,

'I.

LOUISIANA PUBLIC SERVICE COMMISSION
ORDER NUMBER R-31891
LOUISIANA PUBLIC SERVICE COMMISSION, EX PARTE

Docket Number R-31891In Ret Review and Update ofthe Regulations and
Guidelines ofthe Louisiana Public Service Commission Applicable to Customer
Owned Coin Operated Telephone Service Providers and Alternate Operator
Service Providers

(Decided at the Commission's December 12, 2012
Business and Executive Session)
Introduction

At the Louisiana Public Service Commission's (nCommission" or "LPSC")
Business and Executive (sometimes "B&E") Session held on March

23~

2011, the Commission

initiated this investigation to review and update, as required, the Commissionts regulations and
guidelines applicable to Customer Owned Coin Operated Telephone ("COCOT") and Alternate
Operator Service ("AOS") Providers (also known as Operator Service Providers ("aSPs"». In
particular, the Commission indicated that it was interested in the resut ts of an analysis of whether
the rates charged to inmates incarcerated in State, Parish and local correctional facilities were
just and reasonable. Notice of the initiation of this Docket, including the time permitted for
intervention, was published in the Commission's Official Bulletin on April 15, 2011,
Following the inception of this rulemaking docket, several parties filed timely
motions to intervene as follows: Sprint Spectrum, L.P. (ItSprint,,).l Global Tel*Link C'Global"),2
Infinity Networks; Inc. (I'Infinity!1);3 Network Communications International Corporation
("NCIC"), Securus Technologies, Inc. ("Securus"), the Louisiana Cable and Telecommunications
Association, Inc. and the Small Company Committee of the Louisiana Telecommunications
Association C'SCC tr).4 The Department of Corrections (now the Department of Public Safety
and Corrections ("DPS&C"» made an appearance and sought "Interested Partyll status pursuant
to Rule 6 of the Commission's Rules of Practice and Procedure (ltCommission Rules"), which
Sprint subsequently withdrew from this Docket.
2

Global subsequently requested to become Hinactive!l and ultimately withdrew from the
Docket.

3

Infinity subsequently withdrew from this Docket.

4

The SCC subsequently withdrew from this Docket
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was granted. Approximately nineteen months after the opening of the Docket, City TeIe·Coin
Company, (,'CTC") and The Louisiana Sheriffs' Association (ItLSA") requested leave to
intervene out of time, which motions were granted.
During the course of the investigation, the Commission Staff requested a variety
of infonnation from the parties to the Docket. Two rounds of data requests were propounded.
The first contained 22 data requests and the second contained an additional six detailed data
requests. The Staff data requests sought information about a variety of the providers' operations
including: the institutions in which the carriers provided service in Louisiana; the contractual
tenns of the agreements between the carriers and the correctional institutions; the level of rates
charged by the providers; the design of the rates; the specific services provided; the cost to
provide each service; the earned returns on the carriers' Louisiana operations; the level of
commissions paid to the correctional facilities; whether any surcharges or fees are assessed and
collected by the carriers (in addition to the rates charged for telecommunications services
pursuant to the

Commission~authorized

rate caps); whether the collection of any such surcharges

or fees was approved by Commission Orders; whether the carriers would be in favor of any
changes to the level or design of the rate caps approved by the Commission and currently in
effect; changes to the level and design of rates favored by the carriers; and the timing of
implementing any changes to those rates andlor surcharges and fees.
The responses to Staffs discovery varied widely from provider to provider. One
carrier provided somewhat detailed information on not only the services it provides but also~ for
a limited

time~

on its claimed cost of providing those services and its earned returns. Other

carriers provided considerably less information claiming that they couldn't break: out costs and
profitability associated with their Louisiana operations, because they didn't keep their books on
that basis, nor did they see any reason to do so. They did not attempt to provide this information.
Every carrier that responded to the Staffs data requests claimed that some or all of the
information provided was proprietary, confidential, commercially sensitive or constituted trade
secrets and was therefore entitled to the confidentiality protections provided by Rule 12 of the
Commission Rules. The Commission Staff has respected these assertions by the carriers and
treated this information in accordance with Rule 12 of the Commission Rules. None of the
claimed proprietary information has been made public.

Order Number R-31891
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In addition to the data requests propounded by the Commission Staff, the
Commission conducted a technical conference on August 21, 2012. On October 19, 2012, the
Commission Staff Recommendations ("Staff Recommendations") were filed in the Docket and

distributed to aU parties on the Official Service List. Notice of the Staff Recommendations
appeared in the Commissiontg Official Bulletin, and they were posted on the Commission
website. Comments were invited on the Staff' Recommendations and were submitted by Securus,
DPS&C, CTC, NCIC and Global.
Thereafter, this matter was discussed at the Commission's November 15, 2012
Business and Executive Session. After extensive discussion, and the appearance and testimony
of numerous parties and members of the public, a motion to adopt the Staff Recommendations
failed by a vote of 2-2 with one abstention. The matter was scheduled to appear on the Agenda
for the December 12,2012 B&E. On November 21, 2012 the Commission Staj! Consultant
Report ("Consultant Report") was distributed to all parties on the Official Service List. The

following parties and entities filed comments on the Consultant Report: Securus, NCIC, CTC,
Global, DPS&C, and the LSA.

