Alabama Order

Administrative Rulings • Alabama • July 18, 2014

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Table of Contents
Subject

Paragraph

BACKGROUND
ICS SERVICES
CenturyLink Trial
JURISDICTIONAL ISSUES
Applicability of Communications Reform Act
Distinction between ICS and Prepaid Phone Card Service
SITE COMMISSIONS
FCC Order does not Preclude Site Commissions
Inflated Site Commissions
Relationships to Ancillary Charges
Prepaid Inmate Calling Cards Equivalent to Commissions
ICS BASIC SERVICE REQUIREMENTS
Min Customer Account and Information Requirements
Customer Account Statement Format
Kiosk Receipt for ICS Payments
Webpage Requirements
Customer Payment Limits
Limitations to Calling List Associated with Prepaid ICS Account
ICS RATES
Service to Prisons Versus Jails
Security Biometrics
Interim ICS Rate Caps
Single Payment Services
Single Payment Services Offered by Other Providers
Commission Pricing for Single Payment Services
Restrictions on ICS resale
Video Visitation Service and Inmate Voice Mail
UNAUTHORIZED ANCILLARY CHARGES
Regulatory Cost Recovery Fee & USF Collection Admin Fee
Refund Fee
Account Set‐up and/ or Maintenance Fee
Provider Assessed Fines
Other Ancillary Charges or Fees
AUTHORIZED ANCILLARY CHARGES
General
Debit/Credit Card Processing Fees
Bill Processing Fee
Payment Transfer Fees
Inmate Canteen/Trust Fund Transfer (Conveninece) Fee
Paper Billing Fee

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1.00
2.00
2.13
3.01
3.04
4.05
4.09
4.11
4.13
5.09
5.16
5.17
5.19
5.23
5.28
6.06
6.08
6.23
6.25
6.36
6.37
6.44
6.53
7.01
7.06
7.07
7.08
7.09
8.01
8.08
8.12
8.13
8.21
8.23

Table of Contents
Subject

Paragraph

TAXES AND GOVERNMENT FEES
REFUNDS AND UNCLAIMED PROPERTY
Refunds Required
Minimum Amounts Subject to Refund
Refund Procedures
Unclaimed Property
TARIFF REQUIREMENTS
RECORD RETENTION AND REPORTING REQUIREMENTS
Records Retention
Reporting Requirements
PATENTS AND ACQUISITIONS
COST STUDIES
Transparency Required
Cost Study Strategy
IMPLEMENTATION

Page 2 of 2

9.00
10.01
10.02
10.03
10.04
11.00
12.01
12.06
13.00
14.01
14.02
15.00

State of Alabama
ALABAMA PUBLIC SERVICE COMMISSION
P. O. BOX 304260
MONTGOMERY, ALABAMA 36130-4260

TWINKLE ANDRESS CAVANAUGH,

PRESIDENT

JOHN A. GARNER, EXECUTIVE DIRECTOR
JEREMY H. ODEN, ASSOCIATE COMMISSIONER
TERRY DUNN, ASSOCIATE COMMISSIONER

Re: GENERIC PROCEEDING CONSIDERING THE
PROMULGATION OF TELEPHONE RULES
GOVERNING INMATE PHONE SERVICE

)
)
)

DOCKET 15957

FURTHER ORDER ADOPTING REVISED
INMATE PHONE SERVICE RULES
BY THE COMMISSION:

1.00 BACKGROUND

1.01

In the Commission’s1 October 1, 2013 Order for the above styled proceeding, as amended
and supplanted by the Errata and Substitute Order Proposing Revised Inmate Phone
Service Rules and Establishing a Comment Period issued on October 7, 2013
(collectively, the "Order"), the Commission proposed reforms to Inmate Calling Service
(“ICS”) in Alabama and established a comment cycle ending November 8, 2013.

1.02

The Order revised the Commission’s service description in Alabama to Inmate Calling
Service (“ICS”) vice Inmate Phone Service to ensure uniformity with the Federal
Communications Commission’s (“FCC”) service description.

Existing ICS rates in

Alabama consist of an operator surcharge of $2.25 per call. In addition to the operator
surcharge, local calls are assessed a usage charge of $0.50 regardless of call duration.
Toll calls are assessed a usage charge of $0.30 per minute.

The Order proposes

The term “Commission” used throughout this document refers to the Alabama Public Service Commission.

Docket 15957, Page 2
elimination of the operator surcharge and establishing a “postalized” usage charge of
$0.25 per minute for both local and toll calls. The Order prohibits “text-to-collect” call
delivery establishes a charge for “pay now” call delivery that is equal to the charge of the
actual call duration priced at the approved per-minute rate plus the approved payment
processing fee. Additionally, providers are required to offer a free, two-minute, initial
call to new inmates.

1.03

The Order calls for a schedule of “capped” payment processing and convenience fees.
Bill set up or establishment fees, intrastate regulatory recovery fees, and account refund
fees are prohibited. With respect to payment transfer fees, the Order prohibits providers
from participating in any revenue sharing with payment transfer services from charges
assessed to ICS customers.

1.04

The Order proposes that Video Visitation rates be capped at $0.50 per minute. Minimum
customer account and service information requirements, tariff submission, records
retention, and regulatory reporting requirements are proposed. Finally, the Order calls for
strict compliance with Alabama with respect to customer refunds and unclaimed property.

1.05

By filing2 dated October 29, 2013, Global Tel*Link Corporation (“GTL”) submitted a
motionto extend the deadline for filing comments in the proceeding. By Order dated
November 5, 2013, the Commission extended the deadline for the submission of
comments through December 6, 2013.

1.06

By filing3 dated October 31, 2013, Securus Technologies, Inc. ("Securus") submitted a
motion requesting that the Commission hold this rulemaking proceeding in abeyance and
stay all further actions in this Docket. By filing4 dated November 21, 2013, Securus

Global Tel*Link Motion for Extension of Comment Deadline, submitted by Chèrie R. Kiser, Attorney, Cahill
Gordon & Reindel LLP, filed October 29, 2013, Commission Tracking Number TR1324611.
3
Securus Technologies, Inc. Motion to Hold Proceeding in Abeyance, submitted by Riley W. Roby, Counsel, Balch
& Bingham, LLP., filed October 31, 2013. Commission Tracking Number TR1324634.
4
Amended Motion of Securus Technologies, Inc., submitted by Riley W. Roby, Counsel, Balch & Bingham, LLP.,
filed November 21, 2013, Commission Tracking Number TR1324714 (the “Amended Motion”).

Docket 15957, Page 3
amended its motion to hold the proceeding in abeyance (the "Original Motion") for
purposes of requesting additional, alternative relief. The additional relief sought by
Securus was for the Commission to extend the period of time for interested parties to file
comments related to the APSC Order until January 13, 2013, should the Commission
otherwise decline to grant the abeyance requested in the Original Motion. By filing5
dated November 22, 2013, GTL submitted a motion in support of the request by Securus
to extend the time for interested parties in this proceeding to file comments with the
Commission.

1.07

By Order under this Docket dated December 3, 2013, the Commission denied the motion
filed by Securus to hold the proceeding in abeyance. However, the Commission approved
the Securus amended motion providing that limited supplemental comments to this
proceeding would be accepted for the Commission’s consideration if filed by January 13,
2014.

1.08

Comments to the proceeding were received from Securus, GTL, Telmate, LLC
(“Telmate”), ATN, Inc. d/b/a AmTel (“AmTel”), Embarq Payphone Services, Inc.
(“CenturyLink”)6, Network Communications International Corp. (“NCIC”), Pay Tel
Communications, Inc. (“Pay Tel”), Turnkey Corrections (“Turnkey”), Video Visitation
Technologies (“VisitTech”), Prison Policy Initiative (“PPI”), and Equal Justice Initiative
(“EJI”). Supplemental comments were received from Sheriff Larry Amerson of Calhoun
County, AL, Sheriff Todd Entrekin from Etowah County, AL, Ms. Jacqueline Dicie from
Hoover, AL, and GTL.

Global TEL*LINK Corporation Motion in Support of Securus Request for Extension of Time, submitted by Chèrie
R. Kiser, Attorney, Cahill Gordon & Reindel LLP, filed November 22, 2013, Commission Tracking Number
TR1324751.
6
By petition dated December 17, 2013, Embarq Payphone Services, Inc. (EPSI), requested Commission approval to
change its name to “CenturyLink Public Communications, Inc. d/b/a CenturyLink”. The petition was approved on
January 14, 2014 under Dockets 25966 and U-5059.

Docket 15957, Page 4

2.00 ICS SERVICES

2.01

General
ICS provides outbound only calling. All calls, whether collect, debit, or prepaid, rely on
automated collect, interactive voice response (“IVR”) to identify the calling party and the
confinement facility from which the call originates. The called party can accept or deny
the call. This control is typically exercised via numeric keypad or voice responses to IVR
prompts. There are four billing categories for ICS calls: collect, prepaid, debit, and direct
billed.

2.02

Single Payment Services
ICS collect call charges may be applied to the subscriber’s respective wireline provider
billing statement via agreements between ICS providers and local exchange carriers or,
alternately through billing aggregators who in turn, have billing agreements with the
called party’s wireline provider. Some wireline providers bill ICS collect calls but other
wireline providers and most wireless providers will not do so. Single payment services
allow for calls to parties that have not established prepaid ICS accounts and whose
providers will not bill collect ICS calls.

2.03

“Pay Now” is trademarked by Securus Technologies which charges $14.99 for each Pay
Now call. Typically, the ICS provider, using IVR, can place the inmate on hold then
prompt the called party to accept the collect charges by authorizing payment from their
debit/credit card.

2.04

Another option for billing ICS collect calls to wireless phones is available from thirdparty services approved to include charges on the wireless carrier’s subscriber bills.
Before such a call can be completed, the called party’s wireless carrier and ability to
process Short Message Service (SMS) messages (texting) is identified using a database
“dip”. Calls to wireless phones that are not SMS capable are denied. The billing

Docket 15957, Page 5
arrangement is predicated on a revenue sharing agreement between the third-party
provider and the ICS provider.

The third-party provider, in turn, has a payment

arrangement with wireless carriers. Such third-party services include Bill-to-Mobile,
Text Collect, Text2Connect, Text-to-Cell, and similar services (collectively “textconnect”).

2.05

Text-connect relies on IVR to inform the called party of the inmate’s identity, the charge
and maximum duration for the collect call, and then prompts the recipient for
authorization to accept the call. Once the call is completed, the called party receives an
informational text message indicating that the charge will be added to their wireless bill.
Because of the informational text at the call conclusion, the wireless provider can bill the
call to its customer as a “premium SMS text message” service.

2.06

The ICS provider establishes the maximum duration of Pay Now and text-connect calls.
The charge is unaffected by the actual call duration. Therefore, a call of 1-minute duration
is charged the same as a call that extends through the maximum allowable duration. The
call is switched over the ICS provider’s network and the provider records the actual
duration of the call but the usage data is generally withheld from confinement facilities.

2.07

Prepaid and Direct Billed Services
Debit service consists of ICS accounts into which funds are deposited for the inmate to
prepay for calls to parties of their choosing (subject to confinement facility approval).
Debit service is also provided via prepaid inmate phone cards. The face value listed on
the card represents the inmate’s purchasing power in terms of the provider’s debit calling
service. The cards are sold by the ICS provider to inmate commissary companies and,
more frequently, directly to confinement facilities at a 40% to 60% of the card’s face
value. The cards are subsequently resold to inmates at face value.

2.08

Prepaid service is a calling account established for a non-inmate, typically a family
member. The prepaid service subscriber selects determines the telephone numbers that

Docket 15957, Page 6
may be called by the inmate and paid for using the subscriber’s prepaid ICS account. The
Commission notes that CenturyLink subcontracts the debit and prepaid portion of its
inmate services offering in Alabama to Inmate Calling Solutions, LLC of San Antonio,
TX d/b/a ICSolutions.

In other states, CenturyLink subcontracts these services to

ICSolutions and other authorized ICS providers.

2.09

Direct billed service is postpaid. Direct billed customers are typically bail bondsmen and
attorneys. All inmate calls to direct billed subscribers are charged to the subscriber’s
account. Periodic payments are made in accordance with the terms of the agreement
between the subscriber and the ICS provider.

2.10

Video Visitation, Voice Mail, and Email
Traditional face-to-face visitation requires confinement facility security personnel to
escort inmates from the cell block to the visitation room. Additionally, confinement
facility personnel must be present to provide security in the visitation area and in the
holding area where non-inmates await their opportunity to visit inmates. Frequently,
minor children are not authorized in the face-to-face visitation area. Video Visitation
(“VV”) is offered by ICS providers in a growing number of confinement facilities.
Hardened VV terminals are maintained in or near the cell blocks. Separate VV terminals
are located in a secure area of the confinement facility away from the inmates. Those
wishing a VV with an inmate schedule the visit electronically and the inmate chooses
which visits to accept. The visiting parties can see and speak to one another on the VV
terminals and minor children may be authorized in the visitor’s area. The visit duration is
prescribed, typically 20 minutes, and the individual visiting the inmate prepays the
prescribed charges for the prescribed visit duration. VV charges range from $0.50/min to
$1.00/min. Remote VV is possible but rarely offered in Alabama. With remote VV, the
party visiting the inmate may do so from a location away from the confinement facility
using a personal computer with a web camera and microphone. One way voice mail
and/or email service is offered in a few confinement facilities. Non-inmates may prepay
to leave voice mail messages that the inmate my access from confinement facility phone.

Docket 15957, Page 7
Non-inmates may also prepay to store email messages for an inmate that are subsequently
downloaded for the inmate.

2.11

ICS is Non-competitive from the End-user Perspective
Consumers in a competitive market are free to make service choices based on a number of
factors including lowest price. Users of ICS have no choice with respect to their service
provider. The provider is selected by the confinement facility and is the exclusive service
provider for the facility’s inmates. In its Report and Order for the Inmate Calling Service
proceeding, the FCC notes:
While the process of awarding contracts to provide ICS may include
competitive bidding, such competition in many instances benefits
correctional facilities, not necessarily ICS consumers—inmates and their
family and friends who pay the ICS rates, who are not parties to the
agreements, and whose interest in just and reasonable rates is not
necessarily represented in bidding or negotiation.7

2.12

Calling Rates
Automated operator services are used for collect calls, debit calls, and prepaid calls
whether local or toll. ICS calls are typically transported via Internet Protocol (“IP”)
connection, routed at the provider’s network operation center, and transported using least
cost routing before they are terminated. All traffic, local and toll, is similarly routed with
little to no difference in provider costs for transport and termination. Therefore, the
Commission finds no justification for establishing a rate structure that prices local calls
differently than toll calls. Doing so creates an incentive for arbitrage wherein inmate
families and acquaintances subscribe to cellular phones whose calling area is included in
the confinement facility’s local calling area or they pay for telephone numbers local to the
confinement facility from a myriad of online services in order to take advantage of lower
local calling rates. Meanwhile, those using toll service pay a disproportionately higher
rate for service that costs no more to provide. Therefore, the Commission seeks a rate

In the Matter of Rates for Interstate Inmate Calling Services, WC Docket No. 12-375, Report and Order and
Further Notice of Proposed Rulemaking, rel. September 26, 2013 (“FCC ICS Order”), par. 40.

Docket 15957, Page 8
structure that is fair and reasonable for all calls and does not target a preferential class of
customers for lower rates at the expense of other customers.

Terminating access charges are at interstate levels in all jurisdictions and being reduced to
zero in accordance with the FCC’s Inter-carrier Compensation Reform Order. The costs
for ICS services are believed to be declining:
The record in this proceeding suggests that the costs of providing ICS are
decreasing, in part due to technology advances. As one smaller ICS
provider stated, “[g]iven modern-day technology, the costs for providing
secure phone and video services to correctional facilities are low (and are
getting lower).” As ICS moves increasingly to IP technology, we expect
costs to decline as is the case for similar services that are not ICS.8

2.13

Two-Month ICS Trial at Alabama DOC Facilities
CenturyLink conducted a holiday promotion9 of its ICS rates at Alabama
Department of Corrections confinement facilities for the period November 1, 2013
through January 1, 2014 using the following pre-trial and promotional rates shown
on Attachment A to this Order.

2.14

Due to the existing price cap of $2.75 on intrastate local calls, the promotional
rates resulted in an increase in the price of a 15-minute local call in Alabama for
collect, debit, and prepaid calls. The price for collect, debit, and prepaid toll calls
was significantly less. The price for interstate collect, debit, and prepaid calls fell
sharply.

2.15

The Commission required CenturyLink to provide average pre-trial usage and
revenue for each calling category and to report the same for each month of the
trial.

The raw data is treated as proprietary but the Commission obtained

FCC ICS Order, para. 29.
In the Matter of Embarq Payphone Services, Inc. Application for Waiver of Rule T-15.1(B)(4) Related to Inmate
Phone Rate Caps, Docket No. 15957, dated September 26, 2013. Approved October 1, 2013 under APSC Docket
32091.
9

Docket 15957, Page 9
CenturyLink’s consent to publicly disclose general information about the trial
results. The average pre-trial basis of comparison covers the period June through
October, 2013.

The trial was conducted over a period that includes the

Thanksgiving, Christmas, and New Year’s holidays. The pre-trial period includes
the holidays of Father’s Day, Independence Day, Labor Day and Veteran’s Day.

2.16

The usage level wherein the total price for intrastate local calls are equivalent,
based on pre-trial and trial rates, is 13 minutes for collect calls and 14 minutes for
debit/prepaid calls. Local calls of shorter duration are cheaper during the trial
period and longer duration local calls are more expensive. The average duration
for intrastate local calls during the pre-trial period is 20.5 minutes. In November,
the average duration for local calls decreased to 14.9 minutes and decreased
further to 13.7 minutes in December as inmates adjusted their calling behavior to
approximate the average call duration wherein the break-even price for local calls
are achieved. As anticipated, intrastate local usage decreased during the trial
period. Local calling minutes decreased by 27.4% between the pre-trial period
average and the month of November. For December, the decrease was 36.2%.
The Commission received several complaints from inmate spouses and
acquaintances unhappy about the temporary elimination of the local call cap. In
each case, the complaining party resides outside the confinement facility local
calling area and in, one case, outside the state.

2.17

Based on 15-minute call duration, intrastate collect, debit, and prepaid toll calls
decreased in price during the trial by 53.3% to 57.8%.

As anticipated, usage in

these categories increased by 87.7% in November and by 121% in December as
compared to pre-trial average usage. The largest percentage price decrease for the
trial is in the interstate calling category where prices decreased by 73.1% to
74.9%. Usage during November increased as follows: collect (48.9%), debit
(661.3%), prepaid (216.4%) and total interstate usage (225.1%). For December
the increased usage compared to pre-trial are: collect (65.4%), debit (880.9%),

Docket 15957, Page 10
prepaid (318.6%) and total interstate usage (315.3%).

2.18

CenturyLink experienced decreased intrastate and interstate revenue during both
November and December as compared to the pre-trial period. For the month of
November, intrastate revenue decreased by 19.7% and interstate revenue fell by
24.1%. In the month of December, intrastate revenue decreased was 11.9% less
and interstate revenue 3.2% less than average revenue during the pre-trial period.
The Commission notes that intrastate ICS prices during the trial decreased by over
50% on average and interstate prices by approximately 74%. Therefore, call
stimulation mitigated the effects of the price decreases.

3.00 JURISDICTIONAL ISSUES

3.01

Applicability of Alabama’s Communications Reform Act to ICS Providers
The Federal Telecommunications Act of 1996 defines service provided to
confinement facilities as payphone service:

(d) “Payphone service” defined
As used in this section, the term “payphone service” means the provision
of public or semi-public pay telephones, the provision of inmate telephone
service in correctional institutions, and any ancillary services.10
Commission Rule T-15.1(A)(1) provides:

All IPS [Inmate Phone Serice] providers must be certified by the
Commission. IPS certification includes all authority necessary to provide
inmate phone service and payphone service at inmate facilities including
authority for limited toll resale and operator services. IPS certification
does not include customer-owned, coin-operated telephone (COCOT)
authority for payphone service offered generally to the public at locations
other than at inmate facilities. Such authority must be requested separately
as an add-on to the Certificate of Public Convenience and Necessity
(Certificate).
10

47 U.S. Code § 276 - Provision of payphone service.

Docket 15957, Page 11
ICS authority in Alabama is limited to service at inmate confinement facilities.
Therefore, ICS providers do not have authority to serve the public as an incumbent local
exchange carrier (“ILEC”), local exchange carrier (“LEC”) or an inter-exchange carrier
(“IXC”). Such authority requires an application for a CPCN from the Commission, who
after thorough review of the applicant’s capabilities and plans for providing service to the
public, may grant or deny the authority. If the application is approved, specific LEC or
IXC authority is identified with the CPCN.

3.02

Alabama’s Communications Reform Act (the “Act”) establishes the process for carriers
subject to the Act to elect whether they will be regulated under its terms.

“An incumbent local exchange carrier, local exchange carrier, or interexchange carrier shall be deemed to have elected to be regulated under this
chapter unless the carrier files written notice with the commission
declining regulation under this chapter not later than August 31,
2005;…”11
ICS providers cannot confer upon themselves ILEC, LEC, or IXC authority not
specifically provided them in their CPCN from the Commission. The Act is clear as to
which providers are subject to regulation under its provisions including any limitations to
the Commission’s authority provided therein. There is no process in the Act wherein
payphone service providers may elect to be regulated under its terms. The Act makes
clear that the Commission’s regulatory authority is otherwise unaffected.

“Nothing in this chapter shall do any of the following:
Alter the jurisdiction, rights, powers, authority, or duties of the
commission except as specifically provided for in this chapter.”12
3.03

In comments submitted for this proceeding, some ICS providers contend the Commission
lacks regulatory authority for their broadband enabled services, citing Section 37-2A-4 in

11
12

Process for Election, Code of Alabama, 1975, Section 37-2A-5(a).
Interpretation, Code of Alabama, 1975, Section 37-2A-11(b).

Docket 15957, Page 12
the Act (Jurisdiction of the Public Service Commission).
applicable to payphone providers.

However, the Act is not

Therefore, limitations on the Commission’s

jurisdiction provided within the Act are not applicable to ICS in Alabama.

3.04

Distinction between ICS and Prepaid Phone Card Service
Prepaid telephone calling card service is provisioned over other carriers’ equipment and
facilities. The card provider is not involved in provisioning the end-user equipment,
signal transport, or switching of the user calls. The provider is wholly dependent on the
switching and transport facilities of regulated interexchange and local carriers.
Essentially, prepaid telephone card service is resold service. The card may be used on
any end-user instrument, including the user’s own phone, phones at other locations, and
coin-operated and non-coin operated public payphones.

The cards sold by retail

merchants offer virtually unlimited access to the public telephone switched network
(“PTSN”) but, because inmate calling is outward only, cannot be used to call inmates in
confinement facilities. Further, these non-inmate calling cards cannot be utilized by
inmates for calling from the confinement facility. Inmate prepaid telephone calling cards
that may be used for outbound calls from the facility must be those issued by the
exclusive ICS provider serving the confinement facility. Unlike prepaid telephone calling
card service, ICS involves a large capital investment in hardened confinement facility
instruments, security biometrics hardware and software, provider switching equipment,
and provider interfaces with broadband network facilities.

3.05

While ICS requires the use of a personal identification number (“PIN”) just like prepaid
telephone calling card service, there are major distinctions.

The PIN for a prepaid

telephone calling card provides for the use of only that specific card. The PIN is directly
linked to a specific unique item of tangible property – the calling card. The cards are
offered for sale to the general public at retail locations. ICS, however, is not available to
the general public. Its use is limited to calls originating from the confinement facility
served exclusively by the ICS provider. Typically, the ICS PIN is not linked to a specific
item of tangible property, like a calling card, but to the inmate.

