State of Florida

Public Service Commission
CAPITAL CIRCLE OFFICE CENTER ● 2540 SHUMARD OAK BOULEVARD
TALLAHASSEE, FLORIDA 32399-0850

-M-E-M-O-R-A-N-D-U-MDATE:

September 24, 2009

TO:

Office of Commission Clerk (Cole)

FROM:

Office of the General Counsel (Bellak)
Division of Regulatory Compliance (Kennedy)
Division of Economic Regulation (Hewitt)
Division of Service, Safety & Consumer Assistance (Moses)

RE:

Docket No. 060476-TL – Petition to initiate rulemaking to amend Rules 2524.630(1) and 25-24.516(1), F.A.C., by BellSouth Telecommunications, Inc.

AGENDA: 10/06/09 – Regular Agenda – Interested Persons May Participate
COMMISSIONERS ASSIGNED: All Commissioners
PREHEARING OFFICER:

McMurrian

RULE STATUS:

Proposal May Be Deferred

SPECIAL INSTRUCTIONS:

None

FILE NAME AND LOCATION:

S:\PSC\GCL\WP\060476.RCM.DOC

Case Background
On June 26, 2006, BellSouth Telecommunications, Inc. d/b/a AT&T Florida d/b/a AT&T
Southeast (AT&T) filed a Petition to initiate rulemaking to amend Rule 25-24.630, F.A.C., Rate
and Billing Requirements, and Rule 25-24.516, F.A.C., Pay Telephone Rate Caps. AT&T notes
that the rate caps (maximum rates) that operator services providers can charge have been in place
since February 1, 1999. AT&T further notes that the telecommunications industry, the
technology, and the competition in Florida have changed dramatically since the allowable level
of charges was established. AT&T claims that the rate cap levels should be set commensurate
with a competitive market or that the rate caps should be eliminated entirely.

Docket No. 060476-TL
Date: September 24, 2009
On August 9, 2006, the Commission issued Order No. PSC-06-0688-PCO-TL granting in
part AT&T’s Petition to Initiate Rulemaking by requiring a workshop to collect information
from AT&T, other industry participants, and the public that was needed to evaluate the proposed
changes. AT&T did not propose new allowable limitations on the rates charged for operator
services in the specified circumstances addressed by Rules 25-24.630, F.A.C., and 25-24.516,
F.A.C., only that the limitations should reflect the current technological and competitive
conditions of the telecommunications industry in Florida or be eliminated entirely.
On February 19, 2009, staff filed a recommendation which proposed amendments to
Rules 25-24.516 and 25-24.630, F.A.C. Staff recommended an increase to non-inmate operator
services rate caps, and proposed that inmate rates caps be severed from non-inmate rates caps
and remain the same as currently defined in the existing rules. At the March 3, 2009, Agenda
Conference, the Commission directed staff to conduct additional data gathering to seek further
evidence for the need of raising non-inmate operator services rate caps.
During the interim, the Legislature made changes to Section 364.3376, Florida Statutes
(F.S.). The Legislature’s actions and impacts of those actions are discussed below.
Recent Changes to the Statutory Requirement for Establishing Rates for Operator Services
Section 364.3376, F.S., Operator Services, required the Commission to establish
maximum rates and charges for all providers of operator services within the state. To this end,
operator services rate caps were defined in Rules 25-24.516 and 25-24.630, F.A.C.
On June 24, 2009, the Governor signed into law Senate Bill 2626, entitled the Consumer
Choice and Protection Act (Act). The Act amended Section 364.3376(3), F.S., eliminating the
Commission’s authority to establish maximum rates and charges for all providers of operator
services within the state. The Act further deleted all references to tariffs in Section 364.3376,
F.S., and replaced the references to tariffs with “schedules or published schedules.” The
amended statute requires rates charged and billed by operator services providers to comport with
the rates set forth within their published schedules. The amendments to Section 364.3376, F.S.,
became effective on July 1, 2009.
The amendment of Section 364.3376, Florida Statutes, clearly affected proposed rules for
which written comments were previously submitted in this docket. However, staff believed it
was less clear how the statutory changes might affect the applicability of rate caps to telephone
calls placed by inmates from within confinement facilities. Therefore, in a memorandum dated
August 6, 2009, staff invited interested persons to file supplemental comments to address the
subject of the applicability or non-applicability of rate caps to calls made by inmates from
confinement facilities.
Eight respondents, AT&T Florida, Embarq Florida, Inc., Evercom Systems, Inc., T-Netix
Telecommunications Services, Inc., Global Tel*Link Corporation, Network Communications
International Corp., ITI Inmate Telephone Services, Inc., and Public Communications Services,
Inc., argued that by striking Section 364.3376(3), F.S., the Legislature eliminated the
Commission’s jurisdiction for establishing maximum rates and charges for all providers of
operator services within the state.
-2-

Docket No. 060476-TL
Date: September 24, 2009
Two respondents, Florida Citizens for the Rehabilitation of Errants (FL-CURE) and Pay
Tel Communications, Inc., argue that inmate telephone services are not operator services and
from a consumer perspective are monopolistic. They believe that the Commission has authority
to maintain rate caps on inmate calls. They argue that it is in the public interest for the
Commission to maintain rate caps for calls made by inmates from confinement facilities. In
addition, seven private citizens responded with concern about the removal of the rate caps. They
are fearful that the cost of inmate calls will be burdensome for inmates’ families if the rate caps
are eliminated.
This recommendation addresses whether the Commission should propose amendments to
Rules 25-24.516 and 25-24.630, F.A.C., to eliminate rate caps and replace all tariff references
with “schedule” or “published schedule.” The Commission has jurisdiction under Sections
120.54, 364.01, 364.3375, and 364.3376, F.S.

