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HRDC comment to FCC re MI DOC phone rates June 2011

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Dedicated to Protecting Human Rights

Please Reply to Tennessee Office:

Direct Dial: 615-495-6568
5331 Mt. View Rd. #130
Antioch, TN 37013

June 16, 2011

Ms. Marlene H. Dortch, Secretary
Federal Communications Commission
Office of the Secretary
445 12th Street S.W.
Washington, DC 20554

RE: Comment Regarding CC Docket No. 96-128 (“Wright Petition”)
Dear Ms. Dortch:
I am the associate editor of Prison Legal News (PLN), a nationally-distributed monthly
publication that reports on criminal justice and corrections-related issues, and a project of the
Human Rights Defense Center (HRDC). This letter and the related attachments are submitted
as a formal comment relative to CC Docket No. 96-128.
CC Docket No. 96-128, commonly known as the “Wright Petition,” requests that the
FCC enact rules to require competition among prison phone service providers by prohibiting
such providers from entering into exclusive service agreements with contracting government
agencies, and that the FCC impose caps on interstate prison phone rates. The FCC has the
authority to implement such rules pursuant to 47 U.S.C. § 201(b).
PLN has previously submitted formal comments regarding the Wright Petition, on April
18, 2007, May 14, 2007, September 21, 2008 and April 25, 2011. Our last comment included the
results of our comprehensive multi-year research project on prison phone services, including a
state-by-state comparison of prison phone rates, commission (kickback) percentages, and dollar
amounts of commission payments from prison phone contracts nationwide.
We now want to bring to your attention additional information regarding the actual cost
of prison phone services provided by telecommunications companies, which has been a point of
heated contention in the Wright Petition as evidenced by filings made by both the petitioners and
by companies that provide prison and jail phone services.

PLN is a project of the Human Rights Defense Center

Secretary Marlene H. Dortch
June 16, 2011
Page 2

As indicated in our April 25, 2011 comment, prison phone rates vary widely among different
states and even within the same state. Local collect calls cost as much as $2.75 + $.23/minute
(Colorado), intrastate collect calls cost as much as $3.95 + $.69/minute (Oregon) and interstate
collect calls range up to $4.95 + $.89/minute (Washington). This is despite the fact that prison
phone services all provide essentially the same service with the same security features.
Recently, in February 2011, the Michigan Department of Corrections (MDOC) entered into a
phone service contract with Public Communications Services, Inc. (PCS), which is now owned
by Global Tel*Link – the nation’s largest prison telecommunications company, which provides
prison phone services in more than half the states. Michigan is one of 8 states that do not accept
commission “kickbacks” from prison phone service firms.
Under the terms of the MDOC contract, the charged rates are $.0393/minute for collect calls and
$.0343/minute for debit calls regardless of whether the calls are local, intrastate or interstate. See
Exhibit 1, attached – excerpts from contract between the State of Michigan and PCS, effective
February 9, 2011 (first page and exhibits 5P and 6Pof the contract). The contract also provides
for “optional” services that can be added for an additional charge; such options include a “key
word search” feature and a “special equipment fund” charge.
On April 23, 2011, the MDOC executed Change Notice No. 1 to the PCS phone contract (see
Exhibit 2, attached). The change added the optional key word search feature for an additional
$.0075/minute and the optional special equipment fund charge for $.1532 to $.2430/minute,
resulting in total per-minute charges of $.20/minute for collect local and intrastate calls, $.23
per minute for collect interstate calls, $.18/minute for local and intrastate debit calls, and $.21
per minute for interstate debit calls.
It is important to note that the base per-minute rates under the MDOC contract ($.0393/minute
for collect calls and $.0343/minute for debit calls) are the lowest in the nation. According to
MDOC spokesman John Cordell in a June 10, 2011 email, the “[b]ase rate charged by PCS”
covers “the cost of operating expense and their capital costs.” The optional features that the
MDOC added in the April 2011 Change Notice are just that – optional. The word search option
is an extra security feature and the special equipment fund “will be used to install the latest cell
phone detection, jamming or managed signal technologies.” (see Exhibit 3, attached).
That is, the optional features are above and beyond the operational and capital costs of PCS,
which can generate profit at the contractual base rates of $.0393/minute for collect calls and
$.0343/minute for debit calls. These low rates demonstrate the actual cost (plus an unspecified
profit margin for PCS) in providing phone services to the MDOC, despite the claims of prison
phone service companies that their costs are much higher due to security features, specialized
equipment, etc. If PCS could not generate a sufficient amount of profit at the low base rates
specified in the MDOC contract, it would not have entered into that contract.

Secretary Marlene H. Dortch
June 16, 2011
Page 3

Further, since PCS is owned by Global Tel*Link, the largest prison phone service company in
the nation, such low rates could be offered in most other state prison systems, but are not. As we
found during our research into this issue, included with our April 25, 2011 comment submitted
to your office, prison phone rates are usually much higher due to commission “kickbacks” paid
to the contracting agency, averaging 42% of gross revenue generated by prison phone calls. And
since prison phone contracts tend to be awarded based on the highest kickback percentage rather
than the lowest phone rates, the usual competitive forces that result in lower prices to consumers
are largely absent in the prison phone service market.
We submit that the low base rates in the MDOC contract of $.0393/minute for collect calls and
$.0343/minute for debit calls demonstrate that prison phone companies are perfectly capable of
charging such low rates while still generating profit (despite protestations that their operating
costs are higher which they claim justifies higher rates). This is particularly true given that the
MDOC says the base rates cover PCS’s “cost of operating expense and their capital costs.”
Consequently, the caps on interstate prison phone rates requested in the March 2007 alternative
rulemaking proposal submitted in the Wright Petition would not unduly burden prison phone
service companies, as the MDOC contract evidences that such companies can generate profit
at rates of less than $.04/minute for both collect and debit prison phone calls.
Thank you for your continued time and attention in this regard;


Alex Friedmann
Associate Editor, PLN
cc: Paul Wright, PLN Editor
Attachments: Exhibits 1-3