Thereafter, this matter was discussed at length at the

Commission'S December 12,2012 Business and Executive Session.
Jurisdiction and Applicable Law

Article IV § 21 of the Louisiana Constitution of 1974 invests the Louisiana Public
Service Commission with the following authority:
The Louisiana Public Service Commission shall have all power
and authority to regulate common carriers and public utilities and
have such other regulatory authority as provided by law. It shall
adopt and enforce reasonable rules, regulations and procedures
necessary for the discharge of its duties, and shall have other
powers and perform other duties as provided by law.
The Commission has, on a continuous basis, since at least 1989, exercised its
Constitutionally-granted jurisdiction to regulate the rates charged and services rendered by
Operator Service Providers serving correctional facilities. In

1988~

the Commission established

Docket No. U-179S7 to investigate the operating practices and rates and charges of Alternate
Operator Service Providers. The Commission directed the Staff to examine the rates and charges
of the AOS companies as well as their operating practices. In its Order No. U-17957 (March 7,

Order Number R-31891
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1989), the Commission set forth rules and regulations applicable for AOS companies then
operating in Louisiana. 5
On February 12, 1993, the Commission issued Order No. U-17957-B (corrected).
In that order the "cap" for OSP calls was established by utilizing the highest daytime rate for
each category of service from among a benchmark group consisting of AT&T, MCI, Sprint and
South Central BelL At that time, the Commission also established a sub-docket to address those
unique issues concerning correctional institutions.
Commission Order No. U-17957-B (corrected), among others, included the
following requirements.
VIII Intrastate Service and Rates

D. A benchmark group will be used to establish a cap on rates for
operator services. The benchmark group will consist of AT&T,
MCI, Sprint~ and South Central Bell. The cap will be established
by utilizing the highest daytime rate for each category of service
from among the benchmark group.
All prOviders of operator services are subject to the cap with the
exception of the members of the benchmark group. Each member
of the benchmark group shall provide summary sheets to the
Commission with details of the charges per mileage service it
offers.
Providers of operator services may file tariffs with rates higher
than the cap ifthey are able to demonstrate to the Commission why
the cast, value of service, or ather factors justify rates higher than
the cap established by the benchmark group.

E. No asp shall charge for a noncompleted call.
F Surcharges in addition to those contained in the cap are
prohibited.

(Order No. U-17957·B (corrected) (February 12, 1993), Guidelines
for Operator Service Providers Section VIII Intrastate Services and
Rates (D), (8), & (F) (emphasis supplied»:
The language in Sections "D" and "F" above was retained in the subsequent OSP General Orders
(See. e.g., General Order, September 18, 1998 at 19.)

In a subsequent asp General Order, the Commission recognized that one unique
aspect of the provision of telephone service to inmates at correctional institutions is that inmates
have no choice as to their telephone service provider. Whatever AOS provider is chosen by the
correctional institution is the one that must be used by the inmates.

In addition, in the

overwhelming majority of cases, it is not the inmates who pay for the telephone service. Rather,
5

The Commission Orders addressing service offered by OSPproviders are sometimes
referred to herein as the Commission's "General Orders."
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it is the parents or grandparents or children of the inmates who pay for the calls. In Order No.
U-17957 -C, the Commission recognized these unique attributes of the provision of
telecommunications service in correctional institutions as follows:
Another issue must be considered regarding the application of the
Guidelines to correctional institutions. As noted previously, the
calls made by inmates are generally collect calls charged to their
families and friends. It is these individuals who must ultimately
pay for the calls. The rate cap contained in the permanent
Guidelines consists of the highest daytime rates from among the
rates of South Central Bell~ AT&T, MCI and Sprint. Inmates do
not have the ability to access the operator service provider of their
choice and therefore cannot "shop" for the lowest possible rate.
Given the fact that these customers have no choice as to their
provider, there is no reason to eliminate the requirement that
OSPs serving correctional institutions be required to abide by the
rate cap. In addition, as further protection, we will revise the rate
cap for use at correctional institutions in two additional respects.
First, the rate cap must reflect time of day discounts. Therefore,
the highest daytime. evening and night rates of the benchmark
group would cap prices for calls made during those times. (Order
No. U-17957 -C, September 23, 1993 at 4-5, (emphasis supplied)),
The Commission has continuously exercised its regulatory authority on these OSP rates since
1989. Some of these orders were Commission-ordered increases in the rate caps, pursuant to
requests by providers. (See, e.g., Order No. U-27938 (August 1, 2007)}.
Of aU of the entities that were either Intervenors in this Docket, Interested Parties,
or offered comments on the Staff Recommendations or the Consultant Report, only one raised an
issue as to whether the Commission has jurisdiction over the provision of telecommunication
services in Louisiana correctional institutions. 6