The majority of

Docket 15957, Page 13
confinement facilities issue inmates PINs when they are booked. The PIN is created by
the confinement facility and identifies the particular inmate. The ICS provider generates
a random 4-5 digit ID number which is added to complete the PIN and is typically used in
a database that provides information on a myriad of inmate functions. The same PIN
must be used by the inmate for all types of ICS calls including those calls paid for by the
called party. It is also used by the inmate for transactions in their Inmate Trust Fund
account.

3.06

State and local sales taxes are applied in full at the retail establishment where prepaid
telephone calling cards are sold.

The card is fully transportable allowing for the

origination of calls from outside the state or the country. ICS debit calls from Alabama
confinement facilities always originate from within the state regardless of where the calls
terminate and, therefore, are always subject to applicable Alabama taxes.

3.07

Retail prepaid telephone calling cards are not regulated by the Commission. Providers of
prepaid telephone calling service sold to the general public do not require a CPCN to
provide service in Alabama. ICS is fully regulated by the Commission and providers
must possess a CPCN to offer service in Alabama.

As with other regulated

telecommunications service, any resale of inmate debit service via cards or other manner
remains fully subject to Commission jurisdiction and may necessitate the reseller
obtaining authority and certification from the Commission before resale is authorized.

3.08

When an inmate is released or a prepaid account closed, remaining prepaid and debit
service balances are subject to refund. Some ICS providers make refunds in the form of
prepaid telephone calling cards that can be used on the public switched network. The PIN
for the prepaid telephone calling card is not the PIN used by the inmate in the
confinement facility and the calls are no longer subject to the restrictions and monitoring
applicable to ICS.

3.09

Some commenters to the FCC proceeding recommended incorporating an analysis of

Docket 15957, Page 14
prepaid phone card service costs into the cost analysis for ICS:
Petitioners propose a rate-setting methodology that combines an
analysis of prevailing non-ICS prepaid calling card rates with
estimates of the additional costs necessary to provide ICS. Using
their methodology, Petitioners propose a per-minute rate of $0.07
for both collect and debit interstate ICS calls.
Some ICS providers, however, oppose Petitioners’ proposal, stating
that interstate ICS is not comparable to prepaid calling card
services and that basing a methodology on such an assumption
could preclude ICS providers from being fairly compensated.
Some claim that the rate levels proposed by Petitioners, if adopted,
would undermine ICS providers’ financial viability.13
GTL responded to the Petitioners’ recommendation as follows:

Traditional long distance service[s] are not comparable to inmate
calling services given that the services ‘have significantly different
architectures, features, operations and cost structures.’”.14
The FCC concluded:

We do not find on the basis of this record that using commercial
prepaid calling card rates is a reasonable starting point for
calculating ICS calling rates given the significant differences
between the two services, most notably, security requirements.15
3.10

The Commission also concludes that ICS is not comparable to prepaid phone card
service.

Based on the Commission’s consultations with the Alabama Department of

Revenue and the State Treasurer, ICS providers shall not claim taxing and unclaimed
property requirements applicable to prepaid phone card service.

FCC ICS Order, para. 67.
FCC ICS Order, footnote 252.
15
FCC ICS Order, para. 67.
14

Docket 15957, Page 15
4.00 SITE COMMISSIONS

4.01

The FCC does not recognize site commissions as costs when pricing ICS.
Site commission payments are not costs that are reasonably and
directly related to the provision of ICS because they are payments
made to correctional facilities or departments of corrections for a
wide range of purposes, most or all of which have no reasonable
and direct relation to the provision of ICS. After carefully
considering the record, we reaffirm the Commission’s previous
holding and conclude that site commission payments are not part of
the cost of providing ICS and therefore not compensable in
interstate ICS rates.16

4.02

The FCC has not, however, ruled out any recognition of site facility ICS-related costs in
establishing ICS rates:

Although it is clear that site commissions are a revenue stream to
the correctional facility, we cannot foreclose the possibility that
some portion of payments from ICS providers to some correctional
facilities may, in certain circumstances, reimburse correctional
facilities for their costs of providing ICS. As a result, we provide
several avenues for exploring this issue further. First, we set the
interim safe harbors and interim rate caps at conservative levels
above costs in our record. Second, any ICS provider seeking a
waiver of the rate cap or seeking to justify costs between the safe
harbor and the interim rate cap may provide specific details about
payments to correctional facilities that it contends are compensable
for costs meeting our cost standards through interstate ICS rates as
articulated in this Order. Third, as part of the mandatory data
collection we initiate below, we will seek further information on
payments to correctional facilities and whether they cover any costs
of service. Finally, in our accompanying Further Notice, we seek
comment on whether we should categorically find that payments to
correctional facilities are not compensable costs, or whether there
are certain compensable costs that those payments can legitimately
address.17

16
17

FCC ICS Order, para. 54.
FCC ICS Order, footnote 203.

Docket 15957, Page 16
4.03

Without assistance from confinement facilities, ICS cannot function. Simply put, ICS
does not run itself.

The ICS provider installs equipment and facilities but it is

confinement facility personnel working in conjunction with and frequently on behalf of
the ICS provider that ensures the service operates as intended. Without recovery of their
associated costs, there is little incentive for site facilities to continue performing a very
necessary role in ensuring that reliable and efficient service is provided to the inmates.
Absent any recognition of site facility costs in ICS rates, the Commission is concerned
that inmates may not continue enjoying the same level of access to existing and emerging
ICS services. In his Dissent, [FCC] Commissioner Pai notes that this [the FCC] Order
recognizes that excluding site commissions from cost data used to develop our safe harbor
benchmark and rate cap may be an “under inclusive approach given that correctional
institutions themselves often incur costs to provide ICS and those costs may need to be
included in any costs-of-service estimates.”18

4.04

The Commission intends to identify and quantify the site facility costs applicable to ICS
in Alabama and to provide that information for the FCC’s consideration in their ongoing
interstate ICS reforms proceeding. Therefore, the Commission seeks the cooperation of
state, county, and local confinement facility management to assist Commission staff with
this endeavor.

4.05

FCC Order Does Not Preclude ICS Providers from Paying Site Commissions
Following implementation of the FCC’s interim interstate rate caps in February 2014,
several ICS providers serving Alabama confinement facilities notified the facilities that
site commissions for interstate calling are being discontinued. The Commission suspects
that providers are ending site commissions for interstate calls due to the magnitude of the
interstate rate decrease. Prior to February, interstate toll rates in Alabama were $3.95 for
the operator surcharge per call plus $0.89 per minute. These rates were not set by the
Commission which has jurisdiction only over intrastate rates. The FCC’s ICS Order is
their first attempt at regulating interstate rates. The Commission, however, has been

FCC ICS Order, footnote 203.

Docket 15957, Page 17
regulating intrastate rates for several years.

4.06

A 15-minute, interstate, prepaid call under the preexisting interstate rate structure would
result in a $17.30 charge to the subscriber. Alabama’s existing intrastate price for the
same 15-minute toll call is $6.75, a difference of $10.55. The FCC’s newly implemented
interim rate caps price interstate collect calls at $0.25/min and prepaid/debit calls
$0.21/min. A prepaid interstate call that previously yielded $17.30 in revenue for the ICS
provider now yields only $3.15; a decrease of $14.15 per 15-minute call. The FCC’s
interim interstate rate caps are based on the cost study submitted by Pay Tel.19 Pay Tel is
a small to medium sized provider that presently serves only jails. Pay Tel reports average
actual and projected costs for debit and collect ICS calls of $0.208 per minute and $0.225
per minute, respectively, inclusive of additional fees for continuous voice biometric
identification service.20

For the above referenced 15-minute interstate call now capped

at $3.15, Pay Tel’s average reported cost for the call is $3.1221 resulting in a margin of
$0.03. Prior to implementation of the FCC’s interim rate caps, Pay Tel’s margin for the
call was $14.18 ($17.30 - $3.12). Providers with similar costs that deny site commissions
for interstate calls on the basis that there is now insufficient revenue to support the
payments have a legitimate claim. However, any ICS provider denying site commissions
on the premise that the FCC prohibits such arrangements is incorrect.

We do not conclude that ICS providers and correctional facilities
cannot have arrangements that include site commissions. We
conclude only that, under the Act, such commission payments are
not costs that can be recovered through interstate ICS rates. Our
statutory obligations relate to the rates charged to end users—the
inmates and the parties whom they call. We say nothing in this
Order about how correctional facilities spend their funds or from
where they derive. We state only that site commission payments as
a category are not a compensable component of interstate ICS
rates. We note that we would similarly treat “in-kind” payment
requirements that replace site commission payments in ICS

FCC ICS Order, para. 76.
FCC ICS Order, para. 75.
21
Reported prepaid per-minute cost of $0.208 @ 15 minutes = $3.12.
20

Docket 15957, Page 18
contracts.22
4.07

The FCC’s position is that site commissions should not be included in the costs upon
which interstate rates are based. To the extent that the FCC’s interim rate cap exceeds the
provider’s costs, a margin exists from which site commission payments are possible.

The interim rate caps we establish are not a finding of cost-based
ICS rates because we use the highest costs in the record, which
include the costs of advanced ICS security features, to set an upper
bound for interstate rates that will be subject to cost justification.23
4.08

Commission Does Not Preclude Intrastate Site Commissions
The Commission acknowledges that confinement facilities may incur costs associated
with providing ICS and is committed to identifying and quantifying such costs to the
extent they exist and are quantifiable. Additionally, the Commission does not preclude
recognition of site commissions in establishing intrastate ICS rates. Regardless of debate
over the appropriateness of facility site commissions, such commissions are nevertheless
embedded within the current and projected funding for many confinement facilities. The
FY 2015 budgets, for instance, have already been approved by policy makers. The first
and second-year ICS rates proposed in section 6.00 of this Order are higher than the
Commission’s targeted rates in year three.

The initially higher rates provide an

opportunity for confinement facilities to request a higher site commission than may
otherwise be provided under the targeted rates for year three as policy makers with fiscal
oversight deal with any projected budgetary shortfalls from potential site commission
reductions.

The Commission takes such action to safeguard the public interests.

Additionally, the targeted debit and prepaid call rate cap in year three for jails ($0.25/min)
is higher than the FCC’s interim rate caps for interstate debit and prepaid calls ($0.21).
For purposes of addressing future site commission payments, the Commission urges ICS
providers and confinement facilities to consider the differences between intrastate and
interstate interim rate caps.

22
23

FCC ICS Order, para. 56.
FCC ICS Order, para. 74.

Docket 15957, Page 19
4.09

Inflated Site Commissions
The Commission acknowledges that facility site commissions are frequently the primary
driver for confinement facility selection of the ICS provider. Intense competition among
providers to secure contracts as the confinement facility’s exclusive ICS provider has
resulted in increasingly higher site commission commitments.

4.10

Site commissions apply to debit, prepaid, direct billed and, for the most part, collect call
usage. Site commission commitments applicable to the aforementioned ICS calls do not
apply to certain collect inmate calls.

Securus, for example, prices “Pay Now” and

Text2Connect calls at $14.99 and $9.99 respectively. In their contracts with confinement
facilities, Securus refers to “Pay Now” and Text2Connect services as promotional
offerings. Securus pays facilities $1.60 (10.7%) of the $14.99 revenue for Pay Now calls
and $0.30 (3.0%) of the $9.99 revenue for Text2Connect calls. The total Pay Now and
Text2Conect calls are reported in site facility commission settlement statements but
associated call usage and revenue for the calls is not disclosed.

Therefore, the

Commission questions whether the associated minutes of use for these single payment
services were likewise excluded from cost data submitted to the FCC. Purchasers of the
services paid for the allowed call duration regardless of the minutes actually utilized.
Therefore, the purchased minutes and associated revenue are reportable for such calls.

4.11

Relationship to Ancillary Charges
Site commissions are not applicable to ancillary charges (fees) assessed by the provider.
Existing intrastate ICS rates and caps were approved by the Commission in March, 2009.
Therefore, all ICS providers are limited to the same maximum charges for ICS calls.
Nevertheless, site commissions offered by providers have soared.

The highest site

commission known to exist in Alabama is 84.1% offered by ICSolutions to a county jail.
Another Alabama jail is receiving 82% site commissions from Telmate. Based on data
obtained by the staff during this proceeding from ICS providers serving confinement
facilities in Alabama, the average toll call duration is 10.4 minutes (would be billed as 11
minutes). An 11-minute intrastate ICS toll call, priced at the existing intrastate toll cap,

Docket 15957, Page 20
results in a $5.55 charge. A provider that pays 80% site commissions retains $1.11 of the
toll call or $0.101/min. Existing ICS local calls are capped at $2.75 and the average local
call duration in Alabama is 10 minutes. For an 80% site commission, the ICS provider
retains $0.55 per local call or $0.055/min. Local ICS calls, on average, comprise 81% of
all ICS calls in Alabama. Therefore, the weighted average call revenue retained by an
ICS provider paying 80% site commissions is $0.064/min. The Commission postulates
that ICS providers offering abnormally high site commissions are either grossly
exaggerating their reported service costs or they are compensating for calling revenue
losses by substantially inflating ICS charges that are not exposed to site commissions, i.e.,
the numerous ancillary charges (fees) that the provider assesses to its ICS customers.
Prison Policy Initiative made the following observation:

…in order to collect revenue to make up the money lost to
commissions, prison telephone companies add hefty charges
through multitudes of extra fees that often nearly double the price
of a call.24
4.12

In its ICS Reform Order, the FCC focuses heavily on rates and site commissions as the
primary reasons for the high prices paid by ICS customers. In paragraph 38 of its ICS
Reform Order, the FCC touts states that have eliminated site commissions and the
associated lower ICS usage rates that follow. Paragraphs 63-71 of the FCC’s ICS Order,
indicates that the FCC’s safe harbor rates relied heavily upon rates25 effective in the states
that deny site commissions. However, rates and site commissions are only a portion of
the service price borne by customers. The Commission performed a cursory review of the
ICS tariffs in those states cited in the FCC ICS Order and, for the most part, found the
tariffs notably silent with respect to identification of ancillary charges. Usage charges in
conjunction with ancillary charges comprise the total price for ICS.

As previously

acknowledged, the Commission agrees wholeheartedly with the FCC that site
commissions, specifically excessive site commissions, can substantially drive up ICS

Please Deposit All of Your Money, page 2.
The Commission notes that the FCC set safe harbor rates not by analysis of costs but on the basis of the rates
charged in those states that deny site commissions.

Docket 15957, Page 21
rates. However, revenue shortfalls from the application of disproportionately low usage
rates can just as easily be counterbalanced by bloated ICS ancillary charges to the same
extent that such charges are used by providers to compensate for facility site commission
payments.

4.13

Prepaid Inmate Calling Cards Provide the Equivalent of Site Commissions
Implementation of the FCC’s interim rate caps for interstate service failed to curtail ICS
provider enthusiasm for selling their debit service to canteen/trust fund operators and/or
confinement facilities in both prisons and jails at 40% to 60% of the prepaid inmate
calling card face value. Canteen/trust fund operators and/or confinement facilities resell
the prepaid calling cards to inmates for full face value and retain the margin.

4.14

The Commission questions this practice for several reasons. Sales of prepaid inmate
calling cards for a price that includes extremely generous discounts off the “retail price”
of the service undermines any provider contention that the FCC’s interim rate caps are set
too low. The Commission assumes the providers are not selling their service below cost
and are likely earning a margin on the sale of service from the prepaid cards.
Additionally, the Commission assumes the providers are in compliance with Commission
Orders and are pricing calling card calls at the approved rates.

The FCC caps debit

service rates for inmates at $0.21 per minute. With sales of prepaid inmate calling cards
at a 40% to 60% discount of the capped inmate charge for debit service, the provider’s
effective sales price for debit service using the cards is $0.084 to $0.126 per minute.
Assuming a 15-minute average call duration, the calling card discount range referenced
above results in effective intrastate rates of $0.07 to $0.11 per minute for local calls and
$0.18 to $0.27 per minute for toll calls, based on existing intrastate rates in Alabama. Of
course, the inmate sees no such economic benefit, paying the full per minute rate for the
service. The economic benefit is reserved for the resellers of inmate phone service within
the confinement facility.

4.15

If the ICS providers are willing to sell their debit service to an intermediary at a 40% to

Docket 15957, Page 22
60% discount, the Commission questions why the providers can’t offer the same
discounts directly to the inmates. Can similar discounts be provided on prepaid service
for inmate families? Furthermore, the Commission seeks to determine the extent that
wholesale service offerings inflate cost data supporting retail ICS rates. Should wholesale
operational and administrative costs, along with an allocated portion of provider overhead
expense be separated from cost studies supporting retail rates?

5.00 ICS BASIC SERVICE REQUIREMENTS

5.01

Initial Inmate Call
The October 1, 2013 Order for this proceeding, as amended and supplanted by the Errata
and Substitute Order Proposing Revised Inmate Phone Service Rules and Establishing a
Comment Period issued on October 7, 2013 (collectively, the "Order") recommends that
ICS providers offer new inmates an initial call at no charge:

To ensure that newly confined inmates are provided ample
opportunity to inform family members of their confinement status,
identification of the confinement facility ICS provider, and
procedures for establishing a prepaid ICS account, staff
recommends that new inmates (those transferred from another
confinement facility and/or newly processed into the confinement
facility regardless of previous booking instances) be provided an
initial two (2) minute call, at no charge…26
The Commission Order also states that ICS providers will not charge inmates for calls to
the designated customer service number for the ICS provider (Order, page 24)

5.02

Several commenters indicate they make such a call available to new inmates. Pay Tel
provides an initial one-minute free call to inmates in those circumstances when the initial
inmate call is not otherwise billable as a traditional collect call.

Order, Part III K, page 23.

Docket 15957, Page 23
We have found that this one minute call allows adequate time for
the inmate and called party to exchange essential information and
then allows the called party to connect immediately to the Pay Tel
call center for assistance in setting up a prepaid account. With
collect calls that are billable through the Local Exchange Carrier,
however, there is no need to establish a prepaid account. As such,
the call is simply processed as a collect call.27
5.03

AMTEL provides a free three-minute initial inmate call when such calls cannot be billed
as collect (AMTEL comments, page 2). CenturyLink indicated that it is willing to accept
a requirement for a free initial inmate call but asserts that a two-minute period is
excessive (EPSI subsequently renamed “CenturyLink” comments, page 10). CenturyLink
also reminds the Commission that inmates are not authorized to speak with live operators
making the Commission’s requirement for inmate access to the provider’s customer
service problematic (CenturyLink comments, page 11).

5.04

GTL recommends changing the call duration to 30 seconds:

GTL is not opposed to providing limited free inmate calls in the
specific situations outlined in the Order; however, GTL
recommends that the time limit for such calls be reduced to 30
seconds. Thirty seconds provides ample time for an inmate to
inform his or her family about his or her whereabouts. Once the
initial 30 seconds is complete, the ICS provider can then provide
the family member information on establishing an account for
further communications with the inmate.28
Additionally, GTL reminds the Commission that inmates are not permitted to dial tollfree numbers for the provider’s customer service.

The Order also suggests that ICS providers cannot charge inmates
for calls to the designated customer service number for the ICS
provider. Under the Commission’s rules, inmates are not permitted
to call toll-free numbers, and the ICS provider must block all calls
to toll-free numbers (in addition to other types of prohibited
27
28

Pay Tel comments dated December 5, 2013, pp 10-11.
GTL comments dated December 6, 2013, pp 15-16.

Docket 15957, Page 24
numbers). Inmates therefore are not permitted to call GTL’s
customer service number, which is required to be a toll-free
number under Commission rules. Individuals using GTL’s
services, however, have numerous other ways to contact GTL.
GTL’s contact information for its billing and customer service
departments is included on customer bills for those customers
placing collect call charges on their local exchange carrier bill, and
is also available on GTL’s website. To ensure inmates have access
to information regarding GTL’s services, GTL makes posters
available in correctional facilities, which can be hung in each
individual inmate calling location. The poster provides detail on the
applicable call rates, instructions on how to place a call, and
contact information for lodging complaints and inquires. This
information usually is provided in both English and Spanish. GTL
also provides ongoing comprehensive training to facility personnel
to ensure they have the knowledge to answer inmate questions in
regards to ICS usage, rates, and charges.29
5.05

NCIC (comments, page 1) and Securus are opposed to a requirement requiring an initial
inmate call at no charge. NCIC recommends that the policy on initial inmate phone calls
be left to the contracting parties. Securus is opposed to providing an initial inmate phone
call without compensation and challenges the Commission’s authority to oppose such a
requirement.

The Commission proposes a procedure by which ICS providers
must allow a new or newly transferred inmate a free, initial two (2)
minute call at the end of which instructions would be provided for
establishing an ICS account with the ICS provider. The
Commission's recommendation amounts to a taking without just
compensation because it fails to allow the provider to recover the
costs associated with providing such free 2-minute call when a
significant amount of the costs associated with the call are incurred
with the initial connection of the call. Moreover, such proposal
would require Alabama confinement facilities, already operating on
very limited budgets, and to operate and administer the free 2minute phone call system when the Commission lacks jurisdiction
to impose such mandates upon another state agency. Moreover,
any attempt to impose upon the ICS provider all of the costs for
such initial inmate call without recovery amounts to a taking by the

GTL comments dated December 6, 2013, page 16.

Docket 15957, Page 25
Commission without just compensation to the ICS provider.30
5.06

The Commission does not concur with the comments of Securus that it lacks jurisdiction
in this matter.

The Commission fully regulates ICS and may, therefore, establish

minimum requirements for providing the service. There was no attempt to impose a
mandate upon another state agency. To the extent that confinement facilities authorize
inmates to initiate telephone calls, the proposed requirement affects charges for the call
that are borne entirely by the inmate. The confinement facility pays nothing for the call
or any other ICS call and is, therefore, unaffected by the requirement.

5.07

The Commission is persuaded by the comments referenced herein to grant providers
broad discretion with respect to an initial inmate call allowance.

Therefore, the

Commission modifies the recommendation from its Order and authorizes providers
such discretion without imposing a minimum requirement.

Nevertheless, the

Commission encourages ICS providers to offer accommodation for an initial inmate
call, at no charge, when the call cannot be complete via traditional collect billing
arrangements.

Such an accommodation offers inmate families the opportunity to

establish contact with inmates and arrange for prepaid or debit calling services.

5.08

The Commission concedes that inmates are not authorized to speak with live attendants.
Therefore, any requirement that inmates be provided with toll-free access to ICS provider
customer service is impractical. Nevertheless, existing Commission Rule T-15.1(B)(8)
requires ICS providers to provide a toll-free number for customer service inquiries.
Consequently, the Commission requires that prepaid and direct billed customers be
provided a toll-free number for customer service inquiries. For debit service customers,
providers shall include in the tariff filed with the Commission their procedures for
addressing inmate service and billing related inquiries.

5.09

Minimum Customer Account and Service Information Requirements

Securus comments dated December 6, 2013, pp 9-10.

