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Outrageous phone rates devastate families of prisoners
September 1, 2009
Corrections Policy Examiner
Michael Hamden
The Scam: "Give me your money and you can talk to your kid." That may sound like a line from a 1950's Jimmy Cagney gangster movie. But in essence, that is what pay telephone companies are saying every day to millions of people who want to speak with an incarcerated family member. It's a racket, see? Here's how it works.
Correctional agencies request bids for prison phone services. They are not looking for the least expensive bid or the best possible service. Instead, they choose between offers of payment from the telephone companies. These payments, known in the industry as "commissions," are promised in exchange for the exclusive right to provide telephone services. Monopolies often engage in abusive practices, and that is the case here. Rates are as much as 5 times higher than the cost of a pay-phone call outside prison, and the cost of this exploitation is borne by families that are among the least able to afford it.
"Hey, ya' bum! Whata'bout my phone call?"
In jails, people who have just been booked usually ask to use a telephone so they can arrange for bail. That's good for government because it costs around $40 a day to house a pre-trial detainee. People who post bond don't cost government a cent, and they don't add to crowded conditions that exist at many jails.
Correctional professionals and social science researchers have concluded that one of the most important factors in prisoners' success after release is close relationships with their families and their communities. What's more, because the chance to speak with a loved one is perhaps the most important privilege a prisoner enjoys, officials condition telephone access on a clean prison record – no rule violations. In other words, telephones are used as a control mechanism in the correctional setting.
A number of correctional organizations have adopted policies that promote prisoner access to telephones at reasonable prices. Among these leading professional organizations are the National Sheriffs' Association, the Association of State Correctional Administrators, and the American Correctional Association. Indeed, according to the Federal Bureau of Prisons, "telephone privileges [are] part of . . . overall correctional management. Telephone privileges are a supplemental means of maintaining community and family ties that will contribute to an inmate's personal development."
Access to telephones is important to prisoners, and prisoner telephone access is important to correctional professionals. So why charge the families of prisoners excessive rates?
"This is a stick-up!"
The answer to that perplexing question can be found in contracts for prison phone services. "Commissions" paid to correctional agencies range as high as 65% of all revenue generated by the phones. And since collect calls are the most expensive, most facilities permit only collect calling, which generates the highest revenue (and commission).
But that's not all. The prison pay-phone companies have developed unethical practices that include: "service/set-up" fees (charged to customers setting up a required pre-paid account for the first time); "recharge fees" (billed when a customer reopens an account); "processing fees" - imposed either by a service provider or a third party business - for processing a customer's payment; the confiscation of sums remaining in an account after a specified period of inactivity (3 - 6 months); and bogus security measures like "3-way call detection" which can be used to improperly but purposely disconnect calls to increase per-call costs and overall revenue.
Three-way call detection actually has a legitimate security function. To prevent prisoners from calling people who have not agreed to accept their calls, technology has been developed to detect the "line-pop" characteristic of a 3-way call hook-up. When a person authorized to receive a prisoner's call attempts to dial-in a third party, the technology detects the line noise and terminates the call. That prevents prisoners from attempting to contact witnesses, victims, or others who would not wish to hear from them.
"You dirty rat!"
Of course, the technology is subject to misuse. For example, in Florida, the Public Utilities Staff determined that one pay-phone company and the correctional facility with which it had contracted deliberately tampered with the equipment so that practically any noise on the line or in the background would result in termination of the call. A prisoner would then have to place the call a second (or third) time, again incurring the call-origination fee and the most expensive first-minute of a call. As might be expected, the result was to increase revenue, which benefited both the phone company and the correctional facility. Public Staff determined that consumers had been bilked out of $6.3 million dollars. The Staff recommended that the company be made to repay that amount with interest, and that it be fined an additional $1.2 million. And that matter involved only one telephone company and one detention facility. There are more than 18,000 correctional facilities in the U.S., and virtually all of them have inmate telephone systems. Texas recently realized the huge profits such a system could generate and reversed long-standing policy to permit prisoners with no rule violations 1 call every 3 months. The business is so profitable that one state department of correction has decided to cut-out the middleman – the pay-phone company. Maine's DOC is now in the business of providing prisoner phone services, admitting that they charge more than 30% above cost. And the State's highest court has ruled that the Public Utilities Commission has no jurisdiction to regulate the practice.
