Inmate Calling FNPRM Released, Seeks Comments on Competition, Legal Authority

The FCC’s inmate calling service rulemaking notice, released Wednesday, lays out options for setting interstate and intrastate phone rates, and barring or limiting commission and ancillary charges, as expected. It explores in more detail taking “a market-based approach” to encourage competition to reduce rates, while also ensuring “fair but not excessive ICS compensation.” The further notice, which was approved Oct. 17, also seeks comment on the agency’s legal authority to enact further reforms beyond last year’s interim interstate rate caps.

FCC Commissioner Mignon Clyburn, who took the lead in the FNPRM, has said eliminating the commissions that inmate calling service providers pay to correctional facilities would promote market forces in the selections of providers. ICS providers would compete for contracts based on rates and the quality of service, she told reporters when the item was placed on circulation.

The FNPRM seeks comment on whether to require correctional institutions to contract with multiple ICS providers, “instead of awarding a monopoly to a single provider.” Attorneys representing Martha Wright, the Washington, D.C., grandmother who petitioned the FCC to deal with high inmate calling rates, had originally raised the idea. The FNPRM says GTE had said requiring multiple providers “could present significant practical challenges and potentially could increase costs and therefore drive up rates.” Labor costs, for instance, could go up, GTE said.

“Absent further action, we are concerned that the market will continue to fail to promote competition” not ensure just and reasonable rates or fair, the FNPRM said.

The FNPRM also sought comment on an idea Commissioner Mike O’Rielly said he had pushed to try to reduce rates by promoting ICS competition instead of imposing rate caps or other regulations.

Communications Act Section 276 required the commission to “take all actions necessary” to ensure that “all payphone service providers are fairly compensated for each and every completed intrastate and interstate call using their payphone,” the item notes. It sought comment on whether “absent reform,” meeting Section 201(b)’s mandate for “just and reasonable” rates would be “difficult, if not impossible, to achieve.” Among other questions raised in the FNPRM is whether the commission under Section 276 could find “site commissions result in unfair compensation and therefore should be prohibited or otherwise restricted.” Section 276 had also said promoting the deployment of payphones and lower rates result in inmates’ friends and families being able to make more phone calls, the FNPRM said. Is “deployment” limited to installation of new physical infrastructure that would enable the provision of ICS,” the FNPRM asks, “or can 'deployment' reasonably be construed to include new incentives or opportunities for end users to access existing payphone services?”

The agency’s legal authority was questioned by NARUC, as well as Commissioners Mike O’Rielly and Ajit Pai in only partially concurring with the FNPRM at last week’s commission meeting. NARUC General Counsel Brad Ramsay told us earlier this month Section 276 was intended to make sure Bell operating companies don't favor their own payphones over independent payphones, and to ensure that payphone providers received adequate compensation, not the rates customers pay as with the inmate calling issue. In addition to going beyond legislative intent, he said, “none of the case law that arose as a result of early FCC actions based on Section 276 support the proposed expansive FCC preemption of INTRASTATE toll service arrangements,” Ramsay said in an email. Ramsay did not have additional comments, and neither O’Rielly nor Pai would elaborate Thursday.

The “prison phone industry” has "long operated with little regulation in an effective monopoly marketplace,” said Human Rights Defense Center Associate Director Alex Friedmann in a press release. “As a result, prisoners’ family members, who pay for the vast majority of calls made from prisons and jails, have had to pay inflated, exorbitant phone rates to stay in contact with their incarcerated loved ones.” Friedmann told us in an email HRDC believes the commission does have legal authority to enact reforms.

Attorneys representing ICS providers and inmates were still reviewing the FNPRM and had no immediate comment. Comments are due 45 days and replies 60 days after publication in the Federal Register, the FNPRM said.