Docket 15957, Page 26
In Section III I of the Order, the Commission recommends minimum account information
be provided to ICS customers:

Commission Telephone Rule T-5(C) requires that detailed monthly
electronic or paper account statements be provided to customers at
no charge. Monthly, individualized ICS customer account
statements must be provided to ICS customers of debit, prepaid,
and direct billed service (including VVS). The default customer
account statement shall be in electronic format, available over the
internet and printable. The most recent three-months of statements
shall be maintained online. In lieu of an electronic statement, a
paper bill, mailed or faxed to the customer (customer’s option),
shall be provided at the request of prepaid and direct-billed
customers (debit service excluded), subject to the paper bill fee…31
Additionally, the Order recommended inclusion of certain customer service information
on the customer account statement and that the provider’s website include Alabama
specific rates and other Alabama specific information:

Electronic and paper account statements shall include the
provider’s toll free number for customers to call in order to inquire
about the information listed on their statement of payments/charges
and/or to discuss suspected billing errors and/or service issues.
Additionally, the Universal Resource Locator (URL) to the
provider’s ICS website shall be listed. The provider’s toll-free
number and URL shall be prominently displayed in font size that is
easily located by the consumer.
5.10

With respect to customer account information requirements for debit accounts,
CenturyLink responded:
…debit users are inmates and, due to correctional facility policies,
EPSI cannot send detailed customer account statements to them by
mail. EPSI does provide detailed debit account reconciliations to
detention staff and to company representatives who handle inmate
complaints, and who could provide the information to the inmates.
The Order should be amended as it relates to debit services to
accommodate current practice and procedures.32

31
32

Order, Part III I, page 20.
CenturyLink comments, dated December 6, 2013, page 8.

Docket 15957, Page 27
5.11

Pay Tel uses a similar system for providing account information to inmates:

While Pay Tel has and will continue to provide detailed monthly
statements to each of its prepaid and direct billed customers, we do
not automatically provide this to the inmates for debit accounts.
Being incarcerated, inmates do not have ready access to the internet
to log in and look up their accounts. In addition, Pay Tel is
typically only on-site to perform repairs, and for security reasons
our time in the detention areas of the facility is strictly controlled.
There is no easy way to distribute inmate statements for debit
accounts without expecting facility personnel to print and distribute
them. Pay Tel does provide a debit account activity statement (a
sample of which is provided as Exhibit B) to any inmate upon
request.33
Inmates in facilities served by Pay Tel may request an account statement from the floor
officer within the cellblock. The floor officer may email Pay Tel Tech support and/or
open a service ticket requesting the account statement. Pay Tel subsequently emails the
account statement to the floor officer who prints the statement and provides it to the
inmate. Pay Tel does not charge the confinement facility or the inmate for the debit
account statement.

5.12

Securus objections with respect to alleged Commission requirements for written debit and
prepaid service account statements (Securus comments, pp. 8-9) reflect an apparent
misinterpretation of the Order. The Order exempted debit service from any requirement
for written account statements and made such statements optional for prepaid customers,
subject to a paper bill fee. GTL objects to electronic bill statements for debit service:

GTL, however, questions the feasibility of providing electronic
account statements to debit customers, i.e., inmates. Inmates
generally have no way to access the Internet in order to retrieve
account statements or to review the Alabama specific website the
Order would require. The Order already recognizes that a paper
bill is not required for debit service, and the same exclusion should
apply for electronic statements.34
33
34

Pay Tel comments dated December 5, 2013, page 8.
GTL comments dated December 6, 2013, page 14.

Docket 15957, Page 28
5.13

The Commission concedes that electronic account statements for debit service are
impractical since inmates are denied internet access. Additionally, paper statements for
debit service cannot be distributed without participation from confinement facility
personnel.

5.14

The Commission modifies the requirements of the Order for customer account statements.
For prepaid and direct billed service, monthly electronic customer account statements
shall be provided, at no charge. Customers will be provided access to their electronic
account statements for the most recent three months activity. Optional paper bills shall
be provided for prepaid and direct billed ICS subject to the optional paper billing
ancillary charge referenced in Section 8.00 of this Order.

Electronic and paper

account statements shall include the provider’s toll free number for customers to call in
order to inquire about the information listed on their statement of payments/charges
and/or to discuss suspected billing errors and/or service issues. Additionally, the URL
for the Commission’s ICS webpage shall be listed on the account statement. The
provider’s toll-free customer inquiry contact information, and Commission URL shall
be prominently displayed and of no smaller font size that that used for listing the
charges and fees.

5.15

For debit ICS, electronic account statements are not required. However, if requested
by the confinement facility, monthly account statements on paper shall be provided,
without charge to the inmates or the facility, for dissemination by facility personnel to
inmates in the manner cited by CenturyLink. Optionally, and at the discretion of the
facility, account statements specifically requested by inmates shall be submitted to
designated confinement facility personnel, via email or FAX, at no charge to inmates or
the facility, for dissemination in the manner cited by Pay Tel. Both methods are
previously referenced in this Section.

ICS contracts shall offer the confinement

facilities one of the options or their choice from both options for providing inmates with
monthly debit account statements contingent upon the confinement facility’s election to
provide such debit account information to inmates.

Docket 15957, Page 29
5.16

Customer Account Statement Format
The Order establishes minimum informational requirements for customer account
statements.35

In Exhibits A through C of their comments36, Pay Tel provided the

Commission with examples of their online account statements and their debit account
transaction history.

The Commission approves of the detail Pay Tel provides its

customers in online account statements and revises the Order to require the following
minimum account statement information:

Prepaid and Direct Billed Service Account Statements
General Information
Provider contact information for customer billing inquiries, the Alabama PSC ICS
webpage URL, customer account number, account statement date, account activity
period.

Call Detail
Each call will be listed individually and shall include call date, call start time, call
duration in minutes37, call origination location, call rate, and call charge.

Payments
Payments into the account shall be listed individually. For each payment, providers
shall indicate the date the payment was received, the payment method, and the payment
amount.

Activity Period Charges
The following shall be listed individually: total call charges, Alabama Utility Gross
Receipts Tax, Federal USF fee, other Federal fees, and total current charges.

Order, Section III I, Page 21
Pay Tel comments dated December 5, 2013, pages 18-20.
37
Calls will be billed in one-minute increments with fractions thereof rounded to the next whole minute.
36

Docket 15957, Page 30
Account Summary
Beginning account balance (from preceding account statement ending balance), total
customer payments submitted during the current activity period, total current charges,
and the ending account balance (funds available).

The account statement need not follow the recommended terminology or category
headings listed above but the minimum information included therein and separation
into the specified level of detail shall nevertheless be provided.

Debit Service Account Statements
General Information
Inmate name, inmate I.D, confinement facility name.

Payments
Payments into the account shall be listed individually. For each payment, the provider
shall include the payment receipt date and payment amount.

Activity Detail
Each call shall be listed individually and shall include the telephone number called,
date/time of call, call duration in minutes, call charge, Alabama Utility Gross Receipts
Tax, and account balance.

5.17

Kiosk Receipt for ICS Payments
The Order established minimum informational requirements to be included on customer
receipts associated with kiosk payments or transfers of funds from the inmate’s
canteen/trust fund to their debit ICS account at kiosks.

For payments at kiosks, the customer receipt shall provide the
customer name, transaction date, identity of the account to which
the payment applies, amount paid, payment processing fee, and

Docket 15957, Page 31
balance applied to the customer’s ICS account.38
CenturyLink expressed concern over these requirements:

EPSI also has concerns relating to the requirements for payments
made at kiosks. Kiosks are often provided by the commissary or
inmate banking system provider and are offered as a convenience.
Imposing specific requirements for kiosks creates the risk that these
providers will decline to make the kiosks available. Diminished
availability of the kiosks would be detrimental to customers
because the kiosks are a primary funding channel for cash-only
consumers, while other cash-payment options such as cashier's
checks, money orders or Western Union are subject to higher fees
from third parties. The availability of account funding information
within monthly account statements should significantly reduce
concerns about consumer disclosures for kiosk transactions.39
The Order makes clear that there shall be no up-front assessment of taxes and government
fees associated with ICS payments.40 Therefore, the only provider charge that shall be
assessed when payment is made at a kiosk is the authorized payment processing fee for
debit/credit card payments or the authorized convenience fee for transfers from inmate
canteen/trust funds to ICS debit accounts.

5.18

The Commission revises the Order with respect to information requirements for kiosk
payment receipts. The kiosk receipt shall list payee identification information, the
method of payment, the date and amount of payment and the applicable payment or
convenience fee. Alternatively, ICS providers may post signage on or within close
proximity of the kiosk identifying the authorized payment or convenience fee by
payment type (debit/credit card or transfer from canteen/trust funds).

The use of

signage identifying the applicable payment or convenience fee relieves the provider of
the requirement to include such information on the kiosk receipt.

Taxes and

government fees shall be assessed only when the ICS service is used and, therefore,

Order, Section III I, Page 21.
CenturyLink comments, dated December 6, 2013, page 8.
40
Order, Section III D, Page 12.
39

Docket 15957, Page 32
shall not be assessed on payments.

5.19

Webpage Requirements
The Order requires that providers establish a webpage for Alabama specific ICS
information.
The Provider’s ICS website shall have a webpage specifically
devoted to Alabama ICS. The Alabama specific ICS webpage shall
include the following information:
(1) available services;
(2) payment options (including information about kiosks);
(3) ICS rates;
(4) ICS fees;
(5) description and rate/amount of the State Utility Gross
Receipts Tax and government fees;
(6) monthly customer statement options (electronic or
paper);
(7) refund procedures;
(8) customer service contact information;
(9) a link to the Alabama PSC ICS webpage (to be provided
by the Commission).41

5.20

CenturyLink objects to the webpage requirement:

The requirement that ICS providers maintain an Alabama-specific
webpage is particularly problematic. The resources and costs
necessary for EPSI to develop and maintain a webpage solely for
its inmate services in Alabama make the requirement unduly
burdensome for EPSI. It is important to note that specific ICS rates,
available services and payment options are determined by the
facility, rather than applying identically throughout Alabama. Most
if not all of the information required to be provided on the Alabama
website is already generally available when a customer's account is
funded or serviced, except for a link to the Alabama Public Service
Commission website. As an alternative to the website requirements
imposed in the Order, EPSI suggests that it could provide a
"referral link" on the company's home page for "Alabama
customers" which would then state the following:
Inmate calling services are regulated by the
Alabama PSC. As each facility has different rules
41

Order, Section III I, Page 21.

Docket 15957, Page 33
and available services, please visit our customer
service portal [link] to the find the information
relevant to the facility from which you are receiving
calls.42
5.21

Pay Tel’s comments are similar:

Pay Tel fully supports the requirement for pertinent information to
be available to customers and potential-customers on vendor
websites and that rate/fee/policy information should be available to
interested parties before being required to register or open a new
account.
We request clarification of the Alabama specific webpage. The ICS
rates and fees may be state specific, however virtually all of the
other requirements are the same for every state that Pay Tel serves.
Today, a customer can visit the Pay Tel website and view available
services, payment options, customer statements, refund procedures,
and customer service contact information. See attached Payment
Options page in Exhibit D. In addition, by clicking on a specific
state on our service map, the customer will be able to view statespecific rates by facility and view Pay Tel’s state tariff as well. See
attached Rates pages in Exhibit E Adding a link to the Alabama
PSC from this page would be easy to implement. We request that
the Commission clarify its website requirement to ensure that all of
the desired information is provided without the necessity to
duplicate every portion of the existing website in an Alabamaspecific page. One option would be for the vendor to provide a link
to the Payment Options page and any other required information
from the Alabama landing page.43
5.22

The Commission’s intrastate ICS reforms provide uniformity in rates, fees, and other ICS
requirements making possible a webpage that is applicable to all ICS providers in
Alabama. Therefore, the Commission revises its previous recommendation. Providers
are not required to provide an Alabama specific page of rates and services on their
website. The Commission shall create a webpage for ICS in Alabama. In addition to
information about intrastate service, rates, fees, refund procedures, complaint

42
43

CenturyLink comments, dated December 6, 2013, page 9.
Pay Tel comments dated December 5, 2013, pages 9-10.

Docket 15957, Page 34
procedures, etc., the Commission shall provide a list of confinement facilities and
identify the ICS provider serving each confinement facility. Additionally, pertinent
extracts from the ICS provider tariff shall be accessible from the webpage.

ICS

providers shall provide a link to the Commission ICS webpage on their website along
with the following recommended verbiage: “Alabama Inmate Calling Service
customers may click here [Link] for information from the Alabama Public Service
Commission about services, rates, fees, refunds, complaint procedures and other useful
information applicable to Inmate Calling Service in Alabama.”

5.23

Customer Payment Limits
The Order prohibited providers from establishing any limits on maximum customer
payments:
The provider will not establish a ceiling on the payment that may
be submitted by a customer, regardless of payment method utilized.
Such artificial barriers deprive the customer of available
“economies of scale’ with little increase in the provider’s actual
costs. The staff believes such ceilings can be used to force
customers into paying the provider’s processing fees more
frequently. Consequently, the maximum payment processing fees
referenced herein are flat-rated regardless of the payment amount
and method of payment.44

5.24

Telmate responded to the Commission’s proposed elimination of payment caps by
pointing out that payment caps reduces provider exposure to credit card fraud:
ICS providers should be allowed to set fraud thresholds of $100 per
twenty-four hour period and $300 per month. Under the proposed
ICS rates, these thresholds would permit sufficient economies of
scale to shield customers from unreasonably frequent fees while, at
the same time, insulating providers from fraud risk and protecting
inmates from extortion risk—both of which are higher among
inmate populations than in typical markets.45

44
45

Order, Section III G, footnote 5, page 21.
Telmate comments, dated December 6, 2013, page 3.

Docket 15957, Page 35
5.25

Pay Tel concurs:

We agree that the limit of a payment should not be set arbitrarily
low to force families into making multiple small payments and
therefore incurring multiple fees. However, to protect against the
higher costs and fraud risks associated with large credit card
deposits where customers can “Deny All Knowledge” of the
charges within thirty days; we believe that a better approach would
be to set a deposit cap of no less than $100 per deposit. Based on
Pay Tel’s data, the average credit card payment is $27.63; and 92%
of deposits are less than $50. Only 1% of payments are $100 or
more where there is no cap, therefore the impact of requiring a
deposit cap of not less than $100 is minimal to consumers.46
5.26

CenturyLink also points out the problems associated with credit card fraud but urges the
Commission to consider the issue of minimum customer payment thresholds set be some
providers.
First, EPSI agrees that "guaranteed funds" payment methods, such
as Western Union payments and cashier's checks, do not need to
have funding limits. However, credit and debit card payments are
prone to fraud and charge-backs, so that providers must have the
ability to work with their merchant banks to establish funding
limits for these payment mechanisms. Further, while the Order
focuses on funding maximums it ignores the more serious problem
of funding minimums. These minimums can be abused by
providers who can force customers to fund amounts of $25 or more
and then make it very difficult for them to obtain refunds of unused
amounts. EPSI believes the Commission should also address this
potential avenue of customer abuse and require that funding
minimums be prohibited.47

5.27

Based on the comments, the Commission concedes that there are issues with potential
debit/credit card fraud. The $100 per payment (deposit) recommended by Telmate and
Pay Tel is a reasonable approach to addressing the issue of debit/credit card fraud without
severely limiting payment maximums. The Commission agrees with CenturyLink that
the issue of funding minimums should also be addressed. The Commission can conceive

46
47

Pay Tel comments dated December 5, 2013, pages 3-4.
CenturyLink comments, dated December 6, 2013, page 7.

Docket 15957, Page 36
of no possible justification for requiring that customers deposit more funds than they
desire to submit to the provider or any amount that is exceeds their financial means before
accessing ICS. Therefore, the Commission revises its Order to prohibit ICS providers
from establishing payment maximums for cash, money order, check, and online
banking customer payments (deposits). The ICS provider may establish a maximum
limit of $100 per payment for debit/credit card transactions and a limit of $300 for total
debit/credit card payments during the most recent 30 (thirty) day period. Providers
have the flexibility and are encouraged to increase the maximum payment limits, on a
case-by-case basis, for customers who have demonstrated to the provider’s satisfaction,
by past payment activity or by their financial means, that they do not pose a risk for
fraudulent debit/credit card payments. Furthermore, the Order is revised to prohibit
providers from establishing any funding minimums for debit/prepaid ICS.

5.28

Limitations to Calling List Associated with Prepaid ICS Account
Inmate calls to any of the telephone numbers included on the prepaid ICS account
authorized calling list will be charged to the funds in the prepaid account. Having
multiple numbers associated with the prepaid account can be beneficial to both the
subscriber and the inmate. In addition to the subscriber’s wireline phone number, their
wireless phone number can be associated with the account along with wireless numbers
belonging to their children and/or numbers associated with the inmate’s parents.
Associating multiple numbers with the prepaid account frequently eliminates the
necessity for prepaid subscribers to establish and fund separate prepaid accounts with the
requisite fees associated therewith.

5.29

NCIC allows up to ten (10) wireline or wireless numbers to be associated with a
subscriber’s prepaid ICS at no charge. Other ICS providers limit the authorized calling
list to a single number and some charge a wireless administration fee for any wireless
phone numbers linked to the account. The Commission can conceive of no justification
for a provider to disallow the association of multiple numbers to a prepaid account if the
prepaid subscriber requests that the numbers be linked with the account, and the

Docket 15957, Page 37
confinement facility has no objections to the inmate calling any of the listed numbers.
Additionally, the Commission finds no justification whatsoever to charge a fee for
including a wireless number with the authorized call list for prepaid service. Absent such
justification, the practice unfairly discriminates based on telecommunications technology.
The Commission asserts that it is reasonable for ICS providers to include no fewer than 5
wireline and/or wireless numbers to the authorized call list for prepaid ICS at no
additional charge or fee to the subscriber. Consequently, the Commission revises its
Order to require that providers include, at no additional charge, up to 5
wireline/wireless numbers on the call list for prepaid ICS subject to the prepaid
subscriber’s request that the numbers be associated with their prepaid ICS account.
The Commission prohibits assessment of additional charges or fees based on the
underlying telecommunications technology associated with any telephone number.
Future requests for Commission consideration of any proposed wireless administration
fee must be accompanied by a detailed study substantiating the additional costs for
including wireless numbers on the authorized call list for prepaid ICS.

6.00 ICS Rates

6.01

The Order recommends elimination of operator surcharges and adoption of a $0.25/min
“postalized” rate for local and toll intrastate calls.
Staff recommends elimination of existing operator surcharges and
establishment of a single per-minute, postalized rate of $0.25
applicable to both local and toll calls, and to both prepaid and
collect calls. Like the FCC ICS rates, the staff’s recommended ICS
rate is intended to recover all associated ICS biometrics and
security monitoring costs. Call durations shall be rated in
increments of no greater than one (1) minute.48
CenturyLink does not object to the proposed rates in the Order49. NCIC50, AMTEL51, and
Pay Tel52 concurred with the proposed rates. GTL, however responds that it cannot

Order, Section III E, page 13.
CenturyLink comments, dated December 6, 2013, page 4.
50
NCIC comments, dated December 2, 2013, page 1.
51
AMTEL comments, dated December 11, 2013, page 2.
49

Docket 15957, Page 38
support the “arbitrarily low rate of $0.25 per-minute for all ICS calls in Alabama”53. GTL
went on to compare the proposed ICS rates to those for other carriers in Alabama:
In addition, the Commission’s proposed rate cap is irrationally low
when compared to non-inmate, intrastate collect calling offered to
the general public in Alabama. Alabama carriers are charging rates
for non-inmate intrastate collect calling well above the rate caps
proposed by the Commission for ICS. For example, one carrier
charges $0.30 per minute for collect calling with per call charges
ranging from $1.50 to $4.90, while another charges between $0.11
to 0.23 for the initial minute, $0.09 to $0.24 for each additional
minute plus per call surcharges ranging from $0.25 to $4.90
depending on the type of call. These non-inmate collect calling
services include no integrated security features, yet they are
significantly higher than what the Commission has proposed for
inmates who make the same type of calls with the security features
that all parties recognize are an essential integrated feature
necessary for ICS.54
6.02

The Commission notes that GTL cites retail services no longer regulated by the
Commission in accordance with the Act. The Commission also notes that most IXCs, toll
resellers, and CLECs have withdrawn their tariffs in Alabama. Though not required to do
so, some companies continue to submit their tariffs to the Commission for informational
purposes in order to claim legal protection offered under the “filed rate doctrine”. Such
filings receive a docket number but the Commission does not vote to approve the tariffs.
In contrast to the ICS provided by GTL, the cited carriers compete in a fully competitive
marketplace where customers have a choice of providers.

6.03

Securus also takes exception to the proposed rates:
The rate cap proposed by the Commission is demonstrably below
cost for the Alabama confinement facilities that Securus serves as
evidenced by the information provided by Securus to the
Commission in response to the Commission's data requests.
Further, the Commission's proposal fails to permit a "per call" fee
that would acknowledge the reality that a significantly high
percentage of ICS call costs are incurred in the initial screening and

Pay Tel comments dated December 5, 2013, page 6.
GTL comments dated December 6, 2013, page 3.
54
GTL comments dated December 6, 2013, page 8.
53

Docket 15957, Page 39
set-up of the ICS call. Such regulation by this Commission fails to
permit Securus and other ICS providers an opportunity to recover
their costs and to realize a reasonable profit on the ICS service
offered at Alabama confinement facilities and must not be imposed
by the Commission.55
The information that Securus submitted in response to the January 25, 2013 Commission
data request included call revenue and minutes-of-use data – not costs. The data indicates
that Securus’ average ICS revenue in Alabama during CY2012 was $0.27/min56. The
Order proposes removal of the existing $2.75 cap on local calls thus allowing for
additional revenue when local calls exceed 11 minutes (based on the $0.25/min rate
proposed in the Order).

6.04

The FCC’s $0.21/min interim rate cap for debit/prepaid calls is based on the detailed cost
study submitted by Pay Tel:

We establish an interim rate cap for debit and prepaid interstate
ICS calls of $0.21 per minute based on the public debit call cost
data included in Pay Tel’s cost submission. The costs reported by
Pay Tel for debit calling represent the highest, total-company costs
of any data submission in the record and therefore represent a
conservative approach to setting our interim debit and prepaid rate
cap. Specifically, Pay Tel reported that the average of its actual and
projected 2012-2015 debit calling costs, excluding commissions
and including continuous voice biometric identification fees, is
$0.208 per minute.57
The FCC notes that the costs submitted by Pay Tel are on the high end of cost data
included in the record. The FCC notes that Pay Tel is a relatively small provider that
serves only jails and is expected to have higher costs than the larger ICS providers that
serve both jails and prisons. Finally, the FCC notes that transport and termination costs
are decreasing resulting in corresponding cost decreases for ICS providers.

Securus comments dated December 6, 2013, pp 4-5.
Securus response to Commission Data Request dated March 15, 2013.
57
FCC ICS Order, para. 76.
56

Docket 15957, Page 40
The interim rate cap is also significantly higher than the cost study
submitted by Securus. Second, Pay Tel serves jails exclusively,
which are generally smaller and which providers claim are more
costly to serve than prisons. As a result, we expect that the rates of
most facilities, whether jails or prisons, large or small, should fall
below this rate. Third, we include Pay Tel’s estimated increases in
cost projections used to calculate our rate caps, despite record
evidence showing that many ICS costs are significantly decreasing.
We thus accept at face value Pay Tel’s projected costs – costs that
it reports to be increasing – which may include costs that we would
conclude, after a thorough review, may not be related to the
provision of ICS, and costs that it may have the incentive to
overstate as the Commission evaluates reform. Finally, we note that
Pay Tel’s and all ICS providers’ transport and termination costs
will continue to decline pursuant to the Commission’s intercarrier
compensation reform, further reducing the cost of providing the
transport and termination of ICS. For all these reasons, we find Pay
Tel’s debit calling cost data to be an appropriately conservative
basis for our debit and prepaid rate cap and adopt a $0.21 per
minute interim rate cap for debit and prepaid interstate ICS calls.58
6.05

The FCC based its $0.25/min interim rate cap for collect calls on the 2008 ICS Provider
Data Submission to the FCC which includes data submitted by both Securus:

In 2008, the ICS Provider Data Submission identified the cost of
debit and the adjusted cost of collect ICS calls as being $0.164 per
minute and $0.24659 per minute respectively, assuming a 15-minute
call duration. Both Pay Tel and Securus were participants in the
2008 study.60
Collect Call Rate Cap. We use a similar approach to establish the
$0.25 per minute interim rate cap for interstate ICS collect calls.
The costs reported by the ICS Provider Data Submission represent
the highest costs of any data submitted in the record and represent a
conservative approach to setting our interim collect rate cap.
Specifically, the ICS Provider Data Submission reported an
effective per minute cost for ICS collect calls of $0.246 per minute,
assuming a 15-minute call duration. We base our collect call rate
cap on this record information and note that this cost is higher than
58

FCC ICS Order, para. 77.
The actual rate is $0.236 per minute but the FCC added $0.01 to the rate to account for bad debt costs. See
footnote 274 to FCC ICS Order, page 42.
60
FCC ICS Order, para. 75.
59

Docket 15957, Page 41
both Pay Tel’s and Securus’ reported costs of collect calls ($0.225
per minute for collect calls and $0.124 per minute for all calls,
respectively).61
Therefore, the claim that the proposed rates in the Order are below Securus’ costs is
unsubstantiated in both the record for the FCC’s ICS proceeding and the record for this
proceeding.

