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Transportation Conformity
Interagency Consultation
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[FR Doc. 2013–27019 Filed 11–12–13; 8:45 am]
BILLING CODE 6560–50–P

FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 64
[WC Docket No. 12–375; FCC 13–113]

Rates for Interstate Inmate Calling
Services
Federal Communications
Commission.
ACTION: Final rule.
AGENCY:

In this document, the Federal
Communications Commission
(Commission) adopts rule changes to
bring high interstate inmate calling
service (ICS) rates into compliance with
the statutory mandate of being just,
reasonable, and fair. This action is
intended to bring rate relief to inmates
and their friends and families who have
historically been required to pay abovecost rates for interstate ICS.
DATES: This final rule is effective
February 11, 2014 except for 47 CFR
64.6060 and Section III.I which contain
information collection requirements that
are not effective until approved by the
Office of Management and Budget. The
FCC will publish a document in the
Federal Register announcing the
effective date for those sections.
FOR FURTHER INFORMATION CONTACT:
Lynne Engledow, Wireline Competition
Bureau, Pricing Policy Division, (202)
418–1520 or lynne.engledow@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a
summary of the Commission’s Report
and Order and Further Notice of
Proposed Rulemaking in WC Docket No.
12–375, FCC 13–113, adopted on
August 9, 2013 and released on
September 26, 2013. The full text of this
document is available for public
inspection during regular business
hours in the Commission’s Reference
Center, 445 12th Street SW., Room CY–
A257, Washington, DC 20554. The full
text of this document may be

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State
submittal
date/
effective date
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May 31, 2013

downloaded at the following Internet
address: http://www.fcc.gov/
documents/—. The complete text may
be purchased from Best Copy and
Printing, Inc., 445 12th Street SW.,
Room CY–B402, Washington, DC 20554.
To request alternative formats for
persons with disabilities (e.g., accessible
format documents, sign language,
interpreters, CARTS, etc.), send an
email to fcc504@fcc.gov or call the
Commission’s Consumer and
Governmental Affairs Bureau at (202)
418–0530 or (202) 418–0432 (TTY). The
Commission notes that pursuant to the
Small Business Paperwork Relief Act of
2002, Public Law 107–198, see 44 U.S.C.
3506(c)(4), we previously sought
specific comment on how the
Commission might further reduce the
information collection burden for small
business concerns with fewer than 25
employees.
I. Introduction
1. Nearly 10 years ago Martha Wright,
a grandmother from Washington, DC,
petitioned the Commission for relief
from exorbitant long-distance calling
rates from correctional facilities. Tens of
thousands of others have since urged
the Commission to act, explaining that
the rates inmates and their friends and
families pay for phone calls render it all
but impossible for inmates to maintain
contact with their loved ones and their
broader support networks, to society’s
detriment. Today, we answer those
pleas by taking critical, and long
overdue, steps to provide relief to the
millions of Americans who have borne
the financial burden of unjust and
unreasonable interstate inmate phone
rates.
2. This Order will promote the general
welfare of our nation by making it easier
for inmates to stay connected to their
families and friends while taking full
account of the security needs of
correctional facilities. Studies have
shown that family contact during
incarceration is associated with lower
recidivism rates. Lower recidivism
means fewer crimes, decreases the need
for additional correctional facilities, and

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reduces the overall costs to society.
More directly, this helps families and
the estimated 2.7 million children of
incarcerated parents in our nation, an
especially vulnerable part of our society.
One commenter states that the ‘‘[l]ack of
regular contact with incarcerated
parents has been linked to truancy,
homelessness, depression, aggression,
and poor classroom performance in
children.’’ In this Order we help these
most vulnerable children by facilitating
contact with their parents. By reducing
interstate inmate phone rates, we will
help to eliminate an unreasonable
burden on some of the most
economically disadvantaged people in
our nation. We also recognize that
inmate calling services (ICS) systems
include important security features,
such as call recording and monitoring,
that advance the safety and security of
the general public, inmates, their loved
ones, and correctional facility
employees. Our Order ensures that
security features that are part of modern
ICS continue to be provided and
improved.
3. Our actions address the most
egregious interstate long distances rates
and practices. While we generally prefer
to promote competition to ensure that
inmate phone rates are reasonable, it is
clear that this market, as currently
structured, is failing to protect the
inmates and families who pay these
charges. Evidence in our record
demonstrates that inmate phone rates
today vary widely, and in far too many
cases greatly exceed the reasonable costs
of providing the service. While an
inmate in New Mexico may be able to
place a 15 minute interstate collect call
at an effective rate as low as $0.043 per
minute with no call set up charges, the
same call in Georgia can be as high as
$0.89 per minute, with an additional
per-call charge as high as $3.95—as
much as a 23-fold difference. Also, deaf
prisoners and family members in some
instances pay much higher rates than
hearing prisoners for equivalent
communications with their families. For
example, the family of a deaf inmate in
Maryland paid $20.40 for a nine minute

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call placed via Telecommunications
Relay Service (TRS)—an average rate of
$2.26 per minute. A significant factor
driving these excessive rates is the
widespread use of site commission
payments—fees paid by ICS providers to
correctional facilities or departments of
corrections in order to win the exclusive
right to provide inmate phone service.
These site commission payments, which
are often taken directly from provider
revenues, have caused inmates and their
friends and families to subsidize
everything from inmate welfare to
salaries and benefits, states’ general
revenue funds, and personnel training.
4. We applaud states such as New
Mexico and New York that have already
accomplished reforms, and thereby
shown that rates can be reduced to
reasonable, affordable levels without
jeopardizing the security needs of
correctional facilities and law
enforcement or the quality of service.
Similarly, we acknowledge that some
federal agencies, such as the Department
of Homeland Security’s Immigration
Customs and Enforcement (ICE), have
taken similar measures to provide lower
rates, resulting in nationwide calling
rates of $0.12 a minute without
additional fees or commissions at ICE
facilities. Following such reforms, there
is significant evidence that call volumes
increased, which shows the direct
correlation of how these reforms
promote the ability of inmates to stay
connected with friends and family.
There is also support in the record that
ICS rate reform has not compromised
the security requirements of correctional
facilities. Thus, these examples disprove
critics who fear that reduced rates will
undermine security or cannot be
implemented given provider costs. Our
actions build upon these examples by
reducing rates, while balancing the
unique security needs of facilities and
ensuring that inmate phone providers
receive fair compensation and a
reasonable return on investment.
5. While some states have taken
action to reduce ICS rates, the majority
have not. We therefore take several
actions to address interstate rates. We
require inmate phone providers to
charge cost-based rates to inmates and
their families, and establish ‘‘safeharbor’’ rates at or below which rates
will be treated as lawful (i.e., just,
reasonable, and fair) unless and until
the Commission issues a finding to the
contrary. Specifically, we adopt interim
safe harbor rates of $0.12 per minute for
debit and prepaid interstate calls and
$0.14 per minute for collect interstate
calls. Based on the evidence in this
record, we also set an interim hard cap
on ICS providers’ rates of $0.21 per

