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Virginia Law Repeals Phone Rate Ruling

Matthew T. Clarke

Effective July 1, 2002, the Virginia legislature has enacted a law specifically designed to undercut a favorable ruling on prison phone rates by the State Corporation Commission (SCC).

Robert Lee Jones, a Virginia state prisoner, filed a complaint with the SCC concerning the rates charged consumers for collect telephone calls from prisoners at Virginia state prisons. The Virginia Chapter of Citizens United for the Reform of Errants (CURE) joined the suit by asking the SCC to examine the rates charged to people receiving collect telephone calls from Virginia Department of Corrections (DOC) prisoners. The Inmate Telephone System (ITS) is run exclusively by MCI WORLDCOM Network Services of Virginia (MCI) and charges the receivers of the intrastate phone calls the same rate as the public pays for operator-assisted collect calls in an emergency: a surcharge of $2.25 plus up to 37¢ per minute. The call automatically disconnects after 15 minutes and another $2.25 is charged if it is reinitiated.

On August 22, 2001, the SCC issued a Final Order overruling MCI's challenge to their jurisdiction under § 56-481.1 of the Code of Virginia and holding that MCI ITS rates were not competitive. § 56-481.1 places schedules of rates and contracts for services rendered to the state government outside the regulatory powers of the SCC. However, the SCC noted that none of the services were rendered to the state government. Rather, MCI "treats those persons who receive and pay for the collect calls placed from DOC facilities as its customers." The SCC also found that the intrastate interexchange service furnished by MCI to customers under its ITS is not provided on a competitive basis, that MCI must perform an accounting of all ITS charges previously billed at rates inconsistent with the tariffs it filed with the SCC (this occurred from January 1, 1999, until August 31, 2000) with an eye towards future refunds, that it had to impose "traditional ratemaking procedures" for the ITS, and that MCI must file just and reasonable rates for its Maximum Security Collect Call Service.

The SCC noted that MCI and DOC argued that the ITS was not a stand-alone service, but rather part of a package of services provided DOC and that such calls required security procedures not needed with non-prisoner calls. It also noted that eight criteria were used to evaluate the carriers' bids on the ITS contract. However, it held that the bidding process did not result in competitive rates, under any reasonable interpretation of § 56-481.1. In fact, the DOC rejected a bid by MCI at a rate lower than that "consumer" rates charged the public for comparable services. It also noted that DOC receives a commission of 40% on the gross billable ITS revenues (a total of $6,500,000 in fiscal 2001-2002) and a reduced rate would have meant a reduced commission.

On February 4, 2002, the Virginia House passed a Senate bill designed to undercut the SCC's ruling against MCI. Sponsored by Senator Thomas K. Norment Jr., R-James City, the bill was passed unanimously in the Senate and 69-37 in the House. Senate Bill 156 amended § 56-481, effective July 1, 2002, to remove from the SCC's jurisdiction "any telecommunications services provided to the public by virtue of any contract with a the state government' or agency thereof and the schedule of rates for any such telecommunications service.

Let's review: MCI charges VA citizens absurdly high rates for collect calls to prisoners with a hefty kickback to the DOC after the DOC rejects a much lower rate bid. The SCC busts MCI charging even more than its absurdly high rates and orders them to conduct an audit and provide fair rates. Angered by the SCC's intervention in this rip-off, the VA legislatureled by Sen. Normentpasses a law to divest the SCC of jurisdiction so MCI and DOC can continue to scam the citizens who voted for the state legislators who passed the bill. See: Jones v. MCI, SCC Case No. PUC990157.

Sources: Virginia CURE, SB 156, Richmond Times-Dispatch

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Related legal case

Jones v. MCI