6.06

Service to Prisons Versus Jails
In it comments to the FCC, the Commission opined that the cost to serve prisons with ICS
is likely less than the costs for serving jails62. Underlying cost support cited in the FCC
Order appears to validate that contention. In response to the FCC’s 2012 ICS NPRM,
CenturyLink did not file a cost study but “…did file summary cost information for its ICS
operations. Specifically, CenturyLink reported that its per minute costs to serve state
departments of corrections facilities (excluding site commission payments) averaged
$0.116 and that its per-minute costs to serve county correctional facilities (excluding site
commission payments) averaged $0.137”.63

CenturyLink indicates that the state

departments of corrections facilities it serves produced a median per-minute cost of
$0.108, a low per-minute cost of $0.058 and high per-minute cost of $0.188.64 Pay Tel
serves only jails. The cost data Pay Tel submitted to the FCC supports “…average total
costs for collect and debit per-minute calling of approximately $0.23 and $0.21,
respectively, (including the cost of an advanced security feature known as continuous
voice biometric identification).”65 Therefore, the record suggests a lower interim rate cap
is appropriate for prisons.

6.07

Inmates at correctional facilities have longer incarceration periods than jail inmates
requiring accounts to be established, funded, and refunded less frequently than jail

61
62

FCC ICS Order, para. 78.
Comments of The Alabama Public Service Commission, WC Docket No. 12-375, dated December 13, 2013, page

4.
63

FCC ICS Order, para. 28.
FCC ICS Order, footnote 98.
65
FCC ICS Order, para. 27.
64

Docket 15957, Page 42
inmates. Additionally, prisons have larger average inmate populations than most county
and municipal jails in Alabama generating higher call revenues and, therefore, lower
average costs. Nevertheless, the Commission seeks further cost analysis for purposes of
identifying average costs by confinement facility type and by average inmate population.

6.08

Security Biometrics
According to Legacy Inmate Communications:

Detention facilities are legally required to track, record and monitor
all calls made by inmates to prevent illegal activity and prosecute
further criminal behavior. At most facilities, inmates are assigned
a unique Personal Identification Number (PIN) which they are
required to use when making calls. These PIN’s are used to track
inmate calling patterns, identify call recordings and records, and
manage inmate contacts. As an example: an inmate incarcerated for
raping someone would not be allowed to contact the victim by
placing a contact restriction on that inmate’s PIN. 66
6.09

“Security biometrics” refers to a vast array of software driven features offered by ICS
providers.

Frequently, the provider’s “suite” of tools provided under the heading

“security biometrics” includes capabilities and features dedicated to ensuring ICS is
provided in a manner that protects the public and inmates embedded with other functions
and features that have nothing to do with inmate calling. Embedded features include jail
management capabilities and features designed to facilitate communications between law
enforcement agencies as well monitoring capabilities, including GPS tracking capability
for inmate ankle bracelets.

6.10

ICS providers generally offer voice biometric authentication to confinement facilities.
Voice biometric authentication is used to verify that the voice print of the inmate using
the phone is matched with the voice print on file for that inmate’s PIN. ICS providers
record and store an inmate’s voice at booking. The recording of the inmate’s name is

Voice Biometrics Enhance Prison Calling Security, Legacy Inmate Communications blog at
http://www.legacyinmate.com/blog/post/voice-biometrics-enhance-prison-calling-security, April 4, 2014.

Docket 15957, Page 43
saved to use with all future calls. When the inmate attempts to access the ICS system,
they are prompted to enter their PIN, state their name and often required to repeat a short
script to verify that their voice print matches that on file associated with the PIN number
they are attempting to use for funding the transaction. Following the initial voice printPIN match, voice print detection is no longer monitored for the remaining call duration.
Additional security is required following voice authentication. “Recording and listening
to phone calls is standard practice in correctional investigations and phone system
sophistication ranges from simple recording devices to advanced biometrics.

Most

systems in use include basic recording and pre-call validation features. Investigators listen
to calls to obtain information, but it is usually after the fact.”67

6.11

Monitoring inmate every phone call is impractical due to the volume of inmate calls and
the staffing required for performing the monitoring function. In fact, a “best practices”
mandate from the Federal Bureau of Prisons in 1999 recommended that state and federal
prisons aim to monitor a mere 4% of inmate calls (at random, no less), as a high bar of
achievement.68 Therefore, physical monitoring of phone calls leaves a potential security
gap in terms of protecting the public and the inmate population from possible criminal
activity.

6.12

Continuous voice biometrics (“CVB”) goes beyond simple voice print PIN matching.
The intended security provided by voice biometric authentication can be bypassed when,
following the PIN-voice match, the inmate is coerced to hand the phone to a fellow
inmate. CVB includes a variety of features used in monitoring the entire duration of
every call. CVB is able to identify any change in the inmate voice, indicating an attempt
by the inmate to mask their identity or a potential change in the person using the phone.

Correctional News Participates in Technology-Centered Executive Focus Group, Correctional News at
http://www.correctionalnews.com/articles/2012/01/4/correctional-news-participates-in-technology-centeredexecutive-focus-group, January 4, 2012.
68
Determining the Optimal Balance, Balancing the Cost of Inmate Phone Rates While Protecting Vulnerable
Populations — Victims, Witnesses, Jurors, Public Servants, Jail/Prison Staff and Inmates — as well as the General
Public, A White Paper in response to United States Federal Communications Commission’s Notice of Proposed
Rulemaking, in the Matter of Rates for Interstate Calling Services, WC Docket No. 12-375, by Jonathan Klein in
Collaboration with JLG Technologies, LLC, July 2013, page 4.

Docket 15957, Page 44
Inmate attempts to mask their identity or handing the phone to another inmate during a
call is one indication of potential criminal activity. Additionally suspected three-way
calls, prohibited by detention facilities, are detected. Other available features include key
word search as well as phonetic word/phrase search to aid in detecting potential criminal
activity. Typically the call review is completed automatically after call completion and
alerts sent to applicable investigators.

6.13

The recommended maximum ICS rates in the Order include costs for CVB.69 Telmate,
however, argues that providers should be allowed to automatically pass through costs for
advanced biometric features to customers.

The Commission should permit automatic recovery of costs
associated with innovative ICS products if, in light of the benefits
and cost, the correctional facilities deem them appropriate.
Telmate, for example, developed and deploys a secure verification
process called TelmateVerified. This patent-pending product, not
available through any other industry participant, helps law
enforcement prevent and solve crimes—even in real time. That
service, however, is too expensive to provide at the recommended
rate and does not neatly fall within a proposed fee category. The
proposed framework therefore prevents inmates, law enforcement,
and the public from immediately benefitting from
TelmateVerified’s many advantages.70
The Commission has no intentions of permitting ICS providers “automatic recovery”
from inmates and inmate families for security features it chooses to deploy at confinement
facilities.

Such security features must be scrutinized in terms of whether there are

required to provide secure inmate calling.

Furthermore, Telmate is not guaranteed

recovery of its development and marketing costs for an exclusive CVB product when a
comparable CVB product in available and the costs thereof already included in the
interim ICS rates.

69
70

Order, Section III E, page 13.
Telmate comments, dated December 6, 2013, page 7.

Docket 15957, Page 45
6.14

Securus seeks authority to charge for advanced security biometrics without prior
Commission approval:

Securus requests that the Commission consider permitting Securus
and other ICS providers the opportunity to recover (1) the costs to
process customer accounts with wireless numbers, (2) the costs to
provide voice biometrics as required by Alabama confinement
facilities for security purposes, and (3) the costs to provide
specialized investigative and tracking services as required by
Alabama confinement facilities for security purposes. Such cost
recovery should be permitted by the Commission without the
requirement for prior Commission approval.71
6.15

The Commission has no intention of relinquishing its responsibility for ensuring that ICS
providers include only justifiable and verifiable costs in ICS rates and that end user
charges are limited to essential security biometrics. The Commission notes that Securus
recently acquired JLG Technologies, LLC and its affiliates, the leading supplier of
continuous voice biometric analysis and investigative tools to the corrections and law
enforcement sectors. The acquisition uniquely positions Securus to actively pursue new
security biometric features and aggressively market them to law enforcement as well as
other ICS providers while passing the costs directly to inmates and their families.

6.16

GTL likewise argues for the authority to assess a separate charge for advanced biometric
security features:

The Order states that, like the new FCC ICS rates, the new $0.25
rate cap is intended to recover all associated ICS biometrics and
security monitoring costs. Law enforcement officials, however,
increasingly are requesting that ICS providers offer inmate phone
systems with more advanced security features, which leads to
increased costs that ICS providers must recover. Comments filed
by the Alabama Sheriffs Association demonstrate the importance
of the security features associated with ICS and, more importantly,
how those security measures are related to the ICS costs. As the
Alabama Sheriffs Association points out, “without these security
measures, the risks to institutional security and public safety would
71

Securus comments dated December 6, 2013, page 7.

Docket 15957, Page 46
quickly outweigh the benefits of allowing inmate telephone
access.” GTL currently imposes a $0.45 per-call charge for
biometric service when that service is specifically requested by the
correctional facility. The indiscriminately low usage rates proposed
by the Commission (on top of the proposals regarding fees
discussed below) will eliminate the ability of correctional facilities
to avail themselves of this critical security feature.72
The Commission is not persuaded by GTL’s claim that law enforcement officials are
increasingly requesting that ICS providers offer inmate phone systems with more
advanced security features. In a competitive telecommunications marketplace, end users
choose the services they need and/or want commensurate with the price for the services.
With ICS, however, the selection of services and the associated price thereof is
determined by parties other than the end users. The Commission does not refute the
claim law enforcement increasingly covets more tools to assist them with performing
their mission. However, the Commission must focus on what is essential for providing
inmate calling and for ensuring ICS rates are just and reasonable. Moreover, GTL also
states that it charges $0.45 per call for biometrics service when biometrics is requested by
the correctional facility. That charge is 80% higher than the $0.25 per call charge that
JLG contends is typically charged for its high-end, pre-call and advanced CVB service73.

6.17

The FCC’s interim rate caps include the cost of providing continuous voice biometrics.74
In Pay Tel’s cost study submission for the FCC’s 2012 ICS NPRM, Pay Tel’s per-minute
cost of Investigator Pro™ is shown as $0.019375. The FCC added this per minute CVB
cost to Pay Tel’s $0.189 average cost for prepaid and debit calls to arrive at $0.208 per
minute as the cost for debit and prepaid calls utilizing CVB76. The FCC rounded its
calculation to $0.21/min, thereby establishing the $0.21/min rate cap for debit and prepaid

GTL comments dated December 6, 2013, page 9.
JLG Notice of Ex Parte (Gallaso), WC Docket No. 12-375 - Rates for Interstate Inmate Calling Services, Rec.
July 30, 2013, page 1. JLG indicates that the costs of CVB is $0.02 per minute and that the providers commonly
charge $0.25 per call for CVB.
74
FCC ICS Order, para. 58.
75
Pay Tel Communications, Inc., Inmate Calling Services Cost Presentation for WC Docket 12-375 (public
Version), dated July 23, 2013 (rec. July 24, 2013), Cost Summary.
76
FCC ICS Order, para. 75.
73

Docket 15957, Page 47
ICS calls77.

The FCC’s allowance in ICS rates for CVB is supported by JLG

Technologies, vendor for Investigator Pro™, which estimates ICS provider cost is $0.02
per minute.78

6.18

The FCC’s $0.02 per minute allowance in its interim rate caps for CVB is, nevertheless,
problematic. ICS providers that charge the maximum allowable rates under the FCC’s
interim rate caps are compensated for the cost of providing CVB. However, CVB is not
widely deployed. JLG’s and its “Investigator Pro” product is the industry leader in CVB,
counting Securus, Pay Tel, ICSolutions, and CenturyLink as customers. Nevertheless, the
system is deployed at only 152 confinement facilities nationwide in 24 of the 50 states.79
It is not deployed in Alabama.

In its June 11, 2014 press release announcing the

acquisition of JLG Technologies and its affiliates, Securus revealed that the system is
used in only 189 of the over 2,600 confinement facilities Securus serves nationwide.80
The FCC does not require ICS providers to prove that CVB is used at a confinement
facility before charging it customers a rate that assumes its use.

Therefore, the

Commission concurs with providers that the security biometrics component of the ICS
rate should be isolated and applied by providers only when CVB is offered to the
confinement facility.

6.19

Security biometrics are essential for inmate voice services and the applicable costs should
be borne by ICS end users, provided those biometrics are for purposes of protecting the
public and inmates from possible inmate criminal activity and/or inmate intimidation.
However, inmate voice service end users should not be required to pay for features and
functionality used primarily for purposes that do not directly protect the public and
inmates. For example, inmate voice end users should not bear the cost burden for
biometrics supporting video visitation, jail management systems, automated inquiry
systems, non-related investigator tools, cell phone detection technology, ankle bracelets,

Supra footnote 57.
Supra footnote 73.
79
Who Our Customers Are. JLG Technologies website, URL: http://jlgtechnologies.com/customers/index.shtml
80
Securus Technologies, Inc. Announces Acquisition of JLG Technologies and Affiliated Companies, Securus Press
Release dated June 11, 2014.
78

Docket 15957, Page 48
and data mining.

6.20

Pay Tel requests that the Commission consider additional costs for biometric security
services with limitations:

Pay Tel agrees with the Staff-proposed postalized rate cap of $0.25
per minute, billed in one minute increments, inclusive of voice
biometric technology costs. In the interest of continuing to
encourage innovation, Vendors could be permitted to submit cost
justification for approval to the Commission for any additional
ICS-related technology. We recommend that this should be
narrowly defined to only those features which are directly related
to ICS, and that such requests be limited to once per year.81
6.21

Security biometrics is rapidly evolving. New security products that protect inmates and
the public from potential crime and/or violence resulting from inmate use of ICS deserve
serious consideration. Consequently, there is merit in establishing a rate structure with
sufficient flexibility for recognizing evolving security biometric requirements and costs.
Moreover, because security biometric costs are spread over the provider’s total ICS
minutes, the per-minute cost for security biometrics included in rates may conceivably
decrease with increased usage. The inclusion of single payment service usage in the perminute CVB cost analysis may facilitate such decreases. Providers do not presently
report single payment minutes but such services also use security biometrics and the
prepaid minutes associated with those services rightfully belong in the CVB cost
calculations.

Therefore, a separate security biometrics price component may prove

advantageous to ICS customers. The Commission intends to define the specific security
biometrics essential for providing inmate voice service as well as identify features and
functionality not recoverable from ICS end users.

6.22

The Commission revises its Order with respect to security biometrics to allow for
separation of the security biometrics price component from intrastate ICS rates in
future ICS rate analysis. The Commission intends to include the prepaid minutes

Pay Tel comments dated December 5, 2013, pp 6-7.

Docket 15957, Page 49
associated with single payment services in CVB cost calculations.

Consequently,

providers will maintain and report to the Commission prepaid minutes applicable to
single payment services. Additionally, ICS providers shall submit to the Commission,
by no later than the implementation date for this Order, a list of the security biometric
features provided at each Alabama confinement facility served along with a detailed
description of the features and functionality associated therewith and the vendor source
for the product(s).

6.23

Interim ICS Rate Caps
The Commission is responsible for ensuring that ICS usage rates are fair and reasonable
and for protecting the public interest.

Therefore, the Commission must ensure that

Alabama confinement facilities are not unduly harmed by Commission action in this
proceeding. In Comments filed with the FCC, the Commission requested that the FCC
“…consider alternatives to immediate exclusion of site commissions from ICS rates to
include capping site commissions, setting a future date when site commissions must be
excluded from ICS rates, or capping and phasing-down site commissions.”

The

Commission reasoned that such alternatives “…will reduce the burden on state and local
policy makers who are responsible for fiscal oversight of confinement facilities and may
protect confinement facilities from the harmful consequences of potential funding
shortfalls.” 82 The Commission contends that the proposed $0.25 per minute interim rate
cap for all ICS calls is fair and reasonable. To ensure that policy makers have ample
opportunity to correct any funding shortfalls resulting from potential reductions in site
commissions, the Commission seeks to phase down rates to the targeted interim rate caps.
Furthermore, the Commission contends that the record supports a lower interim rate cap
for ICS at prisons. Therefore the Commission revises its Order to set a $0.30/min
interim rate cap for all ICS calls at jails during the first year of implementation,
reduced to $0.28/min beginning on the first anniversary of implementation, and further
reduced to $0.25/min on the second anniversary of implementation.

For ICS at

Comments of The Alabama Public Service Commission, WC Docket No. 12-375, dated December 13, 2013, page

Docket 15957, Page 50
prisons, the interim rate cap for all ICS calls is set at $0.25/min during the first year of
implementation. The rate cap for prepaid and debit calls shall be reduced to $0.23/min
beginning on the first anniversary of implementation and to $0.21/min on the second
anniversary of implementation. The rate cap for automated collect calls at prisons
shall remain at $0.25/min. The Commission seeks comments from interested parties on
whether it should consider reducing the ICS rate caps to the third-year targeted level,
on a case-by-case basis any time during the first and second year following
implementation, should any ICS provider disproportionately reduce site commission
payments to a confinement facility.83

6.24

The interim ICS rate caps include cost recovery for CVB. Nevertheless, the Commission
finds that security biometrics is rapidly evolving and that there is a lack of consistency in
security biometric features and functionality among providers.

Therefore, the

Commission considers it prudent to separate the security biometrics cost component for
detailed and more frequent cost analysis when establishing final ICS rates.

The

Commission intends to define the specific security biometrics essential for providing
inmate voice service as well as identify features and functionality not recoverable from
ICS end users.

Furthermore, the Commission shall verify which providers are not

providing the essential requirements for security biometrics and shall reduce the rate caps
for those providers accordingly. The Commission revises its Order with respect to
security biometrics to require each ICS provider to submit to the Commission, by no
later than the implementation date for this Order, a list of the security biometric
features provided at each Alabama confinement facility served along with a detailed
description of the features and functionality associated therewith. Additionally, ICS
providers shall identify the vendor source for each security biometric service or feature.

6.25

Single Payment Services
The Order recommends elimination of text-connect service and setting the charge for

Based on a comparison of average intrastate ICS usage revenues at the facility preceding and following
implementation of the interim rate caps.

Docket 15957, Page 51
“Pay Now” calls at the approved ICS usage rate plus the approved payment processing
fee.84

In response, Securus challenges the Commission’s authority to regulate their

Text2Connect service:

The Commission cannot prohibit "text-to-collect" call processing
from intrastate ICS in Alabama because (a) the Commission does
not have jurisdiction to regulate wireless telecommunication
services pursuant to Alabama Code Section 40-21-120(2), and (b)
the Commission cannot interfere with contract rates and charges
imposed by third parties on Securus and other ICS providers for
simply sending a call to the third party for processing the "text-tocollect" call.
As the Commission notes, "text-to-collect" is a call processing
service wherein the wireless recipient of an attempted collect ICS
call receives a message from a third-party service that identifies the
calling party, i.e. inmate and correctional institution, and proposes
to complete the call to the wireless recipient for a charge. The
recipient is quoted the charge and required to positively accept
"twice", i.e. double acceptance, before the call is completed to the
called party.
The third party call processor offers this service pursuant to a
contract that the third party processor maintains with wireless
telecommunication service providers. The fee charged to the called
party is established by the contract that the third party processor
has entered with the wireless telecommunication service providers.
In the event that the recipient of the ICS call proactively elects to
accept the "text-to-collect" call, the fee for the "text-to-collect"
service is billed on the ICS call recipient's wireless bill. Securus,
like other ICS providers, simply allows the calls to be sent to the
third party processor for processing. Because the fee charged to the
called party is established by a national contract between the third
party processor and the wireless telecommunication service
providers, the fee is the same throughout the nation, regardless
whether the call originated at an Alabama confinement facility or a
facility in any other state.85
6.26

84
85

The Commission is no way attempting to regulate wireless carriers or wireless service.

Order, Section III B, page 11.
Securus comments dated December 6, 2013, pp 2-3.

Docket 15957, Page 52
The charge assessed to the call recipient’s wireless bill is not that of the wireless carrier
nor does the call originate from a wireless phone. The call originates from an inmate, over
a wireline phone, from a confinement facility served by Securus using regulated ICS.
The charges assessed to the wireless recipient’s wireless bill are those submitted to the
wireless carrier by a third-party processor of Text2connect calls. The ICS provider, not
the third-party processor, sets the call price and negotiates the percentage revenue
retained by the third-party call processor for their services. The wireless carrier’s fee for
including the charge on their customer’s billing statement is established under agreement
with the third-party call processor. The arrangement is no different than an inmate collect
call submitted by an ICS provider’s third-party billing aggregator to a wireline carrier.
The third-party billing aggregator pays a fee to the wireline carrier for billing on their
customer’s monthly statement.

The Commission does not interject itself into the

contractual arrangements between the third-party billing aggregator and the wireline
carrier. Nevertheless, the Commission establishes the end user price for the collect
inmate call charged to the wireline end user regardless of the circuitous billing
arrangements selected by the ICS provider.

6.27

ICS provider, NCIC, which uses third-party provider Bill To Mobile for its text-connect
offering and charges $5.99 for the text-connect call, concurs with the Commission’s
assessment:

NCIC recommends that the Commission allow Text-to-Collect
offering due to the proliferation of cellular users today. "Text
Collect" type products should be permitted, but regulated since the
call is not originated from a wireless phone, but instead from an
inmate phone terminating to a mobile phone. Although these
content providers are not actually providing the service, they do
have control over the rates charged to the end user and should be
able to charge the rates outlined by the PSC. NCIC is familiar with
the service and is aware that IPS providers are able to determine
the amount that is charged to the wireless customer. NCIC suggests
Text-to-Collect be capped at $5.99 per call.86

NCIC comments, dated December 2, 2013, page 2.

Docket 15957, Page 53
6.28

Securus provides its single pay services through 3CInteractive (“3CI”), a third-party call
processor for billing services to mobile subscribers, including ICS calls based on its
patented Text-CollectTM process. Securus charges $9.99 for its branded “Text2Connect”
call. Maximum call times are dictated by the corrections facility. The price for the call is
the same regardless of the actual call duration. By comparison, NCIC, a relatively small
provider offers its text-connect service for $5.99 - 40% less than Securus.

