Bloomberg News

Prison-Phone Rate Cuts Considered by U.S. Regulators

November 15, 2012

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.

Genachowski’s proposal seeks comment on interstate prison phone rules and rates, Mark Wigfield, an FCC spokesman, said in an e-mail. “These issues affect the families of inmates, prisoner rehabilitation, as well as prison security,” Wigfield said.

Private Equity

The market is dominated by two private equity-backed companies, Global Tel*Link Corp. and Securus Technologies Inc.

Castle Harlan Inc., which owns Securus, declined to comment, Michael Millican, a spokesman, said in an e-mail. Caroline Harris, a spokeswoman for Global Tel*Link owner American Securities, in an e-mail declined to comment.

The companies bid for exclusive contracts to provide telephone service, agreeing to pay as much as two-thirds of calling charges to government or private prison operators. Those commissions can drive fees to levels that make it difficult for prisoners to maintain contact with spouses, children and parents.

Prisoners make collect calls or set up prepaid accounts funded by relatives or by their earnings from prison jobs that pay cents per hour. Service providers may collect per-call fees in addition to time-based charges, according to the Prison Policy Initiative.

‘Exorbitant’ Rates

A collection of civil rights, religious groups and members of Congress has pressed the FCC to act on petitions filed by prisoners and family members to cut what they’ve called “exorbitant” rates. Representatives from the Leadership Conference on Civil and Human Rights, the United Church of Christ, the National Urban League and other organizations met with Genachowski in September and asked for a clear date for action. In 2007, petitioners asked the FCC to cap interstate calling services at 25 cents a minute.

Global Tel*Link, based in Mobile, Alabama, has about 50 percent of the correctional-phone services market, followed by Securus with almost 30 percent, according to Standard & Poor’s.

Prison phone charges vary by location. A 15-minute call through Global Tel*Link costs $2.36 in Massachusetts and more than $17 in Georgia, according to a study released Sept. 11 by the Prison Policy Initiative, an advocacy group in Easthampton, Massachusetts. In New York, where commissions to jail operators aren’t allowed, Global Tel*Link charges about 5 cents a minute, according to the study.

Security Cited

Prison calls cost more than residential telephone service for reasons that include security requirements and bad debts, according to Dallas-based Securus, which said in a filing that it has about 1,400 contracts in 46 states.

Prison calling services include security capabilities such as preventing call-forwarding and conference calls, and caller identification based on voice analysis, Global Tel*Link said in an Oct. 3 filing at the FCC.

Corrections Corp. of America, the largest private prison operator, said in a regulatory filing that an FCC decision to bar commissions would have a material adverse effect on its results.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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