Photo Credit: Sara Wadford, Appeals Court Stymies Bid to Regulate High Cost of Prison Phone Calls, ABA Journal (May 1, 2018, 1:40 am), http://www.abajournal.com/magazine/article/regulate_price_prison_phone_calls.
By: Allie Segrest
Associate Editor, American Journal of Trial Advocacy
Introduction
For decades, countless prison inmates have faced significant hardship in the ability to keep in contact with their family and friends via telephone while incarcerated.[1] Compared to citizens who are not incarcerated, inmates in both federal and state prisons have essentially been forced into paying considerably excessive phone rates to make phone calls to stay connected to their loved ones.[2] The average person would likely be shocked to discover how expensive phone bills are for inmates and their families as compared to an average person’s phone bill.[3] The Federal Communications Commission has revealed that some inmates have been required to pay as much as seventeen dollars for a fifteen minute phone call to their family or friends.[4] To illustrate, a disabled, widowed mother of an incarcerated son stated that every time she desired to speak to her son, it would cost her twelve dollars or more for the call.[5] Therefore, she would have to pay around three hundred and sixty dollars a month if she desired to speak to her son every day, which she indicated was half of her disability check.[6] Additionally, an inmate’s wife testified in the Campaign for Prison Phone Justice that one twenty-minute phone call from her husband per day amounts to the monthly cost for groceries.[7] She further stated, “[w]hen you don’t have much, you have to choose between feeding your kids . . . and allowing your kids to know their father.”[8] Thus, the high costs of prison phone rates have left inmates and their families outraged and with no choice but to plead for reform via the Federal Communications Commission, Congress, and the courts to battle the high-priced rates.[9]
Inmate Calling Service Contracts: How are they awarded?
A few dominant payphone providers offer inmate calling services to federal and state correction facilities.[10] The payphone provider companies compete among one another to win long-term, exclusive contracts with prisons to provide inmate calling services to the inmates.[11] The phone contracts are awarded by the prisons to the phone company on the basis of which company is willing to pay the highest “site commission” to the prison and not on the basis of which company provides the lowest phone rates.[12] Site commissions are paid by the phone companies to the prisons out of a portion of the company’s revenues or profits.[13] It has been reported that the phone providers pay as much as sixty-three percent or more of their profits to the prison system, and it has been documented that hundreds of millions of dollars are paid in site commissions to the correction facilities annually.[14] The site commission percentage is one of the most prominent considerations in which provider is awarded the inmate calling services contract.[15] Upon being granted the bid for the inmate calling service contract, that certain telephone provider is the prison’s sole provider for the remainder of the contract, and the provider is often awarded consecutive contract renewals in the years to follow.[16] Therefore, certain inmate calling service providers have essentially created locational monopolies among prisons nationwide, and according to the Federal Communications Commission, merely three inmate calling services providers control almost the entire market.[17] Correction facilities then allow the monopolized inmate calling service provider to recover its profits paid to the facility by charging inmates and their families excessive phone call rates.[18] Thus, it follows that if inmates wish to contact their families or outside individuals while incarcerated, they do not have a choice of phone providers and are forced to pay the rates that the provider mandates, which are excessive and often unaffordable altogether.[19]
Importance of Inmate Calling Services
When considering the excessive phone call rates that inmates and their families must pay to communicate with each other, one might contemplate why the issue is of such importance. Research shows that when the rates of inmate phone calls are so high they become unaffordable, it prevents inmates from communicating with the outside world, which results in significant social consequences.[20] For example, when children of incarcerated parents have no way to communicate with their parents, the children are shown to have higher truancy rates, negative psychological repercussions such as depression, and lower overall school performance.[21] Further, the inmate’s reintroduction into society and post-incarceration success depends highly on maintained relationships with his or her family while incarcerated.[22] Consequently, there are positive outcomes on the community as a whole if inmates have resources to maintain relational connections with loved ones.