6.29

Securus’ Pay NowTM is a similar service except that the call recipient may elect to bill the
call to a debit/credit card. The charge is $14.99 per call up to the maximum allowable
call duration. With Pay Now, the calls originate from inmates using ICS and terminate
not only to wireless but also wireline subscribers. Securus describes87 how Pay Now
works:

Pay Now™ is an Automated Operator Service (AOS) offering
where the called party pays for each call using a major credit card.
This AOS is offered exclusively by Securus Technologies, Inc.
The AOS will prompt the called party to pay with their credit card
in order to connect to a friend or family member detained at a
Securus-managed corrections facility. Prior to accepting the charge,
the calling party's name and the name of the facility from where
they are calling is announced to the called party via an Interactive
Voice Response (IVR) system.
The called party will also be advised of the cost of the call and the
maximum allotted call time.
NOTE: Shorter duration calls or disconnected calls will not be
credited for any unused minutes.
The call time is a maximum set duration as dictated by the
facility.88

The Commission notes that Securus’ description of Pay Now makes no mention of any attempt by Securus to steer
Pay Now call recipients toward establishing a prepaid calling account.
88
How it Works, Securus Pay NowTM website, URL: http://www.1tel.com/how-it-works.php.

Docket 15957, Page 54
6.30

The Pay Now call recipient’s debit/credit card statement contains a URL to Securus’
website for Pay Now:

1tel.com is a short web address, or domain name, that we use on
your credit card statement. We use this domain to make it easier for
you to contact us for any service need.89
The “Terms and Conditions” page, Item 9, advises customers for the service to direct all
notices to 3CI. However, the inmate collect call originates from a confinement facility in
which Securus has the exclusive contract for providing ICS. Securus may only provide
ICS under authority granted by the Commission through a CPCN. Therefore, Securus,
rather than any unregulated intermediary, is responsible to the Commission for the price
charged and for customer service inquiries associated with the call.

6.31

ICS Provider Compliance with Commission Telephone Rule T-15.1, Inmate Phone
Service (“IPS”), is required. Securus and other ICS providers that fail to identify single
payment services and the associated charges in their tariff are non-compliant with
Commission rules.

All IPS providers must file tariffs with the Commission which set
forth the services provided along with the charges and surcharges
for those services. Tariffs shall also identify the billing and
collection methods utilized by the IPS provider; such as LEC or
direct billed collect, prepaid calling card, debit account, prepaid
collect account and any other payment alternatives.90
The operator service and per-minute rates charged the customer for
any local (intraLATA/interLATA) collect call shall not exceed the
currently effective caps ordered by the Commission. The customer
shall not be billed by the IPS provider for any call related or noncall related charges, excluding applicable government taxes and
fees, not specifically included in the tariff on file with the
Commission. Further, the IPS provider will disclose in the tariff on
file with the Commission the identity of all government taxes and

89
90

See URL: http://www.1tel.com/faq.php#4.
Commission Telephone Rule T-15.1(A)(2).

Docket 15957, Page 55
fees that may be assessed the customer.91
Any IPS provider wishing to increase rates which exceed the
currently effective caps ordered by the Commission shall file a
petition with cost justification to the Commission. No rate
increases will be implemented without Commission approval.92
Additionally, the Alabama Utility Gross Receipts Tax applies to all collect calls
originating from Alabama confinement facilities. The Commission is unsure whether ICS
providers of single payment services have historically remitted the applicable state taxes
for single payment services and shall defer the determination to the ADOR for
compliance verification.

6.32

Securus objects to any Commission attempt at regulating the price for Pay Now type
services:
The Commission erroneously seeks to interfere with contractual
relationships between Securus and other ICS providers and third
party "pay now" call processors by capping the rates that Securus
and other ICS providers may charge for "pay now" calls and lacks
the jurisdiction to do so. As the Commission notes, "pay now" call
processing is a call processing service wherein a collect call from a
confinement facility is temporarily connected to a wireless or
wireline recipient with the identification of the caller announced by
the third-party call processor and the recipient afforded an
opportunity to bill the flat rate cost of the call to the recipient's
debit or credit card.
The charge imposed by the third-party call processor for the "pay
now" call processing service is charged pursuant to a contract
between the ICS provider like Securus and the third party call
processor. The credit card processing system used by the thirdparty call process is only capable of imposing a flat fee for the "pay
now" call processing service. The fee charged by the third-party
call processor for the "pay now" call processing service is the same
fee charged throughout the nation without regard to whether the
confinement facility call originated in Alabama or any other state.
Any attempt by the Commission to cap the fee that Securus or any
other ICS provider can charge for offering "pay now" call

91
92

Ibid, T-15.1(B)(4).
Ibid, T-15.1(B)(5).

Docket 15957, Page 56
processing services (a) unreasonably interferes with the ICS
providers' contracts with the third-party call processors and (b)
restricts the ICS providers' ability to recover the costs incurred by
the ICS provider in offering the "pay now" call processing
services.93
6.33

The Commission rejects the claim that it does not have the jurisdiction to set rates for
collect calls. Securus does not dispute the Commission’s authority to set ICS collect call
rates provided Securus delivers the call.

However, Securus advocates Commission

surrender of its pricing jurisdiction whenever Securus chooses to convey the billing and
delivery functions for ICS calls to a third-party over which the Commission has no
regulatory jurisdiction. For the Commission to do so is tantamount to sanctioning an
alternative to the Commission’s ICS rate regulation, the consequences for which may be
incentivizing providers to shift as many inmate collect calls as possible to the more
lucrative unregulated price structure. Moreover, the Commission will have created both
the precedent and the incentive for ICS providers to pursue third-party service
arrangements for prepaid collect and debit ICS calls in order that they too may be
shielded from regulation. The Commission asserts its jurisdiction over the charges for
collect calls originating from Alabama confinement facilities regardless of any
intermediaries the ICS provider chooses to include prior to call termination. Therefore,
Securus and other providers may pursue alternatives for billing and delivery of those calls
free from Commission interference with the “contractual relationships” associated
therewith provided the charge to the end user complies with the Commission’s maximum
ICS rates.

6.34

Single pay services allow for de facto circumvention of the Commission’s capped ICS
rates. A Text2Collect call of 15-minutes maximum duration equates to an effective rate
of $0.67/min.

Subtracting the $3.00 maximum collect call bill processing fee

recommended in the Order from the $9.99 Test2Connect charge results in net usage of
$6.99 and an effective rate of $0.47/min. The effective rate for a $14.99 Securus Pay
Now call is $1.00/min. Subtracting the $3.00 maximum debit/credit card processing fee
93

Securus comments dated December 6, 2013, pp 3-4.

Docket 15957, Page 57
recommended in the Order from the $14.99 Pay Now charge results in net usage of
$11.99 and an effective rate of $0.80/min. The Securus website shows the $14.99 Pay
Now charge call fee is $1.8094 and the “transaction fee” is $13.1995. If the call is less than
the authorized duration, the effective rates are even higher. With Pay Now collect calls,
there is no premium text messaging involved and no fees paid to the wireline or wireless
carrier for billing the charge using their customer’s account.

Nevertheless, Securus

charges $9.99 for a Text2Collect call and $14.99, or 50% more, for the same call using
Pay Now.

6.35

Free from regulatory oversight, ICS providers could impose their will with respect to
charges for single payment services. Additionally, the resulting disparity between capped
prepaid call minutes and the much higher charges for single payment services provides no
incentive for ICS providers to adequately inform call recipients about the provider’s
lower cost prepaid service or about funding the inmate’s debit call account.

Call

recipients that visit the 1tel.com website for Pay Now referenced on their credit card
statement will not find any mention of Securus’ lower priced prepaid calling service
alternative. Instead, they are informed, via the frequently asked questions page, that Pay
Now calls are limited to $150 or 10 calls per month per customer. Furthermore, the
Securus “Friends and Family” services webpage is not linked on the 1tel.com website.

6.36

Single Payment Services Offered by Other ICS Providers
GTL offers service using “collect2phoneTM”, which like Securus’ Text2Connect, is priced
at $9.99. GTL’s Pay Now clone is marketed as “Collect2CardTM” and, like Pay Now, is
priced at $14.99. The trademarks are registered to 3CI96. Credit card charges on the
statements of Collect2Card call recipients reference a 2fon.net website. GTL is not
mentioned on the website nor is there a link to GTL’s “Friends and Family” webpage
wherein the recipient may be informed about prepaid collect alternatives. Telmate’s text-

The Commission suspects the call fee is set at $1.80 because the lowest ICS local phone call rate is in North
Carolina where the rate is $1.71 for a 15-minute call, plus tax, for a total charge of $1.80.
95
Securus Pay NowTM charges are listed at URL http://www.1tel.com/pricing.php.
96
URL: http://www.trademark247.com/collect2phone-86054508-1.html

Docket 15957, Page 58
connect offering is branded as Mobile PayTM and its service for billing collect calls to a
credit card is branded as Quick ConnectTM. The Commission is unable to determine
Telmate’s end user charge for Mobile Pay and Quick Connect and the underlying thirdparty provider.

6.37

Commission Pricing for Single Payment Services
The Commission concedes that the nature of text-connect and Pay Now calls makes it
impractical to charge for actual call duration. The intent is to inform the call recipient of
the total charge up front before seeking customer approval for accepting the charge.
Nevertheless, the Commission seeks to ensure that its ICS rate caps are not circumvented
using single payment call services.

NCIC charges $5.99 per text-connect call and

recommends that the Commission authorize ICS providers to provide the service at that
rate.

6.38

Single payment call charges consist of a calling element and a transaction fee element.
Absent specific cost justification to the contrary, the Commission contends the approved
bill processing fee applicable to other ICS collect calls is applicable to text-connect
service and the Commission approved credit card payment processing fee, is applicable to
Pay Now type service. The Commission’s proposed cap for both the bill processing fee97
and payment processing fee is $3.00 (see Section 8.00 in this Order) which when
deducted from the $5.99 charge proposed by NCIC (rounded to $6.00), leaves $3.00
applicable to the call usage element maximum charge. The Commission’s proposed
maximum collect call rate for prisons is $0.25/min. The $3.00 call usage rate element
divided by $0.25/min yields a 12-minute authorized call duration which the Commission
imputes as the authorized call duration for single payment service calls in prisons and
jails.

The Commission notes that the 6% Alabama Utility Gross Receipts Tax is

applicable to all collect calls originated from Alabama confinement facilities.

The

proposed pre-tax cap for both text-connect and Pay Now calls originating from prisons is

With additional cost analysis, the Commission anticipates the maximum bill processing fee recommended herein
will be decreased. See “Bill Processing Fee” in Section 8.00 (Authorized Ancillary Charges).

Docket 15957, Page 59
$6.00 per call ($3.00 usage charge and $3.00 transaction fee).

6.39

The collect call rate cap for jails proposed herein is set at $0.30/min during the first year
of rate implementation, is decreased to $0.28/min in year two, and to $0.25/min beginning
on the second anniversary of rate implementation. Based on the imputed 12-minute call
duration and the maximum transaction fees, the recommended pre-tax cap for both textconnect and Pay Now calls from jails is $6.60 per call in year one, $6.36 in year two, and
$6.00 beginning with year three. Providers are authorized to add the applicable 6%
Alabama Utility Gross Receipts Tax to the maximum pre-tax charge and quote the
resulting after tax charge for single payment services.

Should the Commission

subsequently revise the maximum ICS collect call rates and/or its maximum transaction
fees associated therewith, the maximum pre-tax charge for single payment service calls
shall be adjusted accordingly.

6.40

Because the customer is paying for 12-minutes usage regardless of actual call duration,
ICS providers will ensure that both the purchased minutes and associated revenues for
single payment calls are reported for cost study purposes and in any reporting
requirements mandated by the Commission and the FCC. The Commission shall consider
provider requests for a waiver of the capped single payment charge. Waiver requests
shall include:

1. Detailed justification from the ICS provider as to why the provider
is unable to meet the Commission’s cap on the charge for the
applicable single payment service.
2. Identification of the third-party vendor(s) used for text-connect
and/or Pay Now service along with the vendor(s) charges to the
ICS provider.
3. Identification of any corporate affiliation between the ICS provider,
or the provider’s parent company, and the provider’s third-party
vendor(s) for the single payment service.
4. Identification of any patents held by the ICS Provider or their
parent company for services provided by the third-party vendor(s)
supporting the single payment service.
5. A copy of the contract(s) between the ICS provider and third-party
vendor(s) for the single payment service(s).

Docket 15957, Page 60
6. Identification of alternative vendors considered and the competing
vendors’ price quotes.
7. For single payment service costs in excess of the third-party vendor
charges, a detailed study supporting the additional costs. The study
shall include accompanying data for the number of annual calls and
annual revenue applicable to the single payment service as well as
detailed analysis for apportionment of shared costs.98
8. The requested single payment charge.

6.41

The most frequent complaint heard from inmates in some Alabama confinement facilities
is the high number of calls disconnected due to suspected three-way call violations. The
software used to identify such suspected violations is adjustable by the provider. At
higher sensitivity levels, the software may misidentify background noise or the accidental
engagement of a dial pad button during the conversation as dual-tone, multi-frequency
signaling associated with call forwarding. Such calls are disconnected for suspected
three-way call violations and the ICS provider does not authorize customer refunds under
such circumstances. These premature call disconnections without refund are particularly
costly to ICS customers under the current rate structure that includes a fixed per-call set
up charge (operator surcharge) which must be paid again when the inmate re-dials the
called party.

The recommended “postalized” ICS rates will mitigate the impact of

misidentified three-way call violations but single payment services will remain
susceptible. ICS providers that offer single payment services do not allow refunds for
premature call disconnections.

Therefore, those calls prematurely disconnected then

subsequently redialed require the recipient to pay the entire single payment charge again.
Since single payment service calls are usually terminated to mobile phones, there is an
inherent risk for a caller to accept such calls while driving or walking within commercial
buildings where structural interference in some areas may interfere with cellular signals
leading to disconnected calls. Another risk for premature disconnection is three-way call
monitoring by the provider. The Commission is concerned about the potential for single
payment service abuse resulting from manipulation of software used to monitor suspected
three-way call violations.

Therefore, the Commission intends to monitor premature

Items # 5, 6, and 7 shall be submitted directly to the Commission’s Utility Services Division and labeled
“Proprietary”.

Docket 15957, Page 61
disconnections associated with single payment services.
6.42

The Order is, therefore, revised by eliminating the recommendation to prohibit textconnect single payment service. The Commission adopts NCIC’s recommendation to
allow but cap charges for text-connect service. The charge for “Pay Now” and similar
single payment services, wherein inmate collect calls are billed to the call recipient’s
debit/credit card, are similarly capped. The charge to the end user for single payment
services consists of a usage (calling minutes) element and a transaction fee element.
The Commission imputes a 12-minute authorized call allowance for single payment
service calls. Providers may offer longer authorized call durations, however, ICS
provider charges to end users shall not exceed the Commission’s cap on the charge for
single payment calls. The usage element of the capped charge is computed by applying
the Commission’s maximum collect call rate for the type confinement facility served
(prison or jail) to the imputed 12-minute call allowance. The transaction fee element of
the end user charge shall not exceed the Commission’s maximum bill processing fee
for text-connect service or the payment processing fee for Pay Now service as provided
in Section 8.00 of this Order. The combined usage and transaction fee elements
constitute the pre-tax maximum charge for both text-collect and Pay Now service. The
provider is authorized to apply the 6% Alabama Utility Gross Receipts Tax to the pretax charge for purposes of establishing the maximum after tax charge for single
payment service. ICS providers may request a waiver of the Commission’s maximum
charge for single payment services subject to the provisions for requesting the waiver as
referenced herein. The Commission shall monitor single payment call durations for
potential abuse via premature disconnections.

6.43

ICS providers shall list in their tariff the single payment services offered, the terms and
conditions as well as the charge for the service(s), the underlying provider(s) of the
service(s), and the webpage and/or other contact information associated with the
charge on the call recipient’s mobile phone bill and/or credit card statement. Upon
request, ICS providers shall submit to the Commission scripts of the IVR message(s)

Docket 15957, Page 62
used for single payment services. ICS providers shall ensure that the charge for single
payment service on the call recipient’s mobile phone bill and/or credit card statement
identifies the ICS provider that serves the confinement facility from which the single
payment collect call originated. Any website associated with the charge on the call
recipient’s billing statement shall identify the ICS provider that serves the confinement
facility from which the single payment collect call originated and include a prominently
displayed link to the ICS provider’s webpage. ICS providers shall be proactive in
informing single pay service call recipients about the prepaid collect services available
from the provider and the procedures for establishing a prepaid collect ICS account.

6.44

Restrictions on ICS Resale
Confinement facilities and/or inmate canteen/trust fund operators order blocks of
numbered cards from ICS providers and resell the cards to inmates for purposes of
providing debit service, primarily at small facilities that lack the Jail Management
System, inmate banking system, and commissary account interfaces necessary for funding
and tracking inmate debit service. The cards, made of paper, are typically sold in face
value increments of $10 and are discounted to resellers. The Order99 requires that the
amount paid by inmates for the card shall provide inmates the equivalent ICS purchasing
power in accordance with the provider’s tariffed debit calling rates.

In comments,

CenturyLink contends the Commission may not have jurisdiction to prevent confinement
facilities and canteen/trust fund operators from marking up the face value of prepaid ICS
cards:

EPSI does not mark-up its prepaid services and, therefore, does not
object to this requirement as it applies to ICS providers. However,
EPSI notes that inmate facilities themselves sometimes impose
markups, which are outside of EPSI' s control. EPSI is unsure
whether the Commission has jurisdiction to impose these
prohibitions on inmate facilities, since they are not under the
Commission's regulatory jurisdiction.100

Order, Section III L, page 24.
CenturyLink comments, dated December 6, 2013, page 11.

100

Docket 15957, Page 63
6.45

The Commission concedes that it lacks regulatory jurisdiction over confinement facilities.
Nevertheless, unrestricted resale of ICS creates an incentive for circumventing the
Commission’s cap on end user ICS rates.

Therefore, the Commission exercises its

jurisdiction to prohibit providers from offering ICS service to resellers that mark up the
price paid by the inmate such that the effective price for the service exceeds the
maximum cap authorized by the Commission for debit calls. ICS providers shall
include on each prepaid inmate calling card the face value for ICS commensurate with
Commission approved ICS rates. Providers shall not offer prepaid inmate calling cards
for resale to any confinement facility or canteen/trust fund service that resells or is
suspected of reselling the calling cards at a price greater than the face value listed
thereon.

Upon suspected violations, the Commission shall exercise its available

remedies that include investigation of the reseller prices and suspension of ICS
provider sales to the reseller. ICS providers shall establish new or amend existing
agreements/contracts with resellers that include the above restrictions for resale of its
ICS services and identify the Commission’s remedies for suspected violations of the
resale restrictions. The resale user agreement shall require the reseller to acknowledge
by signature and date their understanding of the resale limitations and consequences
for violations of the agreement. ICS providers shall provide a copy of the reseller user
agreement upon Commission request.

6.46

Pay Tel’s comments indicate concurrence with the Commission’s position on ICS resale:

Pay Tel agrees that phone cards sold through commissary vendors
and/or directly by confinement facilities should not be sold for any
amount above the face value of that card. Arrangements for any
share retained by the commissary vendor (if any) and the facility in
the form of commission/card discount can be part of the negotiated
terms of sale for the cards without impacting the face value of the
card or the cost to the inmate.101
101

Pay Tel comments dated December 5, 2013, page 12.

Docket 15957, Page 64
6.47

Inmates using ICS prepaid phone cards shall be charged for actual usage102 at rates no
greater than the maximum debit calling rates authorized by the Commission plus
Alabama Utility Gross Receipts Tax103. Absent specific approval from the Commission,
ICS providers are not authorized to assess additional intrastate charges/fees for prepaid
phone card service nor are ICS providers authorized to charge inmates for calls of a
predetermined maximum usage limit regardless of actual duration104.

There are

additional issues associated with resale of ICS not addressed in the Order including
replacement of damaged/lost/stolen calling cards, balance transfers, card expiration, and
refund requirements.

6.48

Because plastic can be used to inflict harm and is, therefore, not authorized for inmate
possession, prepaid inmate calling cards are made of paper. In some instances, the
“calling card” is nothing more than a paper kiosk receipt. Paper calling cards are not
durable and subject to degradation. Additionally, calling cards may be lost or stolen.
Upon activating the calling card, the ICS provider has a record of the inmate PIN
associated with the calling card and is thus capable of issuing a replacement calling card.
Any unused balance from the previous card can be restored in full to the replacement
calling card. The Commission, therefore, requires ICS providers to issue replacement
prepaid calling cards under such circumstances and restore to the replacement card the
unused balance from the card it replaces at no charge to the card holder.

The

replacement balance shall be based upon the purchase price paid by the inmate, not the
price paid by the reseller.

Inmates shall be advised of procedures for replacing

damaged/lost/stolen prepaid cards through information printed on the card and/or by
signage inside the confinement facility.

ICS providers shall include the above

referenced calling card replacement procedures in their tariff.

6.49

Cards purchased in $10 increments frequently have “stranded balances” remaining which

102

In usage increments not to exceed one-minute with fractions thereof rounded upward to the nearest whole usage
increment.
103
The Alabama Utility Gross Receipts Tax applies to interstate and intrastate inmate debit calls including inmate
calls using prepaid phone cards.
104
In the manner single payment service customers are charged.

Docket 15957, Page 65
are insufficient for practical use by the inmate for calling purposes. The Commission
requires ICS providers to fully transfer, at no charge to the inmate, unused balances
from prepaid inmate calling cards to new prepaid calling cards purchased by or for the
inmate. Additionally, ICS providers shall transfer unused balances from an expired
inmate calling card to a new calling card purchased by or for the same inmate.
Balances transferred shall be based upon the purchase price paid by the inmate, not the
price paid by the reseller. Typically such transfers are accomplished upon request from
the inmate. ICS providers shall inform inmates of the prepaid card balance transfer
procedures through information printed on the card and/or by signage inside the
confinement facility. ICS providers shall include the above referenced balance transfer
procedures for inmate prepaid calling cards in their tariff.

6.50

ICS providers establish an expiration date for prepaid inmate calling cards upon which the
card can is no longer valid and all remaining prepaid card balances are held by the ICS
provider for disposition. Typical inmate prepaid calling card expiration dates are 6
months from the date of purchase and the Commission adopts that standard for ICS in
Alabama as the minimum period before the card is deemed expired provided the inmate
is not released from custody or requests a refund from the provider prior to the 6
months expiration date. Under such circumstances, the prepaid inmate phone card
expires on the earlier of the date the inmate is released from the confinement facility or
upon the date the ICS provider receives the inmate’s refund request. Additionally, a
card that is damaged/lost/stolen and replaced with another, cards that have no
remaining balance, or cards wherein the remaining balance was transferred to a newly
purchased card, may be considered expired. ICS providers shall include language in
the tariff identifying the expiration date associated with their prepaid inmate calling
card.

6.51

ICS providers shall, at no charge to the inmate, refund the prepaid inmate phone card
unused balance upon the earlier of an inmate request for refund or the inmate’s
release from the confinement facility. Refunds shall be based upon the purchase price

Docket 15957, Page 66
paid by the inmate, not the price paid by the reseller. Refunds may be accomplished via
transfer of the unused balance to the inmate’s canteen/trust fund for inmates that
remain in custody, by debit release card, or check for inmates that are released from the
confinement facility, provided the amount subject to refund is $1 or more105. Refunds
to the canteen/trust fund of inmates released from the confinement facility may be used
for purposes of consolidating the inmate refund.

The Commission’s preference is

refunds via a debit release card rather than by check.

Many inmates have no

established banking account and may face difficultly attempting to cash a refund check
without paying a check cashing fee to do so.

6.52

ICS providers shall not make refunds using prepaid telephone calling cards for use
over the public switched network. Using this method, the ICS provider dictates how the
refund will be spent and requires that it be spent on their service.

