Federal Communications Commission

FCC 12-167

Before the
Federal Communications Commission
Washington, D.C. 20554

In the Matter of
Rates for Interstate Inmate Calling Services

)
)
)
)

WC Docket No. 12-375

NOTICE OF PROPOSED RULEMAKING
Adopted: December 24, 2012

Released: December 28, 2012

Comment Date: [60 days after date of publication in Federal Register]
Reply Comment Date: [90 days after date of publication in the Federal Register]
By the Commission: Chairman Genachowski and Commissioners McDowell, Clyburn, Rosenworcel, and
Pai issuing separate statements.
I.

INTRODUCTION

1.
In this item we grant two longstanding petitions for rulemaking 1 filed in the docket that
seek to “secure the ‘just and reasonable’ interstate rates for prisoners required by Section 201(b) of the
Communications Act” 2 by initiating this Notice of Proposed Rulemaking (NPRM or Notice) to consider
changes to our rules governing rates for interstate interexchange inmate calling services (ICS). In the first
petition for rulemaking, filed in 2003, (First Wright Petition), Petitioners requested that the Commission
“prohibit exclusive inmate calling service agreements and collect call-only restrictions at privatelyadministered prisons and require such facilities to permit multiple long distance carriers to interconnect
with prison telephone systems. . . .” 3 In the second petition for rulemaking, filed in 2007, (Alternative
Wright Petition), Petitioners proposed that the Commission require debit calling, prohibit per-call charges
and establish rate caps for all interstate, interexchange inmate calling services. 4 The Commission
received significant comment on the two Petitions for Rulemaking. 5 Recently, there has been substantial
renewed interest and comment in this docket highlighting both the wide disparity among interstate
interexchange ICS rate levels and significant public interest concerns.6 We believe it is appropriate to
1

See Implementation of the Pay Telephone Reclassification and Compensation Provisions of the
Telecommunications Act of 1996, Petition of Martha Wright et al. for Rulemaking or, in the Alternative, Petition to
Address Referral Issues in Pending Rulemaking, CC Docket No. 96-128 (filed Nov. 3, 2003) (First Wright Petition);
see also Implementation of the Pay Telephone Reclassification and Compensation Provisions of the
Telecommunications Act of 1996, Petitioners’ Alternative Rulemaking Proposal, CC Docket No. 96-128, at 4-6
(filed Mar. 1, 2007) (Alternative Wright Petition).

2

Alternative Wright Petition at 6.

3

First Wright Petition at 3.

4

See generally Alternative Wright Petition.

5

See infra nn. 49 & 51.

6

See, e.g., Letter from The Leadership Conference on Civil and Human Rights et al., to Chairman Julius
Genachowski, FCC, CC Docket No. 96-128 (filed May 18, 2012) (letter from a group of religious and civic
(continued....)

Federal Communications Commission

FCC 12-167

seek comment to refresh the record and consider whether changes to our rules are necessary to ensure just
and reasonable ICS rates for interstate, long distance calling at publicly- and privately-administered
correctional facilities.
II.

BACKGROUND
A.

Description of Inmate Calling Services

2.
Inmate calling services are typically limited to collect or debit-based calling from
payphones. 7 Collect calls from a correctional facility usually incur a two-part charge; a per-call set up
charge and a per-minute charge. 8 Debit calling (charges are deducted from an inmate’s account),
typically incurs a per-minute charge only. 9 Based on the record, the per-call charge can vary significantly
from $0.50 to $3.95 and per-minute charges can vary significantly from $0.05 to $0.89. 10 Some
commenters state that ICS rates vary based on such factors as facility size, call volume and the
(...continued from previous page)
organizations representing diverse opinions on many issues but who all agree on the need to reduce ICS rates);
Letter from amalia deloney, Assoc. Dir., Center for Media Justice, to Marlene H. Dortch, Secretary, FCC, CC
Docket No. 96-128 (filed Sept. 26, 2012) (attaching THE PRICE TO CALL HOME: STATE-SANCTIONED
MONOPOLIZATION IN THE PRISON PHONE INDUSTRY, a publication of the Prison Policy Initiative); Letter from Alex
Friedmann, Assoc. Dir., Human Rights Defense Center, to Marlene H. Dortch, Secretary, FCC, CC Docket No. 96128 at 3 (filed Oct. 8, 2012) (HRDC Oct. 8, 2012 Ex Parte Letter) (Commission action is necessary to reduce high
ICS rates). Letter from Katherine Grincewich, Assoc. General Counsel, United States Conference of Catholic
Bishops to Chairman Julius Genachowski, FCC, CC Docket No. 96-128 (filed Oct. 12, 2012) (urging the
Commission to cap ICS rates and highlighting the problem of high ICS rates in immigrant detention centers); Letter
from Craig DeRoche, VP, Justice Fellowship, to Marlene H. Dortch, Secretary, FCC, CC Docket No. 96-128 (filed
Oct. 22, 2012) (discussing the importance of regular family contact in reducing inmate recidivism); Letter from Paul
Wright, Exec. Dir., Human Rights Defense Center, to Marlene H. Dortch, Secretary, FCC (filed Oct. 23, 2012)
(letter from 60 different organizations urging Commission action to lower ICS rates); Letter from Holly S. Cooper,
Assoc. Dir., UC Davis Immigration Law Clinic, to Marlene H. Dortch, Secretary, FCC, CC Docket No. 96-128
(filed Nov. 8, 2012) (letter from 83 organizations and 25 individuals urging Commission action to lower ICS rates).
See also National Association of Regulatory Utility Commissioners’ TC-1 Resolution Urging the FCC to take
Action to Ensure Fair and Reasonable Telephone Rates from Correctional and Detention Facilities (Nov. 14, 2012),
available at
http://www.naruc.org/Resolutions/Resolution%20Urging%20the%20FCC%20to%20take%20Actoin%20to%20Ensu
re%20Fair%20and%20Reasonable%20Telephone%20Rates%20from%20Correctional%20and%20Detention%20Fa
cilities.pdf (last visited Dec. 17, 2012); FCC CONSUMER ADVISORY COMMITTEE’s Recommendation
Regarding Affordable Phone Access for Incarcerated Individuals and Families (Sept. 21, 2012), available at
https://org2.democracyinaction.org/o/6220/images/FCC_CAC_recommendation_9-21-12.pdf (last visited Dec. 17,
2012).
7

See Implementation of the Pay Telephone Reclassification and Compensation Provisions of the
Telecommunications Act of 1996, CC Docket No. 96-128, Order on Remand & Notice of Proposed Rulemaking, 17
FCC Rcd 3248 at 3252, para. 9 (2002) (Inmate Calling Order on Remand and NPRM).

8

See Alternative Wright Petition, at App. B at 7-8.

9

Id. at 8.

10

See Alternative Wright Petition, App. B at 8-10. See also Inmate Calling Services Interstate Call Cost Study, CC
Docket No. 96-128, at 4-5 (filed Aug. 15, 2008) (ICS Provider Proposal); Letter from Stephanie A. Joyce, Counsel
for Securus Technologies, Inc., to Marlene H. Dortch, Secretary, FCC, CC Docket No. 96-128, at 1-2 (filed Sept. 20,
2011) (Securus Sept. 20, 2011 Ex Parte Letter); Letter from Stephanie A. Joyce, Counsel for Securus Technologies,
Inc., to Marlene H. Dortch, Secretary, FCC, CC Docket No. 96-128, at Attach. (filed May 10, 2012) (Securus May
10, 2012 Ex Parte Letter). We seek additional, more-recent, ICS rate data below. See infra para. 43.

2

Federal Communications Commission

FCC 12-167

jurisdiction of the call.11 Local and intrastate ICS rates are generally set by the states. 12 The Commission
does not currently regulate interstate ICS rates. 13 ICS rates in federal prisons are set by the Federal
Bureau of Prisons. 14
3.
Public Policy Considerations. Petitioners and some commenters argue that ICS rate
reform is a public policy imperative because high ICS rates limit the ability of most inmates to maintain
contact with their families. Commenters point to studies showing that regular contact with family
reduces inmate recidivism. 15 Commenters note that regular telephone contact with loved ones also
benefits those receiving the calls, including inmates’ children, as inmates may be assigned to
correctional facilities far from their homes thus limiting in-person visits. 16 Commenters contend that
regular telephone contact between inmates and their loved ones at high rates places a heavy burden on
inmates’ families because families typically bear the burden of paying for the calls. 17 In addition, they
assert that the lack of regular telephone contact between inmates and their loved ones is a hardship on
families because neither the inmates nor their families can afford the high rates.18
4.
We note that the Government Accountability Office (GAO) has twice recognized the
conclusions of Federal Bureau of Prison officials that contact with family “aids an inmate’s success
when returning to the community” and thus lowers recidivism. 19 Moreover, the GAO recently found
that “crowded visiting rooms make it more difficult for inmates to visit with their families” and that
“[t]he infrastructure of the facility may not support the increase in visitors as a result of the growth in the
prison population.” 20 As such, we believe that regular telephone contact between inmates and their

11

See Securus May 10, 2012 Ex Parte Letter at 1.

12

“Typically, rates for intrastate operator services (OS) are set by state public utility commissions. It is pursuant to
this authority that states place caps on local collect calling – collect calls cannot be made without OS; therefore, the
power to regulate OS is the power to regulate collect calls.” Inmate Calling Order on Remand and NPRM, 17 FCC
Rcd at 3261, para. 31 (footnotes omitted). “In the case of local (city and county) jails, ICS providers operate in a
largely state-regulated environment. Most calls from city and county facilities are intraLATA toll or local calls, and
most states impose rate ceilings on local calls. Some of these rate ceilings are based on the incumbent local
exchange carriers’ standard collect calling rates; other ceilings are set specifically for inmate calls.” Id. at 3277,
para. 75. See also Letter from Lee G. Petro, Counsel to Martha Wright et al., to Marlene H. Dortch, Secretary, FCC,
CC Docket No. 96-128, Exh. A at 1-2 (filed July 27, 2011) (Petitioners July 27, 2011 Ex Parte Letter).
13

See Petitioners July 27, 2011 Ex Parte Letter, Exh. A at 1-2.

14

See id. at 11-12.

15

See id. at 13-14. See also Letter from Cheryl Leanza, Policy Advisor, United Church of Christ, OC Inc. and the
Leadership Conference Education Fund, to Marlene H. Dortch, Secretary, FCC, CC Docket No. 96-128 at 1 (filed
June 18, 2012) (Leadership Conference June 18, 2012 Ex Parte Letter).
16

See Petitioners July 27, 2011 Ex Parte Letter, Exh. A at 13-14; see also HRDC Oct. 8, 2012 Ex Parte Letter at 4.

17

See Letter from amalia deloney, Assoc. Dir., Center for Media Justice, to Chairman Julius Genachowski, FCC,
CC Docket No. 96-128 (filed Aug. 14, 2012).

18

See id.