"Yeah? And what of it?"
Telephone companies have a lotta' juice," correctional officials carry a lotta' weight, and politicians are scared silly at the thought of imposing a tax, especially one to take care of criminals. So, to fund ever harsher criminal penalties for a wider range of conduct that pushes the prison count beyond record-breaking limits, everyone's happy with this funding mechanism. Well, maybe not everyone – the people paying this hidden tax, the friends and families of prisoners, are being squeezed to pay an expense that should be borne by government. Certainly, the prisoners are not at liberty to take care of their own needs. Even those lucky enough to get a job earn only pennies a day. They are literally a captive audience. But more to the point, if incarceration is supposed to enhance public safety, then the public should pay the cost – that's what taxes are for. (How would you feel about a surcharge so your neighbors' kids can have the text books that were supposed to have been covered with the tax you already paid on your property?)
"Money don't mean nothin' to me."
Oh, sure. So how does North Carolina stack-up? The short answer – not so good. Rates vary with calling times, call duration, distance of the call (local, local instate, instate, and interstate). Typically, calls placed around noon or in the evening are 25% less expensive; night calls are usually 50% less expensive. But for every call of any kind there is a "surcharge." This "call- initiation fee" also varies, ranging as high as $3.95 per call. All local calls that originate from a prison carry a surcharge of 80 cents, and a per-minute cost of 24 cents. (Outside prison, it is not unusual to secure calling rates without surcharges for a cost as low as 6 cents per-minute.)
In 2004, the estimate for revenue that would be generated on public payphones - $1,452,445; revenue that would be generated from prison payphones was estimated at $10,384,838. The state's contract with AT&T and its subcontractor, Evercom, Inc., allocates 30% of the gross revenue* generated from public payphones, and a whopping 56% of gross revenue* generated from prison payphones in commissions to North Carolina. (*Gross revenue excludes surcharges and taxes.) My math isn't that good, but best I can figure, prison payphones were projected to generate about $5.8 million dollars in 2004. But the prison population has increased steadily in the interim, from just under 35,000 to more than 41,000 (an increase of about 11.5 %). Presumably, the number of calls placed from prisons (and the profit they generate) has kept pace.
And one additional noteworthy fact: The offer included an option to pay the state about half the estimated annual revenue in advance as an alternative. It is not entirely clear, but it seems North Carolina received a $175,000 signing bonus when it entered into the contract with AT&T.
To its credit, the state does permit prisoners to make debit calls. The debit cards are sold at a profit of only 42.8%. And, even after a prisoner purchases a card, the rates on debit card calls include a surcharge. Because there are no uncollectible charges associated with debit calls, the state receives an additional 5% commission on all such calls.
Family members may establish prepaid accounts with calls costing 50 cents per minute after the surcharge.
"I don't know nothin,' see?"
As mentioned earlier, correctional authorities and phone companies often attempt to justify these extraordinary costs by pointing to the special need for security measures on prison phones. As to one such measure, 3-way call detection and prevention, AT&T projected a 5% increase in revenue upon implementation. How can revenue increase if more calls are being blocked?
"Cheese it! The Copps!"
If enough people raise cane, maybe this exploitation can be brought to an end. Already, momentum is growing to stop these abusive practices. For instance, legislation has been introduced in the U.S. Congress that directs the Federal Communications Commission to exercise its authority to intercede on behalf of consumers with sensible regulation of the prison pay-phone industry. The Family Telephone Connection Protection Act of 2009 has been the subject of hearings on Capitol Hill and is gaining the attention of a number of influential lawmakers.