With the

preponderance of wireless phones, such cards frequently are not used, effectively
leaving the former inmate with no refund of their prepaid service and providing ICS
providers an opportunity to retain control of the former inmate’s prepaid funds.
Additionally, converting prepaid ICS service to a non-ICS service requires the
Commission to establish maximum calling rates applicable for the non-ICS service.

6.53

Video Visitation Service (“VVS”) and Inmate Voice Mail
The Order proposed capping the rates for VVS and Inmate Voice Mail services:

Staff recommends that the per minute rate for VVS be capped at
$0.50 per minute, with billing increments of no greater than one (1)
minute, until such time as ICS providers individually submit to the
Commission detailed cost studies for ICS and petition the
Commission for alternative rates. Staff’s recommended rate cap is
based on the VVS rate currently charged by ICS competitor,
Homewav, and allows for commissions paid to the confinement
facilities.

105

The Commission does not require providers to refund amounts of less than $1.

Docket 15957, Page 67
Downloadable VVS recorded messages will be capped at $1.00 for
the first minute and $0.50 for each additional recorded minute.106
6.54

Several ICS providers objected to the Commission’s proposed regulation of VVS.

Internet and wireless-based ICS services such as video visitation,
downloadable video messaging, inmate email, and text messaging
are not traditional inmate calling services. Indeed, they are not
“calling” services at all—at least not in the telephony sense. The
FCC already regulates internet and wireless services, and in it its
recent review of interstate ICS rates, it intentionally chose not to
regulate those services separately in the ICS context. As to such
services, then, there exists a federal preemption question that the
Commission has yet to publically consider.107
The Commission again seeks to overextend its jurisdictional
authority and regulate the rates and other terms upon which
Securus and other ICS providers offer and provide video visitation
service ("VVS") at Alabama confinement facilities because VVS is
an internet protocol-based broadband communications service and
outside the purview of the Commission's jurisdiction.108
Securus and CenturyLink cited Section 37-2A-4 in Alabama’s Communications Reform
Act which limits the Commission’s authority over broadband and broadband enabled
services. However, as addressed herein, under Section 3.0 (Jurisdictional Issues), the Act
and its provisions and/or restrictions are not applicable to ICS providers.

6.55

CenturyLink also points out that regulation of VVS may impede its deployment:

As an additional practical matter, because VVS technology is just
being developed and deployed, flexibility is necessary to determine
the most efficient and cost-effective way to provide these services
to meet the needs of potential customers. Importantly, these
services are generally developed and provided by small software
companies that do not have staff dedicated to regulatory
compliance. EPSI believes that imposing burdensome regulations
106

Order, Section III F, page 15.
Telmate comments, dated December 6, 2013, page 6.
108
Securus comments dated December 6, 2013, page 5.
107

Docket 15957, Page 68
on these services at this critical time in their development will
impede competition and may jeopardize the roll out of these
developing services in Alabama. Impeding the roll out of the
services ultimately would be detrimental to inmates and family
members in the state.109
6.56

ICS providers, AmTel and NCIC, concurred with the Commission’s proposed caps for
VVS and Inmate Voice Mail service. Pay Tel indicated agreement with the rates pending
submission of cost studies:

Pay Tel supports Staff’s opinion that VVS, Email and messaging
services are inmate communications services which fall under the
purview of the Commission. We believe that a maximum rate of
$0.50 per message or email would be appropriate to cover the costs
associated with the provision of these services. Rate caps proposed
for Video Visitation are aligned with those charged by companies
who offer these services as their primary business focus, and as
such, Pay Tel supports the levels proposed until such time as a cost
justification is provided substantiating higher costs.110
6.57

ICS is a payphone service under the Telecommunications Act and the regulatory rules
applicable to payphone service providers do not mirror those for telecommunication
carriers. Nevertheless, for certain services, some ICS providers infer they deserve the
regulatory status and exemptions due providers of broadband telecommunication service.
ICS providers do not offer broadband internet service to end users but are, themselves,
subscribers to broadband services. Indeed, inmates are prohibited internet access and
have no choice in the technology and associated carrier used for providing ICS. The
Commission is in no way attempting to set the price that broadband carriers charge for
services provided to their end users, which for ICS are the ICS providers rather than the
inmates. Rather, the Commission exercises regulatory jurisdiction over all ICS end user
services that are provided under payphone service authority granted by the Commission
irrespective of the underlying services to which ICS providers subscribe.

109
110

CenturyLink comments, dated December 6, 2013, page 6.
Pay Tel comments dated December 5, 2013, pp 13-14.

Docket 15957, Page 69
6.58

The Commission concedes that VVS is in the early stages of deployment in Alabama and
concurs that ICS providers need flexibility for purposes of seeking the most cost effective
measures necessary for making the service economically viable.

The Commission

nevertheless urges the FCC to address rates for VVS, Inmate Voice Mail, Inmate Email,
and similar services noting that ICS providers, rather than inmate end users, are
subscribers to the underlying broadband technology that support these ICS services. The
Commission asserts its jurisdiction over all intrastate ICS services until such time that
jurisdiction, or a portion thereof, is officially preempted by the FCC.

6.59

There are issues related to VVS, not covered in the Order, that the Commission is
compelled to address. Subsequent to the Order, staff reviewed the terms of VVS End
User Agreements between Securus and certain Alabama confinement facilities. Among
the conditions in the agreement is the requirement that “For non-professional visitors,
Customer [the facility] will eliminate all face to face visitation through glass or otherwise
at the facility and will utilize video visitation for all non-professional on-site visitations.”
The agreement also proposes to restrict the disciplinary measures that facilities may
impose upon cell blocks: “Customer will allow inmates to conduct remote visits without
quantity limits than for punishment for individual inmate misbehavior”. Securus requires
that $20 be deducted from the facility’s site commission payments111 for any VVS
sessions provided without charge by the facility. At other confinement facilities served
by Securus, face-to-face visitation is reserved for weekends only.

6.60

The Commission is concerned that ICS providers may be using VVS service agreements
and the lure of site commission payments to dictate confinement facility policies
detrimental to inmates and their families. Additionally, the Commission is concerned that
VVS User Agreements that include restrictions on face-to-face visitation for services
regulated by the Commission constitute tacit Commission approval of such restrictions.
Therefore, the Commission requires that restrictions on face-to-face visitation and any
restriction on the disciplinary measures employed by the confinement facility be

111

Securus offers 20% site commissions for VVS.

Docket 15957, Page 70
eliminated as a pre-condition for deploying VVS in Alabama. Such restrictions may,
however, be included in the user agreement provided the warden or confinement facility
administrator signs and dates a letter to the provider, using confinement facility
letterhead, which states that the restrictions on face-to-face visitation included in the
agreement is the facility’s policy and that the facility accepts any restrictions on its
disciplinary procedures as specified in the agreement.

6.61

The Commission revises the Order as it relates to VVS and Inmate Voice Mail. The
Commission defers to a later date the establishment of maximum rates for these
services. ICS providers are required to submit to the Commission’s Utility Services
Division, copies of VVS User agreements with Alabama confinement facilities. Any
user agreement that includes restrictions on face-to-face visitation and/or facility
disciplinary measures as a precondition for deploying VVS must be accompanied by a
letter signed by the warden or confinement facility administrator indicating that
restrictions on face-to-face visitations cited in the agreement are the facility’s official
policy and/or that the facility concurs with any restrictions to its available disciplinary
measures provided in the agreement.

7.00 Unauthorized Ancillary Charges

7.01

Regulatory Cost Recovery Fee & USF Collection Admin Fee
The FCC only began regulating ICS provider rates in 2013 and, to the Commission’s
knowledge, has not specifically authorized ICS providers to charge a regulatory cost
recovery fee for interstate services. In CC Docket No. 96-45, released December 13,
2002, the FCC authorizes providers to recover administrative expenses for collecting and
remitting Universal Service Fund (“USF”) end user fees to the Universal Service Fund
Administration Company (“USAC”) but did not specify the amount or rate that shall be
charged. When is the provider fully compensated for their regulatory costs – when have
they over recovered their regulatory costs?

Docket 15957, Page 71
The regulatory recovery fees charged by providers vary considerably. Telmate charges a
$0.99 Regulatory Assessment Fee at the first and fifth call record. Securus assesses a
$3.49112 Federal Regulatory Recovery Fee on any month an interstate call appears on the
end user bill. The application of this regulatory fee can substantially drive up end user
charges. Assume, for example, 10-minute interstate ICS calls at the $0.21/min cap for
interstate ICS debit calls imposed by the FCC. For a single call, the call charges are
$2.10, the USF fee is $0.35113, and Securus adds a $3.49 Federal Regulatory Recovery
Fee to the call charges and USF fee for a total end user charge of $5.94. For that single
call, the $3.49 Federal Regulatory Recovery Fee assessed by Securus comprises 59% of
the charges the end user is required to pay. The fee exceeds the combined charge for the
call and USF fee. After a second call of the same duration, the fee still comprises 42% of
the total end user charges.

7.02

The FCC expended considerable time and effort attempting to determine the cost of ICS
calls to within a fraction of a penny. Additionally, the FCC goes to great lengths to
ensure the USF fee is adjusted quarterly for projected expenditures and that the federal
Telecommunications Relay Service (“TRS”) Fund114 is adjusted to support actual costs.
Regulatory recovery fees represent a considerable proportion of ICS charges for
customers of some providers and, if authorized, deserve intense regulatory scrutiny to
ensure that consumers are not overcharged. Several ICS providers presently absorb
regulatory costs electing not to charge consumers a separate recovery fee while the
regulatory recovery fees assessed by a few (frequently the largest) ICS providers appear
disproportionate to customer charges.

To the extent that any interstate regulatory

recovery fee and/or USF Administrative Fee is specifically quantified and listed in the
ICS provider’s FCC approved interstate tariff or such fee is specifically quantified and
approved by FCC Order included in the Combined Federal Register, the Commission
acknowledges that such fees are applicable to ICS service in Alabama. The Commission,
112

Includes the USF Admin Fee.
Based on the 2Q, 2014 USF contribution rate of 16.6%.
114
On March 7, 2011, the Federal Communications Commission (FCC) awarded Rolka Loube Saltzer Associates,
LLC (RLSA) of Harrisburg, PA a contract to administer the Interstate TRS Fund, beginning a transition of fund
administration from the National Exchange Carrier Association (NECA) to RLSA.
113

Docket 15957, Page 72
however, does not otherwise acknowledge ICS fees that lack regulatory approval nor
should any consumer be expected to pay fees that lack specific regulatory approval.

7.03

The Commission does not authorize the assessment of an intrastate regulatory recovery
fee. When ICS providers apply for the CPCM to provide intrastate service in Alabama,
applicants attest by signature, that they shall comply with all existing and future
Commission orders and rulings115 and confirm they will pay the requisite Inspection and
Supervision Fees116 to the Commission in order to provide service in Alabama. The
Commission does not distinguish regulatory costs from other costs of providing service
that are recoverable from revenue generated via customer rates. Securus objects to the
Commission position that prohibits the assessment of an intrastate regulatory recovery
fee:

Securus asserts that it should be allowed to charge a regulatory cost
recovery fee for ICS offered by Securus in Alabama
notwithstanding the Commission's recommendation to the contrary.
As evidenced by the Order, the Commission now seeks to
significantly broaden its regulatory oversight of Securus and other
ICS providers to Alabama confinement facilities. As such, the
administrative burden incurred by Securus to comply with the
Commission's proposed regulatory oversight will increase
significantly. These regulatory costs in addition to the other
pressures that will be exerted upon Securus and other ICS
providers if the Commission's proposals are finalized will
adversely impact ICS providers’ ability to realize a reasonable rate
of return for the services offered to Alabama confinement facilities.
Therefore, Securus and ICS providers in Alabama should not be
prohibited from imposing a fee to recoup the costs associated with
the additional regulatory costs incurred.117
7.04

Commenting on the Commission’s refusal to allow an intrastate regulatory recovery fee,
account set up fee, and refund fee, Pay Tel concurs that such fees should not be
considered:

115

Application for Certificate of Public Convenience and Necessity to provide Inmate Phone Service (IPS) in the
State of Alabama, Section 6.6.
116
Ibid Section 6.2.
117
Securus comments dated December 6, 2013, page 7.

Docket 15957, Page 73
As indicated in the cost data provided to the FCC by Pay Tel, these
expenses are a cost of doing business reflected in the overall
average cost per minute. Pay Tel supports the prohibition of such
fees.118
Additionally, NCIC expressed support for the Commission’s position with respect to
regulatory recovery fees119.

7.05

The Commission reaffirms its recommendation in the Order with respect to regulatory
recovery fees.
Alabama.

Separate intrastate regulatory recovery fees are not authorized in

The interim intrastate ICS rates recommended herein are considered

sufficient to recover reasonable regulatory costs incurred by the provider. Future
studies submitted in support of semi-permanent intrastate ICS rates, shall include the
provider’s annualized known and measurable costs for intrastate regulatory
compliance. FCC approved regulatory fees for interstate ICS may be assessed for ICS
in Alabama to the extent that such fees are included in the provider’s FCC approved
interstate tariff or are specifically quantified and approved in FCC Orders. Absent
such specific FCC approval, the fees lack legitimacy and ICS providers are prohibited
from assessing them to ICS calls that originate in Alabama.

7.06

Refund Fee
The Commission Order prohibits provider assessment of fees to refund customer
prepayments of ICS.

No telephone utility certified in Alabama is authorized to assess a
service charge for refunding customer funds. The Commission
considers administrative costs associated with customer refunds to
be normal business overhead to be borne exclusively by the
provider and, therefore, does not authorize a refund fee.120
The Commission reaffirms that ICS providers shall not charge fees for refunding
118

Pay Tel comments dated December 5, 2013, page 4.
NCIC comments, dated December 2, 2013, page 4.
120
Order, Section III H(2), page 19.
119

Docket 15957, Page 74
customer prepayments.

7.07

Account Set-up and/or Account Maintenance Fee
The Commission reaffirms that ICS providers are not authorized to assess an account
set-up or account establishment fee in accordance with the Order121. Additionally,
providers shall not assess an account maintenance fee.

7.08

Provider Assessed Fines
At least one ICS provider attempted to assess its Alabama customers a $25 penalty for
each instance of actual or suspected violations of the confinement facility’s three-way call
policy. The Commission required a full customer refund of these charges with interest.
Such assessments are prohibited for ICS in Alabama in accordance with the Order:

The ICS account is established with an expectation that the funds
submitted to the provider are exclusively for ICS including
applicable taxes and government mandated fees. The funds
associated therewith are the property of the ICS customer until
utilized in part or in whole for ICS. Providers and/or confinement
facilities are not authorized to assess monetary penalties/fines/fees
to ICS customer accounts for violation of confinement facility
security policies or otherwise access the customer’s ICS
prepayments without Commission authorization and the explicit
consent of the ICS customer.122
The Commission reaffirms that such fines/penalties are prohibited.

7.09

Other Ancillary Charges or Fees
No ancillary charge or fee, except those specifically referenced and quantified in
Section 8.0 of this Order (Authorized Ancillary Charges) shall be assessed to intrastate
ICS customers in Alabama.

8.00 Authorized Ancillary Charges
121
122

Order, Section III H(1), pp 18-19.
Order, Section III H(3), page 19.

Docket 15957, Page 75
8.01

General
The Commission authorizes providers to assess an ancillary charge (“fee”) for debit/credit
card payment processing and for transfers of funds from inmate canteen/trust accounts to
an ICS debit call account. Fees will not be assessed for payment via check, money order,
or via online banking. Providers are authorized to charge recipients of inmate collect
calls, billed by the recipient’s carrier, a processing fee to recover the associated billing
costs. Additionally, provider fees may be charged for an optional paper billing statement
and for returned checks. No other ICS provider fees are authorized without specific
approval via a Commission Order.

8.02

GTL asserts the Commission was arbitrary in establishing fee limits:

The Commission correctly recognizes that ancillary products
offered by ICS providers “result in additional provider costs,” and
that ICS providers “should be provided an opportunity to recover”
these “legitimate business costs.” At the same time, however, the
Commission arbitrarily establishes the maximum amount that ICS
providers may charge for certain of these ancillary products. The
Commission claims the established rates are intended to recover the
actual costs incurred by the ICS provider, but provides no evidence
of how it developed its proposed fee limits.123
The recommended Commission caps for provider fees are not arbitrary but are based on
Pay Tel’s comments to the FCC124 with respect to recommended fees:

Pay Tel Communications, Inc. (“Pay Tel”), by its attorneys,
respectfully submits these further comments in response to the
Public Notice, WC Docket No. 12-375 (“Public Notice”), released
June 26, 2013, in the above-captioned proceeding. In the Public
Notice, the Wireline Competition Bureau (“Bureau”) seeks
additional comment on certain fees related to inmate calling
services (“ICS”).125

123

GTL comments dated December 6, 2013, page 11.
Further Comments of Pay Tel Communications, Inc., WC Docket No. 12-375, dated July 17, 2013.
125
Ibid., page 1.
124

Docket 15957, Page 76
8.03

All ICS providers had an opportunity to submit comments with respect to ancillary
charges. Pay Tel complied with the FCC’s request and submitted supporting cost studies.
With regard to the largest ICS providers, the FCC makes note of their failure to
adequately comply in footnote 316 of the FCC ICS Reform Order:

See also Petitioners July 24, 2013 Ex Parte Letter at 2 (noting that
the three largest ICS providers, who control “at least 90% of the
ICS market,” were “remarkably silent” when asked to submit data
regarding ancillary charges).
The Petitioner’s July 24, 2013 Ex Parte Letter referenced in the FCC’s footnote 316
expounds on the silence of the largest ICS providers:

Despite the fact that the FCC specifically requested that the ICS
providers to supply data regarding their own Ancillary Fees, two of
the largest ICS providers failed to file a response, and the largest
ICS provider took the reader on a trip through the rate regulations
from the 1980s and 1990s. While GTL feigned a response, it flatly
refused to provide any other information than “rates and fees
charged by interstate ICS providers are comparable to those being
charged by other non-dominate providers for non-inmate operation
service calling.” But at least GTL acknowledged the FCC’s public
notice, even though it declined to follow the FCC’s instructions.
Securus did not file any response to the public notice. Nor did
CenturyLink.
NCIC and Pay Tel did submit comments in response to the Public
Notice, which proffered information and proposals on reforming
Ancillary Fees. However, these filings must not distract the FCC
from the fact that the three largest ICS providers, who control 95%
of the state DOC ICS contracts, and more than 90% of the ICS
industry’s revenues, have simply refused to cooperate with the
FCC in this proceeding.126
8.04

CenturyLink is mentioned by Petitioners as one of the providers that did not respond to
the FCC’s Public Notice.

Nevertheless, in response to the Commission’s Order,

126

Rates for Interstate Inmate Calling Services, WC Docket No. 12-375, Comments of Lee G. Petro, Drinker Biddle
& Reath LLP, on behalf of Martha Wright, et al (the “Petitioners”), dated July 24, 2013, pp 1-2.

Docket 15957, Page 77
CenturyLink comments:

EPSI [CenturyLink] supports the prohibition on ancillary charges
as set forth in the October 2013 Order, as it believes the prohibition
of these fees will prevent abuses and ensure a level playing field in
the competitive ICS market.127
Pay Tel and NCIC also expressed their support for the Commission’s recommended fees:

In general, Pay Tel supports the notion that any fees beyond those
specifically permitted are expressly prohibited. We feel that every
fee adds to the customer’s true call cost, reduces the funds
available for call acceptance, makes it more confusing for the
customer who is accepting these calls and ultimately reduces
commissionable revenue for the facility.128
8.05

In their comments to the Order, GTL appears to continue the pattern of comparing rates
and fees charged by non-ICS providers for which it was criticized in the Petitioners’ Ex
Parte filing129 to the FCC proceeding:

Further, the Commission’s proposed caps on fees are arbitrarily
low when compared to fees charged by other Alabama
telecommunications carriers for similar non-ICS services. For
example, AT&T Alabama charges a $5.00 payment convenience
fee for payment made via telephone using a credit card, electronic
check, or other similar payment type. Other carriers charge historic
invoice fees (ranging from $10.00 to $25.00), account detail fees
for providing call detail in paper ($5.95), and duplicate bill charges
($2.95 for less than 10 pages, $2.95 plus $0.20 per page for 11+
pages) in the non-ICS context. The Commission has made no
attempt to explain why fees charged by ICS providers warrant
different treatment than the fees charged by non-ICS providers for
the same types of ancillary products.130
The Alabama Legislature passed the Communications Reform Act in 2005 that
127

CenturyLink comments, dated December 6, 2013, page 8.
Pay Tel comments dated December 5, 2013, page 5.
129
Supra footnote 126.
130
GTL comments dated December 6, 2013, page 12.
128

Docket 15957, Page 78
deregulated retail prices for AT&T and other ILECs.

Prior to passage of the Act,

AT&T’s credit card payment fee was $2.50. In 2006, AT&T increased its credit card
payment fee to $3.35. On June 24, 2010, AT&T raised its credit card processing fee to
$5.00. The Commission did not vote to approve either the 2006 or the 2010 AT&T credit
card payment fee increase because it lacks jurisdiction over the fee. Additionally, the
Commission no longer has jurisdiction for AT&T duplicate bill charges. Unlike ICS
providers, AT&T offers their customers an initial paper bill at no charge and assesses a
fee for duplicate paper bills that have been archived.

8.06

As a practical matter, comparing prices between regulated providers of divergent service
technologies and/or vastly different service markets is a meaningless diversion wrought
with inaccurate and misleading conclusions. Seasoned regulators are well aware that
local exchange carriers, for example, have markedly different cost characteristics than toll
carriers. The network, services, service support structure, and organizational structure are
dissimilar. There are often markedly dissimilar costs between different type carriers
within the same service market. Competitive Local Exchange Carriers, for instance,
exhibit different cost characteristics than Incumbent Local Exchange Carriers. Therefore,
GTL’s attempt to compare regulated ICS prices to the regulated and unregulated prices
applicable to different service technologies with vastly dissimilar service markets lacks
credibility and is not useful in the context of this proceeding.

8.07

A comparison of prices between similar service providers is far more meaningful and
credible. The Commission capped existing intrastate ICS rates in 2009. Therefore, all
ICS providers are subject to the same maximum inmate calling rates. GTL, the largest
ICS provider, has greater economies of scale than its competitors and should therefore
have lower average, per unit costs. Consequently, one would expect GTL to be the lowprice market leader for ICS end user fees. The Commission contends that a comparison
of GTL’s end user fees with those of its smaller competitors in this proceeding:
CenturyLink, Pay Tel, NCIC, and AmTel, is far more valid and insightful.

Docket 15957, Page 79
8.08

Debit/Credit Card Payment Fees
ICS payments using debit/credit cards are submitted via the provider’s website, over the
phone using automated IVR, over the phone using the ICS provider’s live payment
agents, and at confinement facility payment kiosks.

Credit card merchant account

processors typically charge ICS providers 3% to 3.5% of the payment for processing
debit/credit card transactions. Large ICS providers can negotiate credit card transaction
fees at the lower end of that range. Therefore, ICS providers pay third-party merchant
account processors $0.75 to $0.88 processing charges for a $25 ICS customer debit/credit
card payment. Providers incur costs for establishing their payment gateway necessary for
submission of credit card information from the web, phone, and kiosks. Providers must
also pay for Payment Card Industry Data Security Standard (“PCI”) equipment and
compliance monitoring for purposes of encryption, transmission, and storage of credit
card account information associated with the five major credit card companies.