19

UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE, BUREAU OF PRISONS; GROWING INMATE CROWDING
NEGATIVELY AFFECTS INMATES, STAFF, AND INFRASTRUCTURE at 21 (2012 GAO Report) available at
http://www.gao.gov/assets/650/648123.pdf; see also UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE,
BUREAU OF PRISONS; IMPROVED EVALUATIONS AND INCREASED COORDINATION COULD IMPROVE CELL PHONE
DETECTION, at 18 (2011 GAO Report) available at http://www.gao.gov/assets/330/322805.pdf.
20

2012 GAO Report at 21.

3

Federal Communications Commission

FCC 12-167

families is an important public policy matter, and that we should consider the impact that interstate ICS
rates have.
5.
Unique Characteristics of ICS. The Commission has recognized that ICS differs from
traditional payphone services in a number of respects. First, although barriers to entry are low for
payphone providers in most locations, 21 a correctional facility typically grants an exclusive contract to a
single ICS provider for a particular facility, essentially creating a monopoly at that facility. 22 As such,
competition exists for ICS contracts but once an ICS provider wins a contract it becomes the sole ICS
provider in that facility. 23 Unlike non-incarcerated customers who have access to alternative calling
platforms on public payphones, inmates only have access to payphones operated by a single provider for
all available services at that payphone.24 These contracts additionally often include a site commission or
location fee paid to the correctional facility. 25 The Commission has previously found that “[t]o have a
realistic chance of winning a contract, the bidder must include an amount to cover commissions paid to
the inmate facility.” 26 Five years ago Petitioners estimated that “commissions add an average of 43
percent . . . to all other costs before commissions.” 27
6.
Security considerations also differentiate ICS from public payphone services. For
instance, correctional facilities typically use an automated voice-processing system to screen and process
inmate collect calls rather than a pre-subscribed operator service provider. 28 ICS providers also employ
blocking mechanisms to prevent inmates from making direct-dialed (that is calls made without using the
automated voice-processing system) calls, access code calls, 800/900 number calls, or calls to restricted
individuals, such as judges or witnesses. 29 Correctional facilities also require that payphones be
monitored for frequent calls to the same number. 30 Moreover, correctional facilities often require
periodic voice overlays that identify the call as being placed from a correctional facility, as well as
listening and recording capabilities for all calls. 31 Commenters note that the costs of these security

21

“Entry into the payphone business appears to be easy. The ability to purchase a payphone, secure a location
contract, obtain a payphone line from the LEC, and maintain the payphone are, together, the minimal technical
requirements to enter into the payphone business.” Implementation of the Pay Telephone Reclassification and
Compensation Provisions of the Telecommunications Act of 1996, et al., CC Docket Nos. 96-128; 91-35, Report and
Order, 11 FCC Rcd 20541 at 20547, para. 11 (1996) (footnote omitted).
22

See Inmate Calling Order on Remand and NPRM, 17 FCC Rcd at 3276, para. 73 (“[H]igh inmate calling rates
may be partially attributable to the absence of market forces.”).

23

See id. at 3252-53, para. 10.

24

See id. at 3253, para. 12.

25

See id.

26

Id. at 3252, para. 10.

27

Alternative Wright Petition, App. B at 12. See also Securus May 10, 2012 Ex Parte Letter at Attach. (citing
Texas statutory requirement of “a commission of not less than 40 percent of the gross revenue”).
28

See Inmate Calling Order on Remand and NPRM, 17 FCC Rcd at 3252, para. 9.

29

See id.

30

See id.

31

See id.

4

Federal Communications Commission

FCC 12-167

features, hardware and software costs, and training for staffers make ICS more costly to provide than
public payphone service. 32
7.
The record to date indicates a wide disparity in ICS rates between states. These rates
reflect the higher security and network costs that are inherent in ICS; the disparity thus may reflect
whether the rates in question include site commissions. For instance, correctional facilities located in
states that do not require commissions from ICS providers often charge lower ICS rates. For example,
New York state prohibited site commissions in state prisons and interstate per-minute rates in such
prisons are as low as $0.048. 33 In contrast, in Colorado, a state that has site commissions, interstate perminute rates can be as high as $0.89. 34 However, in Montana, another state with site commissions, the
interstate per-minute rate is $0.12. 35 Such record evidence raises questions about whether ICS rates
accurately reflect the costs of providing ICS and whether site commission payments are a reasonable cost
of providing ICS that therefore should be recovered in the ICS rates inmates are charged.
8.
We seek comment on the Commission’s legal authority in Section III.E below to address
the issues raised by the Petitioners. While we believe that we have jurisdiction to address interstate ICS
calls we believe those calls may be a relatively small subset of all inmate telephone calls. However,
several commenters argue that interstate calls are often the most expensive and therefore Commission
action, such as establishing an interstate rate benchmark, would nevertheless be effective in helping lower
the cost of contact between inmates and their families. 36 In the interest of developing a complete and
current record, this Notice seeks comment on the reasonableness of current ICS rates and what steps the
Commission can and should take to ensure reasonable ICS rates going forward.
B.

Inmate Calling Order on Remand and NPRM

9.
On February 12, 2002, the Commission adopted an order addressing whether section 276
of the Communications Act of 1934, as amended, (Act) requires the Commission either to preempt state
rate caps on local collect calls or permits ICS providers to collect an additional per-call surcharge above
state rate caps on local collect calls.37 In the Inmate Calling Order on Remand and NPRM, the
Commission concluded that section 276 does not require either preemption or an additional surcharge and
also concluded that it was unnecessary to impose nonstructural safeguards on the Bell Operating
Companies’ provision of ICS services. 38 In making these determinations, the Commission recognized the
unique nature of ICS, and concluded that the “fair compensation” requirement of section 276 did not

32

See CCA Alternative Wright Petition Comments at 14-16; GEO Group Alternative Wright Petition Reply
Comments at 2-3. See also Letter from Stephanie A. Joyce, Counsel for Securus Technologies, Inc., to Marlene H.
Dortch, Secretary, FCC, CC Docket No. 96-128; WC Docket No. 09-144, at 1 (filed June 22, 2012) (Securus June
22, 2012 Ex Parte Letter).
33

See Petitioners July 27, 2011 Ex Parte Letter, Exh. A at 16.

34

See id.

35

See Montana Department of Corrections; Inmate Phones, http://cor mt.gov/Facts/InmatePhones.mcpx (last visited
Dec. 21, 2012).

36

See HRDC Oct. 8, 2012 Ex Parte Letter at 4.

37

See generally Inmate Calling Order on Remand and NPRM.

38

See 17 FCC Rcd. at 3257-59, paras. 23-25.

5

Federal Communications Commission

FCC 12-167

necessarily mean that payphones with higher costs should receive greater compensation than other
payphones. 39
10.
In the NPRM portion of the Inmate Calling Order on Remand and NPRM, the
Commission asked “whether the current regulatory regime applicable to the provision of inmate calling
services is responsive to the needs of correctional facilities, ICS providers, and inmates, and, if not,
whether and how we might address those unmet needs.” 40 Specifically, the Commission sought detailed
comments on ICS rates, commissions paid to the confinement facilities, cost and revenue data,
information from states on how they handle inmate calling, alternatives to the current system, and
information on call disconnections.41 The NPRM also proposed methods to lower ICS rates, 42 including
allowing the use of debit cards or commissary accounts. 43
C.

Two Petitions for Rulemaking
1.

First Wright Petition

11.
In 2000, current and former inmates of Corrections Corporation of America (CCA)
confinement facilities, and the individuals that receive their telephone calls, filed a class-action lawsuit
against CCA seeking relief from exclusive dealing arrangements CCA had with ICS providers. The
plaintiffs alleged that the exclusive dealing resulted in restricted telephone service choices for inmates and
caused rates for those services to substantially increase, in violation of various constitutional and statutory
provisions, including section 201(b) of the Act. 44 On August 22, 2001, the United States District Court
for the District of Columbia dismissed the lawsuit.45 Pursuant to the doctrine of primary jurisdiction, the
court directed the parties to file the appropriate pleadings with the Commission to resolve the issues the
plaintiffs raised. 46
12.
On November 3, 2003, Petitioners filed the First Wright Petition with the Commission
pursuant to the court’s directive.47 Petitioners requested that the Commission address high ICS rates by
prohibiting exclusive ICS contracts and collect-call-only restrictions at privately-administered prisons,
and requiring such facilities to permit multiple long-distance carriers to interconnect with prison
telephone systems. 48 The Commission sought and received comment on the First Wright Petition.49

39

See id. at 3258, para. 23.

40

Id. at 3276, para. 72.

41

See id. at 3276-79, paras. 73-79.

42

See generally Inmate Calling Order on Remand and NPRM.

43

See id. 17 FCC Rcd. at 3277-78, para. 76.

44

See First Wright Petition at 1-4.

45

See Martha Wright, et al. v. Corrections Corporation of America, et al., Civil Action No. 00-293 (GK) (D.D.C.
filed Aug. 22, 2001).
46

See id. See also, Martha Wright, et al. v. Corrections Corporation of America, et al., Civil Action No.
1:00CV00293 (GK) (D.D.C. Nov. 5, 2001) (in which the court granted Petitioner’s Motion to Reconsider the
dismissal of the complaint and stayed the federal court action until the Commission considered the claims).
47

See generally First Wright Petition.

48

See id. at 3.

6

Federal Communications Commission
2.

FCC 12-167

Alternative Wright Petition

13.
On March 1, 2007, Petitioners filed an alternative rulemaking petition proposing that the
Commission address high ICS rates by requiring debit calling, prohibiting per-call charges and
establishing rate caps for all interstate, interexchange ICS. 50 The Commission sought and received
comment on the Alternative Wright Petition. 51 On August 15, 2008, a group of ICS providers filed the
Inmate Calling Services Interstate Call Cost Study (ICS Provider Proposal), which included cost
information to support their proposed rate methodology and rate levels for ICS. 52
14.
As described fully below, in this Notice, we seek updated information on the ICS market
and request answers to questions raised by the Petitioners. We specifically request comment from state
departments of corrections and state officials responsible for prison telecommunications decision making.
After the ICS Provider Proposal was filed, a consensus appeared to be forming about how best to address
inmate calling; we hope to revive those discussions and consensus building through our action today. 53

(...continued from previous page)
49
See Petition For Rulemaking Filed Regarding Issues Related To Inmate Calling Services Pleading Cycle
Established, CC Docket No. 96-128, Public Notice, DA 03-4027 (rel. Dec. 31, 2003) (First Wright Petition PN). A
list of commenters is available at Appendix A.
50

See generally Alternative Wright Petition.

51

Comment Sought on Alternative Rulemaking Proposal Regarding Issues Related to Inmate Calling Services, CC
Docket No. 96-128, Public Notice, 22 FCC Rcd 4229 (Wireline Comp. Bur. 2007) (Alternative Wright Petition PN).
The comment and reply comment deadlines on the Alternative Wright Petition were extended pursuant to order. See
Implementation of Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of
1996; Petition for Rulemaking or, in the Alternative, Petition to Address Referral Issues in Pending Rulemaking, CC
Docket No. 96-128, Order, 22 FCC Rcd 5382 (Wireline Comp. Bur. 2007). The reply comment deadline was
further extended pursuant to order. See Implementation of Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996; Petition for Rulemaking or, in the Alternative, Petition to
Address Referral Issues in Pending Rulemaking, CC Docket No. 96-128, Order, 22 FCC Rcd 9131 (Wireline Comp.
Bur. 2007); see also Implementation of Pay Telephone Reclassification and Compensation Provisions of the
Telecommunications Act of 1996; Petition for Rulemaking or, in the Alternative, Petition to Address Referral Issues
in Pending Rulemaking, CC Docket No. 96-128, Order, 22 FCC Rcd 10837 (Wireline Comp. Bur. 2007). A list of
commenters is available at Appendix B.
52

See generally ICS Provider Proposal.