And more than 900 people have signed a petition asking President Obama to cap the rates that can be charged on prisoner-initiated phone calls. The following comment posted by one of those citizens is characteristic:
"My 24 year old daughter is in prison for 2-4 years. She has a 3 year old son who I have custody of. The prison is 5 hours away so we can only visit once a month. My grandson needs the phone calls so he can stay in contact with his mother. Even though she committed a crime she is sorry for, we are all being punished by the outrageous costs of phone calls. Families need to stay in contact. I believe this is for the good of everyone including the prisoner so they know they are worthy & want to do better by their family."
The website lists dozens of such heart-wrenching testimonials. (http://www.thepetitionsite.com/3/lower-the-cost-of-calls-from-prison)
But perhaps the most promising development has been at the FCC. Commissioner (and former Acting Chairman) Michael J. ("cheese it, the") Copps, and Commissioner Robert McDowell have been joined by newly confirmed Commissioners Mignon L. Clyburn, Meredith Attwell Baker, and Chairman Julius Genachowski. The Chairman has stated that among his priorities are the promotion of competition and the protection and empowerment of consumers and families. Mr. Genachowski promises decisions that are "fact-based and data-driven." If that proves true, then the deplorable practice of bilking the families and friends of prisoners will quickly come to an end.
"The fix is in!"
A 14 year-old case on the FCC docket, In the Matter of Promotion of Competitive Networks in Local Telecommunications Markets, was initiated in 1996 and until recently has languished. But a petition filed by a group of consumers breathed new life into the proceeding.
The "Wright petitioners" have asked the FCC to regulate interstate telephone calls initiated by prisoners. That's great, as far as it goes. But 95% of all prisoner calls are local or in-state long distance.
A more comprehensive approach calling for reasonable regulation of the prison pay phone industry was filed last October. That proposal asks the FCC to: (1) establish a comprehensive, fair rate (derived from the lower rates outlined in the industry-commissioned report, "Inmate Calling Services - Interstate Call Cost Study," by Consultant Don Wood) for (2) all intra-state and inter-state (3) prisoner collect, pre-paid, and debit telephone calls that (4) covers legitimate costs, (5) provides a reasonable rate of return to prison phone providers, (6) eliminates "commissions," (7) forecloses alternative means to unjustifiably inflate the cost of prisoner phone calls, and (8) defers to state public utilities commissions to address requested cost adjustments. In this way, prison phone providers will receive fair and reasonable rates on the widest possible range of prisoner-initiated telephone calls, while consumers are treated fairly rather than being exploited, as they are under the existing hodge-podge of various and inconsistent state regulations.
The October proposal has been received favorably. For example, explicit endorsements of the proposal have come from the American Bar Association (representing some 400,000 lawyers), the National Association of State Utilities Consumer Advocates (representing members in 40 states), the National Legal Aid and Defender Association (representing some 700 programs and 1200 lawyers), and the National Association of Criminal Defense Lawyers (representing 12,000 members and 40,000 affiliate members). The proposal has also been supported by the D.C. Office of the People's Counsel, the executive director of Vera Institute's Commission on Safety and Abuse in America's Prisons, the Brennan Center for Justice, Ad Hoc Coalition for the Right to Communicate, the Public Defender for the Eleventh Judicial District of Florida (whose 180 attorneys defend about 100,000 indigent clients each year), and perhaps as many as two dozen private citizens and consumers.
The merits of such an approach are obvious. However, because of the influence of the industry, meaningful reform may depend on people who will file comments with the FCC decrying unethical and illegitimate industry practices and supporting the comprehensive proposal. Of course, that means the families and friends of prisoners, concerned citizens, attorneys, and prisoners, themselves, must act. An easy-to-follow guide to filing FCC comments can be found at www.HamdenConsulting.com/CallToAction.html. In the interest of fairness and to protect these consumers from shameless exploitation, let's hope the FCC acts expeditiously.
