Critics Say GTL Acceptance of Virginia ICS Rate Cut Undermines Case Versus FCC

January 5, 2015

Communications Daily

Global Tel*Link took some heat after apparently collaborating with Virginia to cut inmate calling service rates well below recent FCC rate caps that the ICS company is legally challenging. The Human Rights Defense Center (HRDC) called FCC attention to GTL comments about partnering with Virginia in lowering ICS rates to four cents per minute, given ICS provider arguments that the FCC’s rate caps of 11 to 22 cents per minute were set below their costs (see 1510220059). “The key thing is they’re signing a contract for 4 cents per minute, when they’re arguing to the FCC, and about to argue in court, that the FCC’s rate caps of 11 cents a minute and higher make it financially impossible for them to make a profit—which is a lie,” HRDC Executive Director Paul Wright told us Monday.

Lee Petro, counsel for the Martha Wright Petitioners, said GTL’s stance on the Virginia rate cuts undermines its arguments against the FCC rate caps. “What Virginia tells us is it doesn’t cost but 4 cents per minute to provide a telecommunications service, and perhaps the FCC was too conservative with their rate caps,” he told us Monday. GTL had no comment Monday.

The HRDC took note of Virginia Gov. Terry McAuliffe’s (D) Dec. 23 announcement that the state’s Department of Corrections “worked with” GTL to drive down ICS rates over the past five years, reducing the cost of an average call from $4.06 in 2010 to 69 cents last month. The prison phone rights group said it confirmed with a Virginia DOC spokeswoman that a new 4 cent/minute rate covered all ICS calls in the state. The Virginia DOC “does not receive a kickback from GTL,” the HRDC said in a filing Thursday in FCC docket 12-375 that included McAuliffe’s news release and the group’s email exchange with the spokeswoman. ICS providers sometimes pay correctional authorities “site commissions” for the right to provide phone service in their prisons and jails, which critics sometimes call kickbacks.

The HRDC noted “with interest” a quote in the release from GTL CEO Brian Oliver that said: “This is an excellent example of how partners who share common goals can work together to reduce the cost of phone calls to friends and family members and still provide the necessary security and safety features to protect the public” (emphasis added by the HRDC). “This statement is in stark contrast to comments made by some ICS providers and corrections officials with respect to the costs of providing ICS services where they claim that the rate caps set by the FCC do not account for their security needs and profit desires,” the HRDC said. “Once again, we believe the lack of transparency in the ICS industry in terms of their profit margins, how they obtain contracts, etc., harms consumers and the public at large. We urge the FCC to use its subpoena power to independently review the actual costs and profitability of the major ICS providers.”

GTL recently asked the FCC to stay implementation of its ICS rate caps (which vary, depending on the type and size of the correctional facility), pending judicial review of the commission’s order on the merits (see 1512220055). FCC rate caps “are unlawful because they set rates below the documented costs of many ICS providers,” GTL said in its petition, asking for a commission answer by Jan. 11. GTL also criticized the FCC for not prohibiting site commissions.

“To the extent GTL can provide the necessary security and safety features to protect the public and still charge only 4 cents a minute in Virginia demonstrates conclusively that the cost studies they submitted were overstated, and that the FCC adopted very conservative price caps,” Petro said. “GTL thinks they can provide a telecom service for 4 cents a minute that covers their costs and that’s 7 cents below what the FCC adopted as their lowest rate cap.” Petro expects the FCC to deny the stay requests of GTL and Securus Technologies, both of which his group opposed (see 1512300041). GTL is “just getting their ticket punched so they can seek a judicial stay,” Andrew Schwartzman, senior counselor at the Georgetown Institute for Public Representation, told us recently (see 1512230034). — David Kaut