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FCC Chairman Called Out on Conflict of Interest Concerning Prison Phone Company

by Carrie Wilkinson

The Human Rights Defense Center (HRDC) submitted a formal comment on three Federal Communications Commission dockets on August 9, 2017, accusing FCC Chairman Ajit Pai, who formerly represented prison telecom giant Securus Technologies, Inc., of having a conflict of interest. In its filings, HRDC noted that “not only does Mr. Pai’s conduct give the appearance of a conflict of interest, there appears to be an actual conflict.”

In a 2011 questionnaire submitted by Pai to the U.S. Senate Committee on Commerce, Science, and Transportation prior to his initial nomination hearing to become an FCC Commissioner, he stated that as an attorney he had performed legal work for Securus and described the company as one of his clients when he worked for the law firm of Jenner & Block. Pai was confirmed by the Committee and joined the FCC as a Commissioner in May 2012.

Since then, Pai has vigorously and consistently taken action to undercut all efforts to impose federal regulations, including rate caps, on the Inmate Calling Services (ICS) industry, which benefits Securus – his former client – as well as other ICS providers. The lack of federal regulation guarantees Securus the ability to continue to generate obscene profits at the expense of prisoners and their family members.

In addition to dissenting on all votes taken by the FCC related to ICS reforms, Pai has taken proactive steps to benefit Securus. In March 2016, he organized an FCC field hearing in South Carolina and announced the agenda and panelists. He failed to disclose, however, the participation of a Securus employee on the panel. As previously reported in Prison Legal News,Dan Wigger was identified on the agenda as “Vice President and Managing Director for solution vendor CellBlox.” While that may have been accurate, Pai failed to mention that Securus had purchased CellBlox in January 2015 and later hired Wigger. [See: PLN, June 2016, p.32].

Pai did not bother to respond to HRDC’s filing on the FCC docket at that time requesting clarification of Wigger’s employment with Securus and questions surrounding the fact that Pai had organized an FCC field hearing promoting a technology (cell phone detection) that would directly benefit Securus, his former client.

More recently, Pai was appointed Chairman of the FCC by President Trump in January 2017, and his confirmation by the U.S. Senate was pending as this issue of PLN went to press. The questionnaire that Pai completed for this round of nomination hearings mostly included the same information contained in his 2011 questionnaire, with some data being updated or added due to the passage of time. HRDC noted, however, that Pai’s description of his client relationship with Securus had changed; while he said Securus was “his client” in 2011, in the 2017 questionnaire the telecom company had been relegated to one of “those clients” of Jenner & Block. HRDC mentioned this change in its recent FCC filings, noting that “only Mr. Pai can (and should) explain why he decided to represent his relationship with Securus differently in the Committee’s 2017 questionnaire than in his 2011 questionnaire.”

Perhaps the most significant action taken by Pai to benefit Securus and the ICS industry was a letter issued by the FCC under his leadership on January 31, 2017, a mere eight days after he learned of his appointment as FCC Chairman by President Trump. As reported in Prison Legal News, a petition for rulemaking commonly referred to as the “Wright Petition” had been pending on the FCC’s docket since 2003, and in recent years the FCC has taken steps towards comprehensive reform of the prison telecom industry, having issued an order in 2013 that capped the rates for interstate calls from detention facilities and subsequent orders in 2015 and 2016 that capped the rates for intrastate calls, which represent around 85-90% of all calls from prisons and jails. Several ICS providers, including Securus, appealed the FCC’s 2015 and 2016 orders, and oral argument in the case was set for February 6, 2017.

One week before the hearing – again, only eight days after Pai was appointed FCC Chairman – Deputy General Counsel David M. Gossett filed a letter with the D.C. Circuit Court of Appeals informing them that he was not authorized to defend the FCC’s authority to cap intrastate ICS phone rates. [See: PLN, July 2017, p.52].

Following the appellate court’s ruling that struck down the FCC’s intrastate rate caps, Pai issued a statement that said, in part, “Today, the D.C. Circuit agreed with my position that the FCC exceeded its authority when it attempted to impose rate caps on intrastate calls made by inmates. Looking ahead, I plan to work with my colleagues at the Commission, Congress, and all stakeholders to address the problem of high inmate calling rates in a lawful manner.”

Notably, he omitted the fact that the Court of Appeals had “agreed” with his position only after he hamstrung the FCC’s attorneys by not allowing them to defend the agency’s jurisdiction over intrastate ICS calls. Further, Pai has not indicated since that time how he plans to address exploitive prison phone rates, which have existed for decades, in a “lawful manner.”

Currently pending is the $1.5 billion purchase of Securus Technologies by Platinum Equities, a hedge fund, which must be approved by the FCC. Once again Pai plans to act on an issue that inures exclusively to the benefit of Securus, his former client, and against the public interest in general and the captive market of millions of prisoners and their families, who are regularly price-gouged by Securus and other ICS providers, in particular.

In its FCC comments, HRDC requested that Pai recuse himself from all actions and decisions involving both Securus and the ICS industry in order to uphold the high ethical standards to which the American public and taxpayers are entitled, and to avoid even the appearance of this obvious conflict of interest. Further, he was asked to disclose any financial relationships he has with Securus or other ICS providers, or companies that own ICS providers.  


Source: Human Rights Defense Center ex parte filing, FCC Dockets WC 17-126, WC 12-375 and GN 13-111 (August 9, 2017)

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