The Council’s five founding global payment brands -- American
Express, Discover Financial Services, JCB International,
MasterCard, and Visa Inc. – have incorporated the PCI DSS as the
technical requirements for their data security compliance programs.
Each founding member also recognizes the practitioners and
companies – Qualified Security Assessors and Approved Scanning
Vendors -- certified by the PCI Security Standards Council as
being qualified to validate compliance to the PCI DSS, making the
Council a centralized resource for access to standards and services
approved by all five payment brands.131
8.09

Additional ICS provider payment processing costs are incurred for credit card
chargebacks, fraud management and refund processing, IVR and web capability,
broadband/telecom facilities, and applicable administrative costs. Many of these costs are
volume sensitive - a higher number of credit card transactions results in a lower average
cost per transaction with the caveat that, at various stages of increased transaction
volume, additional bandwidth and server capacity is required. The Commission notes
that, with the exception of merchant account processor costs, the remaining card payment

131

What Is the PCI Security Standards Council, PCI Security Standards website, URL:
https://www.pcisecuritystandards.org/security_standards/role_of_pci_council.php.

Docket 15957, Page 80
costs are controlled by ICS providers rather than third parties.

8.10

The Order recommended a $3.00 maximum fee for card payments over the web, over the
phone using IVR, and from kiosks. For card payments over the phone using the ICS
provider’s live payment agents, the Order recommends a $5.95 maximum fee.132 These
mirror the recommended maximum ICS fees Pay Tel submitted133 in response to the
FCC’s Public Notice for WC Docket No. 12-375 (“Public Notice”), released June 26,
2013. Securus objects to the recommend maximum card payment fees.

…the Commission's Order proposes to impose certain maximum
fees that fail to allow Securus to recover in full its actual costs for
such services. For instance, the Commission proposes (1) a
maximum fee equal to $3.00 for website payments via credit card
or debit card paid to Securus, and (2) a maximum fee equal to
$3.00 for IVR phone payment via credit card or debit card paid to
Securus. Securus incurs costs that exceed the proposed maximum
fees because Securus must (1) pay the per transaction fee imposed
on Securus by the third party credit/debit card payment processor
for processing such payments, (2) incur expense associated with
specialize encryption software to enhance security associated with
accepting payments via credit/debit card, and (3) incur any and all
bad debt associated with any credit card fraud and chargebacks to
Securus for fraudulent credit card charges. Because the
Commission proposes to impose maximum fees lower than
Securus' costs providing such ancillary services, the Commission
must revisit any such fee caps that it may impose on ICS
providers.134
8.11

Securus contends that the recommended maximum payment fees exceed their actual costs
for such services. The Commission notes that Securus charges debit/credit card payment
fees of up to: $7.95 for web and kiosk payments and up to $9.95 for IVR and live
customer service representative payments. However, when provided an opportunity to
respond to the FCC’s Public Notice seeking comment on certain fees related to ICS,
Securus was “notably silent”. The Commission is, therefore, unable to verify the validity

132

Order, Section III G(1), page 16.
Further Comments of Pay Tel Communications, Inc., WC Docket No. 12-375, dated July 17, 2013, page 6.
134
Securus comments dated December 6, 2013, page 6.
133

Docket 15957, Page 81
of Securus’ claim. Pay Tel, on the other hand, responded to the FCC’s Public Notice and
in its comments recommended the maximum payment fees previously cited.
Furthermore, Pay Tel submitted cost analyses135 to the FCC supporting the recommended
ICS rates included in its response to the FCC Public Notice. Securus is one of the
nation’s largest ICS providers and completes far more card payment transactions than Pay
Tel. As previously discussed, average card payment service costs are volume sensitive.
Therefore, one would expect Securus to experience lower average costs than Pay Tel for
processing card payments. CenturyLink, NCIC, Pay Tel, and AmTel136 support the
recommended maximum payment fees.

The Order authorizes a $3.00 fee for cash

payments at kiosks but, upon reconsideration, the Commission does not find justification
for imposing such a fee. Therefore, the Commission reaffirms its Order with respect to
maximum debit/credit card payment fees:
Submitted via web, by phone using IVR, and via kiosk - $3.00
Payment by phone via a live payment center agent - $5.95
The $3.00 debit/credit card payment fee also applies to the transaction fee portion of
“Pay Now” type calls.
The authorization for a cash payment fee at kiosks is rescinded.
8.12

Bill Processing Fee
The Order recommends a maximum $3.00 bill processing fee137 for inmate collect calls
billed by the call recipient’s serving carrier.

The Commission anticipates a lower

maximum fee when studies isolating actual collect call bill processing costs are
submitted.

In the interim, for consistency, the Commission uses its recommended

maximum debit/credit card payment fee as a surrogate. The fee is applicable once during
the carrier’s normal billing cycle for all collect calls billed to the call recipient by the ICS

135

Further Data Substantiating the Cost of ICS Service as Presented in the Further Comments of Pay Tel
Communications filed July 17, 2013, Docket No. 12-375, Pay Tel Notice of Ex Parte, rec. July 23, 2013.
136
The Commission notes that AmTel recommends that it be allowed to charge more than the recommended
maximum for payment fees processed by its live agents for purposes of supporting other inmate services provided
free of charge to inmates and inmate families.
137
Order, Section III G(2), page 17.

Docket 15957, Page 82
provider.

The bill processing fee shall also apply to the transaction fee portion of text-

connect calls but, because text-connect is a single pay service, the bill processing fee may
be charged for each collect call accepted by the call recipient. Provider comments with
respect to the proposed maximum bill processing fee are minimal. Pay Tel, NCIC, and
AmTel concur with the recommend fee. AmTel adds that it “…does not charge any bill
processing fees; AmTel absorbs the fees from the RBOCs for the customers.”138 The
Commission reaffirms the $3.00 maximum bill processing fee recommended in the
Order noting that specific collect call bill processing costs shall be isolated in detail and
analyzed going forward.

8.13

Payment Transfer Fees
The Order requires that ICS providers identify payment transfer fees charged their
customers by third-party services and justify differences with fees charged the customers
of other ICS providers:

Staff emphasizes that ICS providers are prohibited from receiving
any portion of fees paid by their customers to third-party financial
services for submission of payments for ICS and/or for transferring
funds into inmate accounts. Any evidence that ICS providers are
benefitting financially from fees charged their prospective or
existing customers by third-party money transfer services and/or
that ICS providers are paying confinement facilities commissions
therefrom, constitutes tacit admission that the fees are excessive
and shall subject the provider to Commission regulatory action
including, but not limited to, customer refunds with interest.
All ICS providers shall submit, for informational purposes to the
Commission, the transaction fee charged their customers by
Western Union and MoneyGram for ICS payments and will update
this information as the fees change. Staff will compare fees
submitted by all ICS providers and require justification from ICS
providers for any observed anomalies. ICS providers shall fully
inform customers on their websites of all the payment methods
available, the payment processing charges associated therewith,
including the money order and check payment option available at
no charge, and the estimated time required to establish ICS service
138

AmTel comments dated December 11, 2013, page 3.

Docket 15957, Page 83
applicable to each payment option.139
8.14

GTL objects to the Commission’s position with respect to payment transfer fees:
The Commission’s jurisdiction over certain fees also poses a
serious issue. ICS providers cannot control the fees established by
third-parties, such as Western Union or MoneyGram…140
The Commission disagrees with GTL’s contention that ICS providers cannot control
third-party payment transfer fees.

ICS providers, in fact, can and frequently do

collaborate with third-party providers for purposes of setting the payment transfer fees
their customers pay. Moreover, the Commission contends some ICS providers are not
seeking the most economical payment transfer fees for their customers. Additionally, a
few ICS providers appear engaged in arrangements with Western Union and MoneyGram
wherein the provider receives a portion of the customer’s transfer fee charged by those
services.

8.15

Western Union’s charge for “Quick Collect” service is $9.95. With Quick Collect,
customer name and address is forwarded to the Inmate Calling Service provider along
with the 10-digit account number and payment amount.

AmTel comments in this

proceeding suggests the $9.95 Quick Collect fee includes revenue sharing:
CSA141 respectfully does not agree with a prohibition of the Call
Center receiving a portion of a payment from Western Union and
CSA does not accept payments from MoneyGram. CSA
representatives frequently have to make refunds for Western Union
Quick Collect payments and this portion of a processing fee helps
to recover the associated refund expense. The Western Union
Quick Collect Payment is presently at $10.00 [$9.95] per
transaction.142
However, Western Union also offers a “Prepaid Services” option for $5.95 and a Swift
139

Order, Section III G(1)(f), pp 16-17.
GTL comments dated December 6, 2013, page 11.
141
Customer Service of America, “CSA” and AmTel are subsidiaries of ATN, Inc. CSA is the Call Center for
AmTel.
142
AmTel comments dated December 11, 2013, page 3.
140

Docket 15957, Page 84
Pay option for $5.50. For these options, only the 10-digit account number and payment
amount is submitted to the ICS provider. For Swift Pay service, the ICS provider, in
some instances, must agree to designate Western Union as their exclusive payment
transfer service.

Western Union is known to negotiate these fees with providers.

Customers of the following ICS providers pay the Western Union payment transfer fees
indicated in parentheses: Pay Tel ($5.95), NCIC ($5.00), CenturyLink ($5.50), AmTel
($9.95), GTL ($10.95), Securus ($11.95). The Commission contends that higher payment
transfer fees than Western Union’s $9.95 Quick Collect fee suggests additional revenue
sharing arrangements with ISC providers.

8.16

Competition exists among ICS providers seeking contracts to serve inmates but end user
prices are not a priority for confinement facilities that choose the inmate’s exclusive ICS
provider. ICS is non-competitive from the end user’s perspective and the lack of true
market competition erodes the incentive for ICS providers to seek the same or a lower
third-party transfer fee provided to customers of other ICS providers. Moreover, some
ICS providers appear undeterred from seeking a share of the revenue generated by the
third-party payment fees. ICS customers that pay higher than necessary payment transfer
fees are essentially charged twice for the service. They are charged by the third-party
payment transfer service for submitting their money to the ICS provider and pay an
additional premium when ICS providers fail to seek the lower priced option and/or seek
for themselves a piece of the “third-party” charges. In comments to the FCC, Pay Tel
shares the Commission’s observations:

The following table shows the range of fees charged for payment
processing gathered from publicly available information, including
ICS vendor websites. The disparity in the figures is confusing to
consumers, serves to drive up the overall cost of inmate calling,
and suggests that some ICS providers are using payment processing
fees, which are excluded when calculating facility commissions, as
profit centers.143
Many ICS vendors typically characterize fees charged by third
143

Further Comments of Pay Tel Communications, Inc., WC Docket No. 12-375, dated July 17, 2013, page 4.

Docket 15957, Page 85
party payment services such as MoneyGram or Western Union as
being “set by the third party provider.” In reality, the ICS vendors
have the option of selecting different third party payment services
rates and, based on the inflated rates selected by some providers; it
appears that some ICS providers may have entered into profit
sharing arrangements with the payment processors. Pay Tel has not
elected to enter into such arrangements and instead has negotiated
the lowest fees possible for its customers. Meaningful reform of the
ICS industry will require attention to all fees, including third party
payment services, to ensure that the payment options are priced for
cost recovery and not used as a way to circumvent rate caps.144
8.17

MoneyGram competes with Western Union for payment transfer services. MoneyGram’s
standard fee is $5.65 at its Walmart locations and $5.95 at other MoneyGram service
centers but these fees appear somewhat negotiable. The customer’s name, address, 10digit account number and payment amount are provided to the ICS provider. Numerous
ICS providers do not utilize MoneyGram for their customer payment transfer services
while others use both Western Union and MoneyGram. MoneyGram appears to charge a
provider’s ICS customers a higher fee if the ICS provider collaborates for a share of the
revenue.

Customers of the following ICS providers pay the MoneyGram payment

transfer fees indicated in parentheses at locations other than Walmart: NCIC ($4.99), Pay
Tel ($5.95), Securus ($10.99).

8.18

Securus submitted comments responding to the payment transfer fee recommendation in
the Order:

…the Commission seeks to impose regulatory oversight on the
transaction fees charged to ICS providers by third-party financial
service providers, such as Western Union and MoneyGram, where
the Commission lacks any statutory or other jurisdiction over such
third-party financial service providers to regulate what such thirdparty financial service providers may charge Securus and other ICS
providers.145

144
145

Further Comments of Pay Tel Communications, Inc., WC Docket No. 12-375, dated July 17, 2013, page 5.
Securus comments dated December 6, 2013, page 6.

Docket 15957, Page 86
The Commission in no way seeks to impose regulatory oversight over third-party
payment services for which it has no jurisdiction.

Nevertheless, where market

competition is lacking, the regulator’s role is to create polices that serve as proxy for
competition in order to ensure that provider economic choices mimic those of providers in
a competitive marketplace. The Commission asserts that ICS providers can enter into
payment transfer service agreements, on behalf of their customers, with both Western
Union and MoneyGram for a fee that does not exceed $5.95 per payment. In its FCC
comments, Pay Tel recommended that payment transfer fees be capped at the “Lowest
payment option available from the Third Party Vendor with no fee revenue share
commission paid to the ICS Vendor.”146

8.19

Based on staff research, ICS providers may cancel existing contracts with Western Union
on 30-days’ notice. Moreover, Western Union contracts include a provision requiring
vendor compliance with all regulatory requirements as well as local, state, and federal
laws. Providers can cancel contracts with MoneyGram on 15-days’ notice

8.20

Therefore, the Commission revises its recommendation in the Order with respect to
payment transfer fees. ICS providers shall submit to the Commission’s Utility Services
Division before the implementation date for this Order, the payment transfer fees
charged its customers by third-party payment transfer services. The provider’s payment
transfer fees shall be considered non-proprietary, subject to public release. For any
third-party payment transfer fees that exceed $5.95, the provider shall submit a sworn
affidavit signed by the provider’s Owner, President, or Chief Executive Officer and
notarized, affirming that the ICS provider, its parent company, nor any
subsidiary/affiliate of the provider or its parent company receives no portion of the
revenue charged the provider’s customers by the listed third-party payment transfer
services. For any payment transfer fee that exceeds $5.95, the ICS provider shall also
provide to the Commission a copy of the provider’s contract with the third-party
payment transfer service and shall justify to the Commission in writing, signed by the

146

Further Comments of Pay Tel Communications, Inc., WC Docket No. 12-375, dated July 17, 2013, page 6.

Docket 15957, Page 87
provider’s Owner, President, or Chief Executive Officer, why it is unable to arrange for
payment transfer services at fees that do not exceed $5.95. Such filings are subject to
full investigation by the Commission and to Commission regulatory proceedings. ICS
providers shall fully cooperate with the Commission investigation to include submitting,
in writing, to the third-party payment service (copied to the Commission) its approval
for the Commission to discuss all aspects of the provider’s contract with the third-party
payment service. Providers seeking authority to provide ICS in Alabama shall comply
with this requirement before any such authority is granted. The ICS provider shall
update its list of third-party payment transfer fees on file with the Commission for any
changes thereto within 10 days following implementation, provided none of the
changes to the third party payment transfer fees exceed $5.95. For any proposed
changes to the third-party payment transfer fees on file with the Commission that
exceed $5.95, the ICS provider shall submit the contract, affidavit, and justification
requirements referenced herein no less than 10-days in advance of the proposed
implementation date for the changes.

8.21

Inmate Canteen/Trust Fund Transfer (Convenience) Fee
The Order recommends a maximum fee of 5% of the amount transferred from the inmate
canteen/trust account into ICS accounts for purposes of recovering the charges assessed to
ICS providers for such transfers.147 AmTel indicates that it does not charge a fee to
recover costs for transferring funds from canteen/trust accounts.148 NCIC and Pay Tel
concur with the fee. Pay Tel adds:

This is a necessary fee, appropriate to pass on the cost of
establishing the commissary interface necessary to enable debit
calling. Commissary and Jail Management System vendors may
charge the ICS vendor an initial amount for developing/deploying
the interface and an on-going percentage of debit sales. The
maximum 5% is appropriate to recover this expense.149

147

Order, Section III G(3), page 17.
AmTel comments dated December 11, 2013, page 3.
149
Pay Tel comments dated December 5, 2013, page 4.
148

Docket 15957, Page 88
8.22

The Commission reaffirms its recommended maximum 5% convenience fee for
recovering ICS provider costs associated with canteen/trust account transfers into the
inmate’s ICS account.

8.23

Paper Billing Fee
Local exchange and toll carriers in Alabama are required to provide their customers with
a paper billing statement, via the Postal Service, at no charge. Customers may opt out of
the paper bill and receive an electronic statement at no charge. In the Order, ICS
providers are required to provide Electronic billing statements for prepaid and directbilled service at no charge to the customer. Optionally, customers may request a paper
copy of their bill via the postal service. The Order authorizes a maximum $2 fee for
printing and postage associated with providing the paper bill statement to ICS customers
that request it in lieu of the default electronic statement. Pay Tel concurs with the
recommended paper bill fee.

Provided that ICS vendors are permitted to provide account
statements on-line and paper statements upon request, it is
appropriate to charge a modest fee associated with the printing and
mailing of paper statements to prepaid account holders. Pay Tel
concurs with the proposed $2.00 Paper Bill Fee recommended by
Staff.150
8.24

The Commission reaffirms the $2 maximum fee for paper billing statements requested
by customers of prepaid and direct-billed ICS in lieu of the electronic bill statement.

9.00 Taxes and Government Fees

9.01

The Order is emphatic that the 6% Alabama Utility Gross Receipts Tax applies to ICS.

Staff sought guidance from the Alabama Department of Revenue
(“ADOR”) on whether the State Utility Gross Receipts Tax or sales
taxes apply to ICS. On August 13, 2013, the Commission received
150

Pay Tel comments dated December 5, 2013, page 5.

Docket 15957, Page 89
a response from the Assistant Director, Sales and Use Tax Division
of ADOR (Attachment A). ADOR’s guidance is that the sixpercent (6%) State Utility Gross Receipts Tax applies to all ICS
local service, intrastate toll and interstate toll charges. Local and
State sales taxes do not apply to ICS charges.151
9.02

In response, NCIC requests verification that the Utility Gross Receipts Tax applies to
ICS. The Code of Alabama makes it very clear that the Utility Gross Receipts Tax
applies to all toll calls that originate in Alabama. By letter dated May 7, 2014 from
Commission Executive Director, John Garner152, to ADOR Commissioner Julie Magee,
the Commission requested a definitive assessment from ADOR concerning the
applicability of the Gross Receipts Tax to prepaid (debit and prepaid) ICS. Included with
the letter was a staff “white paper” that discussed in detail all inmate calling services
referenced herein. By letter dated May 9, 2014, signed by ADOR Commissioner Julie
Magee, a definitive assessment was provided.

Section 40-21-82(b), Code of Alabama 1975, as amended levies the
Utility Gross Receipts tax on any utility furnishing telegraph or
telephone services in the State of Alabama. ICS providers do
furnish telecommunications services. Prepaid ICS is tied to the ICS
providers' calling platform at the confinement facility who is the
exclusive provider of ICS in the facility. The service may not be
used outside of the facility. Based on the facts provided in your
letter, it is the Department's position that ICS providers should
charge the Utility Gross Receipts tax for the prepaid ICS service.153
9.03

To avoid any misinterpretation, the Alabama Utility Gross Receipts Tax, rather than sales
tax, shall likewise be assessed to prepaid inmate calling card service. Inmate calling card
service, though funded differently, provides inmate debit service that is exclusive to the
ICS provider and to service at the confinement facility wherein the inmate is incarcerated.
It is not equivalent to prepaid telephone calling card service sold commercially for use
almost anywhere on the public switched network. The taxes and rules concerning refunds

151

Order, Section III C, page 11.
John Garner also serves as the Commission’s Chief Administrative Law Judge.
153
RE: Taxation of Inmate Calling Services, Letter to Commission Executive Director, John Garner, from Alabama
Department of Revenue Commissioner, Julie Magee, dated May 9, 2014, pp 2-3.
152

Docket 15957, Page 90
of unused balances that are applicable to prepaid telephone calling cards do not apply to
prepaid inmate calling cards. Providers are encouraged to direct all questions to the
ADOR with respect to application of the Alabama Utility Gross Receipts Tax to ancillary
services and ancillary charges.

9.04

The Order prohibits providers from assessing taxes and applicable government fees to the
purchase price for debit and prepaid ICS.154 The Alabama Utility Gross Receipts Tax
applies to the charge for ICS only when the call duration is known. For interstate calls,
the USF fee and federal TRS fee apply only when the total usage charges (USF) and call
duration is known (TRS).

9.05

The Commission reaffirms its Order with respect to the tax applicable to ICS and with
respect to prohibiting the upfront assessment of tax and federal fees to the purchase
price for debit and prepaid ICS.

10.00 Refunds and Unclaimed Property

10.01

Refunds Required
Commission telecommunication rules require providers to refund customers for any
overcharges.155 Additionally providers shall fully refund unauthorized ICS charges in
accordance with Commission requirements for such refunds which may, at the
Commission’s discretion, include a requirement to assess accumulated interest to the
refund due the customer. Moreover, ICS providers shall refund unused debit, prepaid
inmate phone card, and prepaid collect funds. Prepaid services were adopted to benefit
ICS providers in that prepayment eliminates the non-collectable expense associated with
billed-collect services. Prepaid balances that remain after deducting authorized charges
for ICS, however, remain the property of the account holder, including any unused
balances associated with prepaid inmate calling cards156.

154

Order, Section III D, page 12.
Order, Section III M, page 24.
156
See “Restrictions on ICS Resale” in Section 6.00 (ICS Rates).
155

ICS providers are not

Docket 15957, Page 91
authorized to permanently retain any unused prepaid ICS balances, unless specifically
authorized by the Commission, nor are providers authorized to permanently retain
unclaimed customer refunds.

Any known or suspected non-compliance with these

restrictions shall subject the provider to Commission procedural actions and available
remedies and/or to the consequences for non-compliance from other Alabama
government agencies.

10.02

Minimum Amounts Subject to Refund
The Commission authorizes ICS providers the option of foregoing a prepayment refund
for an amount less than $1.00. Nevertheless, non-refunded prepayments shall not be
permanently retained by the provider. Non-refunded prepaid balances of $0.01 up to
$1.00 shall be aggregated and submitted to the Alabama State Treasurer, along with
unclaimed refunds of $1.00 or more, in accordance with Alabama’s Uniform Disposition
of Unclaimed Property Act. The Order is revised accordingly.

10.03

Refund Procedures
The Order requires the following with respect to refunds:

ICS providers will be proactive in informing customers of
procedures for refunding unused debit and prepaid balances. ICS
customers will be refunded their unused balances in full. The
provider will not assess any fee to the customer’s balance or
request any payment from the customer for refunds. Refunds of
unused account balances for prepaid ICS and VVS may be made
via check or credits to the customer’s credit/debit card. Refunds of
unused account balances for debit service shall be made by credits
to the inmate’s trust fund account. The Commission will consider
other refund methods, e.g., calling cards that can be used outside
the facility, on a case by case basis. However, these methods and
the rates/charges applicable to the calling cards must be approved
by the Commission and included within the ICS provider’s tariff on
file with the Commission.157
As discussed under “Restrictions on ICS Resale” in Section 6.00 (ICS Rates) of this
157

Order, Section III M, pp 24-25.

Docket 15957, Page 92
Order, the Commission prefers refunds to inmates using debit release cards versus checks
or that the funds be transferred to the inmate canteen/trust account for refund. Refunds of
prepaid ICS, wherein payment was submitted via debit/credit cards, may be issued by
crediting the refund amount to the card account, by debit card, or by check. For other
methods of prepayment, refunds shall be made using checks or debit cards. However, the
Commission does not authorize the issuance of refunds to any class of customers using
prepaid telephone calling cards. When a prepaid telephone calling card is used for
refunds, the ICS provider, rather than the customer, dictates how refunds shall be spent.
Many customers use wireless phones for their telecommunication requirements and have
little need for prepaid telephone calling cards. Moreover, the Commission would be
required to regulate the calling rates/terms to which the ICS refund is converted along
with the associated expiration date for the card. Therefore, the Commission revises its
Order to preclude ICS refunds using prepaid telephone calling cards.

