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HRDC comment to FCC NPRM reply April 2013

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Human Rights Defense Center

April 22, 2013

Submitted Online Only

The Honorable Julius Genachowski
Federal Communications Commission
445 12th Street, S.W.
Washington, DC 20554
Re: Reply Comment in the Matter of Rates for Inmate Calling Services
WC Docket No. 12-375
Dear Commissioner Genachowski:
On March 25, the Human Rights Defense Center (HRDC) submitted a comment concerning
the Commission’s Notice of Proposed Rulemaking on WC Docket No. 12-375, with respect to
Inmate Calling Services (ICS). Our comment provided updated (FY 2012) data on ICS rates
and commission percentages and amounts for the majority of state Departments of Corrections
(DOCs) and the federal Bureau of Prisons. We now submit this reply comment to address issues
raised by other parties in their initial comments provided to the Commission.
Several ICS providers, state DOCs and county sheriffs submitted comments opposing the ICS
benchmark rates urged by the Petitioners, 1 which would ensure that the costs of interstate calls
from U.S. correctional facilities are just and reasonable. The content of this reply comment is
based on records obtained from governmental agencies, including ICS contracts, commissionrelated data and prison phone rates, as set forth in our March 25 comment. 2
“Robust” Competition is a Myth
The three ICS providers that dominate the market for state DOC prison phone services, Global
Tel*Link (GTL), Securus and CenturyLink, claim there is “robust” competition in the prison


See generally, CC Docket No. 96-128, Petitioners’ Alternative Rulemaking Proposal Regarding Issues Related to
Inmate Calling Services, filed Feb. 28, 2007 (“Alternative Wright Petition”).
Comments of the Human Rights Defense Center (HRDC) dated March 25, 2013.

P.O. Box 2420
Brattleboro, VT 05303
Phone: 802.257.1342 Fax: 866.735.7136

phone industry. 3 For example, GTL mentions that “for larger contracts, it is typical for more than
five or more [sic] service providers to submit bids.” 4
Through our extensive research, which included submitting numerous public records requests to
governmental agencies, we obtained the current ICS contracts from the majority of states. Some
of these contracts include RFPs and other bidding-related records. This documentation provides
instructive examples regarding the “competitive bidding” alleged by ICS providers:

In Arizona the “competition” was anything but robust. Records indicate that for the
state’s current ICS contract (awarded in 2007), the three “offerors” were GTL, PCS
(since acquired by GTL) and Evercom (at the time a division of Securus). 5


In Oklahoma’s 2011 ICS bidding process, four bidders represented three companies:
Securus, GTL, VAC (owned by GTL) and CenturyLink. 6


In Alabama only GTL, Securus, Talton and CenturyLink bid on that state’s current
contract, which was awarded to CenturyLink effective June 6, 2012. 7

GTL, Securus and CenturyLink obfuscate their dominance in the market when they are awarded
contracts through subsidiary companies they have acquired – such as VAC (GTL), PCS (GTL),
Embarq (CenturyLink), ICS (CenturyLink) and T-NETIX (Securus).
When it comes to contracts with state DOCs, competition mainly exists between the “big three”
companies: GTL, Securus and CenturyLink. Only four states do not have contracts with one of
the big three companies: Hawaii (Hawaiian Telecom), Illinois (CCPS), Montana (Telmate) and
Oregon (Telmate). 8 Thus, the ICS industry is highly concentrated with only three companies
controlling 92% of the market for state prison phone services. This constitutes an oligopoly,
which is less competitive than a less concentrated market. According to Prof. Richard Culp,
in writing about the private prison industry, “Oligopoly theory and industry life cycle theory
suggest that the remaining companies will be less competitive overall, seeking interdependent
relationships with their competitors to help secure their position now that industry growth rates
have cooled.” 9 In short, a highly concentrated market is inherently less competitive.
Normally, “competitive” means a contract award goes to the bidder that offers an equivalent
service or product for the lowest price. In the ICS market, however, contract awards tend to go


Comments of CenturyLink dated March 25, 2013 at 4; Comments of Global Tel*Link Corporation dated March
25, 2013 at 14; Comments of Securus Technologies, Inc. dated March 24, 2013 at i.
Comments of Global Tel*Link Corporation dated March 25, 2013 at 14.
Arizona Department of Corrections Procurement Services Memorandum re: RFP No. 060072DC – Inmate
Telephone System; specifically “Comprehensive Scores,” dated July 31, 2007. See Exhibit A, attached.
Oklahoma Department of Corrections to Department of Central Services, Central Purchasing Division re: RFQ#
1310003272 Award Recommendation, dated Aug. 19, 2011. See Exhibit B, attached.
State of Alabama Department of Finance, Division of Purchasing Tele Services-Pay Inmate Contract Number
TA497 Bidding Sheet, unknown date. See Exhibit C, attached.
Comments of HRDC dated March 25, 2013.
Culp, Richard. “The Failed Promise of Prison Privatization,” Prison Legal News, Oct. 2011, p.1; available at:


