by Chuck Sharman

On the heels of a May 2021 decision by federal regulators that sharply lowered rates prisoners and their loved ones pay for interstate calls, the California Public Utilities Commission (CAPUC) adopted a rule on August 19, 2021, which takes a hatchet to rates on intrastate calls—the lion’s share of the $1.2 billion U.S. market for prisoner calls, which currently run as high as $6.95 a minute in the state. The rule establishes a rate cap for the first time in the Golden State that now limits providers of “Incarcerated Person’s Calling Services” (IPCS) on an interim basis to a fee of $0.07 per minute.

Paul Wright, the director of the Human Rights Defense Center, a Florida nonprofit which publishes Prison Legal News and Criminal Legal News, provided expert testimony in the proceedings before CAPUC.

When the new rule takes effect on October 7, 2021, 45 days after it was both adopted and issued, it will provide immediate relief to nearly 77,000 prisoners held in California’s 249 local and county jails, plus almost 11,500 prisoners held in 16 federal prisons in the state. There are another 94,500 state prisoners held by the California Department of Corrections and Rehabilitation (CDCR) in its nearly 90 facilities, but they already enjoy lower rates, thanks to a contract CDCR inked with prison call giant Global Tel*Link (GTL) on March 1, 2021, at a per-minute rate of $0.025. The GTL contract significantly reduced rates after the CAPUC began its proceedings and can be seen as an effort to stave off government regulation.

The new CAPUC rule goes a long way toward achieving the rate relief sought by the State Assembly when it passed SB 555 in September 2020, capping California rates for IPCS at $0.05 per minute for voice calls and $0.25 per minute for video calls. That law was hailed by advocates for prisoners, who place about four times as many intrastate calls as interstate calls. It was vetoed, however, in December 2020 by Gov. Gavin Newsome (D) for fear that its ban on “site commission payments”—kickbacks paid by IPCS providers to a prison or jail—would drain “inmate welfare” funds at county jails that rely on them before sheriffs could arrange replacement funding. (Or cut back on the unregulated funds prison and jail officials use as their private slush funds.)

In justifying the need for rate regulation, CAPUC pointed to studies showing that maintaining contact with loves ones while imprisoned has proven to result in lower rates of recidivism. Other studies cited in the ruling also demonstrate that:

• up to 34% of families of prisoners go into debt to stay in touch with them;

• women and people of color—who are among the most economically disadvantaged groups—are over-represented in the prisoner population; and

• prisoners’ annual household incomes fall by about $20,000 from their pre-incarceration levels, putting further strain on family budgets.

Moreover, when a prison or jail signs a contract with an IPCS, it is granting what the Federal Communications Commission (FCC) deems a “locational monopoly” for “a captive consumer base of inmates.” Under California law, if CAPUC cannot encourage a free and open market in which sellers compete against one another to establish a price, the agency must step in to ensure that monopolistic prices are “just and reasonable.” HRDC is advocating for both rate reductions to $.05 a minute or less and consumer choice in terms of being able to chose the phone carrier they want to provide their service in order to foster competition.

During the period when it collected public comments on prisoner call rates, CAPUC heard from six of the largest IPCS providers in the state: GTL, Securus Technologies, IC Solutions, Legacy Inmate Communications, NCIC Inmate Communications and Paytel. GTL is the state’s largest prison call provider, with a nearly 50% market share. Securus Technologies is second-largest, with a market share of 20%. All six firms hold hold a Certificate of Public Convenience and Necessity from CAPUC, subjecting them to the agency’s regulatory authority.

Testimony was also received from almost 300 other Californians, some of whom described spending “an average of $10 to $12 a day for 30 minutes” of phone conversation with an incarcerated loved one, costing one family more than $21,000 in fees over a two-year period. Commenters also complained of poor call quality, dropped calls and opaque billing practices.

CAPUC staff researchers could not find a single prisoner found in the state who had a choice of IPCS providers. But they did find widely varying call rates in the state’s jails and prisons—as high as $1.75 per minute, with first-minute or connection fees reaching $3.60. The result was that a fifteen-minute call could cost as little as little as 37.5 cents in a state prison or as much as $26.95 in some jails. For these reasons, CAPUC said the new rulemaking was justified.