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minute for interstate debit and prepaid
calls, and $0.25 per minute for collect
interstate calls. This upper ceiling
ensures that the highest rates are
reduced immediately to the upper limit
of what can reasonably be expected to
be cost-based rates. Interstate ICS rates
at or below the safe harbor are presumed
just, reasonable, fair and cost-based.
Rates between the interim safe harbor
and the interim rate cap will not benefit
from this presumption.
6. We base the safe harbor rate levels
and rate caps on data and cost studies
presented by parties and/or taken
directly from ICS provider service
contracts in the record. The safe harbor
rate levels are derived from ICS rates in
seven states that have prohibited site
commission payments from ICS
providers to facilities. The interim rate
caps adopted are based on (1) the
highest total-company costs presented
in a cost study provided by Pay Tel, an
ICS provider that exclusively serves
jails, and (2) the highest collect calling
cost data presented in the 2008 ICS
Provider Data Submission, compiling
data from seven different ICS providers
that serve various types and sizes of
correctional facilities. We based the
interim rate caps on these high levels,
without attempting to exclude any
unrecoverable costs or adjust any
inputs, in order to ensure that the cap
levels were a conservative estimate of
the levels under which all ICS providers
could provide service. Even so, we
provide a waiver process to account for
any unique circumstances.
7. In addition to immediate rate
reform, we find that site commission
payments and other provider
expenditures that are not reasonably
related to the provision of ICS are not
recoverable through ICS rates, and
therefore may not be passed on to
inmates and their friends and families.
We require that charges for services
ancillary to the provision of ICS must be
cost-based. We prohibit special charges
levied on calls made using
teletypewriter (TTY) equipment or other
technologies used to access TRS. While
we find that the record fully supports
the safe harbor and rate caps adopted
here, we seek additional information
that could allow us to refine these rates
in the future. Accordingly, we require
all ICS providers to submit data on their
underlying costs so that the Commission
can develop a permanent rate structure,
which could include more targeted
tiered rates in the future.
8. The Communications Act (Act)
requires that interstate rates be just and
reasonable for all Americans—there is
no exception in the statute for those
who are incarcerated or their families.

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The Act further requires that our
payphone regulations ‘‘benefit . . . the
general public,’’ not just some segment
of it. Our actions in this Order, while
long overdue, fulfill these statutory
mandates while taking into account the
legitimate and unique requirements for
security and public safety in the
provision of inmate phone services and
the benefits to society of increased
communications between inmates and
their families. Our work, however, is not
done, and we continue in the Further
Notice (or FNPRM) our efforts to ensure
that these rates are just, reasonable, and
fair to the benefit of both providers and
the general public.
II. Procedural Background
9. In 2003, Mrs. Wright and her fellow
petitioners (Petitioners), which included
current and former inmates at
Corrections Corporations of Americarun confinement facilities, filed a
petition with the Commission seeking to
initiate a rulemaking to address high
ICS rates. The petition sought to
prohibit exclusive ICS contracts and
collect-call-only restrictions. In 2007,
the same petitioners filed a second
rulemaking petition, seeking to address
ICS rates by requiring a debit-calling
option in correctional facilities,
prohibiting per-call charges, and
establishing rate caps for interstate,
interexchange ICS. The Commission
sought and received comment on both
petitions. In 2008, certain ICS providers
placed in the record a cost study that
quantified their interstate ICS costs.
10. In December 2012, the
Commission adopted a notice of
proposed rulemaking seeking comment
on, among other things, the proposals in
the Wright petitions. The 2012 ICS
NPRM, 78 FR 4369, Jan. 23, 2013,
sought comment on the two petitions
and proposed ways to ‘‘balance the goal
of ensuring reasonable ICS rates for end
users with the security concerns and
expense inherent to ICS within the
statutory guidelines of sections 201(b)
and 276 of the Act.’’ The 2012 ICS
NPRM, 78 FR 4369, Jan. 23, 2013,
sought comment on other issues
affecting the ICS market, including
possible rate caps for interstate ICS; the
ICS Provider Data Submission; collect,
debit, and prepaid ICS calling options;
site commissions; issues regarding
disabilities access; and the
Commission’s statutory authority to
regulate ICS.
11. The FCC’s Consumer Advisory
Committee (CAC) adopted a
recommendation in 2012 finding that
ICS rates may be ‘‘unreasonably high
and unaffordable’’ and that such high
ICS rates challenge the ‘‘national goal of

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the reduction of recidivism among
inmates.’’ The CAC recommended that
the Commission: ensure that the rates
for ICS calls are reasonable; restrict
‘‘commissions’’ paid to correctional
institutions; encourage the use of
‘‘prepaid debit accounts’’ or use of other
‘‘low-cost minutes;’’ and continue to
allow collect calls ‘‘with charges that are
a reasonable amount above the actual
cost of providing the call.’’ On August
2, 2013, the CAC reiterated its request
for the Commission to take action on
‘‘this long overdue issue’’ of high ICS
rates.

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III. Ensuring That Rates for Interstate
Inmate Calling Services Are Just,
Reasonable, and Fair
12. In this Order, we take several
actions to ensure that interstate ICS
rates are just, reasonable, and fair as
required by the Communications Act.
First, we examine the statute and the
current state of the ICS market and
conclude that the current market
structure is not operating to ensure that
rates are consistent with the statutory
requirements of sections 201(b) and 276
to be just, reasonable, and fair. Thus, we
require that interstate ICS rates be costbased. We address what appropriate
costs are and conclude, among other
things, that site commission payments,
in and of themselves, are not a cost of
providing the communications service—
ICS. We then address several
interrelated rate issues, including rate
levels and options for provider
compliance with our rules including
‘‘safe harbor’’ rate levels. We require
that ancillary service charges also be
cost-based. We address rates for the use
of TTY equipment. We conclude that
our actions herein do not require us to
abrogate existing contracts between
correctional facilities and ICS providers;
to the extent that any agreement may
need to be revisited, it is only because
those agreements cannot supersede our
authority over rates charged to end
users. Finally, we address collect-calling
only requirements at correctional
facilities, require an annual certification
filing, and initiate a mandatory data
collection, directing all ICS providers to
file data regarding their ICS costs. These
actions take into account the needs of
ICS providers for adequate cost recovery
and the need for just, reasonable, and
fair rates for ICS consumers while
meeting the unique security needs
inherent in the provision of ICS.

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A. Statutory Requirements for ICS
1. Statutory Standards for ICS Rates and
Practices
13. The Communications Act requires
ICS rates, charges, and practices to be
just, reasonable, and fair. Section 201(b)
provides that ‘‘charges, practices,
classifications, and regulations for and
in connection with [interstate common
carrier] service, shall be just and
reasonable,’’ and grants the Commission
authority to ‘‘prescribe such rules and
regulations as may be necessary in the
public interest to carry out the
provisions of this chapter.’’ The
Commission has previously found that
interstate ICS, typically a common
carrier service, falls within the
mandates of section 201.
14. In addition, section 276 directs the
Commission to ‘‘establish a per call
compensation plan to ensure that all
payphone service providers’’—which
the statute defines to include providers
of ICS—‘‘are fairly compensated for
each and every completed intrastate and
interstate call.’’ The Commission has
previously found the term ‘‘fairly
compensated’’ permits a range of
compensation rates that could be
considered fair, but that the interests of
both the payphone service providers
and the parties paying the compensation
must be taken into account. Section 276
makes no mention of the technology
used to provide payphone service and
makes no reference to ‘‘common carrier’’
or ‘‘telecommunications service’’
definitions. Thus, the use of VoIP or any
other technology for any or all of an ICS
provider’s service does not affect our
authority under section 276. Indeed,
several commenters state that the
Commission can regulate ICS regardless
of the underlying technology used to
provide the service. Finally, section 276
provides that ‘‘[t]o the extent that any
State requirements are inconsistent with
the Commission’s regulations, the
Commission’s regulations on such
matters shall preempt such State
requirements.’’
15. Our exercise of authority under
sections 201 and 276 is further informed
by the principles of Title I of the Act.
Among other things, that provision
states that it is the Commission’s
purpose ‘‘to make available, so far as
possible, to all the people of the United
States’’ communications services ‘‘at
reasonable charges.’’ The regulation of
interstate ICS adopted in this Order
advances those objectives.
2. Types of Facilities
16. The rules we adopt herein apply
to interstate ICS provided in
‘‘correctional institutions’’ as that term