to the bidder that offers the highest percentage of gross profits or call revenue to the contracting
agency; i.e., the highest commission rate. Thus, the ICS market is competitive only in the sense
that ICS providers are competing to provide the highest return to the government agencies that
contract for prison phone services. Consequently this works to the detriment of the consumer,
unlike in other competitive milieus that are based on traditional supply and demand.
For example, in an award recommendation letter from the Oklahoma Administrator of Contracts
and Acquisitions to the CPO of the Department of Central Services, the Administrator wrote,
“As indicated in the request that was sent out, the final contract award recommendation is being
made based upon the proposal that offered the highest revenue sharing rates per call throughout
the [assumed ten-year] life of the contract.” 10 The Administrator recommended VAC for the
contract award and included a chart showing the commission offerings of the four bidders
representing three companies: Securus, GTL, VAC (owned by GTL) and CenturyLink.
Other examples of ICS contracts being based on the highest commission percentage, rather than
the lowest cost to the consumer, were included in PLN’s comprehensive April 2011 report on the
prison phone industry. 11
For example, “[W]hen Louisiana issued an RFP for prison phone services in 2001, it specified
that ‘[t]he maximum points, sixty (60) ... shall be awarded to the bidder who bids the highest
percentage of compensation ...,’ and that ‘[t]he State desires that the bidder’s compensation
percentages ... be as high as possible.’” Also, “When the Alaska Dept. of Corrections (DOC)
issued an RFP in 2007, bidders were rated on a point system with 60% of the evaluation points
assigned to cost. The RFP explicitly stated that ‘[t]he cost proposal providing the largest
percentage of generated revenues ... to the state will receive the maximum number of points
allocated to cost.’” Additionally, “According to a March 13, 2007 memo from the [Alabama]
Department of Finance, the RFP ‘proposed to award what amounts to an “exclusive franchise”
to the successful bidder based on the highest commission rate paid to the State on revenues
received from users of the [prison] pay phones.’” 12
This does not constitute “competition” – much less “robust competition” – as those terms are
generally defined and understood outside the ICS market.
Commissions Drive High Prison Phone Rates
In its comment, CenturyLink claims that “The rates and charges determined by facilities are
driven by the costs that facilities and ICS providers incur to provide ICS.” 13 Several providers
go into great detail in their comments concerning the costs of providing prison phone services,
ranging from personnel expenses for call monitoring to site-specific equipment.


Oklahoma Department of Corrections to Department of Central Services, Central Purchasing Division re: RFQ#
1310003272 Award Recommendation, dated Aug. 19, 2011.
Dannenberg, John E. “Nationwide PLN Survey Examines Prison Phone Contracts, Kickbacks,” Prison Legal
News, April 2011, p.1, 3-4; available at:
Comments of CenturyLink dated March 25, 2013 at 4.


However, CenturyLink contradicts itself by further noting, “ICS providers are able to operate
with lower calling rates when site commissions are not required.” 14 CenturyLink then provides
examples (South Carolina and Michigan) that corroborate the data submitted in our comment
regarding the link between ending commissions and lower, more affordable ICS rates. 15 While
some percentage of ICS call charges is needed to cover the operating costs of the phone service
and profit for the provider, a significant portion of the revenue generated by ICS calls goes above
and beyond what is necessary to provide the service, in the form of commissions – in an amount
of more than $103 million annually in FY 2012, not including commission data for six states,
jails, private prisons, juvenile facilities and immigration detention centers. 16
Rehabilitative Programs Should Not Rely on Exorbitant ICS Rates
When county sheriffs and state DOCs argue 17 that “loss or decrease of [ICS commissions] will
negatively affect necessary programs for rehabilitation of offenders and will potentially increase
recidivism,” 18 they are essentially saying that rehabilitative programs for prisoners (educational
opportunities and substance abuse treatment, for example) should be funded by price-gouging
prisoners’ families through high phone rates, rather than through general funding from DOC and
county jail budgets. Commenters that raise this argument fail to address the propriety of having
prisoners’ families fund rehabilitative programs through the high cost of prison telephone calls,
which essentially amounts to a tax on ICS call recipients to pay for such programs.
The Mississippi DOC’s comment mentions that state’s 60.5% commission rate and FY 2012
commission total of $1,651,805.23 (both of which are consistent with our data), without which,
it claims, up to six prison programs potentially could be curtailed. 19
The Louisiana DOC “relies upon the commissions earned to provide security monitoring of
the telephone calls made from the prisons, assist with operational costs and provide specialized
offender education,” 20 and also suggests that programs for prisoners would be cut absent ICS
commissions. The Louisiana DOC claims that the rate reduction proposed in the Alternative
Wright Petition “will force the discontinuance of some, if not all, offender programming and
will probably drive telephone providers out of the market.” 21 Yet how is it that the DOCs in
New York and seven other states that have banned ICS commissions are able to operate secure
facilities while providing rehabilitative programs and affordable prison phone rates?
It is the responsibility of correctional agencies and legislatures to provide rehabilitative programs
for prisoners; they were able to do so before entering into ICS contracts that provide commission
revenue, and eight states continue to do so without accepting ICS commissions. The argument