53

We note that discussions between ICS providers and advocacy groups seem to be ongoing. See e.g., Letter from
Stephanie A. Joyce, Counsel for Securus Technologies, Inc., to Marlene H. Dortch, Secretary, FCC, CC Docket No.
96-128 at 2 (filed July 2, 2012) (Securus July 2, 2012 Ex Parte Letter) (“Securus met with several public interest
groups on April 23, 2012, to discuss the issues involved in inmate calling rates . . . .”). We encourage these ongoing
discussions. We note that on multiple occasions, industry has been able to form coalitions and adjust practices,
bringing benefits to consumers quickly. See, e.g., CTIA – The Wireless Association®, Federal Communications
Commission and Consumers Union Announce Free Alerts to Help Consumers Avoid Unexpected Overage Charges
(Oct. 17, 2011) http://www.ctia.org/media/press/body.cfm/prid/2137 (an agreement that the majority of wireless
providers would send automatic usage notifications to their subscribers to help prevent unexpected overage
charges); U.S. Wireless Industry Announces Steps to Help Deter Smartphone Thefts and Protect Consumer Data
(April 10, 2012) http://www.ctia.org/media/press/body.cfm/prid/2170 (an agreement with CTIA – the Wireless
Association® and law enforcement officials to establish practices to deter theft of smartphones and to protect the
personal information on those devices). To the extent that parties cannot resolve these issues in their discussions,
we believe it is necessary for the Commission to gather up-to-date information, so that we can act to resolve the
controversies presented in the docket.

7

Federal Communications Commission

FCC 12-167

15.
Since the Inmate Calling Order on Remand and NPRM was released in 2002, the
Commission has received numerous comments regarding ICS reform. 54 Responses to the NPRM and
subsequent requests for comment on the First Wright Petition55 and the Alternative Wright Petition have
provided an extensive record on ICS reform. 56 We believe it is appropriate at this time to open a new
docket exclusive to ICS reform in light of the lengthy record, as well as the fact that the ICS record is part
of the general payphone docket (CC Docket No. 96-128) which relates to competition among payphone
providers and the deployment of payphone services. As such, comments and reply comments on this
Notice must be filed in WC Docket No. 12-375. We incorporate comments, reply comments and ex parte
filings from CC Docket No. 96-128 into WC Docket No. 12-375.
III.

ENSURING ICS RATES ARE JUST AND REASONABLE

16.
There are multiple proposals to address ICS rates in the record. We seek to balance the
goal of ensuring reasonable ICS rates for end users with the security concerns and expense inherent to
ICS within the statutory guidelines of sections 201(b) and 276 of the Act. Ensuring just and reasonable
ICS rates may be accomplished through incentives or regulations, or a combination of both; we seek
comment on these proposals below.
A.

Rate Caps in the ICS Market

17.
In the Alternative Wright Petition, Petitioners requested that the Commission set rate
caps for interstate long distance ICS. 57 Specifically, Petitioners requested that the Commission “establish
a benchmark rate for domestic interstate interexchange inmate debit calling service of $0.20 per minute
and a benchmark rate for domestic interstate interexchange inmate collect calling service of $0.25 per
minute, with no set-up or other per-call charge.” 58 The Petitioners used 15 and 20 minute call durations
to calculate the rate caps59 and based their proposed rate caps on then current Federal Bureau of Prison
and several individual states’ ICS rates.60 We seek comment on the elements of the rate cap proposal and
whether the criteria used to develop the proposed caps are appropriate.

54

“We initiate this rulemaking proceeding to explore whether the current regulatory regime applicable to the
provision of inmate calling services is responsive to the needs of correctional facilities, ICS providers, and inmates,
and, if not, whether and how we might address those unmet needs.” Inmate Calling Order on Remand and NPRM,
17 FCC Rcd at 3276, para. 72.
55

See generally First Wright Petition PN.

56

See generally Alternative Wright Petition PN.

57

See generally Alternative Wright Petition.

58

Alternative Wright Petition at 6.

59

See id. at 18-20.

60

When they filed the Alternative Wright Petition in 2007, Petitioners noted that the debit account rate applicable to
the Inmate Telephone System managed by the Federal Bureau of Prisons was $0.23 per minute, and that $0.17 per
minute of that amount was attributable to telephone service costs. Petitioners also pointed to the Colorado
Department of Corrections, which had a debit inmate calling rate of $0.19 per minute, with a $1.25 per call
surcharge. Similarly, the Nebraska Department of Corrections inmate telephone service contract set the interstate
debit rate at $0.16 per minute plus a $0.60 service charge. In Vermont, the debit rate for inmates was $0.14 per
minute plus a connection charge of $0.75. In Maryland, the debit rate was $0.30 per minute, with no per-call
charge. Finally, in Missouri, the inmate prepaid calling services was $0.10 per minute, with no per-call charge and
no commission payments. See Alternative Wright Petition, App. B at 15-18. We note that some of these rates may
have changed since the Petition was filed, and we are seeking to refresh our record on current rates.

8

Federal Communications Commission

FCC 12-167

18.
Per-Call Charge. Each time an inmate places a payphone call there are typically two
elements that make up its cost – a per-call set up charge and a per-minute charge. 61 We first seek
comment on the per-call charge. Petitioners propose eliminating the call set up or per-call charge, which
can be as much as $3.95, and allowing only per-minute charges. 62 We seek comment on this proposal.
What costs are associated with the per-call charge? Would the elimination of the per-call charge help
ensure just and reasonable ICS rates? Would a prohibition on per-call charges result in below-cost
service? 63
19.
Petitioners note that inmates often incur multiple per-call charges when calls are dropped
after a pause in conversation. 64 We seek data on the average number of dropped calls that inmates
experience. We request that commenters suggest ways to prevent multiple per-call charges for a single
conversation that is disconnected by security triggers and subsequently allowed to continue while
maintaining appropriate security measures.65 For example, if the per-call charge is maintained,
Petitioners suggest that if a disconnected call is reinitiated within two minutes, it should not incur another
per-call charge. 66 Should the Commission require such a measure? What other steps could be taken to
prevent inmates from being charged multiple per-call charges for what amounts to one conversation?
What are the costs associated with call security and are they incurred on a fixed or per-call basis?
20.
Per-Minute Rate Caps. Would the per-minute rate cap approach proposed by the
Petitioners ensure just and reasonable rates? Are the proposed rate caps just and reasonable consistent
with sections 201 and 276 of the Act? If not, would different rate caps be appropriate? What factors
should the Commission consider in determining an appropriate per-minute rate cap? Commenters
advocating an alternative per-minute rate cap should provide specific, detailed cost information and other
relevant data to support their proposed per-minute rate caps. 67 Should the domestic interstate
interexchange ICS per-minute rate cap proposed above apply to both publicly- and privately-administered
correctional facilities?
21.
Some commenters argue that the proposed per-minute rate caps are arbitrary and
capricious because they would preclude providers from recovering their legitimate costs of providing
service. 68 Others argue that the Alternative Wright Petition proposal is confiscatory69 or may otherwise
put ICS providers out of business. 70 We seek evidence in support of or disproving such arguments.
Commenters also argue that the adoption of per-minute rate caps would chill innovation and ultimately
result in reductions in service levels because the proposed caps will not adequately compensate the
61

See Alternative Wright Petition at 2.

62

See id. at 2, 6, 11.

63

See Securus June 22, 2012 Ex Parte Letter at 1-2.

64

See Petitioners’ Alternative Wright Petition Reply at 23.

65

See Inmate Calling Order on Remand and NPRM, 17 FCC Rcd at 3278, para. 78.

66

See Letter from Frank W. Krogh, Counsel to Petitioners, to Kevin J. Martin, Chairman, FCC, CC Docket No. 96128 at 16-17 (filed Nov. 19, 2008) (Petitioners’ Nov. 19, 2008 Ex Parte Letter).

67

Below, we seek additional data for use in this proceeding. See infra para. 43.

68

See GTL Alternative Wright Petition Comments at 12-13; see also T-NETIX Alternative Wright Petition
Comments at 10-12.

69

See T-NETIX Alternative Wright Petition Comments at 8.

70
See, e.g., SPCA Alternative Wright Petition Comments at 1, 3-4 (noting that many ICS providers are small- to
medium-sized companies).

9

Federal Communications Commission

FCC 12-167

providers, thus making ICS a less attractive service to offer.71 Others note that new providers are entering
the ICS market. 72 Commenters supporting such assertions are asked to provide specific, detailed
information about the ICS market to support their positions and describe how market trends influence ICS
rates.
22.
In the Alternative Wright Petition, Petitioners argue that several benefits would accrue
from setting per-minute rate caps, such as administrative ease and the absence of jurisdictional
challenges. 73 We seek comment on this argument. Can commenters identify any other benefits to
introducing per-minute rate caps? What are the perceived problems or challenges associated with
introducing per-minute rate caps? For example, parties argue that differences between correctional
facilities including size, location, security levels, facility age and staffing levels will not allow a one size
fits all solution, such as per-minute rate caps. 74 Is this accurate? How can the Commission establish a
solution that addresses the many variations among confinement facilities?
23.
If the Commission decides to implement rate caps in the ICS market how should we?
What additional data, if any, does the Commission require to set rates? 75 Would a rate cap approach
require the Commission to conduct rate cases, as some commenters suggest? 76 We seek comment on the
best ways to determine just and reasonable caps for ICS rates.
24.
Marginal Location Methodology. In 2008, ICS providers submitted the ICS Provider
Proposal for ICS rates. 77 The ICS Provider Proposal uses the “marginal location” methodology, 78
previously adopted by the Commission to calculate public payphone rates, to calculate proposed ICS
rates. 79 The ICS providers believe the “marginal location” methodology provides a “basis for rates that
represent ‘fair compensation’ as set forth in § 276(b)(1)(A).” 80 The ICS Provider Proposal advocates a
two-part rate structure that includes both a fixed per-call charge and a per-minute rate, 81 arguing that percall charges must be maintained to cover such expenses as equipment costs and monthly line charges. 82
71

See GTL Alternative Wright Petition Comments at 16-17.

72

See Letter from David Lindgren, President, Protocall, LLC, to Marlene H. Dortch, Secretary, FCC, CC Docket
No. 96-128 (filed Dec. 1, 2008).

73

See Alternative Wright Petition at 7-8.

74

See, e.g., APCTO Alternative Wright Petition Comments at 5; CCA Alternative Wright Petition Comments at 6-7;
GEO Group Alternative Wright Petition Comments at 10. See also Securus June 22, 2012 Ex Parte Letter at 1.

75

See infra para. 43.

76

See GEO Group Alternative Wright Petition Comments at 10-11.

77

See generally ICS Provider Proposal.

78

See ICS Provider Proposal at 1-2.

79

See Request to Update Default Compensation Rate for Dial-Around Calls from Payphones, WC Docket No. 03225, Report and Order, 20 FCC Rcd 20231 (2004) (order accepting marginal location methodology implementation
practices of various parties); see also Implementation of Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996, CC Docket No. 96-128, Third Report and Order and Order on
Reconsideration, 14 FCC Rcd 2545 (1999) (order establishing the marginal location cost methodology for public
payphone rates).

80

ICS Provider Proposal at 2.

81

See id. at 4.