The Commission's Constitutionally-granted

plenary jurisdiction over public utilities and common carriers unquestionably provides
jurisdiction to regulate AOS/OSP providers. The breadth of the Commission1s authority has
been affinned. by the Louisiana Supreme Court consistently on numerous occasions. See, e.g.,
Cajun Electric Power Cooperative, Inc. v. LPSC, 544 So.2d 362 (La.), cert. denied 493 U.S. 991,

110 S.Ct. 538, 107 L.Ed.2d 536 (1989); Cajun Electric Power Cooperative, Inc. v. LPSC, 532
So.2d 1372, 1380, 1381 (La. 1988) (on original hearing) (Dennis, J. dissenting (Calogero, J.
dissenting); South Central Bell Telephone Co. v. LPSC. 412 So.2d 1069} 1070 (La. 1982);
Central Louisiana Electric Co, v. LPSC 373 So.2d 123, 128 (La. 1979); Louisiana Consumers I
League Inc. v. LPSC 351 So.2d 128, 131 (La. 1977).

6

See November 7, 2012 Comments of CTC questioning whether the Commission "has
jurisdiction to regulate VolP service providers such as CTC." (CTC Comments at 1),
Order Number R-31891
Page50f17

Staff Recommendations
On October 19,2012 the Staff Recommendations were issued and distributed to
all Intervenors and Interested Parties to the Docket. Staff sought comment and input on its
Recommendations from all parties to the Docket. A summary of the Staff Recommendations is
set forth imtnediatelybelow.

Rate Simplification
The Staff found that the telecommunications industry and the manner in which
rates are set have changed dramatically since the Commission first adopted the level and
structure of rates in its AOS General Order in 1989, as described above. In the past, rates were
set on factors such as the time of day the call was made, the length of the caUt whether it was
local, intra~ LATA intrastate, inter~ LATA intrastate, or interstate, the mileage between the central
offices originating and tenninating the call, whether it was a person to person or station to station
call and similar criteria. About 750 rate "caps" were established that set the maximum amounts
that could be charged for cans combining variables from all of these categories. The level of the
caps was determined by reference to the rates of a "benchmark group" consisting of AT&T,

Mel, Sprint and South Central Bell. Caps were established by utilizing the highest rate for each
category of service.
Since the adoption of the General Orders. the technology utilized to deliver
telecommunications services to correctional facilities has changed dramatically.

The vast

majority of service to correctional institutions in Louisiana is delivered via Voice Over Internet
Protocol (nvolplt). The carriers in this Docket all indicated that, to the extent that they are not
already there, they are moving toward 100% use of the VoIP technology. The VolP technology
is far less expensive than the old circuit-switched technology that was utilized when the General
Orders were adopted. The cost to provide the basic telecommunications services has declined
dramatically because of these improvements in technology. In addition, the difference in cost of
providing different services (e.g., local, intra-LATA, inter-LATA) has been virtually eliminated.

In most respects, costs do not vary based on time of day, call mileage, whether the call is intraLATNinter-LATA, or the type of call (station-to-station, collect, station-to-station third number.
station-to-station operator handled, or calling card). Many of the provider Intervenors generally
agree.

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The Commission Staff, as wen as every telecommunications provider who is a
party to the case and offered opinions on the subject, agree that the current rate structure must be
simplified.

The current structure does not reflect conditions today and is unnecessarily

complicated. Given the new technology, and the fact that the cost to complete all types of calls
is virtually identical. there is no reason for time of day rates, inter-LATA, intra-LATA
distinctions or rates based on mileage bands.
Rilte Level

The Commission Staft~ based on the information provided by the Intervenors and
obtained independently) calculated that the average revenue per call for calls made from
correctional institutions in Louisiana for a 12 minute call is about $3.00. This is supported by
the most detailed information supplied by the providers. This ranked at about the middle level both nationwide and among Southern states.

The data supplied by the providers also

demonstrated that the cost of that average 12 minute call to the provider was approximately
$1.59 including a reasonable profit to the provider. The Staff recommended that a reduction in
rates, on average of about 25% would still permit the prison telephone providers to recover all of
their costs associated with the provisioning of telephone service and completion of calls;
including the generation of reasonable returns to the providers. It would also permit the payment
of commissions to the correctional facilities.
The Staff recognized that there are a variety of costs that must be incurred by the
carriers providing service to penal institutions that are unique to those institutions. These include
costs incurred in connection with security, fraud prevention, number verification, and
collections.

