July 1, 2015

By Electronic Filing

Notice of Ex Parte Presentation

Marlene H. Dortch
Secretary
Federal Communications Commission
445 12th Street, S.W.
Washington, D.C. 20554
Re:

WC Docket No. 12-375

Dear Ms. Dortch:
On June 29, 2015, Darrell Baker, Director, Utility Services Division, Alabama Public
Service Commission 1, and Don J. Wood, economic consultant for Pay Tel Communications,
Inc., met with Pamela Arluk, Lynne Engledow, Madeleine Findley, Richard Flannery, Rhonda
Lien, Bakari Middleton, Thomas Parisi, Miriam Strauss, and Don Sussman of the Pricing Policy
Division, Competition Policy Division, and Wireline Competition Bureau to discuss elements of
a proposed framework for ICS reform, focusing in particular on the issue of and a proposal for
facility cost recovery. Mr. Wood met with the above FCC Staff members in person, while
Mr. Baker attended the meeting via telephone.
Baker discussed how his experience with ICS in Alabama informs his view that some
form of facility cost recovery is critical. He explained that the APSC regularly inspects ICS at
jails and prisons in Alabama and is therefore very familiar with the activities and responsibilities
that facility personnel undertake in administering ICS and in monitoring inmate calls. He
concludes that facilities incur costs associated with ICS and should be provided an opportunity to
recover their costs. Otherwise, Baker believes facilities may impose limitations on inmate access
to ICS in order to reduce the resources they are expending to administer and monitor the service.
Baker shared his observation that the existing bid process frequently results in provider
selection based primarily on the highest site commissions offered the facility regardless of the
ancillary fees and single payment call charges assessed by providers on end users for purposes of
supporting their site commission proposal. He concludes, therefore, that facility cost recovery as
a percentage of calling revenue provides little incentive for facilities to ensure the end user’s
economic interests are considered in provider selection. He recommends facility cost recovery
1

Mr. Baker prefaced his remarks to the Commission by stating that his comments do not
necessarily reflect the views of the Alabama Public Service Commission (“APSC”), nor should his
comments be construed as a change or contemplated change to the ratemaking policies of the APSC as
expressed in its Orders under APSC Docket 15957 (Re: Generic
Proceeding
Considering
the
Promulgation of Telephone Rules Governing Inmate Phone Service).

Ex Parte Notice
July 1, 2015
Page 2

on a per minute basis which should incentivize facilities to seek lower end user rates and fees for
purposes of stimulating inmate call minutes.
Because billed collect calls constitute a relatively minor and decreasing proportion of
inmate calls, Baker and Wood (collectively “they” or “their”) recommend consideration of a
composite rate applicable to all inmate call types. Based upon their independent reviews of cost
support data filed by providers in response to the Commission’s Further Notice of Proposed
Rulemaking, released September 26, 2013, Baker and Wood recommend adoption of a
composite rate for prisons and higher composite rates for jails. Their recommendation for jails
includes adoption of a tiered rate structure based upon facility size as defined by inmate average
daily population (“ADP”). Additionally, Baker and Wood request Commission consideration of
a facility cost recovery rate additive for prisons and separate cost recovery rate additives specific
to each of their recommended jail tiers.
Using data from the American Jail Association and the Bureau of Justice Statistics, Baker
and Wood estimate there were 731,208 jail inmates and 1,574,700 prison inmates at mid-year
2013. There are 3,163 jails. Of those, 1,577 (50%) have an inmate ADP of 100 or less and 2,563
(80%) have an inmate ADP of 350 or less wherein 28% of all jail inmates are held (8.8%
combined prison and jail inmates). There are 600 jails (20%) with an inmate ADP of >350
housing 72% of all jail inmates (23% of combined prison and jail inmates).
Baker and Wood presented the “Framework for Consideration,” attached hereto, wherein
the parties proposed the following facility cost recovery mechanism for consideration as a
component of overall ICS reform:
JAIL ADP
0 – 349
350 - 999
1,000 – 2,499
2,500 and above

FACILITY COST
RECOVERY
$.07/minute
$.05/minute
$.05/minute
$03/minute

PRISONS

$.02/minute

Baker and Wood recommend the facility cost recovery fee as an additive to the per-minute rate
which incentivizes vendors and facilities to lower rates in order to spur additional minutes of use;
a desirable outcome for inmates and their families. They also explained that average monthly
compensation using the recommended cost recovery rates may be significantly lower than
existing site commissions depending on jail size and the level of compensation currently
received.