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is used in section 276. Accordingly, the
scope of facilities covered by this Order
is coextensive with the scope of the
term ‘‘correctional institutions’’ in the
statute and includes, for example,
prisons, jails and immigration detention
facilities.
17. Prisons and Jails. Prisons and jails
are both core examples of facilities that
constitute ‘‘correctional institutions’’
under section 276 and this Order. The
Commission has long made clear that its
ICS rules apply at a minimum to inmate
telephone service in prisons and jails.
For instance, the 2002 Inmate Calling
Services Order on Remand and NPRM
repeatedly referred to ‘‘prisons’’ and
‘‘jails,’’ often in contexts that explicitly
make clear that both entities fall within
the definition of ‘‘correctional
institution.’’ 67 FR 17009, April 9, 2002.
Similarly, in the 2012 ICS NPRM, the
Commission repeatedly used the more
generic term ‘‘prison,’’ noting, however,
that jails are a particular subset of
prisons (i.e., that jails are ‘‘local
prisons’’ to be distinguished from ‘‘state
prisons’’). 78 FR 4369, Jan. 23, 2013.
Finally, a number of commenters in this
proceeding—including ICS providers—
submitted data for both prisons and
jails, and/or otherwise stated or
assumed within their written advocacy
that both entities would be subject to
any new rules. We do not distinguish in
this Order between prisons and jails, in
part because our record does not permit
us to draw any clear distinctions.
Because both are included within the
scope of this Order, however, there is no
need at this time to draw any
distinction.
18. Immigration Detention Facilities.
Immigration detention facilities also are
a type of ‘‘correctional institutions.’’
The term is widely understood to
include ‘‘facility[ies] of confinement.’’
This common understanding of the term
has long been reflected in advocacy
regarding the lawfulness of ICS rates
under section 276. As early as 2004, for
example, commenters made arguments
predicated on the assumption that
immigration detention facilities are a
type of ‘‘correctional institution’’ under
section 276. Petitioners in this
proceeding likewise made arguments
based on the same assumption, as did a
number of commenters in response to
the 2012 ICS NPRM as well as
participants in the Reforming ICS Rates
Workshop. This common understanding
of that statutory term was not disputed
or called into question by any evidence
in the record. As such, ‘‘correctional
institution’’ as used within section 276
includes immigration detention
facilities.

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19. Additional support for this finding
derives from the largely fungible nature
of jails and facilities where immigrants
are detained when viewed from the
standpoint of detained immigrants. As
commenters have pointed out, of the
nearly 400,000 immigrants detained in
this country each year, many are ‘‘held
in local jails and prisons that have
contracted with Immigration Customs
and Enforcement.’’ This fact suggests a
rough functional equivalence between
jails and prisons on the one hand, and
immigration detention facilities on the
other—particularly from the perspective
of the would-be users of ICS (i.e.,
apprehended immigrants who may be
detained either in a jail or some other
facility, depending on happenstance).
Moreover, treating the two categories of
institutions differently would result in
disparate treatment among immigrant
detainees. For instance, if immigration
detention facilities were excluded from
the scope of ‘‘correctional institution,’’
immigrant detainees in jails would
receive a ‘‘fair’’ rate for phone calls
while immigrant detainees in ICE
facilities would not. This kind of
disparate treatment would not be just or
consistent with the public interest, and
for this reason as well we find it
reasonable that ‘‘correctional
institutions’’ includes immigration
detention facilities.

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B. Need for Reform
20. In this section, we first describe
the different categories of rates and
charges for ICS and the different options
that end users have to pay for them. We
then explore the record on the costs of
providing ICS, and the record on rates,
and find that in most facilities the rates
for interstate ICS far exceed the cost of
providing ICS. To assess why this
occurs, we look at competition in the
market for ICS, which, in this case, does
not adequately exert downward
pressure on end-user rates. We examine
the societal impacts of high ICS rates,
and we conclude that we must take
action to meet our statutory mandate
that all rates be just, reasonable, and
fair.
1. Current Structures for ICS Rates and
Payment Options
21. ICS providers generally offer their
services pursuant to contracts with
correctional facilities. These contracts
vary by the correctional facilities and
ICS providers involved, and the states
and local jurisdictions in which the
services are provided. ICS rates can
differ for local, intrastate long distance,
and interstate long distance calls and
can include per-minute or per-call
charges or both. This varies, however,

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and some ICS contracts provide only for
a per-minute charge while others
provide only for a flat rate per call. It is
important to note that the users of ICS—
the inmates and the family and friends
whom they call—are not party to these
contracts. Rather, the correctional
institution agrees to an amount that it is
willing to allow the ICS provider to
charge.
22. The inmates who use ICS (or the
persons called by those inmates)
typically pay for calls by using collect,
debit, or prepaid payment options.
These methods differ as to who pays for
the call and when payment is received.
Collect calls occur when an inmate
places a call with the assistance of a live
operator or an automated recording, and
the called party is billed after the call is
completed. Correctional facilities use
collect calling due to the relative ease of
administering such calls, as well as the
high degree of security and control
involved. ICS providers assert, however,
that collect calling can pose billing and
collection problems.
23. Debit calling involves an
arrangement whereby the charges are
deducted from an inmate’s pre-existing
account that often can be used to pay for
a variety of goods and services within a
correctional facility. An inmate’s
account can be funded by the inmate
(with earned funds, for example) or by
outside parties. Inmates typically place
debit calls by dialing into a central
number and using a personal
identification number (PIN) or by
entering the numbers listed on a
physical debit card. An aggregated list
on the record of current ICS contract
rates indicates that 36 states currently
allow debit calling, and that debit
calling is less expensive than collect
calling in many of those states. Some
facilities allegedly do not favor debit
calling because debit calling can be
more administratively burdensome than
collect calling.
24. Prepaid calling refers to
arrangements whereby the called party
has a prepaid account set up with the
ICS provider in advance. This account
is often established and replenished by
the inmates’ friends and family
members. The record indicates that
prepaid calling is generally less
expensive than collect calling but can be
about equal in rates to debit calling.
Some ICS contracts are limited to collect
calling only while others allow prepaid
and/or debit calling options.
2. The Record on ICS Costs
25. In this section, we highlight
aspects of the record regarding the costs
of providing ICS. In 2008, seven ICS
providers filed a cost study based on

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proprietary cost data for certain
correctional facilities with varying call
cost and call volume characteristics.
The study apportioned interstate ICS
costs into per minute and per call
categories and calculated the resulting
averages for both debit and collect calls.
The results of the study indicated that
the per-call cost for debit calls was
$0.16 per minute and the per-call cost
for collect calls was $0.25 per minute.
The providers subsequently provided
additional usage data and cost
calculations but did not otherwise make
the underlying proprietary cost
information available.
26. In response to the 2012 ICS
NPRM, Securus filed a report analyzing
per-call and per-minute costs of ICS for
certain correctional facilities it serves.
The report was based on 2012 data and
analyzed cost, call volume, site
commission and other data according to
type and size of facility. It divided the
study sample into four groups,
including one for state department of
corrections facilities and three others for
different-sized jail facilities. The report
contained total cost data for the
facilities but did not otherwise provide
disaggregated cost data. Using this data,
the Commission calculated an average
per-minute cost for interstate calls from
all facilities included in the report to be
$0.12 per minute with commissions and
$0.04 per minute without them. We note
that the two groups in the Securus
report with the smallest facilities
(‘‘Medium 10’’ and ‘‘Low 10’’) are
estimated to have fewer than 50
(‘‘Medium 10’’) and fewer than 5 (‘‘Low
10’’) inmates per facility, respectively.
Facilities of these sizes hold only a very
small share of inmates nationally. Thus,
the data for the ‘‘Medium 10’’ and ‘‘Low
10’’ groups do not necessarily reflect the
costs of serving vast majority of inmates
that generate nearly all calls.
Nonetheless, for completeness we
included those data in calculating the
averages mentioned above.
27. Pay Tel also filed financial and
operational data for its ICS operations,
which it states are exclusively in jails,
not prisons. The filing contained
comprehensive cost, capitalized asset,
call volume, and other actual and
projected data. The non-confidential
cost summary included in the filing
reported actual and projected 2012–
2015 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).
28. Although CenturyLink did not file
a cost study, it did file summary cost

