After years of discussing affordable inmate calling rates, the FCC prepares to take action on August 9th, 2013. – By Bobby Cervantes
The big push is on at the FCC for the telecom companies that dominate the inmate phone service market and advocates who want to rein in ballooning call rates.
Ahead of an Aug. 9 vote, commissioners and their staffs are hearing arguments from both sides and reviewing the fine print of a proposed order introduced by acting Chairwoman Mignon Clyburn. She has called the prison phone issue a “priority” during her temporary tenure at the helm of the agency.
The order remains confidential as it makes its way around the agency, but an FCC official told POLITICO that the proposal’s overarching goal is to drive down costs at facilities in states and localities that have yet to implement regulations on inmate calling prices and services. It focuses on interstate rates and practices and does not include an across-the-board price cap for all calls, which is a particular point of concern for reform advocates who wanted an FCC-endorsed ceiling of 7 cents per minute.
Clyburn’s proposal, according to the same aide, also aims to create “just, reasonable and fair” rates for consumers and companies alike, in accordance with the agency’s statutory obligations. The current version of the chairwoman’s plan does not include a waiting period before it becomes effective, and an attached further notice of proposed rule-making will include questions regarding telecom access for deaf and hard of hearing inmates, the agency official said.
A spokesman for Commissioner Ajit Pai, the sole Republican member on the panel, said Pai is still reviewing the proposal ahead of the vote. A spokeswoman for Commissioner Jessica Rosenworcel, who has largely backed FCC intervention on the issue, did not respond to calls for comment.
In meetings with FCC staff, many of the largest prison and jail phone companies have told commissioners that an across-the-board deal — especially at the 7 cents per minute request by Martha Wright, the longtime reform advocate — would drive them out of business. “Adoption of the Wright petitioners’ proposal to establish a benchmark ICS [inmate calling services] rate for interstate calls at $0.07 per minute would put providers such as Pay Tel that primarily provide ICS in jails out of business and would result in immediate ‘rate arbitrage’ to the detriment of safety and security, resulting in further industry consolidation by the two dominant national ICS providers,” Pay Tel executives told the FCC in a Wednesday filing.
An interstate rate-only fix should carve out an exception for jails “given the distinct costs” of those facilities compared with prisons, Pay Tel’s Vincent Townsend told Rosenworcel’s staff on Tuesday. The Prison Policy Initiative puts the blame for high prices on state commissions that field bids on inmate calling service contracts, which “select the highest bidder … because the higher rates mean higher commissions,” wrote Paul Wagner, the group’s executive director. “As a result, the prison telephone market offers its services at prices that are well-above ordinary rates for non-incarcerated persons,” Wagner continues in PPI’s Aug. 1 filing. “We urge you to take an expansive view of the commission system when crafting your regulatory response to this broken market. We strongly urge you to ban commissions in all of their forms.”
Telmate CEO Richard Torgersrud told the chairwoman in a meeting last week that the commission should create a tiered system based on size of facilities — less than 200 beds, 200 to 500 beds or more than 1000 beds — “to reflect the cost differences of providing ICS.”
CenturyLink, whose inmate phone subsidiary is called Embarq, warned that price caps, rate regulation and benchmarks “can lead to unintended consequences,” such as undercutting safety measures and forcing providers to turn down bids on new business, CenturyLink executives told Clyburn in a meeting.
Lee G. Petro, Wright’s attorney, is slated to meet with staff from each commissioner’s office and will focus, in part, on the telecom companies’ request for a system tailored to the size of facilities. “While Pay Tel and the AJA [American Jail Association] would have the FCC create a convoluted price structure and adopt separate rules for prison and jails, this is clearly not necessary,” Petro wrote. “Instead, despite the high rate of turnover in very small local jails, the number of accounts that need to be established is, not surprisingly, very small compared to the total number of inmates in prisons and jails.”
Petro also has proposed a “fresh look” period should the commission adopt his client’s proposal. It would allow telecom companies and correctional facilities to renegotiate existing contracts to comply with a new rule. Telmate and CenturyLink in particular had rejected the idea, arguing to the commission that “a fresh look window would more likely result in all existing long-term (three to five year) contracts being renewed almost simultaneously, with little or no opportunity for competitive bidding.”
“It is clear that the parties to ICS contracts routinely reserve the right to amend or renegotiate contracts should there be changes in state or federal regulations,” Petro counters in his Aug. 2 letter to the FCC. “As such, in the event that the FCC adopts the petitioners’ rate proposal, there should be no reason why the changes contemplated therein cannot be then integrated into existing contracts by the ICS providers.”
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