Federal Communication Commission: History of “Rate-Caps”
In 2000, following years of excessive phone rates, Martha Wright, a grandmother who greatly desired to contact her grandson in an Arizona prison, filed a class action on behalf of her grandson and other inmates against inmate calling service providers to challenge the high-priced phone rates.[23] Thereafter, in 2003 and 2007, Wright petitioned the Federal Communications Commission for rulemaking that would prohibit exclusive inmate calling service contracts between telephone providers and prisons.[24] In 2013, the Federal Communications Commission responded by adopting an interim per-minute rate-cap, which prohibited inmate calling service providers from charging more than the prescribed rate-cap for interstate phone calls.[25] The Commission’s 2013 interim rate-cap order did not address intrastate calls, instead urging states to undergo their own reform for improving inmate calling service rates.[26] Finally, in 2015, the Commission voted to set permanent cap-rates for both interstate and intrastate inmate calling service providers.[27] The mandatory rate-caps ranged from fourteen to forty-nine cents per minute, which was a significant decrease from the previous inmate calling service rates.[28] The Commission created four different categories for the correction facilities depending on the type and size of the facility.[29] For example, all “prisons” were considered a category, and jails had three additional categories depending on size.[30] Therefore, the specific phone rate fell within the rate-cap spectrum depending on the category of the correction facility.[31] The Commission formed the ratemaking methodology based on an “industry average cost data excluding site commissions.”[32] The Federal Communication Commission’s rate-capping regulations evidenced an enormous victory on behalf of the inmates and their families.[33] The Commission reported that as a result of the regulation, inmate call volumes increased by seventy percent.[34] Thus, the mandatory rate-caps for the inmate calling service providers helped to promote communication between inmates and their loved ones.[35]
When promulgating the rate-caps for inmate calling service providers, the Federal Communication Commission derived authority from Section 276 of the Telecommunications Act of 1996.[36] The Telecommunications Act of 1996 reformed the telephone industry, which gave the Federal Communication Commission some authority to regulate both interstate and intrastate phone calls and rates.[37] The Commission argued that the 1996 Act requires the agency to “promote competition among payphone service providers and promote the widespread deployment of payphone services to the benefit of the general public.”[38] To accomplish this goal, the 1996 Act additionally gives the Commission the authority to “ensure that all payphone service providers are fairly compensated for each and every contemplated intrastate and interstate call.”[39] The Commission used this language in its contention that they have the authority, and in fact the obligation, to prevent both overcompensation and under-compensation of local payphone companies.[40] The Commission further cited Section 276 of the Telecommunications Act of 1996 to support their authority for preempting any state requirement that is inconsistent with the Commission’s regulations.[41] Additionally, the Commission cited Section 201 of the United States Code stating, “all charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is hereby declared to be unlawful.”[42] Thus, relying on statutory law, the Commission was believed to have full authority to mandate that inmate calling service providers abide by their rate-caps.
The Court’s Present Position on Rate-Caps: Global Tel-Link v. FCC
However, despite the Federal Communication Commission’s supposed authority to promulgate rate-caps for inmate calling service providers, the affected inmate calling service providers, including Tel-Link, Securus Technologies, CenturyLink, Telmate, and Pay Tel, brought suit against the Federal Communication Commission in the recent pivotal case Global Tel-Link v. FCC.[43] In this case, the private phone companies argued that the Commission has no authority to regulate rate-caps.[44] Specifically, the companies contended that the Commission certainly does not have the authority to regulate rate-caps for intrastate phone calls, as those have historically been left to the states to regulate.[45] Administrative officials of the phone companies rebutted the Commission’s rate-cap mandates by stating that the site commissions provided to the prisons in exchange for inmate calling service contracts significantly benefit the prison systems by helping to provide for programs such as inmate and victim services.[46] Consequently, if phone rates go down, private phone companies will not be able to provide as much money to the correction facilities, and thus, the needed funds to upkeep the prisons will result in increased taxes.[47] For the foregoing reasons, a trial ensued over whether the court should enforce the Commission’s rate caps or invalidate them.
In Global Tel-Link, the court concluded that the Federal Communication Commission does not have the authority to regulate caps on intrastate rates.[48] The court held that the Commission overstepped its statutory authority when it regulated intrastate calls.[49] The court noted that the 1934 Telecommunications Act created a presumption against the Commission’s authority to regulate intrastate calls, and the Commission’s rate-cap order did not overcome that presumption.[50] Therefore, the Commission does not have authority to impose rate-caps on intrastate calls.[51] The court further noted that the Commission erroneously interpreted section 201 and section 276 of the United States Code as coterminous.[52] The court states that the two statutes do not work together to provide the Commission with the broad authority to ensure both interstate and intrastate rates are “just, reasonable, and fair.”[53] Instead, the two statutes have fundamentally different language and purposes.[54] Therefore, the court vacated the rate-caps for intrastate calls as it exceeds the Commission’s regulatory authority.[55]
Additionally, the court held in Global Tel-Link that the methodology the Federal Communication Commission used in formulating both interstate and intrastate rate-caps is arbitrary and capricious.[56] As previously mentioned, the Commission used industry-averaged cost data in deciding the rate-caps.[57] The court held that this method had no justification in the record, and it therefore vacated this part of the Commission’s rate-cap mandate.[58] Although the court did not expressly overrule the rate-caps for interstate calls as it did for intrastate calls, the court annulled the method in which the rate-caps were formulated.[59] Therefore, the court essentially overruled the interstate rate-caps indirectly.