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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.
29. 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. Some commenters and the
Petitioners posit that ‘‘[t]echnology has
driven the actual cost of ICS calls to a
fraction of what they were when the
petitions were filed.’’ In particular, they
point to the replacement of live
operators with automated systems, the
reduction or total absence of on-site
service by the ICS providers, the
consolidation of ICS providers, and the
centralized application of requested
security measures. The ability to
centrally provision across multiple
facilities is especially salient given that
the spread of hosted and/or managed
service capabilities can result in
reduced total cost of ownership for
solutions such as VoIP with more
centralized—that is, cloud-based—
remote services, provided over IP packet
based networks.
30. Other developments also point to
lower costs. These changes include
lower ‘‘basic telecommunications
costs.’’ Consistent with recent trends in
capital costs for the communications
industry, some providers acknowledge
that capital costs for on-site equipment
are decreasing. In addition, ICS
providers and correctional facilities
increasingly offer prepaid and debit
calling as an alternative to collect
calling. Because every prepaid or debit
call is paid, this trend is lowering
provider costs by reducing
uncollectibles. Indeed, Pay Tel was a
participant in the 2008 cost study,
which concluded the difference
between the costs of debit and collect
calls was $0.09. In its 2013 submission,
Pay Tel’s costs indicate the differential
between the costs of debit and collect
calls had fallen to $0.02, with the collect
calling costs decreasing significantly.
31. Further, the Commission adopted
comprehensive intercarrier
compensation reforms, which have
reduced the costs of transport and
certain long distance charges for ICS

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providers, a trend that will continue as
these reforms continue to be
implemented. Moreover, IP-transit
charges, relevant for the supply of IPbased services, have also steadily fallen.
32. Notwithstanding these lower cost
trends, some providers assert their costs
have stayed the same or increased due
to factors such as investments in
enhanced features, general and
administrative costs such as additional
personnel to create and maintain
individual customer accounts, and high
corporate debt. Some ICS providers also
include ‘‘free-to-the-inmate’’ services
such as free calls to public defenders,
free calls for indigent inmates, and free
visitation calls as a portion of their costs
of providing ICS. They also highlight
the need to provide security features
that are necessary to the provision of
ICS though there is insufficient
evidence to indicate that the costs of
providing such security features have
increased since the ICS Provider Data
Submission.
33. Finally, providers point to ‘‘site
commissions’’ as a significant driver of
increases to rates charged to inmates.
Site commissions are payments made
from ICS providers to correctional
facilities and related state authorities.
Since the First Wright Petition was filed
in 2003, the record indicates that there
has been a significant increase in site
commission payments made in
connection with the provision of ICS.
Such payments can take the form of a
percentage of gross revenue, a signing
bonus, a monthly fixed amount, yearly
fixed amount, or in-kind contributions.
Site commission payments are currently
prohibited in seven states, as well as at
some federal detention facilities
including dedicated facilities operated
by ICE.
34. The record makes clear that where
site commission payments exist, they
are a significant factor contributing to
high rates. Site commission payments
are often based on a percentage of
revenues ICS providers earn through the
provision of ICS, and such percentages
can range from 20 to 88 percent. While
the record indicates that site
commission payments sometimes fund
inmate health and welfare programs
such as rehabilitation and educational
programs; programs to assist inmates
once they are released; law libraries;
recreation supplies; alcohol and drug
treatment programs; transportation
vouchers for inmates being released
from custody; or other activities, in
accordance with the decisions of prison
administrators and other local
policymakers, such payments are also
used for non-inmate needs, including
employee salaries and benefits,

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equipment, building renewal funds,
states’ general revenue funds, and
personnel training. Thus, it is clear that
the level of such payments varies
dramatically and their use and purposes
differ significantly, from funding roads
to purposes that ultimately benefit
inmate welfare.
3. The Record on ICS Rates
35. The record contains data regarding
interstate ICS rates, including an
aggregation of ICS contract data and
current ICS contracts by state. Some of
the rates for interstate calls are very high
by any measure. While most Americans
have become accustomed to paying no
additional charge for individual long
distance calls, inmates, or those whom
they call, pay as much as $17.30, $10.70
or $7.35 for a 15-minute interstate
collect call, depending upon the facility
where the inmates are incarcerated.
36. Some states and federal agencies,
such as ICE, have reformed ICS rates
and achieved significantly lower rates.
Additionally, interstate ICS rates vary
significantly and in ways that are
unlikely to be based on ICS providers’
costs. Individual ICS providers charge
widely varying rates in the different
facilities they serve, notwithstanding
their ability to share the costs of serving
multiple facilities using centralized call
routing and management and security
platforms. For example, ICS provider
GTL has entered into contracts to charge
both one of the highest rates for a 15minute collect call ($17.30 in Arkansas,
Georgia, and Minnesota) and one of the
lowest ($0.72 in New York).
37. One of the most significant factors
in rate levels is whether the relevant
state has reformed or addressed ICS
rates. For example, an interstate collect
call in Missouri (a state that has
reformed ICS rates) can cost as little as
$0.05 per minute for a 15-minute call,
while the same call in Georgia, a state
that has not undertaken rate reform, can
be as high as $0.89 per minute, plus an
additional per-call charge as high as
$3.95—as much as a 23 fold difference.
States that have lowered rates have done
so in different ways. Some have banned
site commissions entirely, and others
permit only limited or sharply-reduced
site commissions. Some states have
imposed rate caps, disallowed or
reduced per-call charges, and required
providers to offer less expensive calling
options, such as prepaid or debit
calling.
38. Site commission payments appear
to be a particularly significant
contributor to high rates. Several states
have eliminated or reduced such
payments, and available data indicate
that ICS rates in those states are

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substantially lower than those in states
that require commission payments. For
example, in New Mexico, after site
commissions were prohibited, ICS rates
fell from $10.50 for a 15-minute
interstate collect call to $0.65 for the
same 15-minute call based on revised
ICS rates—a 94 percent reduction.
Similarly, New York ended site
commission payments in 2008, ‘‘taking
the position that the state prison system
shall not accept or receive revenue in
excess of its reasonable operating cost
for establishing and administering its
ICS, while ensuring that the system
provides reasonable security measures
to preserve the safety and security of
prisoners, correctional staff, and call
recipients.’’ New York’s prison phone
rates prior to ending its commission
payments were $1.28 per call plus
$0.068 per minute for all categories of
calls, or $2.30 for a 15-minute call.
Today, New York rates are $0.048 per
minute for all categories of calls with no
per-call charges, or $0.72 for a 15minute call—a 69 percent reduction.
When site commission payments were
eliminated in South Carolina and
Michigan, the average cost of a 15minute call went down, from $2.70 to
$1.35 and from $5.30 to $1.10,
respectively. There is no evidence in
this record that these reformed rates are
below cost or insufficient to cover
necessary security features of the ICS
networks, or do not provide fair
compensation for ICS providers.
Moreover, ICS providers have seen
significant increases in call volumes in
states in which rates have been lowered,
often providing additional revenue even
as rates decrease.
4. Competition in the ICS Market
39. The Commission traditionally
prefers to rely on market forces, rather
than regulation, to constrain prices and
ensure that rates are just and reasonable.
The 2012 ICS NPRM sought comment
on the competitive nature of the ICS
market and whether such competition
constrains ICS rates. 78 FR 4369, Jan.
23, 2013. Economic literature states that,
in effectively competitive markets, firms
expect to earn sufficient revenues to
cover their long run economic costs, and
not more.
40. In response to the 2012 ICS
NPRM, some commenters suggest that
the ICS market is competitive but, in so
doing, these commenters focus on
competition among providers to obtain
contracts from correctional facilities, not
whether there is competition within the
facility giving inmates competitive
options for making calls. While the
process of awarding contracts to provide
ICS may include competitive bidding,