The cost of these provider-supplied services are covered in the Staffs

Recommendations to reduce the average cost of a 12 minute call to $2.29. A reduction in the
average revenue per call to $2.29 would not make Louisiana's costs per call even close to the
lowest in the nation (at least 13 states would still have lower average cost per minute rates). In
addition, as described below; these would not be flash cuts. Rather, pursuant to the Staff
Recommendations, carriers would have up to 24 months to implement the rate changes. The
Staff also recommended that because so many costs of a caU are incurred whether or not it is a
one minute or a twelve minute

can

(e.g., determining the inmate's PIN; verifying the called

number; validating the called party account on collect calls; processing the call; announcing the
inmate call; and completing the call) that there be a substantial initial charge ($1.69) and
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subsequent per minute charges of $.05/minute. The Staff Recommendation regarding rate levels
would reduce the cost of an average call by just under 25%.
Surcharges and Fees

In addition to analyses of the level and design of rates, Staff investigated and
provided recommendation on one additional major issue. This is the surcharges or fees assessed
by the AOS/OSP carriers serving correctional institutions that are collected over and above the
rates charged pursuant to the rate caps. 7 Separate surcharges are assessed by the carriers for the
foHowing types of transactions (the various carriers assign different names to the surcharges and
the amount of the surcharges vary from carrier to carrier):
Prepaid Funding by Phone - This is a charge incurred by relatives or friends to buy calling time
for inmates. It works as follows:· If a family member or friend of an inmate wants to fund
$50.00 of calling time, it could cost, depending upon the carrier, anywhere from $250 to $8.50
to fund that account. Stated otherwise, to fund $50.00 of calling time could cost a friend or
relative $58.50. Alternatively, if a friend or relative paid $50,00, only $41.50 of calling time
would be available.
Refund Fee Surcharge - This is a charge for obtaining a refund of amounts remaining in an
inmate's account. This surcharge works as follows: Assume an inmate has $30,00 remaining in
a prefunded phone account and is released from prison. The former inmate may be charged
$5.00 to obtain a refund of the unused amount, meaning, in the example above, only $25.00 will

be refunded. Some carriers have policies that have the amounts in the prepaid accounts forfeited

7

At the November IS, 2012 Business and Executive Session, Commissioner Sknnetta
directed the Staff to perform additional analysis of the issue of fees and surcharges as
follows:
I direct Staff to research fees and deposits that are being required
by prison payphone providers/correctional facilities to establish
pre-paid telephone accounts for inmate calls and provide
recommendations back to the LPSC. I want the focus to be on the
basis for these fees and deposits, processing of said fees and
deposits and how refunds of these fees are provided.

(Tr. November 15,2012 B&E at 8-9).
The Staff perfomed the requested analysis and distributed it to all parties to the Docket
In that document, the Staff reaffirmed its original
on December 6, 2012.
recommendation to have the Commission require that all such surcharges and fees he
removed within 30 days and also provide the carriers with the opportunity to make filings
with the Commission seeking Commission-authorized exemptions or exceptions to the
surcharge/feeprohibition.
Order Number R-31891
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to providers if there is no activity in the account for 90 or 180 days. At least one carrier simply
makes no refunds at all.
This is not an exhaustive list of the additional surcharges and fees being assessed
by the carriers serving correctional institutions in Louisiana. One carrier assesses a 4% per-call
"Validation Surcharge" applied to the base rate of aU calls. These are just several examples of
and fees that arc assessed by carriers serving correctional institutions. It is the carriers, not the
correctional institutions that retain the money generated by these surcharges and fees. The Staff
indicates that there is no evidence that the Commission has ever approved any of these,
surcharges or fees and the vast majority of these surcharges and fees are not contained in the
carriers'tariffs.
Timing ofimplementation
The final portion of the Staff Recommendation addresses the timing of
implementation of the changes in the rate cap, rate deSign and elimination of the surcharges and
fees. The Staff recommended that any rate and rate design changes adopted by the Commission
should be implemented for the next contract after an existing contract expires. In the event that a
contract has an option, extension, or rollover provision, the new cap and rate design would apply
to any such option. extension or rollover of the contract. However, regardless of the date of the
expiration of any contract, any revised rate cap and rate design should be effective no later than
24 months after the effective date of a Commission Order in this Docket. For the surcharges and
fees, the Staff recommends that they be removed within 30 days of the effective date of a
Commission Order in the Docket.

