The Federal Communications Commission (F.C.C.) has barred prison phone companies from charging high rates on interstate long-distance calls, according to its press release.
The F.C.C. action comes on the heels of a new report released by the Prison Policy Initiative (PPI) that highlights the “perverse conflicts of interests” in the contracts of companies dominating the industry.
The report details “how contracts are awarded…to the company that offers to share the largest portion of the call revenue with the prison system.” This business practice “drives up the cost of a call,” and “removes any incentive for state prison systems to advocate for lowering the phone bills.”
“We urge state regulators, local contracting authorities, and the F.C.C. to take a comprehensive view of the prison telephone industry,” said Peter Wagner, Executive Director of the Prison Policy Initiative.
In August, the Los Angeles Times reported, “Under the new regulations…telephone providers may only charge up to 21 cents for a debit or prepaid call within the United States, and up to 25 cents for domestic collect calls made by inmates.”
Prior to the new F.C.C. regulations, telephone companies were able to set their own rates with no federal oversight, according to the Los Angeles Times.
In May 2013, the Economist quoted Congresswoman Eleanor Holmes Norton (Washington, D.C.) as saying that in the past, lack of regulation gave telephone companies the ability to “extort excessive telephone rates from the people in society least able to pay them.”
According to the PPI report, most calls originating from prisons are collect calls, or pre-paid by families who set up accounts with private telephone companies that have a contract with the prison. “[T]he families of incarcerated persons have no input on the contracts or ability to take their business elsewhere.”
F.C.C. Commissioner Ajit Pai commented in the report that “choice and competition are not hallmarks of life behind bars.”
PPI documented that the prison phone industry does not hesitate to subject consumers to what it calls a “barrage of fees… The current structure of the prison phone market guarantees exorbitant phone bills.”
To increase the amount of commissions paid to prisons, families and friends who accept collect calls from inmates are burdened with fees that can double the cost of a telephone call. It’s estimated that customers spend $386 million every year on fees, according to PPI.
“One of the reasons that fees are so profitable to prison phone companies is that fee income is exempt from the phone companies’ commission responsibilities,” the report continued. Some of these fees do nothing more than “act as a stealth profit center for the phone companies.”
The report outlines 11 phone companies’ fees associated with pre-paid telephone calls. These companies charge fees anywhere from $1.50 to $11.95 for customers to prepay by telephone, use the companies’ website, or Western Union.
For example, Global Tel Link (GTL), which provides telephone service to inmates in all California State prisons, charges $4.75 to $9.50 for prepaid calls when using its website. GTL’s maximum rate to use this service is the highest among the 11 companies, according to PPI.
To prepay for calls using Western Union, GTL charges $10.95, the second highest fee of the other 11 companies.
Prison telephone companies also profit from calls never made, the report said. This is done by “either seizing the balance,” or “charging customers hefty fees to recoup their own money” when an inmate comes home from prison.
“One of the reasons that fees are so profitable to prison phone companies is that fee income is exempt from the phone companies”
According to the report, “the charge to refund money can be as much as $10. Prison phone companies have a wide range of policies about if, how, and when a customer can claim his or her funds.”
The report said most companies take unused balances left in accounts a few months after an inmate is released from prison. “Global Tel Link has one of the shortest deadlines to claim unused funds,” the report said. It allows customers only 90 days to request a refund before seizing the unused funds.
The new F.C.C. regulations do not address these exorbitant fees, but apply only to phone calls made from state to state. It would be up to the California Public Utilities Commission to deny such high rates and fees.
In the meantime, F.C.C. says its “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.”