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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.
41. Thus, the Commission has
previously found that competition
during the competitive bidding process
for ICS ‘‘does not exert downward
pressure on rates for consumers,’’ and
that ‘‘under most contracts the
commission is the single largest
component affecting the rates for inmate
calling service.’’ We reaffirm those
findings here. Indeed, as the
Commission has found, competition for
ICS contracts may actually tend to
increase the rate levels in ICS contract
bids where site commission size is a
factor in evaluating bids. For example,
a former Commissioner on the New
Mexico Public Regulation Commission,
Jason Marks, has stated that the
interstate ICS market is characterized by
‘‘reverse competition’’ because of its
‘‘setting and security requirements.’’ He
further asserts that ‘‘reverse competitive
markets are ones where the financial
interests of the entity making the buying
decision can be aligned with the seller,
and not the buyer’’ and that such
competition ‘‘is at its most pernicious in
the inmate phone service context
because buyers not only do not have a
choice of service providers, they also
have strong reasons not to forego using
the service entirely.’’ Although one ICS
provider asserts that ‘‘service providers
compete vigorously with respect to
rates’’ it is clear from requests for
proposals (RFPs) in the record that, at
best, end user rates are but one of many
factors that correctional facilities use to
judge competing bids. The record also
indicates that some correctional
facilities may base their selection of a
contractor largely on the amount of cash
and/or in-kind inducement offered
rather than being driven by proposals
focused on high quality service at the
most affordable rates for consumers. In
sum, market forces do not appear to
constrain ICS rates. Absent Commission
action here, it is clear that we will not
have met our statutory obligation to
ensure that rates are just, reasonable,
and fair.
5. Societal Impacts of High ICS Rates
42. Excessive ICS rates also impose an
unreasonable burden on some of the
most economically disadvantaged in our
society. Families of incarcerated
individuals often pay significantly more
to receive a single 15-minute call from
prison than for their basic monthly

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phone service. We have received tens of
thousands of comments from
individuals, including many personal
stories from inmates, their family
members and their friends about the
high price of staying in touch using ICS.
These rates discourage communication
between inmates and their families and
larger support networks, which
negatively impact the millions of
children with an incarcerated parent,
contribute to the high rate of recidivism
in our nation’s correctional facilities,
and increase the costs of our justice
system. Familial contact is made all the
more difficult because ‘‘mothers are
incarcerated an average of 160 miles
from their last home, so in-person visits
are difficult for family members on the
outside to manage.’’
43. Just, reasonable, and fair ICS rates
provide benefits to society by helping to
reduce recidivism. The Congressional
Black Caucus cites ‘‘a powerful
correlation between regular
communication between inmates and
their families and measurable decreases
in prisoner recidivism rates.’’ In
addition, NARUC formally endorsed
‘‘lower prison phone rates as a step to
reduce recidivism and thereby lower the
taxpayer cost of prisons.’’ As the Center
on the Administration of Criminal Law
explains, ‘‘a reliable way of decreasing
the likelihood that prisoners will reoffend is to foster the growth of a family
support structure that gives inmates a
stake in the community to which they
return and can provide them with the
tools and incentives they need to
succeed upon release.’’ Further,
reducing recidivism would provide
significant cost savings, as the annual
cost to incarcerate one person is
estimated at over $31,000 per year or
between $60 and $70 billion per year
nationwide. Indeed, one study indicates
that a one percent reduction in
recidivism rates would translate to more
than $250 million in annual cost savings
across the United States.
44. Just and reasonable interstate ICS
rates will produce further societal
benefits by providing the justice system
with cost savings and improved
representation for inmates. Some public
defenders and court-appointed lawyers
limit the number of collect calls they
accept because the cost of calls from
correctional facilities has become overly
expensive. One commenter states that
the cost to one public defenders’ office
for such collect calls rose to $75,000 in
one year alone, while another says that
some public defenders ‘‘spend more
than $100,000 a year accepting collect
calls from prisoners.’’ Commenters
assert a correlation between lower rates
and a lower incidence of contraband

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cell phone use in correctional facilities,
noting that efforts including ‘‘good
security measures for both visitation
and perimeter security’’ are also
contributing factors. Reforms are
necessary to ensure that these benefits,
which unquestionably are in the public
interest and will not be accrued in the
absence of ICS rate reform, are realized.
6. Reforms Are Necessary To Ensure
That Interstate ICS Rates Are Just,
Reasonable, and Fair
45. Based on the record, we conclude
that the marketplace alone has not
ensured that interstate ICS rates are just
and reasonable and that they are fair to
consumers, as well as providers. The
Commission must therefore take action
to establish just, reasonable, and fair
rates. As the Commission has previously
explained, ‘‘the just and reasonable rates
required by Sections 201 and 202 . . .
must ordinarily be cost-based, absent a
clear explanation of the Commission’s
reasons for a departure from cost-based
ratemaking.’’ Thus, although the
Commission ‘‘is not required to
establish purely cost-based rates,’’ it
‘‘must, however, specially justify any
rate differential that does not reflect
cost.’’ The Commission has not
previously justified such a departure in
the context of ICS rates, nor do we find
a basis in this record to do so now.
Given our findings above that the rates
for ICS frequently are well in excess of
the costs reasonably incurred in
providing those services, we conclude
that the rate reforms we begin in this
Order are necessary to ensure they are
just and reasonable.
46. Likewise, under section 276,
although the Commission has
previously found the term ‘‘fairly
compensated’’ to be ambiguous, and
acknowledged that a range of
compensation rates could be considered
fair, it has evaluated the question with
reference to the costs of providing the
relevant service, including in the
context of ICS. As noted above, the
Commission traditionally prefers to rely
on market forces, rather than regulation,
to constrain rates. Thus, the
Commission indicated in 1996 that it
preferred to defer to the results of
commercial negotiations, and in a 1996
order stated that ‘‘whenever a PSP is
able to negotiate for itself the terms of
compensation for the calls its
payphones originate, then our statutory
obligation to provide fair compensation
is satisfied.’’ There, however, the
Commission was focused on fair
compensation from the perspective of
ensuring that payphone providers
received compensation that was not too
low. As the Commission has recognized,

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the concept of fairness encompasses
both the compensation received by ICS
providers and the cost of the call paid
by the end-user. Given the significant
record evidence regarding the many
exorbitant rates for ICS today, except in
areas where states have undertaken
reform, continuing to rely upon
negotiated agreements in this context
will not adequately ensure fairness to
the end-user paying the cost of the ICS
because evidence is clear that this
process does not constrain unreasonably
high rates. We thus find the rate reforms
begun in this Order are necessary to
implement section 276(b)(1)’s ‘‘fair
compensation’’ directive.
C. Framework for Just, Reasonable, and
Fair ICS Rates
47. In this section, we create a new
framework to ensure that interstate ICS
rates are just and reasonable, as required
by section 201(b), and provide fair
compensation to providers and
consumers of interstate ICS consistent
with section 276. We require ICS rates
to be cost-based. We identify the costs
that are and are not to be included in
determining whether a rate is consistent
with the statute.
48. We address rates by adopting
interim safe harbor rate levels and
interim rate caps that work together to
ensure that ICS rates are just,
reasonable, and fair to both providers
and end users. We adopt interim safe
harbor interstate rate levels for prepaid
and debit calls and separately for collect
calls, and we will presume that
interstate ICS rates at or below the safe
harbors are cost-based and therefore just
and reasonable under section 201(b) and
fair under section 276. Specifically, we
adopt initial interim safe harbor rates of
$0.12 per minute for debit and prepaid
interstate ICS calls and $0.14 per minute
for collect interstate ICS calls. We adopt
an interim rate cap of $0.21 per minute
for debit and prepaid interstate calls,
and $0.25 per minute for collect
interstate calls.
49. As of the effective date of this
Order, ICS providers’ interstate perminute rates must be at or below the
interim rate cap levels. An ICS provider
may elect to charge rates at or below the
interim interstate safe harbor rates and
benefit from a presumption that such
rates are just, reasonable, fair, and costbased. Rates above the safe harbor will
not benefit from such a presumption.
1. Interstate ICS Rates and Charges Must
Be Cost-Based
50. As discussed above, the
Commission typically focuses on the
costs of providing the underlying
service when ensuring that rates for

