Prison Phone Providers Seek Fee Waiver on Calls Amid Coronavirus

As prisoners increase their reliance on phone visits during the new coronavirus, telecommunications companies are asking the FCC to waive a fee on inmates’ interstate and international calls.

The push by Securus Technologies LLC and Network Communications International Corp. highlights a years-long policy debate at the Federal Communications Commission over how to rein in prison call rates.

The phone providers must pay a fee equal to 20% of revenue from every interstate and international prison call to the FCC’s Universal Service Fund. The fund subsidizes phone and broadband service for low-income Americans, schools, telehealth and rural areas. The providers pass along the fee to their customers.

Prisoners are relying on telephones after most authorities eliminated in-person visits to curtail the spread of Covid-19. The Federal Bureau of Prisons suspended visits effective March 13. The bureau announced March 31 that inmates would be secured in assigned cells or quarters for 14 days starting Wednesday.

The FCC can bring “immediate relief to consumer calling charges for interstate and international calls placed from these facilities,” Jade Trombetta, a spokeswoman at JPay, a subsidiary of Securus, said in an email.

The agency didn’t respond for a request for comment on the companies’ fee-waiver petitions. Separately, the commission is seeking public input on the extent of its authority to regulate rates for ancillary charges.

Private equity-backed companies Securus and GTL accounted for about 70% of the prison phone market in 2018, according to an analysis by the Prison Policy Initiative, a non-profit research group.

Securus, which is owned by Detroit Pistons owner Tom Gores’ Platinum Equity, and other prison phone companies have monopoly phone service contracts with correctional facilities across the country. In addition to phone rate charges, prison phone companies often impose ancillary charges on inmates, such as fees to create phone accounts or add minutes.

Securus last year abandoned a takeover bid for smaller rival Inmate Calling Solutions LLC after FCC Chairman Ajit Pai said he agreed with agency staff that the deal posed “serious competitive concerns and would not be in the public interest.”

The Obama-era FCC adopted an order in 2016 capping the rate of interstate calls at 21 cents a minute for debit and prepaid calls, and 25 cents a minute for collect calls. Carriers add the 20% fee, which changes by fiscal quarter, on top of the rate. The order also capped rates for in-state phone calls, but the prison phone industry succeeded in getting a court to overturn that part of the order in 2017.

Securus on March 18 filed an emergency waiver petition with the FCC seeking an exemption from the 20% fee in light of the coronavirus. Network Communications International Corp. told the FCC it backed Securus’ emergency request after filing a similar petition last year. GTL, Pay Tel Communications Inc. and other prison phone companies backed Network Communication’s petition.

The elimination of prison visits “has placed even greater importance on the need for inmates and their families to remain in contact” via phone, Network Communications said in a March 23 filing.

The fee waiver would annually save about $47 million, or 0.5% of the overall Universal Service Fund budget, Network Communications said.

The FCC is accepting comments on the companies’ request through April 17. Democratic Commissioner Jessica Rosenworcel, who hasn’t taken a position on the petitions, said the agency should act to lower rates.

“With visitation being shut down or curtailed, the high cost of prison phone rates is especially cruel,” Rosenworcel said in an email. “The FCC needs to step up to help those families keep in touch with their loved ones.”

The issue is also getting attention on Capitol Hill. Rep. Bobby Rush (D-Ill.) introduced a bill (H.R. 6389) March 25 that would reduce prison phone rates by banning Securus and other providers from giving commissions to correctional facilities. The measure would cap in-state and interstate prepaid calls at four cents a minute and collect calls at five cents a minute.

Advocates Opposed

It’s not clear whether the FCC will grant the providers’ request.

“From what I see, the relief is not warranted, but they are granting a lot of waivers,” former Democratic FCC Commissioner Mignon Clyburn said, referring to the Securus petition.

Consumer advocacy groups, including Worth Rises, Media Justice and OC Inc., the advocacy arm of the United Church of Christ, say prisoners can ill-afford expensive phone calls during the pandemic.

The groups oppose the phone companies’ fee-waiver requests, arguing that the providers are unlikely to share the savings with customers. They argue that the companies should still be charged the fee, but not be allowed to pass the cost onto their customers.

Securus wants “to use the COVID-19 crisis to decrease the corporation’s costs at a time when many of its customers are struggling to stay afloat,” Briana Tylek, executive director of Worth Rises, told the FCC in a March 23 filing.

Some prison authorities have increased inmates’ access to phone services during the coronavirus, according to the Prison Policy Initiative. The Utah Department of Corrections, for instance, is giving inmates 10 free calls per week.

Network Communications CEO Bill Pope said the company also recently agreed to the FCC-sponsored pledge to continue service to customers who can’t pay as a result of the coronavirus, and is offering one or two free calls for inmates per week at jails that have asked.

Securus is “partnering with multiple individual corrections agencies to offer a combination of free access and reduced rates for telephone calls, e-messaging and video connection products currently offered,” Trombetta said.

For additional legal resources, visit Bloomberg Law In Focus: Coronavirus (Bloomberg Law Subscription)