Inmate phone providers threaten legal action over new rules

Inmate phone providers threaten legal action over new rules

The largest players in the prison pay phone industry made a last-minute blitz against a set of regulatory changes that they predict will have a "devastating" effect on their business.

In meetings and letters to the Federal Communications Commission, the industry leaders threatened legal action if the rules to cap inmate phone rates are not changed before a vote next week. 

"Representatives of the various parties reiterated that their companies would suffer irreparable, immediate harm under the regulatory approach described in the fact sheet, and further forecast that this harm would be sufficient to support a stay of the order in court," three industry leaders wrote in a filing after a call with commission staff this week. 

Rather than taking specific issue with the price caps, the companies have targeted another portion of the order dealing with so-called kickbacks that they generally pay prisons to house the phones. 

The companies outlined a detailed set of changes and issued a sort of ultimatum — promising to "not seek judicial review" if the commission bends. 

The push for change is coming from Securus Technologies, Telmate and Global Tel Link — listeners to the popular podcast "Serial" will remember the Global Tel Link name from the opening credits of Sarah Koenig's series that explores a decades-old murder case in phone conversations with inmate Adnan Syed. 

The companies take in more than 90 percent of all the revenue in the inmate pay phone industry. Another company PayTel, which operates in smaller jails, has also lobbied for the changes. 

The FCC declined to discuss the proceeding while it is pending. But a spokesman pointed to a smaller inmate calling company that largely endorsed the plan mapped out by FCC Chairman Tom Wheeler and Democratic Commissioner Mignon Clyburn, and supported by a number of civil rights advocates. 

"Easing the financial burden on these families is not only the compassionate thing to do, it’s the smart thing to do," Clyburn said last month. 

Under the order, the vast majority of prison inmates would not be charged more than 11 cents per minute for any call — a more than 50-percent cut for the current cap on interstate calls. Other service charges would be capped as well. 

The FCC also seeks to discourage, but not ban, the upfront "commissions" that prison phone companies generally fork over to correctional facilities to win exclusive contracts — something a number of senators this week described as "kickbacks."

Prisons say the payments are necessary to cover the administrative and security cost of housing and monitoring the calls.

Phone companies have been required to ensure that their phone rates for inmate are reasonable and fair. One way they have justified higher-than-normal prices in the past is by factoring in the upfront commissions they pay prisons. But the new order would exclude those commissions when calculating reasonable phone rates. 

The inmate phone industry argues that model puts them in an untenable position, in which they will still have to dole out the payments to prisons, but now there will be no way to recoup the costs. 

FCC Commissioner Clyburn has disagreed. 

"These caps also would provide sufficient revenue for correctional institutions to recover the costs of providing calling service and a fair return for providers while delivering reasonable rates for inmates and their families," Clyburn said last month. 

 The companies have proposed a framework in which those prison commissions would be banned and replaced with a model where prison fees would be tacked onto inmate calls on a per minute basis, so the phone companies would not be on the hook. Those fees would increase prison calls by 1-to-3 cents per minute under the plan.

The FCC has said it did not take on the so-called kickbacks more directly because its authority to do so is legally questionable. But the phone companies disagreed, and outlined a nine-page legal argument to support FCC action. 

"In the absence of the adoption of such a mechanism, various companies will be forced to exercise their appellate remedies and will challenge the order in full," the groups wrote in a filing. “