This is a matter before the Federal Communications Commission, dealing with high charges for prisoner phone calls. It is a continuation of the FCC matter CC Docket 96-128 regarding the First and Alternative Wright Petitions (PC-DC-0027
). In that matter, the FCC had received significant comment on the First and Alternative Wright Petitions, including an ICS provider proposal containing cost information to support their proposed rate methodology and rate levels for ICS.
The FCC opened a new docket number, and on December 28, 2012, initiated a Notice of Proposed Rulemaking (NPRM) to consider changes to the rules governing rates for interstate interexchange inmate calling services (ICS) and granted two longstanding petitions: the First Wright Petition (filed November 3, 2003) and the Alternative Wright Petition (filed March 1, 2007). The NPRM was initiated for rulemaking to "secure the 'just and reasonable' interstate rates for prisoners required by Section 201(b) of the Communications Act." These two petitions are discussed in PC-DC-0027
. The NPRM introduction stated that there has been substantial renewed interest and comment in this docket highlighting both the wide disparity among interstate interexchange ICS rate levels and significant public interest concerns. On September 21, 2012, the FCC Consumer Advisory Committee also had adopted a resolution urging the FCC to ensure the price of calls from inmates to be just and reasonable.
The NPRM sought public comments on it legal authority and all the extant proposals regarding per-call charges, per-minute cap rates, cost methodology, impact of rate reductions on call volumes, collect v. debit calling, site commissions, etc.
During the NPRM comment period, on March 25, 2013, petitioners submitted comments calling the FCC to establish a benchmark ICS rate at $0.07/min for debit, pre-paid, and collect class, with no per-call rate and no other ancillary fees or taxes, from all private, public, state, count and local correctional and detention facilities. The ICS providers also submitted comments to undermine the petitioners' proposal. However, the petitioners rebutted certain ICS providers' arguments to limit the FCC's authority, and also stated that the IC providers failed to provide specific data to oppose adoption of benchmark rates.
On August 19, 2013, the FCC issued a Report, Order, and Further NPRM (FNPRM). It reported that technology made actual costs lower but site commissions are significant factors contributing to high rates. Based on the record, the FCC concluded that the marketplace alone has not ensured that interstate ICS rates were reasonable and reforms were necessary. It also affirmed that site commissions are not part of the cost to provide ICS and thus are not compensable in interstate ICS rates.
The Order included that the interstate ICS rates be cost-based and ICS providers to adopt an interim rate cap of $0.21/min for debit and prepaid interstate calls and $0.25/min for collect calls, or an interim safe harbor rate of $0.12/min for debit and prepaid interstate calls and $0.14/min for collect calls. (Rates at or below the safe harbor are presumed just, reasonable, fair and cost-based, while rates between the safe harbor and the interim rate cap will not benefit from this presumption). It also stated that ancillary charges must be cost-based. To enforce the rules, ICS providers are required to file an annual certification and data regarding interstate and intrastate ICS rates. The Order initiated a one-time mandatory data collection directing all ICS providers to file data of their ICS costs to enable the FCC to develop a permanent cap and safe harbor rates.
The FNPRM sought comments for: reforming intrastate and interstate ICS rates; ICS for the deaf and hard of hearing community; ensuring ancillary charges are cost-based, ways to foster competition, etc.
Several ICS providers petitioned the FCC to stay the Order. The FCC denied the petitions. However on January 13, 2014, prior to the effective date of the Order, a number of parties filed an appeal and a motion for a stay in the D.C. Circuit Court of Appeals, which was granted in part. The D.C. Circuit consolidated several cases (13-1280, 13-1281, 13-1291, 13-1300, 14-1006) and stayed three rules adopted by the FCC pending resolution of the appeal, including the provisions: requiring rates to be cost-based, adopting an interim safe harbor, and requiring ICS providers to file annual reports and certifications. Other aspects of the Order were allowed to take effect, including the interim interstate rate caps. The matter was then briefed in the D.C. Circuit, with final briefs submitted in December 2014 and oral argument calendared for Feb. 6, 2015. However, the FCC asked (without opposition) the D.C. Circuit to hold those cases in abeyance, pending final agency resolution of the matter. The D.C. Circuit agreed, entering an order to that effect on December 16, 2014. (The assigned judges were Kavanaugh, Millett, and Wilkins)
On February 11, 2014, the FCC granted a temporary waiver (nine months) of the interim ICS rate caps to one ICS provider on the consideration of its economic sustainability due to the impact of its below-cost intrastate rate restrictions working in tandem with the Order's interstate rate caps.