82

See id. at 5-6.

10

Federal Communications Commission

FCC 12-167

The ICS providers determined that the methodology and data yield a requisite fixed per-call charge of
$1.56 with a per-minute rate of $0.06 for debit calls, and a fixed per-call charge of $2.49 with a perminute rate of $0.07 for collect calls, applicable to all ICS providers. 83 In response, Petitioners point out
that the ICS Provider Proposal “largely supports Petitioners’ requested benchmark rates.”84 Petitioners
calculate that the ICS Provider Proposal two-part rate structure equals rate caps of $0.16 per minute for a
15-minute debit call and $0.24 per minute for a 15-minute collect call. 85
25.
We seek comment on whether the ICS Provider Proposal methodology would result in a
just and reasonable rate. We also encourage commenting parties that disagree with the ICS Provider
Proposal or proposed methodology to provide alternative methodologies supported by sufficientlydetailed data. 86 We seek comment on whether the ICS Provider Proposal has provided sufficient cost,
demand, and revenue detail to allow the Commission to determine whether the proposed rates are just and
reasonable.
26.
We also seek comment on whether the underlying cost and demand factors for public
payphones and ICS are similar enough to justify using a cost methodology designed for public payphones
to set ICS rates. In particular, we seek comment on the extent to which ICS rates and call volumes vary
among prisons across the country, and how the rates and call volumes compare with the variation that
occurs with public payphones. We seek comment on whether an additional justification exists for
adopting this cost methodology.
27.
Impact of Rate Reductions on Call Volumes. We seek comment on whether call volumes
have increased where rates have been lowered, and the resulting impact on ICS providers’ revenues. We
note that the 2011 GAO Report found that only approximately 25 percent of inmates in the Federal
Bureau of Prisons use their entire monthly allotted minutes for calls and that if rates were lowered it
would encourage greater communications with families, which the Bureau of Prisons “has stated
facilitates the reintegration of inmates into society upon release from prison.”87 Do other correctional
facilities find that incarcerated individuals are not using all their allotted time to make calls? How much
time is allotted, and what is the percentage of individuals who use all their time?
28.
Tiered Pricing. A recent ex parte filing by Petitioners attached a transcript from a New
Mexico Public Service Commission hearing that described the possible use of a tiered, by monthly

83

See id. at 4. The ICS Provider Proposal does not include site commissions in the proposed rates and the providers
supporting this proposal contend this makes the proposed rates conservatively low. See id. at 9-10, 15-16.
However, the proposed rates do include ICS-related costs such as additional security precautions which Petitioners
suggest shows that their proposed rate caps are a viable option. See Petitioners’ Nov. 19, 2008 Ex Parte Letter at 26. The ICS Provider Proposal also contained an additional estimate that included three high-cost facilities.
According to the ICS Provider Proposal, those data would yield a fixed per-call charge of $2.09 with a per-minute
rate of $0.06 for debit calls, and a fixed per-call charge of $3.19 with a per-minute rate of $0.07 for collect calls.
See ICS Provider Proposal at 5.
84

Petitioners’ Nov. 19, 2008 Ex Parte Letter at 2-6.

85

See id. If the Commission maintains a per-call set up charge, the Petitioners request that the per-call and perminute charges are calculated to stay under the proposed rate caps. See id. at 17.
86

For example, Petitioners challenge the selected facilities used in the calculation, claiming that the ICS Providers
cherry-picked high-cost facilities. See Petitioners’ Nov. 19, 2008 Ex Parte Letter at 2-3.

87
2011 GAO Report, at 18 & n.39. The Report also notes the disadvantages of lowering rates, including the
revenues generated for the Trust Fund which is used for inmate amenities. See id.

11

Federal Communications Commission

FCC 12-167

volume of minutes, pricing structure in the state.88 Do commenters believe a per-minute rate set by usage
volume is a viable option? 89 Would tiered pricing address concerns over a one size fits all reform
approach such as rate caps? What factors should the Commission consider in establishing pricing tiers?
What are potential problems with tiered pricing?
29.
Market Forces. Petitioners note that telecommunications costs in general, and long
distance costs in particular, are decreasing90 and therefore, they believe, ICS rates should follow the
market and decrease as well. 91 Some participants in this proceeding note that “rates in the largest
majority of correctional facilities are moving in a downward trend.”92 Is this accurate? Can commenters
provide concrete examples of decreases in ICS rates?
30.
Collect Calling v. Debit Calling. The Alternative Wright Petition suggests two different
rate caps: one for collect calling and one for debit calling. 93 A collect call is a call in which the called
person pays for the call and a debit call deducts the cost of the call from a prepaid account. Petitioners
argue that collect calling is more expensive because its costs include billing costs and uncollectibles,
while debit calling is less expensive because it reduces staff responsibilities and uncollectibles.94 Do
commenters agree that there should be different per-minute rate caps for collect and debit calling? What
are the benefits of debit calling? For example, do commenters believe that debit calling will exert
downward pressure on collect calling rates? 95
31.
Some commenters have expressed concern about the expense and difficulty of
implementing debit calling. Specifically, they cite difficulty in blocking restricted telephone numbers, the
expense of purchasing new equipment and the challenges of establishing new processes and procedures
and verifying calling party identities.96 Parties have also expressed safety concerns related to debit
calling. 97 Some prisons already allow for debit calling. For example, the Federal Bureau of Prisons
allows debit calling in some of its facilities98 and the state of Iowa offers debit calling only. 99 What safety
concerns are raised by debit calling service, and how have those concerns been addressed where debit
calling already is permitted? Commenters also note the increased administrative workload and cost
88

See Letter from Lee G. Petro, Counsel for Martha Wright, et al., to Marlene H. Dortch, Secretary, FCC, CC
Docket No. 96-128, Exh. B at 82-88 (filed June 28, 2012).

89

Inmate calling service provider Securus, which participated in the New Mexico proceeding supported the adoption
of a tiered rate system in the state with a rate variance option. See Securus July 2, 2012 Ex Parte Letter at 1-2.

90

See, e.g., Alternative Wright Petition App. B, at 5-7.

91

See id. at 7.

92

CCA Alternative Wright Petition Comments at 10.

93

See Alternative Wright Petition at 6. (We note that, in this context, we take debit calling to mean a debit account
with a unique PIN for each inmate, not a physical debit card.)

94

See id. at 20-21, 23-27.

95

See CURE Alternative Wright Petition Comments at 9.

96

See CCPS Alternative Wright Petition Comments at 9-11; CCA Alternative Wright Petition Comments at 16-18.

97

See PCS Alternative Wright Petition Comments at 6-7; T-NETIX Alternative Wright Petition Reply Comments at
13-14.
98

See U.S. Department of Justice; Federal Bureau of Prisons; Program Statement 5264.07 (Jan. 31, 2002) available
at http://www.bop.gov/policy/progstat/5264_007.pdf.

99

See Petitioners’ July 27, 2011 Ex Parte Letter, Exh. A at 16.

12

Federal Communications Commission

FCC 12-167

associated with debit calling caused by such tasks as issuing PINs to each inmate in facilities with high
turnover. 100 Have commenters experienced such challenges, and how have they been overcome? What
are the other pros or cons of debit calling? We seek comment on ICS providers’ overall experiences with
offering debit calling.
32.
How many correctional facilities currently offer debit calling? Has debit calling become
more common? What are the current ratios of debit to collect calling in correctional facilities? Should
the Commission mandate debit calling in privately and publicly-administered correctional facilities? 101
One commenter says it offers debit calling to all of the facilities it serves, but it is not practical to mandate
debit calling because not all correctional facilities want the service. 102 What are other challenges to
mandating debit calling?
33.
Prepaid Calling. Commenters suggest prepaid calling as an alternative to collect and
debit calling. 103 Prepaid calling allows inmates or their family members to prepay for minutes, usually at
a discount. 104 This is different from debit calls, in which money is deducted from an account, but the
minutes are not purchased in advance. Commenters argue that the benefits of this approach may include
administrative ease for the providers, increased safety, controlled costs for call recipients, and eliminating
the need to block calls because of a call recipients’ credit standing. 105 However, Petitioners note that
there are outstanding questions with prepaid calling such as: how to handle monthly fees; how to load an
inmate’s account; and minimum required account balance.106 If these issues can be sufficiently
addressed, is prepaid calling a viable ICS option? Do any ICS providers currently offer prepaid
calling? 107 What are some other concerns or considerations with prepaid calling?
34.
Intrastate-Interstate Parity. Another alternative would be to adopt an intrastate-interstate
parity principle that would require that rates for interstate, long-distance calls not exceed rates for
intrastate, long-distance calls. Rates for intrastate, long-distance calls are typically set by state public
utility commissions, 108 and those commissions may set rates that take into account the varying cost of
providing inmate calling services within each state given the security and other features required by state
law. 109 To the extent that interstate rates for inmate calling services are significantly higher than intrastate
rates, 110 how would a requirement that ICS providers set interstate rates at a level no higher than
intrastate, long-distance rates affect the justness and reasonableness of those rates? How many states set
100

See, e.g., KY DOC Alternative Wright Petition Comments at 3; PCS Alternative Wright Petition Comments at 67; PayTel Alternative Wright Petition Comments at 15.

101

See Alternative Wright Petition at 24.

102

See PCS Alternative Wright Petition Comments at 6-7.

103

See CCPS Alternative Wright Petition Comments at 12-13.

104

See id.

105

See id.

106

See Petitioners’ Alternative Wright Petition Reply at 29-30.

107

“The state of the industry has changed, and correctional authorities are permitting prepaid calling options with
more regularity.” Securus July 2, 2012 Ex Parte Letter at 2.
108

Inmate Calling Order on Remand and NPRM, 17 FCC Rcd at 3261, para. 31.

109

Id. at 3277, para. 75 (noting that some states set rate ceilings “specifically for inmate calls”).

110
See HRDC Oct. 8, 2012 Ex Parte Letter at 4 (arguing that interstate calls typically cost much more than intrastate
calls).

13

Federal Communications Commission

FCC 12-167

rates specifically for ICS? What is the rate structure for ICS calls in those states, and what are the rates
for intrastate, long-distance calls? How do states that set specific ICS rates ensure that ICS providers are
“fairly compensated?” 111 How do intrastate, long-distance rates differ between states that establish
general rate caps and those that set specific caps for ICS? If the Commission adopts a parity principle,
should there be any exceptions to that principle?
C.