In formulating its rule, CAPUC said it relied in part on work done by the FCC to regulate fees that can be charged for interstate calls. In a rule adopted on May 24, 2021, the FCC capped those rates at $0.14 per minute for prisons and $0.16 per minute for jails with an average daily population of 1,000 or more. For smaller jails, the FCC left in place its existing rate cap of $0.21 per minute.

The new CAPUC rule also places an interim cap on third-party transaction fees passed through by an IPCS provider—such as those from a financial services firm to load a prisoner’s account—which is limited to the actual cost without markup and may not exceed $6.95 per transaction. That matches the cap established by the FCC for interstate calls, which in turn was set to match the cost of loading a prisoner’s pre-paid calling account with a Western Union transaction. HRDC has pointed out that in no other context are consumers made to pay for the privilege of paying their bills.

In addition, just as the FCC ruled for interstate calls, CAPUC said an IPCS provider in California may pass through without markup any government taxes charged for an intrastate call. However, the FCC also allowed ancillary fees for placing just a single call, requesting a paper bill, using a live agent or making an automated payment, none of which is permitted by CAPUC’s new rule for an intrastate call in California.

CAPUC also did not match the FCC’s per-minute allowance of $0.02 for site commission payments included in its rate caps. That apparently was because, under SB 87 passed in 2007, site commission payments had already been phased out at state prisons by 2011. However, despite kickbacks being ostensibly banned in state prisons in California, rates remained very high and GTL provided the de facto kickback of cellphone detection services to CDCR prisons, which also served to boost its bottomline.

Just like the FCC, though, CAPUC got pushback from IPCS providers.

Some providers attempted to argue that the rate caps represented unconstitutional “takings.” They also said that their competition for a facility’s contract exerted the same market forces on pricing as competing for each prisoner’s call. The FCC didn’t buy those arguments, and neither did CAPUC.

It also didn’t create any mechanism to seek a waiver of the caps, as some providers requested and as the FCC had done. But neither did the agency heed the call of some advocates to provide one free call per week or per month to every prisoner.

CAPUC also didn’t flinch from smacking down GTL and Securus Technologies when the firms complained that the rate caps were below their cost to provide the service, noting that neither one had provided any cost data to back up that assertion. Those same two firms also insisted that the higher rates they charged California prisoners (outside of state prisons run by CDCR) were simply reflective of the higher cost of doing business, either because the facility was a small one that lacked the economies of scale afforded by a larger jail population or because it was a jail holding arrestees and pretrial detainees with a higher rate of turnover.

But two other large IPCS providers, Verizon and NCIC Inmate Communications, agreed with CAPUC staff that rates were monopolistically elevated. That contention was also advanced during public comments by prisoner and consumer advocates, including: CAL Advocates, TURN (The Utility Reform Network), CforAT (Center for Accessible Technology), Prison Policy Institute and the Justice Coalition.

The new rule is specifically limited to voice and voice-over-Internet-protocol (VoIP) calls. In the next phase of its rulemaking, CAPUC also promised to address video calling and messaging services not covered by the new interim rate caps.

By the time the recently adopted rules take effect, every IPCS provider in California must submit a Notice of Compliance and an Interim Rate Compliance Report to CAPUC. A Plan for Notification to current and prospective customers and account holders is due for review 15 days before that, including drafts notices of policies for allowed third-party charges and ancillary fees, as well as customer service contacts for websites, bills and marketing materials.

Securus has already indicated it plans to file suit to challenge the regulatory attempt that might in any diminish its exploitation of prisoners and their families. It is expected that other prison phone providers will do the same.

HRDC has partnered with the Center for Accessible Technology to advocate on behalf of California prisoners and their families in this proceeding. The proceedings are ongoing. 

See: Decision Adopting Interim Rates for Incarcerated Person’s Calling Services (IPCS), Before the Public Utilities Commission of California, Rulemaking 20-10-002, Decision 21-08-037, August 19, 2021; Date of Issuance 08/23/2021.

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