison systems have no incentive to select the telephone company that offers the lowest rates; rather, correctional departments have an incentive to reap the most profit by selecting the telephone company that provides the highest commission. Source

Prison-Phone Rate Cuts Considered by U.S. Regulators: U.S. regulators are considering rate caps and other steps to lower jailhouse telephone rates that enrich private equity firms as they cost U.S. prisoners and their families as much as $17 for a 15-minute call.

Federal Communications Commission Chairman Julius Genachowski yesterday proposed information-gathering that could lead to a vote to intervene in the $1.2 billion prison-phone market, FCC Commissioner Mignon Clyburn said at a rally today.

“For far too long, friends and family of the incarcerated have had no choice but to pay unconscionably high long-distance rates,” Clyburn told demonstrators seeking lower rates who gathered outside the agency’s headquarters in Washington.

Clyburn, like the chairman a Democrat, said the proceeding was started by Genachowski and could lead to lower rates “soon,” without specifying a timeline. Rate caps are among steps being considered, said two agency officials who spoke on condition of anonymity because the matter hasn’t been made public. Source

Human rights groups: Telecoms gouging prison callers: U.S. prisons, immigration detention centers and telecom carriers are charging “exorbitant” rates on collect calls made by inmates, and the U.S. Federal Communications Commission should step in to set rates, a coalition of 110 human rights groups, lawyers and professors said.

The expensive collect-call charges make it difficult for immigrants in detention to contact their families, legal counsel and human rights organizations, the groups said in a Thursday letter to the FCC.

Problems with prison phone rates are “well documented” by past media and government reports, said the letter, organized by Holly Cooper, associate director of the University of California Davis Immigration Law Clinic. A request for the FCC to address prison phone rates has been pending since 2003, Cooper noted. Source

Costly Phone Calls for Inmates: Members of Congress and civil rights groups are pushing the Federal Communications Commission to rein in telephone companies that, in many states, charge inmates spectacularly high rates that can force their families to choose between keeping in touch with a relative behind bars and, in some cases, putting food on the table.

The time is long past for the F.C.C. — which has been weighing this issue for nearly a decade — to break up what amount to monopolies and ensure that prisoners across the country have access to reasonably priced interstate telephone service.

The calls are expensive because they are placed through independent telephone companies that pay the state a “commission” — essentially a legalized kickback — that ranges from 15 percent to 60 percent either as a portion of revenue, a fixed upfront fee or a combination of both. According to a new report by the Prison Policy Initiative, a research group based in Massachusetts, depending on the size of the kickback, a 15-minute call can cost the family as little as $2.36 or as much as $17. Source

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