The carriers should be authorized to seek, from the

Commission, exemptions or exceptions from the rate changes and from the elimination of the
surcharges and fees.
Based on the data provided by the carriers. the information accumulated by the
Staff. the technical conference and input from the carriers and the LPSC, the Staff made the
following six recommendations:
1)

A single rate cap shall be established eliminating all rate differentials based on
inter-LATA. intra-LATA, mileage bands, time of day, etc.;

2)

The rate cap shall contain an Initial Charge of $1.69 and a per-minute-of-use
charge of $,05;

3)

Surcharges being collected by the ADS providers that have not been authorized
by the Commission General Orders and have nDt been approved by an affirmative
vote .of the Commissioners, shall be eliminated within 30 days of the effective
date of a CommissiDn Order in this Docket;

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4)

The new rate cap and rate design shall be implemented for the next contract after
an existing contract expires but if a contract has an option, extension, or rollover
provision the new rate cap will apply to any such option, extension or rollover of
the contract. However, regardless of the date of the expiration of any contract, the
revised rate cap and rate design shall be effective no later than 24 months after the
effective date of tho Commission Order adopting the changes;

5)

The carriers are authorized to seek exemptions/exceptions from the amounts that
can be charged under the rate cap or from the elimination of the unauthorized
surcharges.

6)

Rates and caps for local calls currently in effect shall remain in place.

Comments on Staff Recommendations
As previously mentioned, numerous entities submitted comments on the Staff
Recommendations andlor the Consultant Report Some of those entities were parties to the
Docket and participated in the proceedings. Others did not seek intervenor status until after the
Staff Recommendations were issued nor did they seek to participate in the Docket as Interested
Parties. The Commission considered the substantive comments of all of these entities.

Secutus
Securus objected to the Staff Recommendations and the Consultant Report
alleging that there was inadequate support for the Staff Recommendations and Consultant
Report; the rate recommendation would not provide Securus with recovery of all of its costs
(including commissions to be paid to correctional facilities); data from state, parish/county and
local penal institutions is not broken out, distorting results; the elimination of the additional
surcharges and fees is unwarranted as they cover costs (of the providers) not included in rates
and since the Commission never rejected the tariffs, Securus is entitled to recover the surcharges;
fmaUy Securus objects to the 30 day requirement to remove the surcharges and the requirement
that rate changes take place when current contracts expire or within 24 months. Securus agrees
with the Staff that the existing rate structure needs to be simplified, but seeks more flexibility. It
agrees with Staff that rates should not vary by call type, distance or time of day, but that these
caps must be established on an institution-specific basis. Securus also agrees that the "transportlt
costs of completing inmate caUs is increasingly insensitive to differences in the time-of-day, call
type, call jurisdiction and distance.
NCIC
NCIC agrees with Staff that a single rate cap should be established for each
jurisdiction.

For local calls it recommends the current cap.

For all other calls, NCIC

recommends an initial setup charge of$2.15 with a per minute use charge of$.25, for an average
Order Number R.31891

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12-minute call cost of $5.15 as opposed to the Staffs recommendation of an initial charge of
$1.69 and $0.5 for each additional minute, for a total cost of an average 12 minute call of$2.29.

8

NCIC alleges that Staffs rates won't cover costs. It opposes the elimination of the surcharges
and fees and disagrees with the timing of implementation of the rate changes. It claims that Staff
did not use aU of the data supplied by the intervening carriers, did not support the fact that VoIP
technology has lowered the cost of providing service, and did not properly differentiate among
state, parish and local facilities. NCIC alleges that no Public Service Commission has eliminated
the payment of commissions to penal institutions - rather, it has been State Legislatures that have
eliminated the payment of commissions. NCIC objects to the discontinuance of the surcharges
and requests that the following surcharges be put in place: $4.95 - Account establishment fee
using live operator; $2.50 - Account establishment fee robot IVR; $1.50 - Funding fee for
automated recharges; $2.50 - Refund fee for live operator recharges.

NCIC disagrees that

unauthorized surcharges should be removed within 30 days and objects to the 24 month limit to
implement the rate changes.

DPS&C

The DPS&C states that it !!has no knowledge in {sic] or understanding of all the
varying rate differentials on the type of call and thus has no comment on the varying rate caps."
Its function is public safety and works to ensure inmate calls are not made to victims, felons and
gang members. All inmate calls are recorded and monitored. DPS&C Staff monitors caUs at all
nine DPS&C facilities. Reducing the rates will have negative impacts on public safety and
prison security. The new contract with Securus included upgrades to the phone facilities. If
commissions paid to DPS&C are reduced, it will not be able to pay its telephone-related
employees. Commissions help pay for offender welfare and public safety. Reducing rates may
result in limiting contact between prisoners and family.

If the Staff Recommendations are

adopted, DPS&C recommends that they not be implemented until all current contracts, plus
option periods, expire. The DPS&C takes no position on the elimination of the surcharges and
fees.

