Pay Tel Receives Waiver of Prison Phone Rate Caps

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

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

The FCC’s Wireline Competition Bureau found that Pay Tel had “met its burden of proof to establish a good cause to grant a limited, temporary waiver of the Commission’s interim [prison phone] rate cap rule.” Accordingly, on February 11, 2014, Pay Tel received a nine-month “narrow waiver” that allows the company to charge phone rates above the caps, not to exceed $.46 per minute for interstate prison phone calls – or up to $6.90 for a 15-minute call. Absent any further action by the FCC, the waiver will expire on November 11, 2014. See: In the Matter of Rates for Interstate Inmate Calling Services, FCC WC Docket No. 12-375.

Pay Tel had argued it could not recover its costs if it was required to comply with the FCC’s rate caps, due to intrastate (in-state) rate restrictions in five of the states where it provides phone services. The Human Rights Defense Center – the parent organization of Prison Legal News – had filed comments with the FCC contesting the claims made by Pay Tel in its waiver petition.

Separately, other prison phone service providers such as Global Tel*Link (GTL) and Securus have challenged the FCC’s rate caps and other reforms in the D.C. Circuit Court of Appeals, and Securus has applied for a blanket rate cap waiver in all of the states where Pay Tel has contracts. But unlike Pay Tel, Securus did not submit detailed documentation indicating how the rate caps would inhibit the company’s ability to recover its costs. Pay Tel had submitted records to the FCC and Wireline Competition Bureau showing that its costs exceeded the rate caps, which was instrumental in obtaining the waiver.

The petitioners in the Wright petition have opposed Securus’ request for a “me too” rate cap waiver, noting that “Securus has steadfastly refused to provide any actual cost data to the FCC.” By continuing to pay commission kickbacks to correctional agencies for intrastate calls while failing to provide the FCC or Wireline Competition Bureau with financial statements that demonstrate the company’s actual costs, it will be more difficult for Securus to justify its waiver request.

The Wright petitioners argued in a March 11, 2014 comment in opposition to Securus’ request that “until such time that Securus and the other [prison phone service] providers are willing to submit the same financial information as provided by Pay Tel Communications in connection with its Petition for Waiver, i.e., audited Financial Statements, substantive cost studies, the FCC must deny any attempt to extend similar relief.”

Meanwhile, both GTL and Securus have stated that due to the rate caps imposed by the FCC, they are no longer paying commission kickbacks to correctional agencies on revenue generated from interstate prison phone calls.

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