SEC Rejects CCA, GEO Group Shareholder Resolutions to Reduce Prison Phone Rates

On February 18, 2014, the Securities and Exchange Commission (SEC) granted a request filed by for-profit prison company GEO Group to exclude a shareholder resolution that sought to reduce the high cost of phone calls made by prisoners at GEO-operated facilities. Ten days later, the SEC granted a request by Corrections Corporation of America (CCA) to exclude a similar shareholder resolution.

The resolutions, filed by Alex Friedmann, managing editor of PLN and associate director of the Human Rights Defense Center (HRDC), would have required the companies to forgo “commission” kickbacks from prison phone service providers. [See: PLN, Jan. 2014, p.44]. Such kickbacks are typically based on a percentage of revenue generated from inmate telephone services (ITS) – revenue that is mostly paid by prisoners’ families.

Specifically, the shareholder resolutions stated that GEO and CCA “shall not accept ITS commissions” at their facilities, and that when the companies contract with prison phone service providers they “shall give the greatest consideration to the overall lowest ITS phone charges among the factors [they consider] when evaluating and entering into ITS contracts.” CCA and GEO both filed no-action requests with the SEC ...

Louisiana Public Service Commission Considers Prison Phone Issues

The Advocate reported in March 2014 that tensions were high between Louisiana Public Service Commission (PSC) Chairman Eric Skrmetta and PSC Commissioner Foster Campbell during a hearing on issues related to prison and jail phone rates.

Previously, in December 2012, the PSC voted to lower the cost of phone calls made by Louisiana prisoners by cutting the rates of some calls by 25% and prohibiting surcharges. The ban on surcharges went into effect on February 28, 2013, while the rate reduction – which only applies to calls made to family members, clergy, attorneys and certain other parties – was postponed until 2014. [See: PLN, April 2013, p.29; Jan. 2013, p.14; Feb. 2012, p.36].

Two prison phone service providers, City Tele-Coin and Securus Technologies (which also has the phone contract for Louisiana’s state prison system), were subsequently cited by the PSC for contempt for charging additional fees in spite of the prohibition on surcharges.

Commissioner Campbell had championed the prison phone reforms, including the 25% rate reduction. City Tele-Coin and Securus have since petitioned the PSC to rescind the rate cut and ban on surcharges.

Additionally, City Tele-Coin hosted a fundraiser for PSC ...

Pay Tel Receives Waiver of Prison Phone Rate Caps

 

On January 8, 2014, Pay Tel Communications, a North Carolina company that provides phone services at correctional facilities in 13 states, filed a petition requesting a waiver of the rate caps on interstate (long distance) prison phone calls imposed by the Federal Communications Commission. The rate caps went into effect on February 11, 2014. [See: PLN, Feb. 2014, p.10].

As a result of longstanding efforts by prisoners, their family members and advocacy organizations (including the Campaign for Prison Phone Justice) against exorbitant prison and jail phone rates, the FCC ordered the rate caps and other reforms after examining the issue for almost a decade in a proceeding known as the Wright petition. The rate caps include a maximum of $.25 per minute for collect interstate calls and $.21 per minute for debit or prepaid interstate calls. [See: PLN, Dec. 2013, p.1].

The FCC’s Wireline Competition Bureau found that Pay Tel had “met its burden of proof to establish a good cause to grant a limited, temporary waiver of the Commission’s interim [prison phone] rate cap rule.” Accordingly, on February 11, 2014, Pay Tel received a nine-month “narrow waiver” ...

There are currently 2.2 million people held in prisons and jails in the United States,1 and an estimated 95% of prisoners currently in custody will one day be released. Based on 2012 data, around 637,400 people are released annually from state and federal prisons.2

According to an April 2011 report by the Pew Center on the States, the average national recidivism rate is 43.3%.3 Based on that average rate, an estimated 276,000 released prisoners can be expected to recidivate each year, many committing new crimes and returning to prison.

This negatively impacts our communities in several ways, including the societal costs of more crime and victimization as well as the fiscal costs of reincarcerating ex-prisoners who commit new offenses – at an average annual cost of $31,286 per prisoner, according to a 2012 report by the Vera Institute.4

Studies have consistently found that prisoners who maintain close contact with their family members while incarcerated have better post-release outcomes and lower recidivism rates.

These findings represent a body of research stretching back over 40 years. For example, according to “Explorations in Inmate-Family Relationships,” a 1972 study: “The central finding of this research is the strong and consistent positive relationship that exists ...

PLN’s December 2013 cover story provided an updated look at the prison phone industry and examined a recent order by the Federal Communications Commission (FCC) that imposed rate caps on interstate (long distance) prison and jail phone calls. There have since been several new developments on the prison phone front.

As previously reported, the nation’s two largest Inmate Calling Service (ICS) providers, Global Tel*Link and Securus Technologies, filed legal challenges to the FCC’s order in the D.C. Circuit Court of Appeals.

On January 13, 2014, the appellate court ruled on Securus’ motion for a stay of the FCC’s order, granting the motion in part and denying it in part. As a result, several key provisions of the order were placed on hold pending the outcome of Securus’ lawsuit.

The interim rate caps imposed by the FCC – $.25 per minute for collect interstate ICS calls and $.21 per minute for debit and prepaid interstate ICS calls – were not stayed and went into effect on February 11, 2014. As of that date, all correctional facilities nationwide were required to comply with the rate caps.

In addition to the rate caps for interstate prison phone calls, the D.C. Circuit also declined ...