-3-

Docket No. 060476-TL
Date: September 24, 2009
Discussion of Issues
Issue 1: Should the Commission propose amendments to Rule 25-24.630, F.A.C., Rate and
Billing Requirements, and Rule 25-24.516, F.A.C., Pay Telephone Rate Caps?
Recommendation: Yes, the Commission should amend Rule 25-24.630, F.A.C., and Rule 2524.516, F.A.C., as set forth in Attachment A . (Bellak, Kennedy, Hewitt)
Staff Analysis: As described in the Case Background, the Governor signed into law Senate
Bill 2626, entitled the Consumer Choice and Protection Act. The Act eliminated the requirement
and authority for the Commission to establish maximum rates and charges for all providers of
operator services within the state. By proposing the amendment of Rules 25-24.630 and 2524.516 as set forth in Attachment A, the Commission will implement the changes to Section
364.3376, F.S., by removing the rate caps from the rules.
Further, the Act deleted all references to tariffs in Section 364.3376, F.S., and replaced
the references to tariffs with “schedules or published schedules.” The amended statute requires
rates charged and billed by operator services providers to comport with the rates set forth within
their published schedules. All of the amendments to Section 364.3376, F.S., became effective on
July 1, 2009. Staff is recommending that the rules be amended to replace all references to tariffs
with “schedules” or “published schedules” in conformance with the statute.
On August 6, 2009, a memorandum was issued to interested parties in the docket
advising that the legislative change would impact the rulemaking. The memorandum also
invited additional comments concerning the impact of the legislation on the applicability of rate
caps to telephone calls placed by inmates from within confinement facilities.
Although two commenters, FL-CURE and Pay Tel Communications, Inc., argued that
continued regulation of inmate telephone service (ITS) would be in the public interest because,
from the caller’s perspective, the service is a “monopoly in fact,” the remaining commenters
argued to the contrary. They maintained that the bid process utilized by prisons to select
providers of the service is highly competitive. They concluded that the Legislature intended to
deregulate operator services and made no exception for providers of ITS.
Staff agrees with the conclusion that deregulation of operator services, including ITS,
was intended by the Legislature. Section 364.02 defines “operator service” as follows:
Operator service includes, but is not limited to, billing or completion of thirdparty, person-to-person, collect, or calling card or credit cards calls through the
use of a live operator or automated equipment.

-4-

Docket No. 060476-TL
Date: September 24, 2009
Since this broad definition includes the services provided by ITS, the Legislative intent to
deregulate rates for operator service by removing the rate caps previously applicable would
apply to ITS as well, as consistent with Attachment A.1
Staff has included a minor change to Rule 25-24.516, Line 12, to clarify that providers of
operator services must either be registered with or have a certificate of public convenience and
necessity with the Commission. Interexchange carriers are not required to obtain a certificate of
public convenience and necessity. They are only required to register with the Commission.
Statement of Estimated Regulatory Cost (SERC)
The SERC, which is appended as Attachment B, states that there should not be any net
incremental costs for the Commission. There may be increased complaints to the Commission of
higher prices, but staff time verifying price schedules may decrease.
Customers would be adversely affected if their present operator service provider raises its
rates and the customers do not shop around for more competitively priced operator service rates.
Small businesses that are operator service providers would have greater pricing
flexibility. Small cities and small counties are not expected to be affected by the rule
amendments.
Review of Tariff Amendments
Since July 1, 2009, staff has identified ten tariff amendments that were filed to change
operator service rates or to add per-call surcharges. The per-minute rates range from a low of
$0.30 to a high of $1.99. The operator charge ranges from a low of $1.75 to a high of $13.40. In
addition, there are some new surcharges that range from $0.99 to $6.00. A few examples of the
surcharges are property imposed fee, non-subscriber fee, billing statement fee, and tax recovery
surcharge.
Based on the above, staff recommends that the Commission propose amendments to Rule
25-24.630, F.A.C., Rate and Billing Requirements, and Rule 25-24.516, F.A.C., Pay Telephone
Rate Caps, as set forth in Attachment A.

1

Staff has not resolved the issue of whether ITS is competitive or monopoly service. Since the issue is contingent on
whether the Legislature reconfers jurisdiction on the Commission to regulate the rates of that service, the issue is not
ripe for decision at this time.

-5-

Docket No. 060476-TL
Date: September 24, 2009
Issue 2: Should this docket be closed?
Recommendation: Yes, if no requests for hearing or comments are filed, the rule amendments
as proposed in Issue 1 should be filed for adoption with the Secretary of State and the docket
should be closed. (Bellak)
Staff Analysis: Unless comments or requests for hearing are filed, the rules as proposed in Issue
1 may be filed with the Secretary of State without further Commission action. The docket may
then be closed.

-6-