Additional Proposals in the Record

35.
There are multiple other proposals in the record that do not directly address per-call and
per-minute ICS rates. We seek comment on any other proposals parties contend address the concerns
raised in this proceeding, including any proposals in the record that are not addressed below.
36.
Competition in the ICS Market. The First Wright Petition requested that the Commission
mandate the opening of the ICS market to competition and prohibit collect call only restrictions in
privately-administered correctional facilities.112 ICS contracts are typically exclusive; competition
appears to exist in winning an ICS contract but once an ICS provider wins a contract it becomes the sole
provider. 113 How do exclusive contracts influence ICS rates? How would competitive ICS services be
provided? The First Wright Petition also argued that the collect calling-only limitations imposed by many
confinement facilities increase costs to both ICS providers and inmates that are not outweighed by
corresponding benefits and that such limitations should therefore be prohibited.114 To the extent ICS is
still limited to collect calling in some correctional facilities, we seek comment on the rationale behind this
restriction.
37.
Site Commissions. ICS contracts frequently include a site commission or location rent 115
which is paid to the facility and in some instances may go to fund inmate services at the facility. 116 What
types of inmate services or other services do site commissions fund? How do site commissions in ICS
contracts vary by facility? Petitioners argue that ICS rates are inflated to cover commissions, which can
be as much as 65 percent of gross revenues, 117 causing the rates to be unreasonable in violation of section
201(b). 118 Is this accurate? We seek updated data on how much these site commissions are and how
much they add to per-call costs. The FCC has previously found that “under most contracts, the
commission is the single largest component affecting the rates for inmate calling service”119 and “because
the bidder who charges the highest rates can afford to offer the confinement facilities the largest location
111

47 U.S.C. § 276(b)(1)(A).

112

See First Wright Petition at 3. But see, RBOC Payphone Coalition First Wright Petition Comments at 1-2
(arguing that there is no need for additional regulation of the ICS market, there is robust competition already).
113

See Inmate Calling Order on Remand and NPRM, 17 FCC Rcd at 3252-53, para. 10.

114

See First Wright Petition at 15.

115

“To have a realistic chance of winning a contract, the bidder must include an amount to cover commissions paid
to the inmate facility.” Inmate Calling Order on Remand and NPRM, 17 FCC Rcd at 3252-53, para. 10.
116

“[C]ompensation in the form of commission payments is an important source of the funding needed to provide
the resources, including human resources, needed by the managers and operators of correctional facilities to ensure
that telephone service is provided safely and securely and is not used for improper purposes.” APCTO Alternative
Wright Petition Comments at 6. See also ICS Provider Proposal at 9.
117

See Alternative Wright Petition at 2.

118

See id. at 22-23.

119

Inmate Calling Order on Remand and NPRM, 17 FCC Rcd at 3252-53, para. 10.

14

Federal Communications Commission

FCC 12-167

commissions, the competitive bidding process may result in higher rates.” 120 Do commenters believe this
is still accurate? The Commission has also found that “location rents are not a cost of payphones, but
should be treated as profit.” 121 Do commenters agree with that conclusion?
38.
Some site commissions are mandated by state statute,122 while several states have
reduced or eliminated commissions in ICS contracts. 123 If a state has reduced or eliminated site
commissions, how has any resulting rate transition been handled? How has the lowering or elimination of
site commissions impacted rates? Is this evidence that site commissions are not necessary, or124 is it
evidence that the market is working and the Commission need not intervene? 125 Must the Commission
address site commissions and the effect they have on ICS rates in order to ensure just and reasonable ICS
rates?
39.
Offer No-Cost Calling. In the Alternative Wright Petition, Petitioners include a
suggestion they contend will advance the Commission’s universal service goals and provide all inmates
valuable contact with the outside world.126 Specifically, Petitioners suggest that ICS providers provide a
certain amount of no-cost calling per inmate per month in each of the facilities they serve in exchange for
the right to charge a higher per-minute rate. 127 Petitioners suggest implementing rate caps of $0.22 per
minute for debit calling and $0.275 per minute for collect calling if ICS providers offer 20 minutes of free
calling per inmate per month. 128 Can or should the Commission mandate a certain amount of free calling
per inmate per month, or should this be offered at the providers’ discretion? What legal questions are
raised by this proposal? What other considerations are raised by this proposal?
40.
Billing-Related Call Blocking. Petitioners also express concern over billing-related call
blocking in correctional facilities.129 Specifically, Petitioners note that ICS providers are increasingly
unable or unwilling to enter into agreements with LECs to provide for ICS providers’ billing the LECs’
customers receiving collect calls from inmates. As a result, ICS providers cannot bill for an increasing
120

Id. at 3253, para. 12.

121

Id. at 3254-55, para. 15. But see Embarq Alternative Wright Petition Comments at 3.

122

See Securus May 10, 2012 Ex Parte Letter at 1 and Attach.

123

See CURE Alternative Wright Petition Comments at 6-7 (some states have acted to lower or eliminate site
commissions but a comprehensive approach is needed). See also Leadership Conference June 18, 2012 Ex Parte
Letter at 2. See Alternative Wright Petition at 3-4 (citing the waiver of site commissions in New York State and the
reduction of calling rates and commissions in Florida and Washington). See also CURE Alternative Wright Petition
Comments at 6-7 (some states have acted to lower or eliminate site commissions but a comprehensive approach is
needed). But see KY DOC Alternative Wright Petition Comments at 2 (states are responsible for state programs and
their funding and administration); CCA First Wright Petition Reply at 6 (noting that the FCC should not impose on
what is a state issue).
124

See NASUCA Alternative Wright Petition Reply at 5.

125

See, e.g., CCA Alternative Wright Petition Comments at 10-11; SPCA Alternative Wright Petition Comments at
2-3. But see Leadership Conference June 18, 2012 Ex Parte Letter at 2 (“The market in this case does not drive
down rates. Instead, companies offering telephone service in prisons compete to offer the highest commissions to
prisons, driving up rates to family members . . . .”).
126

See Alternative Wright Petition at 27-28.

127

See id.

128

See id.

129

See id. at 23-24.

15

Federal Communications Commission

FCC 12-167

percentage of inmate calls 130 and thus “block inmate collect calls to numbers served by LECs with which
the service providers have no billing arrangements.” 131 Petitioners argue that in facilities where collect
calling is the only option, this practice may ultimately prevent inmates from being able to make any
telephone calls. 132 Commenters note that many ICS providers have solutions to “ensure that inmates can
contact customers served by these CLECs that refuse to bill for collect calls.”133 Does this practice
continue? Petitioners argue that debit calling, which requires pre-payment, may prevent the need to block
calls when the ICS provider does not have a billing arrangement with the terminating LEC. 134 Is this
accurate? Do commenters have experience with billing-related call blocking? Can commenters provide
data on the average number of calls that are blocked per month and the reason for the blocking? Are there
ways, other than mandating debit calling, to deter or prevent billing-related call blocking?
41.
Non-Geographic Numbers. ICS providers have argued that lowering interstate calling
rates may create an incentive for call recipients to obtain telephone numbers from other states, perhaps
from wireless or VoIP providers, to take advantage of the lowered interstate rates. 135 Petitioners counter
that the opposite is currently happening; call recipients are obtaining telephone numbers, from wireless or
VoIP providers, that are local to the prison to take advantage of lower local calling rates.136 Have
commenters experienced either of these practices? Do these practices raise any security concerns and if
so what are those concerns?
42.
Disabilities Access. There is evidence in the record to indicate that inmates with hearing
disabilities may not have access to ICS at reasonable rates using TTYs.137 The record suggests that
because the average length of a telephone conversation using a TTY is approximately four times longer
than a voice telephone conversation, deaf and hard of hearing inmates who use TTYs have to pay more
than their hearing counterparts. 138 The record also suggests that TTY users have had to pay additional
fees for connecting to a TTY relay operator. 139 We seek comment on the types of ICS access that
individuals who are deaf or hard of hearing experience during their incarceration. Where such access to
ICS is provided, are the rates the same as those available to those without a disability? If the rates differ,
what is that difference and what are the explanations for such difference? We note that section
276(b)(1)(A) specifically exempts “telecommunications relay service calls for hearing disabled
130

See id. at 23.

131

Id.

132

See id. at 24.

133

CCA Alternative Wright Petition Comments at 20. Providers may allow one free call to a blocked telephone
number so alternative arrangements may be made for future contact. See id.

134

See Alternative Wright Petition at 24.

135

See, e.g., CCPS Alternative Wright Petition Comments at 7-8.

136

See Petitioners’ Nov. 19, 2008 Ex Parte Letter at 10. The Commission currently has before it a separate Petition
for Declaratory Ruling seeking an order that Securus may block inmate telephone calls that are terminated via a call
diversion scheme which it argues is a form of dial-around calling and therefore prohibited in the ICS market. See
Policies and Rules Concerning Operator Service Providers, Amendment of Policies and Rules Concerning Operator
Service Providers and Call Aggregators, Petition for Declaratory Ruling of Securus Technologies, Inc., CC Docket
Nos. 90-313, 94-158, WC Docket No. 09-144 (filed July 24, 2009).
137

See, e.g., Letter from amalia deloney, Center for Media Justice, Testimony of Pastor Mark Erlichman (filed Nov.
24, 2012);
138

Id.

139

Id.

16

Federal Communications Commission

FCC 12-167

individuals” from the Commission-established “per call compensation plan” ensuring that ICS providers
are “fairly compensated.” 140 How should the Commission take this exemption into account in examining
rates?
43.
Updated Data. We seek updated data from all interested parties and the public, but
especially from ICS providers. Commenters note that the record regarding nationwide interstate ICS rates
is limited to an “analysis of prison phone contracts nationwide” that was conducted by Prison Legal News
in April 2011. 141 As such, we seek comment on the accuracy and reliability of the study. In addition,
from independent research we have found more-current state rates, which continue to demonstrate a range
of prices for ICS calls among states. For example, for a 15-minute interstate call, we found the following
rates: $6.65 in California; 142 $2.04 in Montana; 143 $6.45 in Texas; 144 and $16.55 in Idaho. 145 We
encourage commenters to submit the most up-to-date information available regarding interstate ICS rates
to aid us in developing a clearer understanding of the ICS market. This includes per-call and per-minute
rates, information on commissions and what percentage of a rate they comprise, the number of
disconnected calls, the average length of calls, and how calls break out by type, i.e., collect, prepaid and
debit. 146
44.
We also seek comment on whether the Alternative Wright Petition and ICS Provider
Proposal are grounded in sufficiently-reliable data.147 For example, the ICS Provider Proposal contains
data for less than 30 correctional facilities, none of which impose site commissions. 148 Is this too small a
sample, or a non-representative sample, on which to base a nationwide solution? ICS providers argue that
in calculating their proposed rate caps the Petitioners relied on data from facilities with low cost

140

47 U.S.C. § 276(b)(1)(A).

141

Petitioners’ July 27, 2011 Ex Parte Letter, Exh. A at 1.

142

See California Department of Corrections and Rehabilitation, Notice to Family and Friends (rel. June 2010),
available at
http://www.cdcr.ca.gov/visitors/docs/GTL_Notices/GTL_English_Notices/GTL_Notice_to_Inmate_Family_re_New
_Rates_Prisons-Camps-CCF-FRCCC_English_rev_5-25-10.pdf.
143

See Montana Dept. of Corrections; Inmate Phones, http://cor mt.gov/Facts/InmatePhones.mcpx (last visited Dec.
21, 2012).
144

See Texas Offender Telephone; Friends and Family Enrollment,
http://texasoffenderfriendsandfamily.com/rates.asp (last visited Dec. 21, 2012).

145
See Idaho Dept. of Correction; Phone Service,
http://www.idoc.idaho.gov/content/prisons/offender_services/phone_services (last visited Dec. 21, 2012).
146

The Commission previously received this information but seeks more recent data. See, e.g., Letter from Marcus
W. Trathen, Counsel to PayTel, to Marlene H. Dortch, Secretary, FCC, CC Docket No. 96-128 (filed April 20,
2007).
147

“The largest flaw in the Alternative Wright Petition . . . is that much of the data the Wright Petitioners rely upon
is based upon information in the record from 1999, not current data.” PayTel Alternative Wright Petition Comments
at 8. See SPCA Alternative Wright Petition Comments at 3 (the data relied upon in the Alternative Wright Petition
is outdated and from several companies that no longer provide ICS).
148

See ICS Provider Proposal at 4-5. The ICS Provider Proposal also provides no information about the geographic
distribution of facilities in the sample, the distribution between state prisons and local prisons (jails), and the
distribution between public and privately administrated facilities. Information about these facility characteristics
would be relevant to analyzing whether the sample is representative. See also Securus Sept. 20, 2011 Ex Parte
Letter at 1.