Recent Changes in FCC Leadership Impacts Future Reform
Many inmates, their families, and outside commentators consider the holding in Global Tel-Link as a victory on behalf of the inmate calling service provider companies.[60] Upon President Trump’s inauguration in 2017, he appointed Ajit Pai as the Commissioner of the Federal Communication Commission’s commissioner, and Pai expressly stated that the Commission “overstepped its authority” by imposing rate-caps on the inmate calling service providers.[61] Under Pai’s leadership, in the midst of the Global Tel-Link trial, the Federal Communications Commission refused to defend its original contention that it had authority under section 276 to cap intrastate rates.[62] In fact, counsel for the Commission advised the court that it would be “abandoning . . . the contention . . . that the Commission has authority to cap intrastate rates.”[63] Therefore, the court’s holding in Global Tel-Link was largely in part because the Commission declined to defend the rate-caps that the Commission mandated under previous leadership.[64]
The Inmate Telecommunication Dilemma Persists
Following the outcome of Global Tel-Link, it appears that the
ball is back in the states’ court in terms of regulating inmate calling service
providers’ rates.[65] The
holding in Global Tel-Link suggests
that the Federal Communication Commission has no statutory authority to
regulate intrastate calling rates, and the Commission will not have the
authority to regulate interstate calling rates until it promulgates a less
arbitrary standard for formulating the rate-caps.[66]
Further, as evidenced by Global Tel-Link,
present leadership appears to be taking a less “hands-on” approach in
regulating inmate calling service rates. Thus, the Commission is delegating
more regulatory authority to the states. Currently, there seems to be no
immediate relief for inmates and their families from paying the rates set by
the inmate calling service providers.[67] Thus,
the recent changes in the world of prison telecommunications will likely lead to inmates and their families
embarking on a continued reform-seeking journey in the near future.
[1] Sam Gustin, Prison Phone Calls Will No Longer Cost a Fortune, Time (Feb. 12, 2014), http://time.com/6672/prison-phone-rates/.
[2] Id.
[3] See generally Avik Roy, Prison Phone Rates: The Ripoff Continues, Forbes (Nov. 28, 2016, 1:30 pm), https://www.forbes.com/sites/realspin/2016/11/28/prison-phone-rates-the-ripoff-continues/#9b05ce05e0e8 (discussing the extremely high phone rates that a mother had to pay to speak to her incarcerated son weekly).
[4] Gustin, supra note 1.
[5] Roy, supra note 3.
[6] Id.
[7] Lorelei Laird, Appeals Court Stymies Bid to Regulate High Cost of Prison Phone Calls, ABA Journal (May 1, 2018, 1:40 am), http://www.abajournal.com/magazine/article/regulate_price_prison_phone_calls.
[8] Id.
[9] In re Rates for Interstate Inmate Calling Services, 30 FCC Rcd. 12763, 12765 (2015).
[10] Global Tel-Link v. FCC, 866 F.3d 397, 404 (D.C. Cir. 2017).
[11] Id.
[12] Ann E. Marimow, FCC Made a Case for Limiting Cost of Prison Phone Calls. Not Anymore., The Washington Post (Feb. 5, 2017), https://www.washingtonpost.com/local/public-safety/fcc-made-a-case-for-limiting-cost-of-prison-phone-calls-not-anymore/2017/02/04/9306fbf8-e97c-11e6-b82f-687d6e6a3e7c_story.html?utm_term=.7ce8ae95b180
[13] Global Tel-Link, 866 F.3d at 404.
[14] Id. (citing In re Rates for Interstate Inmate Calling Services, 30 FCC Rcd. At 12821).
[15] Laird, supra note 7.
[16] Global Tel-Link, 866 F.3d at 404.
