Jails pocket up to 60 percent of what inmates pay for phone calls
There's widespread agreement that prisoners in the US pay far too much for phone calls, but several of the Federal Communications Commission's attempts to cap those prices have been blocked in court.
One of the biggest obstacles is that phone companies have to pay large "site commissions" to prisons and jails in order to win the exclusive right to offer phone service to inmates. Newly released documents show that these payments can account for up to 60 percent of what prisoners pay for calls.
MuckRock, a nonprofit journalism organization that focuses on public records requests, obtained the contracts between prison phone companies and some parish jails in Louisiana.
Prison phone company Correct Solutions Group has a contract with the Union Parish Detention Center that requires it to pay the jail a commission of 60 percent of the total gross revenue of phone calls.
Despite the jail getting most of the money, the phone company does pretty much all of the work and supplies all of the necessary equipment. Correct Solutions is required to install and maintain inmate telephones and the billing system "at its sole cost and expense" and have its own technicians dispatched to the jail to keep phones in working order. Correct Solutions also had to supply a $25,000 "administrative phone system" to the jail, again at Correct Solutions' "sole cost and expense."
Price caps would lower payments to jails
Prison phone companies have often said that the FCC should not impose limits on inmate calling rates because of these site commissions. Yet the Union Parish contract contains one important exception which shows that prison phone companies can turn a profit even when the FCC limits prices.
Generally, the FCC has been allowed to limit the price of interstate calls from prisons (those that cross state lines) but not for intrastate calls (calls in which both parties are in the same state). But that doesn't mean Correct Solutions loses money when it has to charge lower rates, because the contract simply doesn't apply the 60 percent commission to interstate calls.
The 60 percent commission must be paid on revenue for "all completed calls regardless of call type with exception to Interstate Calls due to FCC ruling," the contract says (emphasis ours).
A similar contract between prison phone company Ally Telecom and the West Baton Rouge sheriff's office requires a commission of 60 percent of gross billed revenue. The contract gives Ally the right to immediately renegotiate terms if the FCC or state authorities impose limits on prices.
In a contract proposal sent to the sheriff's office, Ally Telecom said that it keeps fees charged to prisoners low so that "more commissionable revenue can be generated for your Sheriff's Department." Ally provides service to about a dozen parishes in Louisiana, MuckRock wrote. An Ally contract with another parish includes a commission of 58 percent.
Call prices of up to $14 a minute
Call prices have sometimes hit $14 a minute because of the high per-minute rates and various fees applied to inmate calls, according to the FCC. In October 2015, the FCC voted to impose caps of 11¢ to 22¢ per minute on all interstate and intrastate inmate calling prices.
The October 2015 ruling did not ban site commissions, but the FCC wanted the new limits to encourage a shift away from the payments.
"Site commissions are profits, not a cost of providing ICS [inmate calling services]," the FCC said at the time. The FCC said that "it strongly encourages parties to move away from site commissions and urges states to take action on this issue."
The FCC also imposed new limits on ancillary fees tacked on when prisoners pay for calls. The limits were $3 for making automated payments by phone or website; $5.95 for making payments with a "live agent;" and $2 for "paper bill fees." Other types of ancillary fees were banned.
If the FCC's proposed caps had fully taken effect, inmates would today be paying much lower prices, and prisons and jails would likely have had to accept lower commission payments. But after voting to limit prices, the FCC repeatedly had to go back to the drawing board when judges threw out certain parts of the price cap rulings.
For prisoners, things changed for the worse when Republican Ajit Pai became FCC chairman. Pai quickly decided to drop the commission's court defense of caps on intrastate calling rates. A federal appeals court subsequently struck down price caps on intrastate phone calls made by prisoners.
Judges noted that the FCC is generally forbidden from regulating intrastate communication services, which is left to individual states. Judges also faulted the commission for the way it used industry-averaged cost data to calculate caps and for excluding site commission payments from the calculus.
Besides wiping out intrastate limits, the court ruling also remanded the ancillary fee caps back to the commission "to determine whether it can segregate proposed caps on interstate calls (which are permissible) and the proposed caps on intrastate calls (which are impermissible)."
MuckRock is continuing its investigation into prison phone rates. MuckRock said it still has not been able to obtain contracts between jails and Securus Technologies, which is the second-biggest prison phone provider in the US after Global Tel*Link (GTL). Both companies have repeatedly opposed FCC efforts to limit rates and sued the commission to prevent enforcement of price caps.