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service are just and reasonable under
section 201(b). Likewise, the cost of
providing payphone service generally
has been a key point of reference when
the Commission evaluates rules
implementing the fair compensation
requirements of section 276(b)(1)(A). In
the 2012 ICS NPRM the Commission
sought comment on ways of regulating
ICS rates based on the costs of providing
ICS. 78 FR 4369, Jan. 23, 2013. Although
the Commission theoretically might
deviate from such an approach, we find
no basis to do so here and conclude that
interstate ICS rates, which include perminute charges, per-call charges, and
ancillary charges and other fees charged
in connection with such service, must
be cost-based.
51. Section 276(b)(1) states that the
Commission’s regulations implementing
that provision should, among other
things, ‘‘promote the widespread
deployment of payphone services to the
benefit of the general public.’’ Beyond
harming the end users paying ICS rates,
excessive ICS rates, and the resulting
negative consequences, harm the public
more generally. Since cost-based rates
help avoid such negative consequences,
this statutory language supports our
reliance on such an approach. Our
mandate to carry out our responsibilities
under section 276(b)(1), along with the
same underlying policy considerations,
likewise persuades us that requiring
cost-based interstate ICS rates will best
implement section 201(b), as well.
52. We recognize that the term ‘‘cost’’
is itself ambiguous, and a range of
possible interpretations of this term
might be reasonable. For purposes of the
interim rules and requirements adopted
in this Order, we evaluate whether ICS
rates are cost-based by relying on
historical costs. We expect that
historical cost information will be most
readily available to ICS providers for
production to the Commission as
needed, making this approach readily
administrable for purposes of interim
rules that will represent an
improvement over the status quo for
interstate ICS rates, while we consider
possible further reforms as part of the
FNPRM. We discuss in further detail
below the types of historical costs that
are reasonably and directly related to
the provision of ICS to be included in
those rates.
2. Costs of Providing Interstate ICS
a. General Standard
53. In this section, we conclude that
only costs that are reasonably and
directly related to the provision of ICS,
including a reasonable share of common
costs, are recoverable through ICS rates

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consistent with sections 201(b) and
276(b)(1). Such compensable costs
would likely include, for example, the
cost of capital (reasonable return on
investment); expenses for originating,
switching, transporting, and terminating
ICS calls; and costs associated with
security features relating to the
provision of ICS. On the other hand,
costs not related to the provision of ICS
may include, for example, site
commission payments, costs of
nonregulated service, costs relating to
general security features of the
correctional facility unrelated to ICS,
and costs to integrate inmate calling
with other services, such as commissary
ordering, internal and external
messaging, and personnel costs to
manage inmate commissary accounts.
b. Site Commission Payments
54. The Commission has previously
held that site commissions are—for
purposes of considering ICS rates under
section 276—an apportionment of
profit, not a cost of providing ICS. In the
2012 ICS NPRM, the Commission sought
comment on its prior conclusion that
site commission payments, or ‘‘location
rents are not a cost of payphones, but
should be treated as profit.’’ 78 FR 4369,
Jan. 23, 2013. 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.
55. We disagree with commenters
who argue that site commission
payments should be treated as
compensable ICS cost for the purpose of
determining whether rates are just or
reasonable under section 201(b). These
commenters argue that the analysis
conducted by the Commission with
respect to fair compensation under
section 276 for payphone providers is
fundamentally different from
determining whether a service
provider’s rates comply with section
201(b). We need not determine whether
the standards for determining
compliance with section 276 and
section 201(b) are identical because
under the ‘‘fair compensation’’
requirement of section 276 or the ‘‘just
and reasonable’’ requirement of section
201(b), we reach the same conclusion:
site commission payments are not a

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compensable category of ICS costs
because they are not costs that are
reasonably and directly related to
provision of ICS. While we appreciate
the view that these excess revenues are
paid to correctional facilities and thus
may not be ‘‘profits’’ to ICS providers in
the sense that they can keep these
excess revenues and use them for
whatever purpose they like, they are
excess revenues above costs
nonetheless. This argument is analogous
to that considered in the USF/ICC
Transformation Order, where the
Commission determined that ‘‘excess
revenues that are shared in access
stimulation schemes provide additional
proof that the LEC’s rates are above
cost.’’ There, the Commission
concluded that ‘‘how access revenues
are used is not relevant in determining
whether switched access rates are just
and reasonable in accordance with
section 201(b).’’ The same principle
applies here: the fact that payments
from excess revenues are made to
correctional facilities is not relevant in
determining whether ICS rates are costbased and thus just, reasonable, and fair
under sections 201(b) and 276.
Moreover, even if site commission
payments are viewed as a cost rather
than as excess revenues, they still
would not be reasonably and directly
related to the provision of ICS because,
as noted above, they are simply
payments made for a wide range of
purposes, most or all of which have no
reasonable and direct relation to the
provision of ICS.
56. We also disagree with ICS
providers’ assertion that the
Commission must defer to states on any
decisions about site commission
payments, their amount, and how such
revenues are spent. 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 ‘‘inkind’’ payment requirements that
replace site commission payments in
ICS contracts.
57. The record reflects that site
commission payments may be used for
worthwhile causes that benefit inmates
by fostering such objectives as

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education and reintegration into society.
Law enforcement and correctional
facilities assert that some or all of these
programs would cease or be reduced if
commission payments were not
received as no other funding source
would be available. Although these
causes may contain worthy goals, we are
bound by our statutory mandate to
ensure that end user rates are ‘‘just and
reasonable,’’ and ‘‘fair,’’ taking into
account end users as well as ICS
providers. The Act does not provide a
mechanism for funding social welfare
programs or other costs unrelated to the
provision of ICS, no matter how
successful or worthy.
58. We also are cognizant of the
critical security needs of correctional
facilities. For example, the U.S.
Department of Justice has chronicled
hundreds of criminal convictions
involving the use of ICS as part of the
criminal activity. Moreover, according
to one commenter, a disproportionately
large percentage of ICS-enabled crimes
target and victimize vulnerable
populations consisting of victims,
witnesses, jurors, inmates, and family
members of these individuals. While
our actions to establish interim ICS safe
harbors and rate caps prohibit the
recovery of site commission payments,
we include costs associated with
security features in the compensable
costs recoverable in ICS rates. Security
monitoring helps correctional facilities
identify potential altercations; monitor
inmates who the facility is concerned
may be suicidal; prevent criminal
activity outside of the jail; prevent
violation of no-contact orders and
witness tampering; and aid in the
prosecution of criminal cases. Our
actions in this Order take into account
security needs as part of the ICS rates as
well as the statutory commitment to fair
compensation. Indeed, data from
facilities without site commission
payments, which form the basis for our
interim safe harbor rates, demonstrate
the feasibility of providing ICS on an
on-going basis to hundreds of thousands
of inmates without compromising the
levels of security required by these
states’ correctional facilities. Our
interim rate caps are based on cost
studies that include the cost of
advanced security features such as
continuous voice biometric
identification.
3. Interim Interstate Rate Levels
59. In the 2012 ICS NPRM, the
Commission sought comment not only
on various rate cap alternatives, but also
on other possible ways of regulating ICS
rates, as well as any other proposals
from parties. 78 FR 4369, Jan. 23, 2013.