On November 26, 2013, shareholder resolutions were filed with Corrections Corporation of America (CCA) and The GEO Group, Inc. – the nation’s two largest for-profit prison companies; the resolutions seek to reduce the high cost of phone calls made by prisoners at CCA and GEO facilities nationwide.

Prison phone rates are typically much higher than non-prison rates, and a 15-minute call can cost up to $17.30. Such exorbitant costs make it difficult for prisoners to maintain regular contact with their families and children; an estimated 2.7 million children in the United States have an incarcerated parent.

In September 2013, the Federal Communications Commission issued an order capping the cost of interstate (long distance) prison phone calls. FCC Commissioner Mignon Clyburn observed that “Studies have shown that having meaningful contact beyond prison walls can make a real difference in maintaining community ties, promoting rehabilitation, and reducing recidivism. Making these calls more affordable can facilitate all of these objectives and more.” However, the FCC’s order has not yet gone into effect and does not apply to in-state prison phone rates. [See: PLN, Dec. 2013, p.1].

Therefore, Alex Friedmann, associate director of the Human Rights Defense Center (HRDC), PLN’s parent non-profit organization, filed ...

The rate caps recently imposed on interstate (long distance) prison phone calls by the Federal Communications Commission (FCC) signal much-needed financial relief for prisoners and their families; however, they will also leave an estimated $650,000 gap in the 2014 budget for the Nevada Department of Corrections.

Due to the FCC’s rate caps, which have not yet gone into effect, the Nevada Board of Prison Commissioners was informed on December 17, 2013 that the state’s prison system will no longer be able to charge per-call connection fees for interstate phone calls.

The Associated Press incorrectly reported that the Nevada DOC’s interstate phone rates include a $1.00 connection fee; actually, the connection fee for long distance calls from Nevada prisons is $2.50, plus $.49 per minute. The Nevada DOC’s intrastate (in-state) phone rates include a $1.00 connection fee plus $.13 per minute – but intrastate calls are not covered by the FCC’s order. [See: PLN, Dec. 2013, p.1].

When the rate caps go into effect – which is scheduled for February 13, 2014, although pending litigation may extend that date – prison systems will be allowed to charge a maximum of $.21 per minute for interstate debit and prepaid calls, and $.25 ...

by John E. Dannenberg and Alex Friedmann

"After a long time – too long – the Commission takes action to finally address the high cost that prison inmates and their families must pay for phone service. This is not just an issue of markets and rates; it is a broader issue of social justice." – FCC Commissioner Jessica Rosenworcel


On August 9, 2013, the Federal Communications Commission (FCC), in a landmark decision, voted to cap the cost of long distance rates for phone calls made by prisoners and enact other reforms related to the prison phone industry. [See: PLN, Sept. 2013, p.42].

The FCC's 131-page final order was released in September and published in the Federal Register on November 13, 2013. It has not yet gone into effect due to a 90-day waiting period following publication in the Register, plus legal challenges have since been filed by the nation's two largest prison phone companies.

The order, entered in response to a petition for rulemaking submitted to the FCC, is the result of a decade-long effort to lower prison phone rates and implement much-needed changes in the prison phone industry.

Prison Phone Services: A Primer

The billion-dollar prison phone industry is ...

In April 2013, the Florida Department of Corrections (FDOC) issued an invitation for companies to bid on the department’s coveted prison phone contract.

The FDOC evaluated responses to the bid invitation and conducted negotiations with three companies: Global Tel*Link (GTL), Securus Technologies, Inc., which currently holds the department’s phone contract, and CenturyLink – the nation’s three largest prison phone service providers. The FDOC then issued a request for best and final offers (BAFO), and each company responded by June 18, 2013. After reviewing the final bids, the FDOC selected CenturyLink as the company that demonstrated the best value and service.

CenturyLink was able to woo the FDOC by offering an unusual proposition – increasing the department’s “commission” kickback to 62.6% of gross prison phone revenue from the current rate of 35%, while lowering the cost of a 15-minute call by approximately 25%. The 62.6% commission would be in effect for the initial contract term of five years, then change to 63.6% for the first two one-year renewals and increase to 64.1% for the third, fourth and fifth-year renewals.

CenturyLink indicated that its proposed rates did not include a per-call surcharge, which would allow prisoners to make more frequent calls at ...

1 Alaska provides free local calls, plus free calls to the state’s Public Defender Agency, Office of Public Advocacy and Ombudsman’s Office. First-minute rates for intrastate calls range from $.17 to $.60, with subsequent minutes as indicated in Chart B.

2 Illinois’ ICS contract changed to Securus in late 2012; the charts reflect current (2013) rates. The state’s prior contract was with Consolidated Communications Public Services (CCPS). Illinois’ contract with Securus initially had a commission rate of 87.1%, later reduced to 76%; the commission amounts in Chart D are pursuant to the state’s prior contract with CCPS, which had a commission rate of 56%.

3 Iowa only allows debit calls, with a maximum charge of $9.00 for interstate calls and $7.40 for intrastate calls. The Iowa DOC’s phone service is provided through the Iowa Communications Network (ICN), a state government agency, and PCS/GTL. The state does not receive a commission but rather retains all revenue in excess of the cost of providing prison phone services, which is termed “revenue” or “rebates.”

4 Maryland’s ICS contract changed to GTL in early 2013; the charts reflect current (2013) rates. The commission rate in Chart D (65-87%) is based on documents provided by ...