GTL
GTL agrees with the Staff that time of day and mileage rate distinctions should be
eliminated but wants to maintain distinctions between intra-LATA and inter-LATA calls. It
NCIC's proposal could increase the cost of inmate calls on average, above the levels
currently in place.
Order NU1IIber R-31891

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notes that Louisiana rates are roughly in the middle ofthe range in the South and nationally. The
Staff Recommendations do not adequately take into consideration the law enforcement aspects of
a prison phone system, GTL claims that its surcharges are tariffed and objects to the 30 day
surcharge elimination period and the 24 month maximum period to implement the new rates.

eTe
CTC challenges the Staff Recommendations questioning "whether the LPSC has
jurisdiction to regulate VolP service providers such as eTC,"

It believes that Staff

Recommendations will hann Louisiana sheriffs and the DPS&C (and in some cases the public
and inmates) by eliminating a funding source, safety and security features, revenues from state
and parish budgets and inmate job training, health and educational programs. The lowering of
rates could cause taxes to increase. CTC points out the many unique and costly features of
inmate telecommunications. In most states that have no commission payments, it was the result
of legislative action. CTC challenges the Staffs analysis of the issues. Finally, CTC cites the
$650,000 minutes of free cans for inmates it claims it provided last year and claimed that if fees
paid to CTC were eliminated, the free calls would cease.

CTC did not comment on the

elimination of surcharges or fees. It sought deferral of a Commission decision.

LSA
LSA objects to the Staff Recommendations on the ground that they did not
consider the impact of the proposals on public safety and security. It notes that the commission
revenues allow law enforcement to protect public safety and institutional security; taxpayers will
have to make up any shortfalls; Louisiana prison rates rank about in the middle of the Southern
states and nationally. The LSA states it is studying inmate telephone issues to develop unifonn
standards, while potentially eliminating some fees to reduce the cost of the calls and maintaining
security and public safety. The LSA did not comment on the elimination of the unauthorized
surcharges and fees. It requested deferral of Commission action.

Commission Consideration of the Issues
At the December 12, 2012 B&E, the Commission adopted

the Staff

Recommendations with the following revisions: The single rate cap of an initial charge of $1,69
and a per minute charge of $.05 would only apply to calls to: 1) immediate families of inmates;
2) legal aid services and groups; 3) clergy, churches, pastors, ministers and similarly situated
entities; 4) governmental agencies, including schools; and 5) attorneys and public defenders. All
other rate caps currently in effect shall remain in place. The new rate cap and rate design for the
Order Number R-31891

Page 12of17
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five categories of call recipients will be implemented for the next contract after an. existing
contract expires, but if a contract has an option, extension, or rollover provision, the new rate cap

will apply to any such option, extension or rollover of the contract. However, regardless of the
date of the expiration of any contract, the revised rate cap and rate design shall be effective no
later than 24 months after the effective date of the Commission Order adopting the changes. All
other provisions of the Staff Recommendations, including the elimination of the surcharges and
fees, remain the same.
The Commission's action will result in just, reasonable and not unduly
discriminatory rates. As previously discussed, the structure of the prison telecommunications
industry is that it is the mothers, fathers, children, relatives and friends of the inmates who
actually pay for the calls, not the inmates themselves.

The rate proposal adopted by the

Commission will reduce calling rates by about 25% to precisely those individuals and entities
that fund the inmates calling accounts and those whose contact is most necessary to rehabilitation
~

family, clergy and legal assistance. The carriers and correctional institutions are protected from

any adverse consequences of the Commission's rate reduction and rate redesign in at least two
ways. First, these are not flash cuts with immediate impact on existing contracts. The reduced
and redesigned rates will not go into effect until current contracts expire or after 24 months.
There will thus be ample opportunity to incorporate the Commission-mandated rate and rate
design changes. Second, to the extent that a correctional institution or a carrier believes that a
higher rate than that mandated by this Order is justified or warranted, it has the opportunity to
file with the Commission for exemptions or exceptions from any provision of the new rates. If
the carrier or correctional institution makes such a filing and can demonstrate for cost of service,
public policy, public health and safety, or for any other reason that an exemption or exception
from the new rates is warranted, the Commission. by affirmative vote, may authorize the
establishment ofrates other than those required by this Order.
Regarding the elimination of the surcharges and fees, since 1989, when the
Commission began exercising its

Constitutionally~granted

authority to set rates for asps serving

correctional facilities, it has consistently prohibited those providers from assessing and collecting
surcharges or fees that were not specificaUy authorized in the approved rate caps or otherwise
approved by a vote of the Commission. These prohibitions have remained in the Guidelines
from the Commission's very first General Order in 1989, to the present, as fonows:
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"Surcharges, in addition to those contained in the cap are
prohibited. II
(Order No. U-17957 (March 7, 1989) Guidelines VIII F. atp. 9.]
"Surcharges, in addition to those contained in the cap are
prohibited.
[Order No. U-17957-B (corrected) (February 12, 1993) Guidelines
VI F. atp. 7.]
!!Surcharges in addition to those contained in the Commission's
rate cap are prohibited. ,.
[General Order. September 18, 1998 at 19.]9
Because there has been no explicit prior approval of these surcharges, they violate
the Commission General Orders cited above and their collection should cease immediately.
These surcharges and fees are not contained in the existing rate caps, they were not specifically
approved by a vote of the Commission and most of them are not contained in the carriers' tariffs.
They are simply unauthorized. Two carriers have some of their surcharges in their tariffs. Even
for those carriers, however, these surcharges are not contained in the cap, nor have they been
approved by a majority vote of the Commission.

