FCC to Propose Cuts in Prisoners’ Rates for Phone Calls

The Federal Communications Commission today said it will propose rules to lower rates charged to prison inmates for interstate telephone calls, after considering the issue for nine years.

The agency in a news release said it would consider rate caps and other measures to rein in costs in the $1.2 billion market dominated by Global Tel*Link Corp. and Securus Technologies Inc., companies owned by private-equity firms.

“This is not just an issue of markets and rates; it is a broader issue of social justice,” Commissioner Jessica Rosenworcel, a member of the agency’s Democratic majority, said in a statement posted on the FCC’s website. “When a single call may cost as much as a month of unlimited phone service, the financial burden of staying in touch may be too much for inmates’ families to bear.”

Civil rights and religious groups supported by some members of Congress have pressed the FCC to act on a petition filed in 2003 by prisoners and family members to cut rates they termed “exorbitant.” High rates isolate prisoners from family members, the advocates said.

Prisoners pay as much as $17 for a 15-minute call with their families, according to filings at the FCC. Charges are set by contracts that state and local agencies strike with companies, and costs can include commissions the companies pay to the agencies.

‘First Step’

“It is encouraging that the FCC has taken the long-awaited first step,” Lee Petro, a Washington-based attorney representing the coalition seeking lower rates, said in an e- mailed statement.

More work remains “to win justice for the incarcerated and their families,” Petro said. “The petitioners and their supporters face well-funded companies, supported by private equity funds, who have had no reason to reform their practices absent action by the FCC.”

Ajit Pai, a Republican who joined the FCC in May, said that while he generally believes prices should be set by the marketplace, he’s open to regulating prison phone rates.

“Choice and competition are not hallmarks of life behind bars,” he said in a statement. “Inmates cannot choose among multiple carriers for lower rates.”

‘Wide Disparity’

The FCC today said it has found a “wide disparity” in rates. In New York, where commissions are prohibited, interstate rates are as low as 48 cents a minute. In Montana, where commissions are charged, the interstate per-minute rate is 12 cents, the FCC said.

It said costs for a 15-minute interstate call were $6.45 in Texas, $6.65 in California and $16.55 in Idaho.

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

Global Tel*Link is owned by American Securities LLC, a Park Avenue private equity firm, and Securus is owned by New York- based Castle Harlan Inc.

American Securities declined to comment, Caroline Harris, a spokeswoman, said in an e-mail. Castle Harlan declined to comment, Michael Millican, a spokesman, said in an e-mail.

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

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, and the FCC today said it would scrutinize those charges.

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