Id. at 14.
Comments of HRDC dated March 25, 2013.
Id., Exhibit C.
See, e.g., Comments of the Routt County Sheriff’s Office dated March 11, 2013 at 1; Comments of the San Diego
County Sheriff’s Department dated March 15, 2013 at 1; Comments of the California State Sheriffs’ Association
dated March 22, 2013 at 1; Initial Comments of Mississippi Department of Corrections (MDOC) dated February 14,
2013 at 1.
Initial Comments of MDOC dated February 14, 2013 at 1.
Comments of the State of Louisiana Department of Public Safety and Corrections dated March 22, 2013 at 3.
Id. at 6.


that such programs may be eliminated or curtailed absent commission funding, which is mainly
derived by overcharging prisoners’ families for ICS phone calls, is a red herring that lacks merit.
Moreover, there is no evidence correlating the amount of ICS commissions paid to state DOCs
and jails with the amount actually spent on rehabilitative programs, nor is there any requirement
that ICS commission revenue be used to fund such programs in most cases.
Prison Legal News’ Data is Reliable and Accurate
The ICS data collected by Prison Legal News (both in our April 2011 report that reflects 20072008 data 22 and our more recent research reflecting FY 2012 data 23 ) is reliable and accurate to
the extent that state Departments of Corrections, the federal Bureau of Prisons and ICS providers
have supplied accurate information in response to our requests.
GTL incorrectly contends that the earlier data provided by Prison Legal News is unreliable. 24
GTL claims that “the [2011] PLN study ... reflects incorrect rates” for several states; however,
the “correct” rates that GTL cites are from 2010 or later, even though GTL counterintuitively
acknowledges that PLN’s April 2011 data was collected from the years 2007-2008.
Nor is GTL particularly forthcoming with its own ICS-related information. For example, GTL
successfully moved to seal its contract with the Mississippi Department of Corrections and the
amounts of commissions paid to that agency, in a state court proceeding. When PLN requested
those records, the MS DOC refused to produce same, citing the protective order entered upon
GTL’s request in the court proceeding. As a result, PLN was forced to file suit in Hinds County
Chancery Court to obtain the requested records, 25 which we contended were public records that
had been improperly sealed. The case settled with PLN obtaining the requested records. This
demonstrates the efforts that PLN has undertaken to ensure we obtain accurate data.
GTL notes that “the [2011] PLN study [analyzing 2007-2008 data] does not provide a currently
accurate picture of the inmate calling market,” for example, because it only analyzes traditional
collect calling rates and not the other options offered by some facilities such as prepaid or debit
calling. 26 We selected a comparison of collect calling rates for our April 2011 report because 49
state DOC systems offered ICS collect calls but not all provided debit or prepaid calling options.
However, our most recent data – submitted as Exhibit B to HRDC’s March 25, 2013 comment –
includes rate information and 15-minute total call costs for collect, prepaid and debit calls, based
on FY 2012 data. 27


Dannenberg, John E. “Nationwide PLN Survey Examines Prison Phone Contracts, Kickbacks,” Prison Legal
News, April 2011, p.1, 3-4; available at:
Comments of HRDC dated March 25, 2013, Exhibits B and C.
Comments of Global Tel*Link Corporation dated March 25, 2013 at 26-27.
Prison Legal News v. Miss. DOC and Global Tel*Link, Hinds County Chancery Court (MS), Case No. 2009-391
Comments of Global Tel*Link Corporation dated March 25, 2013 at 26.
Comments of HRDC dated March 25, 2013.


GTL contends that PLN’s information is “stale,” and that “accurate and up-to-date information
is available.” We agree that the data published in our April 2011 report is no longer timely and
also agree that more recent information is available – which is why we have provided updated
data (as of FY 2012) in our March 25, 2013 comment submitted to the Commission. 28
Further Delay is Unwarranted and Unacceptable
CenturyLink “recommends the establishment of an ICS Federal Advisory Committee (ICS FAC)
to address the ICS issue.” 29 We strongly disagree with this approach. Consumers of ICS services
have waited ten years for the Commission to address the exorbitant phone rates charged by ICS
providers, and further delaying action on this issue through the appointment of a committee does
a disservice to the tens of thousands of consumers who have been negatively impacted by such
predatory prison phone rates over the past decade. We therefore urge the FCC to act now.

Thank you for your consideration of this reply comment; please feel free to contact us should
you require any additional information that we may be able to provide.


Paul Wright
Executive Director, HRDC
Attachments: Exhibits


Comments of CenturyLink dated March 25, 2013 at i.