17

Federal Communications Commission

FCC 12-167

calling. 149 We therefore invite parties to comment on whether the data supporting the First Wright
Petition, the Alternative Wright Petition and the ICS Provider Proposal is representative of correctional
facilities across the country. 150
45.
Existing Contracts. Petitioners suggest that if the Commission implements a rate cap it
should also mandate a one-year fresh look, transition period for existing ICS contracts. 151 Petitioners
envision that this transition period would allow for any necessary review and termination or renegotiation
of existing ICS contracts in order to introduce rate caps which would be effective by the end of the
transition period. 152 Commenters argue that the Commission cannot insert itself into the procurement
decisions of correctional agencies,153 and that any new ICS-related rules should not be applied to existing
contracts but only to contracts entered into after the adoption of new rules. 154
46.
Would it be appropriate to mandate a fresh look period or should any new ICS rules
apply only to contracts entered into after the adoption of new rules? With renegotiated contracts, how
long should the transition period last? What are typical ICS contract terms? Do such contracts usually
have change of law provisions that would be triggered by a Commission order? How does the length of
existing contracts affect the implementation of any of the proposals discussed above? If commenters
provide alternative proposals not discussed above, they should include information on how the contractual
process will function with each specific proposal. After implementing a new ICS regime, should the
Commission require a periodic rate review to ensure that the rates remain just and reasonable?
47.
We encourage comment on any new issues that have arisen in the ICS market or issues
that have not been addressed above. We request that commenters provide evidentiary support for their
comments and suggestions in this proceeding.
D.

Cost/Benefit Analysis of Proposals

48.
Acknowledging the potential difficulty of quantifying costs and benefits, we seek to
determine whether the proposals above will provide public benefits that outweigh their costs, and we seek
to maximize the net benefits to the public from any proposals we adopt. For example, commenters have
argued that inmate recidivism is decreased with regular family contact.155 Accordingly, we seek specific
comment on the costs and benefits of the proposals above and any additional proposals received in
response to this Notice. We also seek any information or analysis that would help us to quantify these
costs or benefits. Further, we seek comment on any considerations regarding the manner in which the
149

See Letter from Stephanie A. Joyce, Counsel for Securus Technologies, Inc., to Marlene H. Dortch, Secretary,
FCC, CC Docket No. 96-128 at 1 (filed Dec. 17, 2008).
150

We acknowledge that Securus recently has filed a piece of updated cost information. See Letter from Stephanie
A. Joyce, Counsel for Securus Technologies, Inc., to Marlene H. Dortch, Secretary, FCC, CC Docket No. 96-128 at
1 (filed Oct. 11, 2011).

151

See Alternative Wright Petition at 28.

152

See id.

153

See GEO Group Alternative Wright Petition Comments at 17.

154

See CCA Alternative Wright Petition Comments at 21.

155

“Communication with families will combat recidivism, which is extremely expensive. A report by the Pew
Center on the States found that more than four in ten offenders return to state prisons within three years of being
released and reducing recidivism by just ten percent could save the states more than $653 million in one year. While
communication is not a silver bullet, evidence shows it helps to reduce recidivism.” Leadership Conference June
18, 2012 Ex Parte Letter at 1.

18

Federal Communications Commission

FCC 12-167

proposals could be implemented that would increase the number of people who benefit from them, or
otherwise increase their net public benefit. We request that interested parties discuss whether, how and
by how much they will be impacted in terms of costs and benefits of the proposals included herein. We
recognize that the costs and benefits may vary based on such things as the correctional facility served and
ICS provider. We request that parties file specific analysis and facts to support any claims of significant
costs or benefits associated with the proposals herein.
E.

Legal Authority

49.
We seek comment on the scope of the Commission’s legal authority to regulate ICS. 156
Section 276 of the Communications Act of 1934 (Act) requires that all payphone providers, including ICS
providers, 157 be “fairly compensated.” 158 We seek comment on our authority to address interstate
interexchange ICS rates under section 276(b)(1)(A), which directs the Commission to “establish a per call
compensation plan to ensure that all payphone service providers [(PSPs)] are fairly compensated for each
and every completed intrastate and interstate call.”159 We also seek comment on our authority to address
interstate interexchange ICS rates under section 201(b) of the Act, which requires common carriers to
provide service at “just and reasonable” rates and authorizes the Commission to “prescribe such rules and
regulations as may be necessary in the public interest to carry out the provisions of this chapter.”160 Does
the Commission have the jurisdiction to establish per-minute rate caps for privately- and publiclyadministered facilities? We encourage commenters to discuss additional sources of legal authority for the
Commission to address ICS rates.
50.
We note that only a portion of the telephone calls inmates make from correctional
facilities are interstate, interexchange ICS. 161 Many calls made from correctional facilities are intrastate
local or long distance calls, which are regulated by the states.162 We therefore seek comment on how the
Commission can encourage states to reevaluate their policies regarding intrastate ICS rates.
51.
We also seek comment on how and whether use of VoIP technologies by ICS providers
impacts our analysis under section 276 of the Act. To what extent are providers currently utilizing VoIP
technology to provide ICS? Would the use of VoIP technology affect the authority of state regulators to
address intrastate ICS rates? What authority regarding ICS rates would control in that circumstance?
156

See NASUCA Alternative Wright Petition Comments at 3 (maintaining that the Commission “has the authority to
impose benchmark rates on interstate interexchange inmate collect and debit card calling.”). See also ABA
Alternative Wright Petition Comments at 5 (section 201 gives the Commission authority to act). But see Embarq
Alternative Wright Petition Comments at 6. See also CCA Alternative Wright Petition Comments at 15
(“[R]equirements for fair compensation under Section 276(b)(1)(A) flow to the carrier, and do not establish rights
for the end user, in this case the inmates or the parties they call.”) (emphasis in original).
157

47 U.S.C. § 276(d).

158

See 47 U.S.C. § 276(b)(1)(A). The questions raised in this NPRM do not relate to the Commission’s legal
authority to regulate payphone compensation between providers, which is well-established under Section 276 and
the Commission’s implementing rules. See 47 U.S.C. §§ 276(b), 201(b).
159

47 U.S.C. § 276(b)(1)(A). In the Inmate Calling Order on Remand and NPRM, the Commission acknowledged
the difficulty of determining what constitutes fair compensation for each and every payphone call since the cost of a
call depends on how many calls are made from that payphone. See Inmate Calling Order on Remand and NPRM,
17 FCC Rcd at 3254-59, paras. 14-26.
160

See 47 U.S.C. § 201(b).

161

See supra para.8.

162

See supra para. 2.

19

Federal Communications Commission

FCC 12-167

52.
We recognize the important role that states play in managing correctional facilities and in
contracting with private correctional management companies. Some parties believe ICS is exclusively a
state issue 163 because it involves management of correctional facilities and therefore its regulation should
be left to state correctional officials. 164 How would such a conclusion be reconciled with the
Commission’s obligations under sections 201 and 276 and the fact that the question of the reasonableness
of ICS rates was referred to the Commission under the doctrine of primary jurisdiction? 165 Would the
Commission’s fulfillment of its obligations under sections 201 and 276 potentially result in preemption of
states’ exercise of regulatory or police power authority? 166
53.
We also seek comment specific to the proposals discussed above. Does the Commission
have the authority to disallow an additional call set up charge when inmates’ calls are disconnected?
Does the Commission have the legal authority to mandate that ICS providers offer debit calling? What
legal authority does the Commission have to address the site commissions common in ICS contracts?
IV.

PROCEDURAL MATTERS
A. Filing Instructions

54.
Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 47 C.F.R. §§ 1.415,
1.419, interested parties may file comments and reply comments on or before the dates indicated on the
first page of this document. Comments may be filed using the Commission’s Electronic Comment Filing
System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
Comments and reply comments on this NPRM must be filed in WC Docket No. 12-375.
•

Electronic Filers: Direct cases and other pleadings may be filed electronically using the Internet
by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

•

Paper Filers: Parties who choose to file by paper must file an original and one copy of each
filing. If more than one docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by firstclass or overnight U.S. Postal Service mail. All filings must be addressed to the Commission’s
Secretary, Office of the Secretary, Federal Communications Commission.
• All hand-delivered or messenger-delivered paper filings for the Commission’s Secretary
must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325,

163

“Only [state and local government bodies] can comprehensively consider, and are fully empowered to address,
the full range of interrelated issues. These issues include not only inmate calling rates but also security
requirements, appropriate service levels, and budgetary prerogatives, among other considerations.” GTL Alternative
Wright Petition Comments at 10. See also APCTO Alternative Wright Petition Comments at 3-4.
164

Embarq Alternative Wright Petition Comments at 1. See also GEO Group Alternative Wright Petition
Comments at 2, 14.
165

See supra para. 11.

166

According to one commenter, “[u]nder Petitioners’ own legal theory, the FCC would have to rule that
commissions paid by CCPS and other providers of inmate calling services are invalid or unlawful in order to grant
the relief requested. That puts the FCC in the position of ruling directly upon the validity and lawfulness of states’
exercise of their police power.” CCPS Alternative Wright Petition Comments at 2. See also Embarq Alternative
Wright Petition Comments at 5; KY DOC Alternative Wright Petition Comments at 2.

20

Federal Communications Commission

FCC 12-167

Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries
must be held together with rubber bands or fasteners. Any envelopes and boxes must be
disposed of before entering the building.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority
Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th
Street, SW, Washington DC 20554.
People with Disabilities: To request materials in accessible formats for people with disabilities
(braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).
B. Ex Parte Requirements
55.
The proceeding this Notice initiates shall be treated as a “permit-but-disclose” proceeding
in accordance with the Commission’s ex parte rules. 167 Persons making ex parte presentations must file a
copy of any written presentation or a memorandum summarizing any oral presentation within two
business days after the presentation (unless a different deadline applicable to the Sunshine period applies).
Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation
must (1) list all persons attending or otherwise participating in the meeting at which the ex parte
presentation was made, and (2) summarize all data presented and arguments made during the
presentation. If the presentation consisted in whole or in part of the presentation of data or arguments
already reflected in the presenter’s written comments, memoranda or other filings in the proceeding, the
presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or
other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be
found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission
staff during ex parte meetings are deemed to be written ex parte presentations and must be filed
consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has
made available a method of electronic filing, written ex parte presentations and memoranda summarizing
oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment
filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt,
searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission’s ex
parte rules.
C. Initial Regulatory Flexibility Analysis
56.
As required by the Regulatory Flexibility Act of 1980 (RFA), 168 the Commission has
prepared an Initial Regulatory Flexibility Analysis (IRFA) for this Notice, of the possible significant
economic impact on small entities of the policies and rules addressed in this document. The IRFA is set
forth as Appendix C. Written public comments are requested on this IRFA. Comments must be
identified as responses to the IRFA and must be filed by the deadlines for comments on the Notice
provided on or before the dates indicated on the first page of this Notice. The Commission’s Consumer
and Governmental Affairs Bureau, Reference Information Center, will send a copy of this Notice of

167

47 C.F.R. §§ 1.1200 et seq.

168

See 5 U.S.C. § 603.