None of the surcharges currently being

collected by the correctional facility carriers have ever been brought to the Commission for
consideration and approvaL
Although the Commission's asp Orders do contain a prohibition of assessing any
surcharges not contained in those orders

Of

the caps, those orders also contain language such as

the following:
2c. The Commission, through its Secretary, must accept, reject or
elect to follow the procedure set forth in 3 below [not applicable]
within ten (10) working days after the filing of a tariff. If no action
is taken within the ten (10) day period the tariff is deemed
accepted.
General Order. Sept. 18, 1998
9

The regulations for competition in the local telecommunication market were most
recently amended in General Order No. R 31825, dated June 20, 2012. Section 401(D)7
of the regulations is entitled Prohibited Tariff Filings and states:
M

A tariff filing that is designed to alter or modify any Commission order, rule,
regulation t policy or procedure in any way is prohibited.
Order No. R-31825, Attach. A, § 401 (d)7, p. 20 (June 20,2012).
This same provision has continuously appeared in the prior Local Competition orders
since 1996 (General Order November 25, 1996). Therefore, any suggestion that
collection of surcharges is authorized by merely filing a tariff containing fees that were
not contained in the General Order rate caps or specifically authorized by the
Commission, is rejected.

Order Number R-31891
Page 140[17
t11W74vl

In that same General Order, one page later, the following lanh>uage appears:
5. PSPs and OSPs may petition the Commission seeking rates
higher than the cap if they are able to demonstrate to the
Commission why setting rates higher than the rate caps would
promote the public interest~ such as higher costs of providing
services, enhanced value of services or other such factors.
6. No OSP shall charge for a noncompleted call. A positive
response from the end user is required prior to the initiation of
charges for a collect call.
7. Surcharges in addition to those contained in the Commission's
rate caps are prohibited.

!d. (emphasis supplied)

Identical or similar specific prohibitions have appeared in the Commission's OSP orders since at
least 1989. Simply including a prohibited surcharge in tariff language does not do away with
these Commission~mandated prohibitions.
The Commission's decision to have the carriers remove all surcharges within 30
days will also result in just, reasonable, and not unduly discriminatory rates. These surcharges
and fees directly violate provisions of numerous Commission General Orders. There is no
evidence that the carriers applied fur, much less received Commission approval for any of these
fees or surcharges.

In addition, as with the revised rate caps, every carrier will have the

opportunity to seek exemptions or exceptions from the elimination of these surcharges and fees.
To the extent that a carrier is able to demonstrate, for cost of service, public policy, public health
and safety, or for any other reason that an exemption or exception from the elimination of the
surcharges or fees is warranted. the Commission may authorize the collection of the surcharge at
an appropriate level.
At the conclusion of the Commission's consideration of these issues at the
December 12,2012 Business and Executive Session, Commissioner Sknnetta gave the Staff
the following directive:

[1] [d]irect Staff to open a docket beginning January of 2013 to
create a specific docket for regulatory prison telephone
communication system, and to transfer ail current prison telephone
communication companies from the [COCOT] docket into a
specific docket created especially for dealing with the prison
telephone system. And to set a technical conference to take place
at the end of January, I prefer it to be in New OrJeans.
(December 12,2012 B&E Tr. at 150).

Order Number R-31891
PagelS 0/17
IlB974vl

Commission Action at the December 12, 2012 Business and Executive Session
These matters were considered by the Commission at its December 12,2012
Business and Executive Session.

On Motion of Commissioner Boissiere, seconded by

Commissioner Skrmetta and unanimously adopted, the Commission voted as follows: The
Commission StaffRecornmendations are adopted with the following changes. The single rate
cap of an initial charge of $1.69 and a per minute charge of $.05 would only apply to calls to:
1) immediate families of inmates; 2) legal aid services and groups; 3) clergy, churches,
pastors, ministers and similarly situated entities; 4) governmental agencies, including schools;
and 5) attorneys and public defenders. All other rate caps currently in effect shall remain in
place. Copies of the resulting rate caps are attached to this Order. The new rate cap and rate
design for the five categories of call recipients will be implemented for the next contract after
an existing contract expires, but if a contract has an option, extension, or roHover provision,
the new rate cap will apply to any such option, extension or rollover of the contract.
However, regardless of the date of the expiration of any contract, the revised rate cap and rate
design shall be effective no later than 24 months after the effective date of the Commission
Order adopting the changes.