[17] Id.
[18] Laird, supra note 7.
[19] Global Tel-Link, 866 F.3d at 404.
[20] Id. at 405.
[21] Id.
[22] See Nancy G. La Vigne et al., Examining the Effect of Incarceration and In-Prison Family Contact on Prisoners’ Family Relationships, 21 J. of Contemp. Crim. Just. 314, 328-32 (2005) (discussing the importance of familial relationships pre-release from incarceration), http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.1008.4109&rep=rep1&type=pdf.
[23] Global Tel-Link, 866 F.3d at 405.
[24] Id.
[25] See In re Rates for Interstate Inmate Calling Services, 30 FCC Rcd. at 12772, vacated in part by Global Tel-Link, 866 F.3d 397 (explaining the rate-caps in the FCC’s 2013 interim order as safe harbor caps of twelve cents for debit and prepaid calls and fourteen cents for collect calls, and hard caps of twenty-one cents for harbor and prepaid calls and twenty-five cents for collect calls).
[26] Id.
[27] Id. (citing In re Rates for Interstate Inmate Calling Services, 30 FCC Rcd. at 12775-76, 12838-62); see Marimow, supra note 12 (discussing how the FCC’s 2015 rate-cap order significantly decreased the per-minute phone call rates for both interstate and intrastate inmate calls).
[28] Global Tel-Link, 866 F.3d at 405.
[29] Id.
[30] Id.
[31] Id.
[32] Id.
[33] See Gustin, supra note 1 (examining the benefits that the rate-caps have on promoting inmate phone calls to their families and how the increased communication decreases recidivism, in turn positively effecting society as a whole).
[34] In re Rates for Interstate Inmate Calling Services, 30 FCC Rcd. at 12772.
[35] See Inmate Telephone Service, Fed. Comm. Commission, https://www.fcc.gov/consumers/guides/inmate-telephone-service (last visited May 21, 2018) (stating that “the FCC is working to rein in the excessive rates and egregious fees on phone calls paid by some of society’s most vulnerable people: families trying to stay in touch with loved ones serving time in jail or prison”).
[36] 47 U.S.C. § 276 (b)(1) (1996) (“In order to promote competition among payphone service providers and promote the widespread deployment of payphone services to the benefit of the general public . . . the Commission shall take all actions necessary to establish a per call compensation plan to ensure that all payphone service providers are fairly compensated for each and every completed intrastate and interstate call using their payphone”).
[37] See Global Tel-Link, 866 F.3d at 403 (citing New England Pub. Commc’ns Council Inc. v. FCC, 334 F.3d 69, 75 (D.C. Cir. 2003)) (explaining that the 1996 Act altered the 1934 act, which gave the FCC no authority to regulate intrastate communications; instead, giving all regulatory authority over intrastate calls to the individual states).
[38] Id. (quoting 47 U.S.C. § 276 (b)(1).
[39] Laird, supra note 7 (quoting 47 U.S.C. § 276(b)(1)(A).
[40] Id.
[41] Global Tel-Link, 866 F.3d at 404.
[42] 47 U.S.C. § 201(b) (1934).
[43] 866 F.3d at 405.
[44] Id. at 405; Laird, supra note 7.
[45] Global Tel-Link, 866 F.3d at 408-09.
[46] Gustin, supra note 1.
[47] Id.
[48] 866 F.3d at 402.
[49] Laird, supra note 7.
[50] Global Tel-Link, 866 F.3d at 409.
[51] Id.
[52] Id.
[53] Id.
[54] Id.
[55] Id.
[56] 866 F.3d at 416.
[57] Id. at 405.
[58] Id. at 416.
[59] Id.
[60] Laird, supra note 7.
[61] Id.
[62] Id.
[63] Global Tel-Link, 866 F.3d at 406.
[64] Id.
[65] See generally Id. at 416 (holding that the FCC’s intrastate rate-caps are invalidated, and the interstate rate-caps are indirectly invalidated by vacating the methodology for forming the rate-cap; therefore, the court delegated the authority to regulate prison phone rates to the states and not to a federal agency such as the FCC).
[66] Global Tel-Link, 866 F.3d at 416.
[67] See generally Roy, supra note 2 (discussing the fact that without a court holding or federal agency rulemaking decision in the inmates’ favor, there will be no immediate fix to the excessive inmate phone rate problem).
American Journal of Trial Advocacy 