This article was originally published on examiner.com at the link below; it is posted on PLN's site with permission of the author.
http://www.examiner.com/x-18991-Corrections-Policy-Examiner~y2009m9d1-Outrageous-phone-rates-devastate-families-of-prisoners
Corrections Policy Examiner
Michael Hamden
The Scam: "Give me your money and you can talk to your kid." That may sound like a line from a 1950's Jimmy Cagney gangster movie. But in essence, that is what pay telephone companies are saying every day to millions of people who want to speak with an incarcerated family member. It's a racket, see? Here's how it works.
Correctional agencies request bids for prison phone services. They are not looking for the least expensive bid or the best possible service. Instead, they choose between offers of payment from the telephone companies. These payments, known in the industry as "commissions," are promised in exchange for the exclusive right to provide telephone services. Monopolies often engage in abusive practices, and that is the case here. Rates are as much as 5 times higher than the cost of a pay-phone call outside prison, and the cost of this exploitation is borne by families that are among the least able to afford it.
"Hey, ya' bum! Whata'bout my phone call?"
In jails, people who have just been booked usually ask to use a telephone so they can arrange for bail. That's good for government because it costs around $40 a day to house a pre-trial detainee. People who post bond don't cost government a cent, and they don't add to crowded conditions that exist at many jails.
Correctional professionals and social science researchers have concluded that one of the most important factors in prisoners' success after release is close relationships with their families and their communities. What's more, because the chance to speak with a loved one is perhaps the most important privilege a prisoner enjoys, officials condition telephone access on a clean prison record – no rule violations. In other words, telephones are used as a control mechanism in the correctional setting.
A number of correctional organizations have adopted policies that promote prisoner access to telephones at reasonable prices. Among these leading professional organizations are the National Sheriffs' Association, the Association of State Correctional Administrators, and the American Correctional Association. Indeed, according to the Federal Bureau of Prisons, "telephone privileges [are] part of . . . overall correctional management. Telephone privileges are a supplemental means of maintaining community and family ties that will contribute to an inmate's personal development."
Access to telephones is important to prisoners, and prisoner telephone access is important to correctional professionals. So why charge the families of prisoners excessive rates?
"This is a stick-up!"
The answer to that perplexing question can be found in contracts for prison phone services. "Commissions" paid to correctional agencies range as high as 65% of all revenue generated by the phones. And since collect calls are the most expensive, most facilities permit only collect calling, which generates the highest revenue (and commission).
But that's not all. The prison pay-phone companies have developed unethical practices that include: "service/set-up" fees (charged to customers setting up a required pre-paid account for the first time); "recharge fees" (billed when a customer reopens an account); "processing fees" - imposed either by a service provider or a third party business - for processing a customer's payment; the confiscation of sums remaining in an account after a specified period of inactivity (3 - 6 months); and bogus security measures like "3-way call detection" which can be used to improperly but purposely disconnect calls to increase per-call costs and overall revenue.
Three-way call detection actually has a legitimate security function. To prevent prisoners from calling people who have not agreed to accept their calls, technology has been developed to detect the "line-pop" characteristic of a 3-way call hook-up. When a person authorized to receive a prisoner's call attempts to dial-in a third party, the technology detects the line noise and terminates the call. That prevents prisoners from attempting to contact witnesses, victims, or others who would not wish to hear from them.
"You dirty rat!"
Of course, the technology is subject to misuse. For example, in Florida, the Public Utilities Staff determined that one pay-phone company and the correctional facility with which it had contracted deliberately tampered with the equipment so that practically any noise on the line or in the background would result in termination of the call. A prisoner would then have to place the call a second (or third) time, again incurring the call-origination fee and the most expensive first-minute of a call. As might be expected, the result was to increase revenue, which benefited both the phone company and the correctional facility. Public Staff determined that consumers had been bilked out of $6.3 million dollars. The Staff recommended that the company be made to repay that amount with interest, and that it be fined an additional $1.2 million. And that matter involved only one telephone company and one detention facility. There are more than 18,000 correctional facilities in the U.S., and virtually all of them have inmate telephone systems. Texas recently realized the huge profits such a system could generate and reversed long-standing policy to permit prisoners with no rule violations 1 call every 3 months. The business is so profitable that one state department of correction has decided to cut-out the middleman – the pay-phone company. Maine's DOC is now in the business of providing prisoner phone services, admitting that they charge more than 30% above cost. And the State's highest court has ruled that the Public Utilities Commission has no jurisdiction to regulate the practice.