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Below, we adopt interim rate caps that
include interim safe harbors setting
boundaries for rates that will be treated
as lawful absent a Commission decision
to the contrary, and serve to minimize
regulatory burdens on ICS providers.
The interim rate cap framework we
adopt enables providers to charge costbased rates up to the interim rate caps.

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a. Interim Safe Harbors for Interstate ICS
Rates
60. We adopt interim safe harbor rates
of $0.12 per minute for debit and
prepaid interstate ICS calls and $0.14
per minute for collect interstate ICS
calls. Rates at or below these interim
interstate safe harbor rate levels will be
treated as lawful, i.e., just and
reasonable under section 201(b) of the
Act and ensuring fair compensation
under section 276(b)(1)(A) of the Act,
unless and until the Commission makes
a finding to the contrary. Providers will
have the flexibility to take advantage of
the interim safe harbor rates if they so
choose. Providers that elect to take
advantage of the safe harbors will enjoy
the presumption that their rates are
lawful and will not be required to
provide refunds in any complaint
proceeding.
(i) Methodology for Setting Interim Safe
Harbor Per-Minute Rate Levels
61. We base our methodology for
setting conservative interim interstate
ICS safe harbor rate levels on our
analysis of rate data in the record. In
particular, the record includes detailed
data on interstate ICS rates charged by
ICS providers serving various types of
correctional facilities. Specifically,
HRDC filed detailed and comprehensive
2012 ICS rate data for virtually all of the
state departments of corrections in the
country. We conclude that these data
provide a reasonable basis for
establishing safe harbor rates that are
intended to approximate the costs of
providing interstate ICS—costs that
include fair compensation (including a
reasonable profit) and include full
recovery for security features the
correctional facilities have determined
to be necessary to protect the public
safety. Further, these safe harbor rates
are validated by other evidence in the
record.
62. The comprehensive rate data
submitted by HRDC include data for
seven states that have excluded site
commission payments from their rates.
Rates in every state, including the noncommission states, were included by
ICS providers in their bids for state ICS
contracts, such that we can presume
that they are high enough to cover the
providers’ costs. We find that this subset

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of rates, derived from states that have
eliminated site commissions and
maintained adequate security, is the
most relevant to our approach to
determining the costs that should still
be recoverable through interstate ICS
rates. The subset provides a reasonable
basis for establishing a conservative
proxy for cost-based rates. We set our
interim safe harbor at conservative
levels to account for the fact that there
may be cost variances among
correctional facilities.
63. We first derive an interim safe
harbor rate for interstate ICS debit and
prepaid calls. We establish a single rate
for both debit and prepaid calls, given
the evidence that costs for both billing
approaches are substantially similar. We
begin by calculating the average perminute interstate ICS debit and prepaid
call rates of the seven identified state
departments of corrections. We assume
a call duration of 15 minutes for
purposes of our calculation. We then
total the charges for a 15-minute call for
each state, taking into account perminute as well as per-call charges. We
divide that total by 15 to calculate an
average per-minute rate for each state.
Finally, we average those per-minute
rates across the seven relevant states.
This calculation results in an average
rate of $0.1186 per minute for a 15minute debit call. We similarly calculate
the same states’ prepaid interstate ICS
calling rates, to obtain an average
prepaid rate of $0.1268 per minute.
Given the similarities of debit and
prepaid charges, we group the two into
a single category and average those rates
to obtain an overall per minute average
of $0.1227, which we round to $0.12 per
minute. We therefore adopt $0.12 as the
safe harbor per minute rate for interstate
ICS debit and prepaid calls. As
described in more detail below, ICS
providers have the flexibility to satisfy
the safe harbor either by certifying that
the per-minute rate is at or below the
safe harbor or by demonstrating that
their total charge for a 15-minute call is
at or below the safe harbor per-minute
rate times 15.
64. We derive a corresponding interim
safe harbor rate level for interstate ICS
collect calls by utilizing the data
provided by HRDC for the interstate ICS
collect calling rates for the same set of
states. Employing the same
methodology utilized by ICS debit and
prepaid calls, we determine the average
rate for a 15-minute interstate ICS
collect call for these states to be $0.1411
per minute, which we round to $0.14
per minute. We therefore adopt $0.14
per minute as the safe harbor rate for
interstate ICS collect calls.

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65. Other data in the record further
validate that the interim interstate safe
harbor rates we establish here are just,
reasonable, and fair. In addition to being
higher than rates currently charged by
several state departments of corrections
without site commissions, our $0.12 per
minute safe harbor debit call rate is at
or above the rate that would result if site
commissions were deducted from the
rates in ten states that allow them.
Similarly, there are nine states with site
commission payments in their rates
whose interstate ICS collect rates are at
or below our $0.14 per minute safe
harbor collect call rate when their
commissions are deducted.
Additionally, our interim safe harbor
rate levels closely approximate the rates
currently being charged in ICEdedicated facilities.
66. Data in the record on the demand
stimulation effects of lower rates further
validate the conservative nature of our
safe harbor rates and the likelihood that
the safe harbors will provide fair
compensation to ICS providers. There is
general agreement in the record that
lower rates will stimulate additional ICS
usage, which will help to offset any
revenue declines ICS providers might
experience from lower rates. For
example, petitioners cite an immediate
increase in call volume of 36 percent
following a significant reduction of ICS
rates by New York in 2007. The New
York State Department of Corrections
and Community Supervision reported
that call volumes continued to increase
following their ICS rate reductions—
from a total of 5.4 million calls in 2006
to an estimated 14 million calls in
2013—an increase of approximately 160
percent. Also, Telmate reported a 233
percent increase in call volume in one
state when it brought its interstate ICS
rates down to the $0.12 per minute level
of its local ICS rates. Telmate also saw
an increase of up to 300 percent in call
volume when it lowered its rates
elsewhere. Given the largely fixed cost
nature of the ICS industry, call volume
increases are likely to generate
significant revenues for ICS providers
without resulting in significant cost
increases. Such revenue increases are
likely to offset in part the revenue
declines ICS providers might otherwise
experience from lower rate levels.
67. Other Methodologies. We find that
using comprehensive state rate data to
establish the interim safe harbor rates is
preferable to other methodologies
proposed in the record. For example,
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

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Federal Register / Vol. 78, No. 219 / Wednesday, November 13, 2013 / Rules and Regulations
ICS. Using their methodology,
Petitioners propose a per-minute rate of
$0.07 for both collect and debit
interstate ICS calls. Other commenters
support Petitioners’ approach. 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. 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. Further, Petitioners’
proposed methodology relies on
combining prepaid calling card rates
with ICS providers’ costs. Because the
two sets of data are not necessarily
related, it would be difficult for us to
adopt this methodology as the basis for
our rates without further explanation.
68. We also decline to base our safe
harbor rates on the call volume, cost,
commission, and revenue data
submitted by Securus or the cost data
submitted by CenturyLink. While
Securus’ data provide some insight into
the costs of its ICS operations, we have
concerns about relying entirely on these
data to calculate rates, in part because
Securus did not provide the
disaggregated data used to derive the
report’s total cost results, and the data
it submitted did not distinguish
between collect, debit, or prepaid calls.
Similarly, consistent with our
discussion below, we decline to base
our safe harbors on the cost data
CenturyLink submitted given the
absence of underlying data, the lack of
a description of its methodology, and
the lack of a distinction between debit,
prepaid and collect calling costs.
69. Additional Considerations. We
disagree with concerns that it is not
feasible to adopt uniform rates for all
correctional facilities, particularly with
regard to the safe harbors we are
establishing here. Our safe harbors are
not binding rates but are designed to
give providers that elect to use them an
administratively convenient pricing
option that offers a rebuttable
presumption of reasonableness. If
providers serving jails or other facilities
with different cost characteristics do not
choose to use them, they may price their
service up to the rate caps we establish
below or seek a waiver of those caps.
Ultimately, we believe that the safe
harbors are set at levels that are likely