Ex Parte Notice
July 1, 2015
Page 3

Baker and Wood also discussed additional aspects of comprehensive ICS reform, as
outlined on the Framework for Consideration document, including a tiered rate structure for jails;
restrictions on single-call programs; and prohibitions and/or limitations on ancillary fees. The
Framework for Consideration represents a compromise position that the parties would
respectfully propose for consideration by the Commission.
Enclosed are copies of the handouts that formed the basis of the discussion in the
meeting.
Pursuant to Section 1.1206(b) of the Commission’s rules, a copy of this notice is being
filed in the appropriate docket.
Please do not hesitate to contact either of us should you have any questions.
Sincerely yours,
/s/ Darrell Baker
Darrell Baker

cc via email to:
Pamela Arluk, Chief of the Pricing Policy Division
Lynne Engledow, Acting Deputy Chief of the Pricing Policy Division
Madeleine Findley, Acting Deputy Bureau Chief, WCB
Rhonda Lien, Attorney, Pricing Policy Division
Bakari Middleton, Attorney, Competition Policy Division
Thomas Parisi, Attorney, Pricing Policy Division
Don Sussman, Telecom Analyst, Pricing Policy Division
Richard Flannery, Intern, Pricing Policy Division
Miriam Strauss, Intern, Pricing Policy Division

ADP
JAILS
1 - 349
350 –999
1,000 –2,499
 2,500
PRISONS

PERCENTAGE OF INMATES AND AGENCIES
PERCENT OF
NUMBER OF
INMATES
AGENCIES
8.8%
2,563
7.7%
424
11.1%
154
4.1%
22
68.3%

50 DOCs

PERCENT OF
AGENCIES
80%
13%
5%
0.5%
1.5%

JAIL COST RECOVERY - INDUSTRY-WIDE PROJECTION

Revenue Producing MOU
Type

JAIL

Facility Cost Recovery

ADP Group
0-349
350-999
1000-2,499
2,500+

Debit/Prepaid
382,815,600
557,842,765
919,367,926
331,472,790
2,191,499,081

Collect
40,974,921
39,563,311
65,621,546
23,659,469
169,819,247

Total
$0.03
$0.05
$0.07
423,790,522
$ 29,665,337
597,406,076
$ 29,870,304
984,989,472
$ 49,249,474
355,132,259 $ 10,653,968
2,361,318,329 $ 10,653,968 $ 79,119,777 $ 29,665,337

TOTAL
$ 29,665,337
$ 29,870,304
$ 49,249,474
$ 10,653,968
$ 119,439,082

Number of
Facilities
2,563
424
154
22
3,163

Annual
Compensation
per Facility
$11,574
$70,449
$319,802
$484,271
$37,761

Monthly
Compensation
per Facility
$964.54
$5,870.74
$26,650.15
$40,355.94
$3,146.78

FRAMEWORK FOR CONSIDERATION
JAIL ADP
0 – 349
350 - 999
1,000 – 2,499
2,500 and above

RATE
CAP
$.22/minute
$.20/minute
$.18/minute
$.16/minute

FACILITY COST
RECOVERY
$.07/minute
$.05/minute
$.05/minute
$03/minute

MAXIMUM
TOTAL RATE
$.29/minute
$.25/minute
$.23/minute
$.19/minute

PRISONS

$.08/minute

$.02/minute

$.10/minute

Notes:
Collect calls would now be capped at the same level as Prepaid and Debit calls.
All calls are billed in one minute increments; flat rate charges for an assumed number of minutes are not
permitted.
Restrictions on Single Call programs: Programs which allow the called party to pay for a single call
without establishing a prepaid collect account (e.g., billing directly to credit/debit card) may only be
offered as follows: (1) the total charges may not exceed the applicable per-minute Rate Cap plus Facility
Cost Recovery per minute for the actual call duration plus the permissible ancillary charge for an
automated payment; and (2) the provider must clearly disclose the option to set up a prepaid account to
the consumer at the beginning of each call.
Ancillary Fees:
All Fees would be prohibited except:
Account Setup via IVR/Web
Account Setup via Live Agent
Debit Transfers

$3.00
$5.95
5%

Money Transfer Fees must be at the lowest commercially available rate with no revenue sharing or
additives.
State Actions:
States must bring regulations into compliance by the end of the transition period or inconsistent
regulations will be subject to preemption. State action that is consistent with the regulations that the
Commission adopts would not be subject to preemption.