"Yeah? And what of it?"
Telephone companies have a lotta' juice," correctional officials carry a lotta' weight, and politicians are scared silly at the thought of imposing a tax, especially one to take care of criminals. So, to fund ever harsher criminal penalties for a wider range of conduct that pushes the prison count beyond record-breaking limits, everyone's happy with this funding mechanism. Well, maybe not everyone – the people paying this hidden tax, the friends and families of prisoners, are being squeezed to pay an expense that should be borne by government. Certainly, the prisoners are not at liberty to take care of their own needs. Even those lucky enough to get a job earn only pennies a day. They are literally a captive audience. But more to the point, if incarceration is supposed to enhance public safety, then the public should pay the cost – that's what taxes are for. (How would you feel about a surcharge so your neighbors' kids can have the text books that were supposed to have been covered with the tax you already paid on your property?)
"Money don't mean nothin' to me."
Oh, sure. So how does North Carolina stack-up? The short answer – not so good. Rates vary with calling times, call duration, distance of the call (local, local instate, instate, and interstate). Typically, calls placed around noon or in the evening are 25% less expensive; night calls are usually 50% less expensive. But for every call of any kind there is a "surcharge." This "call- initiation fee" also varies, ranging as high as $3.95 per call. All local calls that originate from a prison carry a surcharge of 80 cents, and a per-minute cost of 24 cents. (Outside prison, it is not unusual to secure calling rates without surcharges for a cost as low as 6 cents per-minute.)
In 2004, the estimate for revenue that would be generated on public payphones - $1,452,445; revenue that would be generated from prison payphones was estimated at $10,384,838. The state's contract with AT&T and its subcontractor, Evercom, Inc., allocates 30% of the gross revenue* generated from public payphones, and a whopping 56% of gross revenue* generated from prison payphones in commissions to North Carolina. (*Gross revenue excludes surcharges and taxes.) My math isn't that good, but best I can figure, prison payphones were projected to generate about $5.8 million dollars in 2004. But the prison population has increased steadily in the interim, from just under 35,000 to more than 41,000 (an increase of about 11.5 %). Presumably, the number of calls placed from prisons (and the profit they generate) has kept pace.
And one additional noteworthy fact: The offer included an option to pay the state about half the estimated annual revenue in advance as an alternative. It is not entirely clear, but it seems North Carolina received a $175,000 signing bonus when it entered into the contract with AT&T.
To its credit, the state does permit prisoners to make debit calls. The debit cards are sold at a profit of only 42.8%. And, even after a prisoner purchases a card, the rates on debit card calls include a surcharge. Because there are no uncollectible charges associated with debit calls, the state receives an additional 5% commission on all such calls.
Family members may establish prepaid accounts with calls costing 50 cents per minute after the surcharge.
"I don't know nothin,' see?"
As mentioned earlier, correctional authorities and phone companies often attempt to justify these extraordinary costs by pointing to the special need for security measures on prison phones. As to one such measure, 3-way call detection and prevention, AT&T projected a 5% increase in revenue upon implementation. How can revenue increase if more calls are being blocked?
"Cheese it! The Copps!"
If enough people raise cane, maybe this exploitation can be brought to an end. Already, momentum is growing to stop these abusive practices. For instance, legislation has been introduced in the U.S. Congress that directs the Federal Communications Commission to exercise its authority to intercede on behalf of consumers with sensible regulation of the prison pay-phone industry. The Family Telephone Connection Protection Act of 2009 has been the subject of hearings on Capitol Hill and is gaining the attention of a number of influential lawmakers.