Following the Order, the FCC received several proposals urging ICS reform. For example, several ICS providers submitted a Joint Provider Reform Proposal urging the adoption of rate caps of $0.20/min for debit and prepaid interstate and intrastate calls, and $0.24/min for all interstate and intrastate collect calls. The petitioners, along with several public interest groups, urged the FCC to adopt a $0.07/min rate cap for all interstate debit, prepaid, and collect calls, with no per-min rate, and no other ancillary fees or taxes.
On October 17, 2014, the FCC initiated a 2nd FNPRM seeking comments to develop a comprehensive and permanent ICS reform not limited to reform of interstate rates. It sought comments on the various proposals including the Joint provider Reform Proposal and the petitioners' proposal--in particular, to establish permanent cap rates for all intrastate and interstate rates, limit ancillary charges, whether to eliminate site commissions, ways to promote competition, accessible services, and newer technologies for services.
The key documents are included in this case record, but additional documents can be found in the FCC website
. Use Proceeding Number "12-375" and click "here to remove the date restriction" to search. Important comments can be found by using "Wright," "Friedman," and "Wireline Competition Bureau" for the Name of Filer.
On Sept. 30, 2015, the FCC's chairman, Tom Wheeler, and FCC Commissioner Clyburn issued a Fact Sheet on reforms related to the prison phone industry, titled "Ensuring Just, Reasonable, & Fair Rates for Inmate Calling." It explained that the two were asking their colleagues on the FCC to vote on October 22, 2015 for additional reforms to reduce the cost of all calls--interstate, intrastate, and international. If adopted, new caps will reduce the average rates for the vast majority of inmate calls substantially, from $2.96 to no more than $1.65 for a 15-minute intrastate call, and from $3.15 to no more than $1.65 for a 15-minute interstate call. The proposed rate caps are:
- 11 cents/minute for debit/prepaid calls, in state or federal prisons.
- 14 cents/minute for debit/prepaid calls in jails with 1,000 or more inmates.
- 16 cents /minute for debit/prepaid calls in jails with 350-999 inmates.
- 22 cents /minute for debit/prepaid calls in jails of up to 349 inmates.
- Rates for collect calls are slightly higher in the first year and will be phased down to these caps after a two-year transition period.
Related Link:FCC Guide to Inmate Telephone Service
On October 22, 2015, the FCC issued a document titled "Second Report and Order and Third Further Notice of Proposed Rulemaking" (FCC 15-136). 210 pages long, including six appendices, the document explained the history of this matter, and adopted what it described as "comprehensive reform . . . to correct a market failure, foster market efficiencies, encourage ongoing state reforms, and ensure that ICS rates and charges comply with the Communications Act." Specifically, the FCC:
- Adopted tiered debit, prepaid, and collect call rate caps that apply to all interstate and intrastate calls.
- Excluded site commission costs from the rate caps (while discouraging, but not prohibiting, providers from sharing their profits and paying site commissions to facilities)
- Capping ancillary service charges and addressing various loopholes
- Prohibiting prepaid calling account funding minimums and establishing a prepaid
calling account funding maximum limit
- Establishing periodic review of reforms
- Preempting state laws that allow limits higher than the federal framework
- Requiring that the per-minute rates charged for TTY-to-TTY calls be no more than 25 percent of the rates the providers charge for traditional inmate calling services and that no provider shall levy or collect any charge or fee for TRS-to-voice or voice-to-TTY calls
- Adopting a transition period of 90 days for prisons and six months for jails
- Requiring annual reporting and other disclosures rates and policies
- Allowing providers to seek waivers if they are unable to receive fair compensation
Once phased in, the basic rate cap ranged from 11 cents per minute to 22 cents per minute, depending on the size of the affected jail (all prisons will be held to the lowest rate).
Finally, the Commission issued a third notice of proposed rulemaking, which stated: "291. While we adopt regulations in this Order to correct failures in the ICS [Inmate Call Services] 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. We also seek comment on the extent to which the reforms adopted today facilitate a properly functioning market." In addition, the Commission asked for comments on whether the conditions promoting market failure relating to voice calls also required regulations of video calls and international calls, etc. Comments were due late January.
On January 25, the State of Oklahoma filed a Court of Appeals challenge to the November 5 order. It was docketed as 16-9503. David Cho - 11/25/2014