21

Federal Communications Commission

FCC 12-167

Proposed Rulemaking, including the IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA). 169
V.

ORDERING CLAUSES

57.
ACCORDINGLY, IT IS ORDERED that, pursuant to sections 1, 2, 4(i)–(j), 201(b) and
276 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152, 154(i)–(j), 201(b) and 276,
this Notice of Proposed Rulemaking IS ADOPTED.
58.
IT IS FURTHER ORDERED, that the Petition of Martha Wright et al. for Rulemaking
or, in the Alternative, Petition to Address Referral Issues in Pending Rulemaking is GRANTED IN
PART.
59.
IT IS FURTHER ORDERED, that the Petitioners’ Alternative Rulemaking Proposal is
GRANTED IN PART.
60.
IT IS FURTHER ORDERED, that the Commission’s Consumer and Governmental
Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Notice of Proposed
Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration.
61.
IT IS FURTHER ORDERED, that pursuant to sections 1.4(b)(1) and 1.103(a) of the
Commission’s rules, 47 C.F.R. §§ 1.4(b)(1) and 1.103(a), that this Notice of Proposed Rulemaking
SHALL BE EFFECTIVE on the date of publication of a summary thereof in the Federal Register.
FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch
Secretary

169

See 5 U.S.C. § 603(a).

22

Federal Communications Commission

FCC 12-167

Appendix A
List of First Wright Petition Commenters and Reply Commenters

Commenters
American Civil Liberties Union and Washington Lawyers’ Committee for Civil Rights and Urban Affairs
(WLC)
Ad Hoc Coalition for Right to Communicate
Association of Private Correctional and Treatment Organizations (APCTO)
AT&T
Corrections Corporation of America (CCA)
Citizens United for Rehabilitation of Errants (CURE)
Evercom
National Association of State Utility Consumer Advocates (NASUCA)
New York State Dept. of Corrections
Ohio Dept. of Corrections
RBOC Payphone Coalition
T-NETIX
Worldcom
Reply Commenters
American Jail Association
Association of Private Correctional and Treatment Organizations (APCTO)
Corrections Corporation of America (CCA)
Evercom
Martha Wright et al.
MCI
National Association of State Utility Consumer Advocates (NASUCA)
Our Place DC
Qwest
T-NETIX

23

Federal Communications Commission
APPENDIX B
List of Alternative Wright Petition Commenters and Reply Commenters
Commenters
American Bar Association
Association of Private Correctional and Treatment Organizations (APCTO)
Citizens United for Rehabilitation of Errants (CURE)
(Ad Hoc) Coalition for the Right to Communicate
Consolidated Communications Public Services, Inc. (CCPS)
Corrections Corporation of America (CCA)
Embarq
GEO Group, Inc. (GEO Group)
Global Tel*Link (GTL)
Idaho Dept. of Correction
Innocence Project and the Incarcerated Mothers Program
Kentucky Dept. of Corrections (Kentucky DOC)
Legal Services for Prisoners with Children
National Association of State Utility Consumer Advocates (NASUCA)
North Carolina Prisoner Legal Services, Inc.
Office of the People’s Counsel, District of Columbia
Our Place, DC and Hope House, DC
Pay Tel Communications, Inc.
Prison Legal News (PLN)
Public Communications Services, Inc. (PCS)
Sentencing Project, et al.
Southern Public Communications Association (SPCA)
T-NETIX, Inc. and Evercom Systems, Inc. (T-NETIX)
Virginia Dept. of Corrections (Virginia DOC)

Reply Commenters
Consolidated Communications Public Services, Inc. (CCPS)
GEO Group, Inc. (GEO Group)
Martha Wright, et al.
National Association of State Utility Consumer Advocates (NASUCA)
T-NETIX, Inc. and Evercom Systems, Inc. (T-NETIX)

24

FCC 12-167

Federal Communications Commission

FCC 12-167

APPENDIX C
Initial Regulatory Flexibility Analysis (IRFA)
1.
As required by the Regulatory Flexibility Act of 1980, as amended (RFA), 1 the
Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on a substantial number of small entities by the policies and rules proposed in this
Notice of Proposed Rulemaking (NPRM or Notice). 2 Written comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments
on the NPRM. The Commission will send a copy of the NPRM, including this IRFA, to the Chief
Counsel for Advocacy of the Small Business Administration (SBA). 3 In addition, the NPRM and IRFA
(or summaries thereof) will be published in the Federal Register. 4
A.

Need for, and Objectives of, the Notice

2.
This NPRM seeks comment on a variety of issues relating to inmate calling service
(ICS). As discussed in the Notice, the NPRM is the result of two Petitions for Rulemaking. In the NPRM
the Commission seeks information on such things as the ICS market, ICS rates and ICS options. To
allow informed decision making, the NPRM seeks comment on a number of specific topics.
B.

Legal Basis

3.
The legal basis for any action that may be taken pursuant to the NPRM is contained in
sections 1, 2, 4(i)-(j), 201(b) and 276 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
152, 154(i)-(j), 201(b) and 276.
C.

Description and Estimate of the Number of Small Entities to Which the Proposed
Rules Will Apply

4.
The RFA directs agencies to provide a description of, and where feasible, an estimate of
the number of small entities that may be affected by the proposed rules, if adopted.5 The RFA generally
defines the term “small entity” as having the same meaning as the terms “small business,” “small
organization,” and “small governmental jurisdiction.” 6 In addition, the term “small business” has the
same meaning as the term “small-business concern” under the Small Business Act. 7 A “small-business

1

See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601–612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).

2

We note that an Initial Regulatory Flexibility Analysis was conducted in the Inmate Order on Remand and NPRM.
See Inmate Order on Remand and NPRM, 17 FCC Rcd at 3279-83, paras. 80-89.
3

See 5 U.S.C. § 603(a).

4

See id.

5

See 5 U.S.C. § 603(b)(3).

6

See 5 U.S.C. § 601(6).

7

See 5 U.S.C. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business
Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register.”

25

Federal Communications Commission

FCC 12-167

concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the SBA. 8
5.
Small Businesses. Nationwide, there are a total of approximately 27.5 million small
businesses, according to the SBA. 9
6.
Wired Telecommunications Carriers. The SBA has developed a small business size
standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or
fewer employees. 10 According to Census Bureau data for 2007, there were 3,188 firms in this category,
total, that operated for the entire year.11 Of this total, 3,144 firms had employment of 999 or fewer
employees, and 44 firms had employment of 1,000 employees or more. 12 Thus, under this size standard,
the majority of firms can be considered small.
7.
Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed
a size standard for small businesses specifically applicable to local exchange services. The closest
applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.13 According to Commission data,
1,307 carriers reported that they were incumbent local exchange service providers.14 Of these 1,307
carriers, an estimated 1,006 have 1,500 or fewer employees and 301 have more than 1,500 employees.15
Consequently, the Commission estimates that most providers of local exchange service are small entities
that may be affected by our action.
8.
Incumbent Local Exchange Carriers (incumbent LECs). Neither the Commission nor
the SBA has developed a size standard for small businesses specifically applicable to incumbent local
exchange services. The closest applicable size standard under SBA rules is for Wired
Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer
employees. 16 According to Commission data, 1,307 carriers reported that they were incumbent local
exchange service providers. 17 Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer employees
and 301 have more than 1,500 employees. 18 Consequently, the Commission estimates that most providers
of incumbent local exchange service are small businesses that may be affected by our action.

8

See 15 U.S.C. § 632.

9

See SBA, Office of Advocacy, “Frequently Asked Questions,” http://www.sba.gov/sites/default/files/sbfaq.pdf
(last visited July 11, 2012).
10

13 C.F.R. § 121.201, NAICS code 517110.

11

U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm
Size: Employment Size of Firms for the United States: 2007 NAICS Code 517110” (issued Nov. 2010).

12

See id.

13

13 C.F.R. § 121.201, NAICS code 517110.

14

See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry
Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service).
15

See id.

16

See 13 C.F.R. § 121.201, NAICS code 517110.

17

See Trends in Telephone Service at Table 5.3.

18

See id.

26

Federal Communications Commission

FCC 12-167

9.
We have included small incumbent LECs in this present RFA analysis. As noted above,
a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard
(e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its
field of operation.” 19 The SBA’s Office of Advocacy contends that, for RFA purposes, small incumbent
LECs are not dominant in their field of operation because any such dominance is not “national” in
scope. 20 We have therefore included small incumbent LECs in this RFA analysis, although we emphasize
that this RFA action has no effect on Commission analyses and determinations in other, non-RFA
contexts.
10.
Competitive Local Exchange Carriers (competitive LECs), Competitive Access
Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither
the Commission nor the SBA has developed a small business size standard specifically for these service
providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications
Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. 21
According to Commission data, 1,442 carriers reported that they were engaged in the provision of either
competitive local exchange services or competitive access provider services.22 Of these 1,442 carriers, an
estimated 1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees.23 In addition,
17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have
1,500 or fewer employees. 24 In addition, 72 carriers have reported that they are Other Local Service
Providers. 25 Of the 72, 70 have 1,500 or fewer employees and two have more than 1,500 employees.26
Consequently, the Commission estimates that most providers of competitive local exchange service,
competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are
small entities that may be affected by our action.
11.
Interexchange Carriers (IXCs). Neither the Commission nor the SBA has developed a
size standard for small businesses specifically applicable to interexchange services. The closest
applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.27 According to Commission data,
359 companies reported that their primary telecommunications service activity was the provision of
interexchange services. 28 Of these 359 companies, an estimated 317 have 1,500 or fewer employees and

19

5 U.S.C. § 601(3).

20

See Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May
27, 1999). The Small Business Act contains a definition of “small business concern,” which the RFA incorporates
into its own definition of “small business.” See 15 U.S.C. § 632(a); see also 5 U.S.C. § 601(3). SBA regulations
interpret “small business concern” to include the concept of dominance on a national basis. See 13 C.F.R. §
121.102(b).
21

See 13 C.F.R. § 121.201, NAICS code 517110.

22

See Trends in Telephone Service at Table 5.3.

23

See id.

24

See id.

25

See id.

26

See id.

27

See 13 C.F.R. § 121.201, NAICS code 517110.

28

See Trends in Telephone Service at Table 5.3.