And more than 900 people have signed a petition asking President Obama to cap the rates that can be charged on prisoner-initiated phone calls. The following comment posted by one of those citizens is characteristic:
"My 24 year old daughter is in prison for 2-4 years. She has a 3 year old son who I have custody of. The prison is 5 hours away so we can only visit once a month. My grandson needs the phone calls so he can stay in contact with his mother. Even though she committed a crime she is sorry for, we are all being punished by the outrageous costs of phone calls. Families need to stay in contact. I believe this is for the good of everyone including the prisoner so they know they are worthy & want to do better by their family."
The website lists dozens of such heart-wrenching testimonials. (http://www.thepetitionsite.com/3/lower-the-cost-of-calls-from-prison)
But perhaps the most promising development has been at the FCC. Commissioner (and former Acting Chairman) Michael J. ("cheese it, the") Copps, and Commissioner Robert McDowell have been joined by newly confirmed Commissioners Mignon L. Clyburn, Meredith Attwell Baker, and Chairman Julius Genachowski. The Chairman has stated that among his priorities are the promotion of competition and the protection and empowerment of consumers and families. Mr. Genachowski promises decisions that are "fact-based and data-driven." If that proves true, then the deplorable practice of bilking the families and friends of prisoners will quickly come to an end.
"The fix is in!"
A 14 year-old case on the FCC docket, In the Matter of Promotion of Competitive Networks in Local Telecommunications Markets, was initiated in 1996 and until recently has languished. But a petition filed by a group of consumers breathed new life into the proceeding.
The "Wright petitioners" have asked the FCC to regulate interstate telephone calls initiated by prisoners. That's great, as far as it goes. But 95% of all prisoner calls are local or in-state long distance.
A more comprehensive approach calling for reasonable regulation of the prison pay phone industry was filed last October. That proposal asks the FCC to: (1) establish a comprehensive, fair rate (derived from the lower rates outlined in the industry-commissioned report, "Inmate Calling Services - Interstate Call Cost Study," by Consultant Don Wood) for (2) all intra-state and inter-state (3) prisoner collect, pre-paid, and debit telephone calls that (4) covers legitimate costs, (5) provides a reasonable rate of return to prison phone providers, (6) eliminates "commissions," (7) forecloses alternative means to unjustifiably inflate the cost of prisoner phone calls, and (8) defers to state public utilities commissions to address requested cost adjustments. In this way, prison phone providers will receive fair and reasonable rates on the widest possible range of prisoner-initiated telephone calls, while consumers are treated fairly rather than being exploited, as they are under the existing hodge-podge of various and inconsistent state regulations.
The October proposal has been received favorably. For example, explicit endorsements of the proposal have come from the American Bar Association (representing some 400,000 lawyers), the National Association of State Utilities Consumer Advocates (representing members in 40 states), the National Legal Aid and Defender Association (representing some 700 programs and 1200 lawyers), and the National Association of Criminal Defense Lawyers (representing 12,000 members and 40,000 affiliate members). The proposal has also been supported by the D.C. Office of the People's Counsel, the executive director of Vera Institute's Commission on Safety and Abuse in America's Prisons, the Brennan Center for Justice, Ad Hoc Coalition for the Right to Communicate, the Public Defender for the Eleventh Judicial District of Florida (whose 180 attorneys defend about 100,000 indigent clients each year), and perhaps as many as two dozen private citizens and consumers.
The merits of such an approach are obvious. However, because of the influence of the industry, meaningful reform may depend on people who will file comments with the FCC decrying unethical and illegitimate industry practices and supporting the comprehensive proposal. Of course, that means the families and friends of prisoners, concerned citizens, attorneys, and prisoners, themselves, must act. An easy-to-follow guide to filing FCC comments can be found at www.HamdenConsulting.com/CallToAction.html. In the interest of fairness and to protect these consumers from shameless exploitation, let's hope the FCC acts expeditiously.
This article was originally published on examiner.com at the link below; it is posted on PLN's site with permission of the author.
http://www.examiner.com/x-18991-Corrections-Policy-Examiner~y2009m9d1-Outrageous-phone-rates-devastate-families-of-prisoners
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