An

other provisions of the Staff Recommendations would

.remain the same and were included in Commissioner Boissiere's substitute motion. By a vote
of 5·0, the Commission voted to approve Commissioner Boissiere's substitute motion.
IT IS THEREFORE ORDERED THAT:
1. For caUs made by inmates in correctional institutions to: 1) Immediate
families of inmates; 2) Legal aid services and groups; 3) Clergy, churches,
pastors, ministers and the like; 4) Government agencies, including schools; and
5) Attorneys/public defenders, a single rate cap shall be established eliminating aU
rate differentials based on inter-LATA, intra-LATA, mileage bands, the time of
day, etc.
2. The rate cap for these five categories of call recipients shall contain an Initial
Charge of $1.69 and a per-minute-of-use charge of $.05
3. All other rates and caps currently in effect shall remain in place.
4. Surcharges and fees being collected by the AOS providers that have not been
authorized by the Commission General Orders and have not been approved by an
affinnative vote of the Commissioners shall be eliminated within 30 days of the
effective date ofthis Commission Order.
5. The new rate cap and rate design for the five categories of call recipients shall
be implemented for the next contract after an existing contract expires but if a
contract has an option, extension, or rollover provision the new rate cap will apply
to any such option, extension or rollover of the contract. However; regardless of
the date of the expiration of any contract, the revised rate cap and rate design shall
be effective no later than 24 months after the effective date of this Commission
Order.

Order Number R-31891
Page 160/17
IlIW74v!

6. The carriers are authorized to seek exemptions/exceptions from the
Commission from the amounts that can be charged under the rate cap or from the
elimination of the unauthorized surcharges and fees.

7. Rates and caps for local calls shaH remain the same.

THIS ORDER IS EFFECTIVE IMMEDIATELY

BY ORDER OF THE COMMISSION
BATON ROUGE, LOUISIANA
January 28, 2013

lSI FOSTER L CAMPBELL
DISTRICT V
CHAIRMAN FOSTER L. CAMPBELL
lSI JAMES M. FIELD
DISTRICT II
VICE CHAIRMAN JAMES M. FIELD
lSI ERIC F. SKRMETTA
DISTRICT I
COMMISSIONER ERIC F. SKRMETTA
lSI LAMBERT C BOISSIERE
DISTRICTUI
COMMISSIONER LAMBERT C.BOISSIERE, III
EVE KAHAO GONZALEZ
SECRETARY

IS/CLYDE C. HOLLOWAY
DISTRICT IV
COMMISSIONER CLYDE C. HOLLOWAY

Order Number R-31891
Page 17 of 17
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IntraState (IntraLATA & InterLATA) Maximum Allowable Rate (CAP)
Excluding Correctional Facilities
Dotket No, R-l1891
Ad(>!'ted: O_,*, 12,2012 Open SMsIoII
Effecllve! Jarmry 28,2013

LOCAL CALLS - MAXIMUM ALLOWABLE RATE
Rates In Effeet: January 28, 2013

Operator Service Fee (InlUal Charge}
Usage Fee (Per Five Mlnutelncrament)

0.81 peteall
0.50 per S minute Increment
Appendix t, Page 1 of 3

CAP INTRASTATE (lNTRALATA & INTERLATA) OPERATOR SERVICES EXCLUDING CORRECTIONAL FAC1LJT/ES

f'IIll81of3

IntraState IntraLATA Maximum AUowabie'Rate (CAP) for Correctional Facilities
Docl<et No.It·31891
Adopted: llectnlber 12, 2012 Open Session
Effective: J.lltla'Y 28. 2013

LOCAL CALLS .. MAXIMUM ALLOWABLE RATE
Rates in EffKt: January 28, 20'13

Operator &lrvtce Fee (Initial Charge}
Usage fee (Per Ftve Minute Increment)

0.81 por call
0.50 pel' 5 minute Increment

INTRASTATE INTRALATA LONG DISTANCE CALLS FROM CORRECIONAL FACIUTIES PLACED TO:
1) Immediate Families of In pies
2) Legal aid &lMce.
3) Clergy. Churches, Pastors, Ministers and theUke
4) Government Agencies, Including Schools and
5) AttomeyslPubilc Defenders

Operator Servles F'ee (Initial Clu\"9I1)
Per Mlnut. of Use Charge

lut per Call
$0.05 per minute

ALL OTHER INTRASTATE INTRALATA LONG DISTANCE CALLS FROM CORRECIONAL FACIUTlES:

Correctional Facility CAP for Operator Services· IntraLATA

CALLING CARD

Correctional FacUlty CAP for Operator Services- IntraLATA

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