27

Federal Communications Commission

FCC 12-167

42 have more than 1,500 employees. 29 Consequently, the Commission estimates that the majority of
interexchange service providers are small entities that may be affected by our action.
12.
Local Resellers. The SBA has developed a small business size standard for the category
of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or
fewer employees. 30 According to Commission data, 213 carriers have reported that they are engaged in
the provision of local resale services.31 Of these, an estimated 211 have 1,500 or fewer employees and
two have more than 1,500 employees. 32 Consequently, the Commission estimates that the majority of
local resellers are small entities that may be affected by our action.
13.
Toll Resellers. The SBA has developed a small business size standard for the category
of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or
fewer employees. 33 According to Commission data, 881 carriers have reported that they are engaged in
the provision of toll resale services. 34 Of these, an estimated 857 have 1,500 or fewer employees and 24
have more than 1,500 employees. 35 Consequently, the Commission estimates that the majority of toll
resellers are small entities that may be affected by our action.
14.
Other Toll Carriers. Neither the Commission nor the SBA has developed a size
standard for small businesses specifically applicable to Other Toll Carriers. This category includes toll
carriers that do not fall within the categories of interexchange carriers, operator service providers, prepaid
calling card providers, satellite service carriers, or toll resellers. The closest applicable size standard
under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such a business is
small if it has 1,500 or fewer employees.36 According to Commission data, 284 companies reported that
their primary telecommunications service activity was the provision of other toll carriage. 37 Of these, an
estimated 279 have 1,500 or fewer employees and five have more than 1,500 employees. 38 Consequently,
the Commission estimates that most Other Toll Carriers are small entities that may be affected by our
action.
15.
Payphone Service Providers (PSPs). Neither the Commission nor the SBA has
developed a small business size standard specifically for payphone services providers. The appropriate
size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.39 According to Commission data, 40
535 carriers have reported that they are engaged in the provision of payphone services. Of these, an
29

See id.

30

See 13 C.F.R. § 121.201, NAICS code 517911.

31

See Trends in Telephone Service at Table 5.3.

32

See id.

33

See 13 C.F.R. § 121.201, NAICS code 517911.

34

See Trends in Telephone Service at Table 5.3.

35

See id.

36

See 13 C.F.R. § 121.201, NAICS code 517110.

37

See Trends in Telephone Service at Table 5.3.

38

See id.

39

See 13 C.F.R. § 121.201, NAICS code 517110.

40

See Trends in Telephone Service at Table 5.3.

28

Federal Communications Commission

FCC 12-167

estimated 531 have 1,500 or fewer employees and four have more than 1,500 employees. 41
Consequently, the Commission estimates that the majority of payphone service providers are small
entities that may be affected by our action.
D.

Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements for Small Entities

16.
In this Notice, the Commission seeks public comment on options to reform the inmate
calling service market. Possible new rules could affect all ICS providers, including small entities. In
proposing these reforms, the Commission seeks comment on various options discussed and additional
options for reforming the ICS market.
E.

Steps Taken to Minimize the Significant Economic Impact on Small Entities, and
Significant Alternatives Considered

17.
The RFA requires an agency to describe any significant, specifically small business,
alternatives that it has considered in reaching its proposed approach, which may include the following
four alternatives (among others): “(1) the establishment of differing compliance or reporting requirements
or timetables that take into account the resources available to small entities; (2) the clarification,
consolidation, or simplification of compliance and reporting requirements under the rules for such small
entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of
the rule, or any part thereof, for such small entities.” 42
18.
The NPRM seeks comment from all interested parties. The Commission is aware that
some of the proposals under consideration may impact small entities. Small entities are encouraged to
bring to the Commission’s attention any specific concerns they may have with the proposals outlined in
the NPRM. In addition, the Commission seeks updated data, as described in the NPRM, from small
entities that may be impacted by Commission action on ICS.
19.
The Commission expects to consider the economic impact on small entities, as identified
in comments filed in response to the NPRM, in reaching its final conclusions and taking action in this
proceeding. Specifically, the Commission will conduct a cost/benefit analysis as part of this NPRM and
consider the public benefits of any such requirements it might adopt, to ensure that they outweigh their
impacts on small businesses. Further, these requirements are necessary to ensure that the statutory goals
of Section 276 of the Act are met.
F.

Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules

20.

None.

41

See id.

42

5 U.S.C. § 603(c)(1)–(c)(4).

29

Federal Communications Commission

FCC 12-167

STATEMENT OF
CHAIRMAN JULIUS GENACHOWSKI
Re:

Rates for Interstate Inmate Calling Services, WC Docket No. 12-375

I’m pleased that we’re moving forward with today’s Notice of Proposed Rulemaking on interstate
prison phone rules and rates. I want to particularly thank Commissioner Clyburn for her leadership on
this important issue, which affects the families of inmates, prisoner rehabilitation, and prison security. I
look forward to working with my colleagues and all stakeholders as we move forward.

30

Federal Communications Commission

FCC 12-167

STATEMENT OF
COMMISSIONER ROBERT M. McDOWELL
Re:

Rates for Interstate Inmate Calling Services, WC Docket No. 12-375

I am pleased to support this interstate prison phone rulemaking which will refresh the record and
allow the Commission to evaluate these issues with updated data. I commend Commissioner Clyburn for
her diligence on these issues, and I look forward to working with all of my colleagues and the full range
of stakeholders. As the record develops, I will focus, in particular, on the Commission’s legal authority.

31

Federal Communications Commission

FCC 12-167

STATEMENT OF
COMMISSIONER MIGNON L. CLYBURN
Re:

Rates for Interstate Inmate Calling Services, WC Docket No. 12-375

Today, we officially answer the call from tens of thousands of consumers who have written,
emailed, and yes, phoned the Commission, pleading for relief on interstate long distance rates from
correctional facilities. As discussed in the Notice, the nearly ten year old “Wright Petition,” was filed on
behalf of friends and family of the incarcerated, who generally pay significantly higher toll rates than
those offered for the typical interstate, long distance call. This NPRM requests information from
providers of inmate calling services in order for the Commission to determine whether those rates are just
and reasonable. It also seeks comment on various options submitted in the record, to limit those rates. I
encourage providers to file detailed cost information and to work with the Commission, as well as the
interested consumer and public interest groups, to find workable solutions to this important issue.
The telephone is a crucial instrument for the incarcerated, and those who care about them,
because voice calling is often the only communications option available. Most inmates along with their
families and friends are low-income, so in-person visits due to distance and expense are infrequent. It is
not uncommon for state prisons to be located hundreds of miles away from urban centers, but even in
places where the facility is nearby, the engagement often requires a significant amount of time to clear
security. And because many of these complexes are frequently overcrowded and ill-equipped to handle
the volume of visitors, the wait (not even to mention the economic burden of missing work, etc.) is quite
severe.
So why should the rest of us care? Maintaining contact with family and friends during
incarceration not only helps the inmate, but it is beneficial to our society as a whole. There are well over
two million children with at least one parent behind bars and regardless of their circumstances, both
children and parents gain from regular contact with one another. Studies also show that those released are
less likely to reoffend if they are able to maintain relationships with their loved ones while they are in
prison. With seven hundred thousand individuals released every year from these institutions, it is crucial
that we do whatever we can to strengthen family ties before these individuals return home. One sure way
to realize this is through the provisioning of affordable phone service. The overall costs of not doing so
are too great, for those who re-offend place a substantially higher economic burden on taxpayers than any
lost proceeds that would result from lower prison phone rates.
It is important, however, that any steps taken do not jeopardize quality phone service to and from
correctional facilities, and that the security features needed by law enforcement remain intact. But the
time is now for us to have an honest discussion about the use of site commissions and their impact on
low-income families. We are seeking that information in this Notice.
I want to thank the Chairman and my colleagues for their work on and their support for this
Notice, as well as our staff who spent many hours sifting through the thousands of pages of this decade
old proceeding. It also is important to recognize the hard work of the community-based social, media
justice, religious, legal and immigration organizations, the FCC’s own Consumer Advisory Committee
and the National Association of Regulatory Utility Commissioners. All have been bringing significant
attention to this issue and have urged this Commission and our state counterparts to review these rates and
act, where necessary, to protect consumers. As a result, we have seen several states take action to lower
their rates and today, I am pleased that this Commission is gathering the information it needs to ensure
that all consumers have access to just and reasonable interstate rates.

32

Federal Communications Commission

FCC 12-167

STATEMENT OF
COMMISSIONER JESSICA ROSENWORCEL
Re:

Rates for Interstate Inmate Calling Services, WC Docket No. 12-375

With this rulemaking, the Commission takes a step toward addressing the high cost that prison
inmates and their families must pay for phone service. This is not just an issue of markets and rates; it is
a broader issue of social justice. Consider that across the country roughly 2.7 million children have at
least one parent in prison. In many cases, inmates are separated from their families by hundreds of miles,
and families may lack the time and means to make regular visits. Phone calls are the only way these
families can stay connected. But 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. This
harms the families and children of the incarcerated. But it goes beyond that. It harms all of us because
we know that regular contact between prisoners and family members reduces recidivism.
This rulemaking presents an opportunity to ask questions and refresh the record on interstate
inmate payphone rates. The record this proceeding has generated so far has shown that inmate rates can
vary tremendously based on the state law involved, the type of prison facility, and the specific contract for
services. Since site commission fees paid by inmate telephone service providers to prisons may be used
to cover the costs of inmate security, as we move forward we must ensure that our efforts to reduce
interstate rates do not compromise prison safety.
Finally, I want to thank Chairman Genachowski for initiating this proceeding, and Commissioner
Clyburn for her advocacy on this issue on behalf of prisoners and their families. I look forward to
reviewing the record, and working with my colleagues to help find a way to lower these rates—and in
turn, help inmates and their families stay connected.

33

Federal Communications Commission

FCC 12-167

STATEMENT OF
COMMISSIONER AJIT PAI
Re:

Rates for Interstate Inmate Calling Services, WC Docket No. 12-375

Today we launch a proceeding to consider new rules for interstate inmate calling services
pursuant to our duty under the Communications Act to ensure that rates for interstate telecommunications
services are just and reasonable. 1 We do so in response to calls to action from hundreds of inmates and
their families, Members of Congress, 2 the National Association of Regulatory Utility Commissioners,3
numerous civil rights organizations, the FCC’s own Consumer Advisory Committee, 4 and my colleague,
Commissioner Mignon Clyburn. 5
But it should not take a letter from Congress, it should not take manifold resolutions, it should not
take hundreds of individual signatures to get the FCC to act on a nine-year-old petition for rulemaking.
Martha Wright came to the Commission nine years ago, seeking redress for the high rates she paid to
speak with her then-incarcerated grandson. When she did so, she could not have expected to wait longer
for action on her petition than it took the prison system to release her grandson. Ms. Wright expected—
and deserved—better. And although our response is late, I am nonetheless pleased to support today’s
action.
As a general matter, I believe that prices should be set by the free market rather than by
government fiat. At the same time, however, we must recognize that choice and competition are not
hallmarks of life behind bars. Inmates cannot choose among multiple carriers for lower rates. Instead,
prison administrators select the service provider, and their incentives do not necessarily align with those
who are incarcerated. Accordingly, I am open to exploring whether there is action we can and should
take, consistent with our legal authority, to address the issues identified in Martha Wright’s petition for
rulemaking.

1

47 U.S.C. § 201(b).

2

Letter from Representatives Henry A. Waxman and Bobby L. Rush to Julius Genachowski, Chairman, FCC (Sept.
12, 2012), available at http://go.usa.gov/gAU9.

3

NARUC, TC-1 Resolution Urging the FCC to take Action to Ensure Fair and Reasonable Telephone Rates from
Correctional and Detention Facilities (adopted Nov. 14, 2012), available at http://bit.ly/VWFVFB.
4

FCC Consumer Advisory Committee, Recommendation Regarding Affordable Phone Access for Incarcerated
Individuals and Families (adopted Sept. 21, 2012).

5

Statement of FCC Commissioner Mignon L. Clyburn on Meeting Petitioners Martha Wright and Ulandis Forte and
Screening the Award-Winning Film Middle Of Nowhere (Sept. 24, 2012), available at http://go.usa.gov/gARH.

34