10.04

Unclaimed Property
ICS services are subject to Alabama’s Disposition of Unclaimed Property Act of 2004
(“Unclaimed Property Act”).

The staff “white paper” on ICS services provided to

ADOR, discussed previously in Section 9.00 (Taxes and Government Fees) of this Order,
was also submitted to the Alabama State Treasurer’s Unclaimed Property Division
requesting a definitive assessment with respect to applicability of the Unclaimed Property
Act on ICS. On May 2, 2014, the Commission President, Executive Director and Chief
Administrative Law Judge, and the Director of the Commission’s Utility Services
Division conducted a conference call with Alabama’s State Treasurer and the Director of
the State Treasurer’s Unclaimed Property Division. The State Treasurer confirmed both
the Commission’s findings that ICS is subject to Alabama’s Unclaimed Property Act and
the Commission’s findings with regard to the applicable dormancy period for customer
refunds under the Act.

Title 35, Chapter 12, Article 2A, in the Code of Alabama codifies
the Uniform Disposition of Unclaimed Property Act of 2004.
Section 35-12-72(a)(15) is applicable to utility service and defines

Docket 15957, Page 93
unclaimed as a “Deposit or refund owed to a subscriber by a utility,
one year after the deposit or refund becomes payable”. The
Commission hereby defines the terminology “one year after the
deposit or refund becomes payable” to be one year from the date of
the last customer generated debit or credit to the customer account,
i.e. one year following the last customer payment for ICS in the
account or one year after the customer’s last usage of funds in the
account for ICS, whichever comes later.158
10.05

CenturyLink disagrees that ICS prepayments should be considered property subject to
unclaimed property requirements under Alabama law:

The October 2013 Order imposes significant new requirements that
unused debit or prepaid ICS dollars be refunded or treated as
unclaimed property under Alabama law (pp. 24-26). EPSI believes
that it is a mischaracterization of prepaid ICS services to classify
end-user payment amounts as "property" subject to potential
abandonment. Instead, such payments are, in fact, the purchase of
services to be rendered and what is owed to the end-user is a
service delivery obligation, not money. Further, while network
usage is certainly a contributing component of ICS costs, the fixed
elements of labor, call processing technology, and equipment
represent the vast majority of ICS costs and are incurred by the ICS
provider regardless of whether the end-user ever completes a phone
call. Therefore, ICS providers are entitled by law to spend amounts
collected for the purchase of services on establishing and
supporting the infrastructure necessary to deliver such services. For
these reasons, EPSI believes that the requirements in the Order
related to refunds and unclaimed property are inappropriate and
unnecessary, and should be eliminated.159
Alabama’s Unclaimed Property Act defines “property” as:

PROPERTY. Tangible property held in a safe deposit box or other
safekeeping depository in this state, and fixed and certain interest
in intangible property that is held, issued, or owed in the course of
a holder's business, or by a government, governmental subdivision,
agency, or instrumentality, and all income or increments therefrom.
The term includes, but is not limited to, property that is referred to
158
159

Ibid, page 25.
CenturyLink comments, dated December 6, 2013, page 8.

Docket 15957, Page 94
as or evidenced by any of the following:
a. Money, a check, draft, deposit, interest, or dividend.
b. Credit balance, customer's overpayment, gift certificate, security
deposit, refund, credit memorandum, unpaid wage, unused ticket,
mineral proceeds, or unidentified remittance.160
10.06

Any unutilized prepayment for ICS is clearly a credit balance included in the Act’s
definition of property. The Commission requires refunds for any remaining balance for
ICS prepayment after charges are deducted by the provider for calling services rendered
and “refunds” are also included in the Act’s definition of property.

Therefore, the

Commission disagrees with CenturyLink’s claim that it is a mischaracterization of
prepaid ICS services to classify end-user payment amounts as "property". The Act clearly
defines credit balances and refunds as “property”.

10.07

The Commission agrees that a service obligation is owed to the ICS customer for
prepayments submitted to the provider. However, ICS is outbound only service from
inmates at detention facilities.

Once the inmate is released from the facility, that

obligation can no longer be fulfilled by the ICS provider to the former inmate and their
family members.

The Commission agrees with CenturyLink’s assessment of the

provider’s cost elements but disagrees with the conclusion that “…ICS providers are
entitled by law to spend amounts collected for the purchase of services on establishing
and supporting the infrastructure necessary to deliver such services”. The provider is
entitled to seek the necessary capital for establishing and supporting their infrastructure
with the expectation that revenue generated by sales of their services is sufficient to cover
their costs. The provider is also entitled to use ICS sales revenue for their costs of service
and for profit. However, prepayments are not sales until the customer uses the service for
which prepayment is intended whereupon the provider is entitled only to that portion of
the customer’s prepayment commensurate with the charges for services rendered.
Unused prepayments entrusted to the provider remain the property of the customer and
160

Article 2A, Uniform Disposition of Unclaimed Property Act of 2004, Code of Alabama, 1975, Section 35-1271(11).

Docket 15957, Page 95
the provider is not authorized by Alabama law to seize the property of inmates and their
families to support the provider’s network infrastructure and/or increase the provider’s
profitability.

10.08

The Order precludes ICS providers from assessing customers any charges for refunds and
from assessing dormancy charges to unclaimed funds.

The Commission does not consider ICS provided under exclusive
contract with the confinement facility to represent any explicit or
implied contractual agreement with users of their ICS service for
purposes of determining whether dormancy charges apply to the
customer’s abandoned property. Furthermore, the Commission
prohibits any attempt by ICS providers to include in ICS offerings
to their customers, or otherwise in their tariff on file with the
Commission, any requirement that the customer’s property is
subsequently subject to dormancy charges in the event of
abandonment. Dormancy charges are not applicable to ICS in
Alabama.161
10.09

Securus objects to the one-year dormancy period for unclaimed property:

The Commission proposes to require Securus and other ICS
providers to keep all unexpired prepaid ICS customer accounts
open and valid for a period of one (1) year following account
inactivity before the ICS provider is permitted to terminate the
account and tender account proceeds to the Alabama State
Treasurer pursuant to the Alabama Uniform Disposition of
Unclaimed Property Act of 2004. Because ICS providers like
Securus encounter burdensome accounting difficulties if otherwise
required to maintain such inactive accounts for a 1-year period,
Securus respectfully requests that the Commission permit the ICS
provider to transfer such inactive prepaid account balance to the
Alabama State Treasurer following a period of inactivity equal to
180 days. Such request is wholly consistent with Securus' current
tariffed terms and conditions and does not impose unduly
burdensome accounting requirements on the ICS provider.162

161
162

Order, Section III M, page 25.
Securus comments dated December 6, 2013, page 10.

Docket 15957, Page 96
10.10

The Alabama Unclaimed Property Act is not a Commission requirement. It is an Act of
the Alabama Legislature and carries with it the force of law. The dormancy period for
utility refunds is listed on the Alabama State Treasurer website as 1 year163.

The

dormancy period for utility refunds is the shortest of those authorized. The Commission
does not have authority to grant a waiver from the law. Securus comments demonstrate a
misunderstanding of unclaimed property requirements. The Unclaimed Property Act does
not require providers to keep an account “open and valid” for the duration of the
prescribed dormancy period. It requires providers to retain the funds due the customer for
the duration of the dormancy period, during which time the provider actively seeks to
refund the customer. The customer’s opportunity to claim the money due them does not
end when the funds are remitted to the Alabama State Treasurer164. The property is listed
Money Quest Alabama, the Alabama State Treasury's official website for unclaimed
property searches:

The Alabama State Treasury serves as custodian of these assets and
makes every effort to return them to the rightful owner or their
heirs. This site allows you to search the Alabama unclaimed
property database to see whether the state may be holding assets
that belong to you, your family or your business. You may also
print claim forms and track the progress of your submitted claims.
Claims submitted for assets held by the State of Alabama are
processed by the State Treasurer's Office. There is never a charge
to search the database, file and track a claim or receive your
assets!165
10.11

The Commission reaffirms its Order with respect to unclaimed property. Unclaimed
refunds due ICS customers in Alabama and other customer prepaid funds166 retained
and not returned to the owner are subject to Alabama’s Unclaimed Property Act. ICS
providers shall comply with its requirements and with the Alabama State Treasurer’s
Unclaimed Property reporting procedures.

163

Reporting of Unclaimed Property, Appendix, Alabama Dormancy Periods / Reporting Guide, Alabama State
Treasurer, URL: http://www.treasury.state.al.us/Content/Business_Owners.htm
164
Custody by state; recovery by holder; defense of holder; Code of Alabama, Section 35-12-79.
165
URL: https://www.moneyquest.alabama.gov/
166
Includes unused balances associated with prepaid inmate calling cards.

Docket 15957, Page 97
11.00 Tariff Requirements

11.01

The Order establishes the following tariff requirements:

ICS providers will submit revised tariffs that comply with the
requirements in the final Order for this proceeding and rules
adopted therein. Within the provider’s tariff, a separate section will
be established identifying all services provided to confinement
facilities in Alabama, a description of each service provided, and
the associated rates for each service. Additionally, a separate tariff
section will be provided that identifies, defines, and provides the
associated price for all ICS fees and ancillary charges. The provider
will not assess any rate or charge to ICS customers without
Commission approval nor will any rates of charges be included in
the tariff that are not specifically listed in the separate tariff
sections referenced above. No existing or new ICS will be offered
by the provider until the service and associated rates are approved
by Commission and included in the provider’s tariff on file with the
Commission.167
11.02

Section III P, page 27, in the Order establishes the Commission’s filing requirements.
PayTel’s comments are supportive of the requirements.

Pay Tel supports the tariff filing and reporting requirements
proposed by Staff. Pay Tel believes the only way to protect
consumers from inflated fees is for the Commission to require ICS
vendors to list all payment processing fees on the vendor website
and in their tariff including third party negotiated fees such as
Western Union® and MoneyGram®. Following a review of cost
justification by the Commission the fees would be approved or
denied.168
11.03

The Commission shall develop a template for the ICS tariff and include it on the
Commission website before implementation of this Order to include an abbreviated
version that identifies only the provider’s rates and ancillary charges. The Commission
revises its Order with respect to the services that shall be included in the ICS provider

167
168

Order, Section III O, page 26.
Pay Tel comments dated December 5, 2013, page 5.

Docket 15957, Page 98
tariff. The provider shall identify all services, along with the rates and fees associated
therewith, provided at/from confinement facilities in Alabama including but not limited
to single payment services, prepaid inmate phone cards, and video visitation service.
The tariff shall identify a provider point of contact for questions about the tariff and a
point of contact for customer service inquiries, including the contact name, mailing
address, telephone number, and email address. As a minimum, the Commission’s
abbreviated version of the tariff is due within ten (10) days following implementation of
this Order and the full version of the tariff no later than sixty (60) days following the
Order implementation. All updates shall be submitted to the Commission’s Utility
Services Division.

12.00 Record Retention and Reporting Requirements

12.01

The Order requires that providers maintain the following records:

ICS providers shall maintain electronic and/or paper copies of the
following documents, records, or forms applicable to ICS in
Alabama for the months in the current calendar year plus the most
recent three (3) complete calendar years (Jan – Dec):
(1) customer monthly account statements, referenced in Part III
I;
(2) forms showing the State Utility Gross Receipts Tax
collected and the State Utility Gross Receipts Tax remitted
to the Alabama Department of Revenue;
(3) forms showing USF fee collections and payments submitted
to USAC;
(4) forms showing collections of the federal TRS fee and
payments remitted to the TRS Fund Administrator;
(5) records showing unused customer balances, by customer
identification, and records of refunds by customer
identification including the date, amount, and method of
refund;
(6) Unclaimed Property Report forms showing submission of
unclaimed customer funds to the Alabama State
Treasurer.169
169

Order, Section III J, page 22.

Docket 15957, Page 99
12.02

GTL supports the record retention requirements provided adequate time is provided for
providers to achieve compliance with the requirements:

GTL supports the Commission’s proposals with two recommended
modifications. First, the Commission must ensure adequate
implementation time for its proposals. To the extent ICS providers
do not already keep the requested records in the format proposed
by the Commission, it will take some time for ICS providers to
come into compliance with the new rules.170
12.03

Pay Tel indicates it is in compliance with the requirements and concurs with the
requirements.171

12.04

Upon further review, the Commission vacates and supplants the record retention
requirements in the Order with the following.
1. On a monthly basis, beginning with January 2013, segregated into collect,
prepaid collect, prepaid debit, prepaid inmate phone card, and direct-billed
service at each Alabama confinement facility served:
a. Number of local calls, local minutes of use, and associated local call
revenue.
b. Number of intrastate toll calls, intrastate toll minutes of use, and
associated intrastate toll revenue.
c. Number of interstate toll calls, interstate toll minutes of use, and
associated interstate toll revenue.
2. On a monthly basis, beginning with January 2013, for service originating at
Alabama confinement facilities:
a. Number of single payment service calls billed to mobile phones (textconnect) and associated revenue.
b. Number of single payment service calls billed to debit/credit cards (Pay
Now) and associated revenue.
c. Alabama Utility Gross Receipts Tax collected.
d. Unused prepaid collect, prepaid debit, and prepaid inmate phone card
account balances refunded by service type, customer name, customer
mailing address and phone number (if known), PIN (if applicable) and
confinement facility association.
e. Unclaimed funds by service type, customer name, last known customer

170
171

GTL comments dated December 6, 2013, pp 14-15.
Pay Tel comments dated December 5, 2013, page 10.

Docket 15957, Page 100
mailing address and phone number, PIN (if applicable), Alabama
confinement facility association, and date funds are declared unclaimed.
3. Beginning with implementation of the Order:
a. Monthly prepaid minutes associated with single payment services
(imputed call duration for collect calls billed using text-connect type
service and for collect calls billed to a debit/credit card).
b. Monthly data identifying the total single payment service calls
originating from Alabama confinement facilities and the number of
single payment service calls terminated for suspected three-way call
violations.
c. Monthly data, by confinement facility, identifying the total number of
ICS calls and the total number of ICS calls disconnected for suspected
three-way call violations.
d. Monthly customer account detail separated into prepaid collect, prepaid
debit, prepaid inmate phone card, and direct-billed service with customer
name, customer mailing address and phone number (if known), PIN (if
applicable), and Alabama confinement facility association. Monthly
customer account detail shall be retained for 36 months.
4. Proof of the following beginning with implementation of the Order:
a. Alabama Utility Gross Receipts Tax remittance reports to the ADOR.
b. Unclaimed Property Report to the Alabama State Treasurer.
12.05

The records retained by the ICS provider, as referenced herein, as well as the
provider’s ledgers, books, and records are subject to audit by the Commission. Section
37-1-82 in the Code of Alabama requires providers under the Commission’s
jurisdiction to make their books and records available for inspection at a location
within the state of Alabama. If all or parts of the provider’s books, documents, and/or
records referenced herein are not presented for inspection at a location within the state
of Alabama, the ICS provider is required to reimburse the Commission for employee(s)
out-of-state travel, meals, lodging, and incidental expenses associated with
inspection/review of the company’s books and records. For purposes of compliance
verification or customer complaint investigation, providers shall submit electronic or
paper copies of ICS customer account statements upon Commission request.

12.06

Reporting Requirements
The Order requires providers to report the following to the Commission quarterly:

100

Docket 15957, Page 101
(1) local ICS minutes, number of calls, and associated revenue;
(2) intrastate ICS minutes, number of calls, and associated revenue;
(3) interstate ICS minutes, number of calls, and associated
revenue.172
12.07

CenturyLink recommends less frequent reporting to the Commission:

EPSI suggests that reporting should be required annually, rather
than quarterly as the October 2013 Order currently requires.
Annual reporting should provide sufficient information to allow the
Commission to exercise adequate oversight of inmate calling
services providers.173
The Commission concurs with CenturyLink’s recommendation and revises its reporting
requirements.

12.08

By no later than January 31, 2015 for the period ending on the last day of the
preceding December and annually thereafter174, ICS providers shall report the
following, electronically, to the Commission Utility Services Division:

From the record retention requirements identified in this Order,
item 1 (a through c), item 2 (a through e), item 3 (a through c),
and item 4 (a through b).

13.00 Patents and Acquisitions

13.01

In the Further Notice of Proposed Rulemaking for WC Docket No. 12-375, the FCC seeks
comments on ways to foster competition within the ICS industry175
primarily on competition within confinement facilities.

The focus is

The Commission, however,

contends that a significant impediment to reduced ICS provider costs exists beyond
172

Order, Section III N, page 26.
CenturyLink comments, dated December 6, 2013, page 12.
174
Portions of the initial annual report include the period than begins January, 2013. Subsequent annual reports
include only the most recent calendar year.
175
FCC ICS Order, para. 177.
173

101

Docket 15957, Page 102
detention facility walls, far removed from contracts and site commissions. Patents are a
two-edged sword. They are used to safeguard innovative products and designs from
misappropriation that deprives innovators an opportunity to recover research and
development costs and ultimately profit from their efforts. On the other hand, patent
shopping and the subsequent control exercised over competitors through patent litigation
and the threat of such litigation may be used to stifle competition. Moreover, the pursuit
of market domination through an aggressive strategy of acquiring the supporting
protocols/architecture upon which ICS depends may be able to exert control over their
competitors’ costs and, therefore, ICS prices.

13.02

The Commission finds the following statement disconcerting:

Richard A. Smith, President and Chief Executive Officer of
Securus Technologies said, “It is well known that Securus
Technologies has by far the largest patent portfolio in the
corrections industry and we have spent in excess of $200 million
developing sophisticated technology – and we have solid patents.
You cannot operate in our industry legally without having a
patent license agreement with us [emphasis added] and GTL’s
license agreement expired in early August, 2013 – they did not
renew the license agreement so we had to file this lawsuit.”
“Without an agreement, GTL cannot legally provide the Securus
patented services to prisons and jails – so they cannot run their
business and we will ask the Court to stop them,” said Smith.176
13.03

Securus controls the overwhelming majority of ICS industry patents:

"We have had a total of 121 patents issued by the United States
Patent and Trademark Office and patent offices in other countries
and have another 61 patents pending - so 182 patents issued or
pending," said Richard A. ("Rick") Smith, President and Chief
Executive Officer of Securus Technologies, Inc. "That represents
approximately 75% of the entire corrections sector patents (Issued
176

Securus Technologies Files Lawsuit in Federal Court Against Global Tel*Link for Patent
Infringement When Global Fails to Renew Existing License, Securus Press Release dated October 4, 2013. URL:
https://securustech.net/press-releases/-/asset_publisher/JBo9KqWeTcqo/

102

Docket 15957, Page 103
plus Notice of Allowance plus Pending status patents) and we are
filing an additional 20 to 30 patents per year.177
13.04

U.S. Patent Office files indicate Securus was assigned Patent 8190121178, “System and
Method for Authorizing and Monetizing Collect Cellular Telephone Calls” from 3C
Interactive which is believed to be the patent for text-connect service. Additionally,
Securus acquired IVR platform provider, Telerus, and, more recently, JLG Technologies,
LLC and their affiliates, the leading supplier of continuous voice biometrics.179 Further
research is necessary for purposes of identifying ICS provider patents as well as provider
acquisitions of suppliers that offer critical ICS protocols, architectures, and supporting
services.

13.05

The Commission will follow ongoing ICS proceedings at the FCC to determine if this
issue is addressed at the federal level wherein jurisdiction for such matters is reserved
and may subsequently submit comments to the extent this matter is addressed in such
proceedings.

14.00 Cost Studies

14.01

Transparency Required
For some ICS providers, organizational and financial relationships with affiliates,
subsidiaries and partnerships are not easily identified. For cost study purposes, it is
essential that such relationships be revealed for purposes of verifying that (A) third-party
costs reported by providers are those over which the provider and/or the provider’s
corporate parent exercise no organizational control; and, (2) provider costs associated
with affiliates and subsidiaries that serve other providers and/or provide non-related

177

Securus Technologies Announces Continued Strong Growth of Patent Portfolio, Securus Press Release dated
April 4, 2014, URL: http://www.freshnews.com/news/924349/securus-technologies-announces-continued-stronggrowth-patent-portfolio
178
Patent Assignment Abstract of Title, United States Patent and Trademark Office, Patent 8190121. Also published
as US 8626118 B2, US 20090054031, US 20120202454, and US 20140080443.
179
Securus Technologies, Inc. Announces Acquisition of JLG Technologies and Affiliated Companies, Securus
Press Release dated June 11, 2014.

103

Docket 15957, Page 104
services represent a reasonable allocation of that portion of costs specific to the provider
and to the service(s) under review. Consequently, the Commission shall only consider
cost support submitted by providers that fully reveal, to the Commission’s satisfaction,
their organizational structure and that of their parent organization (if applicable) including
all affiliate and subsidiary relationships. Additionally, affiliates and subsidiaries are
subject to the Commission’s discovery process180 for information contributed in support
of the provider’s ICS costs.

14.02

Cost Study Strategy
Following implementation of this Order and the interim rates and fees provided herein,
the Commission intends to analyze costs supporting future intrastate ICS rates, provider
ancillary charges, and confinement facility cost reimbursement,. To assist the staff in
developing cost study procedures, the Commission shall establish a workgroup consisting
of staff and selected representatives from ICS providers that serve or intend to provide
ICS service to Alabama confinement facilities; one provider that serves primarily jails
and another with extensive experience serving prisons.

The proposed cost study

procedures and supporting requirements developed by the study group shall be subject to
review and comment by all ICS providers before adoption. The studies shall focus on
intrastate data that is national in scope. Rates and fees adopted from the cost study
analysis shall apply to all providers in Alabama regardless of participation in the study
process. Separate costs for prisons and jails shall be identified and jails may be further
subdivided according to facility size.

14.03

The Commission intends to establish a separate security biometrics component for
intrastate ICS rates due to the rapid evolution of this technology and subsequent changes
in detention facility security requirements. Commission consideration shall be given to
reviewing minimum security biometrics requirements and the associated price component
thereof every two years. The Commission shall consider a review of intrastate ICS along

180

Data may be deemed confidential and shall not be released to parties outside the Commission absent specific
approval from ICS provider..

104

Docket 15957, Attachment A

CenturyLink Holiday Promotion
Alabama Department of Corrections Facilities
November – December 2013

PRE-TRIAL

PROMOTION

Per Call

Per
Call

Per Minute

Per
Minute

Usage

Per Call
Surcharg
e

Per
Call
Usage

Usage

Surcharge

Usage

INTRASTATE
Collect
Local
Toll

$2.25
$2.25

$0.50
$0.00

$0.00
$0.30

$0.00
$0.00

$0.21
$0.21

INTRASTATE
Debit/Prepaid
Local
Toll

$2.25
$2.25

$0.50
$0.00

$0.00
$0.30

$0.00
$0.00

$0.19
$0.19

See Note
$3.95
$3.95

$0.00
$0.00

$0.89
$0.89

$0.00
$0.00

$0.31
$0.29

INTERSTATE
Collect
Debit/Prepaid

PRETRIAL

PROMOTION

15 Minute
Call

Price
Change

INTRASTATE
Collect
Local
Toll

$2.75
$6.75

$3.15
$3.15

14.5%
-53.3%

INTRASTATE
Debit/Prepaid
Local
Toll

$2.75
$6.75

$2.85
$2.85

3.6%
-57.8%

INTERSTATE
Collect
Debit/Prepaid

$17.30
$17.30

$4.65
$4.35

-73.1%
-74.9%

Note: Interstate rates are not set by the Alabama Public Service Commission.

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