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to ensure fair compensation for
providers serving a significant
proportion of inmates. Accordingly, we
find that it is reasonable to establish a
uniform set of interim safe harbor rate
levels for providers serving different
sizes and types of correctional facilities.
Ultimately, we conclude that by setting
the interim safe harbor rates at
reasonable levels and providing
flexibility to providers implementing
the rates, including the ability to charge
cost-based rates up to the interim rate
cap, our interim interstate safe harbor
rates will ensure that ICS providers are
fairly compensated.
70. Because we find that the interim
safe harbor rates we establish here will
provide fair compensation to ICS
providers and will encourage continued
investment and deployment of ICS to
the general public, we do not find
persuasive the assertion that regulation
of interstate ICS would negatively
impact ICS providers generally, possibly
even curtailing ICS access. Rather, our
finding is supported by the fact that
many state departments of correction
make ICS available to inmates at rates
lower than those we implement here
and nonetheless operate in a safe,
secure, and profitable manner.
Moreover, testimony in our record
indicates that following a legislative
mandate to lower rates in New Mexico,
the New Mexico Corrections
Department released an RFP for ICS that
prescribed even lower rates than those
adopted in the state’s reform
proceeding. ICS continues to be made
available to inmates even at these lower
rates.
71. Additionally, by using existing
rates from states that have prohibited
site commission payments to derive the
interim safe harbors, we believe that our
reforms will not impact security or
innovation in the ICS market. Indeed,
we note that innovation will continue to
drive down costs through automation
and centralization of the security
features correctional facilities require.
Some commenters have raised concerns
that decreasing ICS rates will result in
a lower quality of service for inmate
calling. As we discuss above, the
interim safe harbor levels and rate caps
we adopt today are conservative
numbers. Accordingly, we believe the
rate framework we adopt today should
not negatively impact quality of service.
For example, ICE has rates for all long
distance calls for their detainees on par
with those we adopt today, and
concurrently includes quality of service
standards, in addition to a 25 to 1 ratio
of detainees to operable telephones. We
encourage continued innovation and

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efficiencies to improve the quality of
service for ICS.
72. In summary, on the effective date
of this Order, which is 90 days
following its publication in the Federal
Register, all rates, fees, and ancillary
charges for interstate ICS must be costbased. ICS providers that elect to utilize
the safe harbor to establish cost-based
interstate ICS rates as of that date must
lower their interstate ICS rates to or
below $0.12 per minute for debit and
prepaid interstate calls and $0.14 per
minute for collect interstate calls for
their rates to be presumed to be just,
reasonable and fair. Separately, in the
accompanying Further Notice we seek
comment on adopting permanent safe
harbors.
b. Interim Rate Caps for Interstate ICS
Rates
73. We adopt interim rate caps to
place an upper limit on rates providers
may charge for interstate ICS. As
explained below, the interim rate caps
we establish are $0.21 per minute for
debit and prepaid interstate calls and
$0.25 per minute for collect interstate
calls. We adopt the interim rate caps to
provide immediate relief to consumers.
As of the effective date of this Order (90
days after Federal Register publication),
providers’ rates for interstate ICS must
be at or below these levels.
74. We believe that the rate caps we
establish here are set at sufficiently
conservative levels to account for all
costs ICS providers will incur in
providing ICS pending our further
examination of such costs through the
accompanying FNPRM and data
collection. 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.
We also establish a waiver process to
accommodate what we expect to be the
rare provider that can demonstrate that
recovery of its ICS costs requires rates
that exceed our caps.
(i) Methodology for Establishing Interim
Rate Caps
75. To establish interim interstate ICS
rate caps, we identify the relevant ICS
provider cost data available in the
record, which consists principally of the
ICS Provider Data Submission, cost
filings by Pay Tel (an ICS provider that
exclusively serves jails), Securus, and
CenturyLink (ICS providers that serve a
variety of type and sizes of correctional
facilities). In 2008, the ICS Provider
Data Submission identified the cost of
debit and the adjusted cost of collect

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ICS calls as being $0.164 per minute and
$0.246 per minute, respectively,
assuming a 15-minute call duration.
Both Pay Tel and Securus were
participants in the 2008 study. In its
recent cost study, 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, or $0.189 and
$0.205 per minute without such costs.
Securus submitted total cost data for a
subset of the facilities it serves that on
a minute-weighted basis averaged
$0.044 per minute for all types of calls.
CenturyLink also submitted summary
ICS cost data. All these costs were
reported excluding site commission
payments.
76. Debit and Prepaid Call Rate Cap.
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.
While Pay Tel’s cost data are
characterized by certain limitations, we
conclude that Pay Tel’s public cost
submission provides a sound basis to
derive the conservative high-end
estimate that we use to set the debit and
prepaid interim rate cap. This is true for
a number of reasons.
77. First, this interim rate cap for
debit calls is significantly higher than
the per-minute cost for debit calling
reported in the 2008 ICS Provider Data
Submission ($0.164 per minute,
assuming a 15-minute call duration) or
by Securus ($0.044 per minute for all
call types). The 2008 ICS Provider Data
Submission is the only multi-provider
cost sample in the record and includes
debit call cost data from locations with
varying cost and call volume
characteristics, and is $0.05 per minute
lower than our interim debit and
prepaid rate cap. 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

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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.
78. 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 15minute call duration. We base our
collect call rate cap on this record
information and note that this cost is
higher than 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).
Additionally, we take a conservative
approach by setting the rate caps above
the level we believe can be cost-justified
while the Bureau reviews ICS provider
rates and cost data submitted pursuant
to the data collection and evaluates the
record in response to the Further Notice.
79. The 2008 ICS Provider Data
Submission represents an appropriately
conservative foundation for our collect
call rate cap. These data represent the
highest cost of a per-minute collect call
in the record, and includes cost data
from locations with varying cost and
call volume characteristics. The ICS
Provider Data Submission states that its
purpose is to ‘‘[p]rovide the basis for
rates’’ and to ‘‘[p]rovide cost
information necessary to develop costbased rate levels and rate structures.’’
Although from five years ago, the record
indicates continued support for such
data, and, as an ICS provider-submitted

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cost study, it presumably ensures fair
compensation to ICS providers.
80. We find that the 2008 ICS
Provider Data Submission on which we
base our interim ICS collect rate cap
likely overstates ICS providers’ costs in
a number of respects. First, costs to
provide interstate ICS have, by many
measures, declined since the ICS
provider data was submitted. Second,
smaller, potentially higher-cost facilities
are over-represented in the data
submission’s sample, as compared with
the national distribution of sizes of
correctional facilities. Third, the sample
does not include cost data from the
largest ICS provider, which cites
economies of scale and efficiencies that
it claims it enjoys, making it one of the
lowest cost ICS providers. The ICS
Provider Data Submission also uses a
marginal location analysis similar to an
analysis that the Commission has used
in the past to calculate payphone rates
and some commenters assert this data
tends to overcompensate ICS providers.
Moreover, the rate is above the costs
reported by Pay Tel, a provider serving
exclusively smaller facilities and jails.
Further, as we noted above, all ICS
providers’ transport and termination
costs will continue to decline pursuant
to the Commission’s intercarrier
compensation reform, further reducing
interstate ICS providers’ costs. Finally,
the record supports the notion that
lower rates will increase call volumes,
providing an additional offset to
compensation foregone as a result of
lower rates.
81. We disagree with commenters
who assert it is not feasible to adopt
uniform rates—in this instance our rate
caps—for correctional facilities
generally. We base our rate caps on the
highest cost data available in the record,
which we anticipate will ensure fair
compensation for providers serving jails
and prisons alike. We note that ICS
providers themselves submitted a single
set of costs for the multiple providers
participating in the ICS Provider Data
Submission, regardless of the differing
sizes of the correctional institutions
they served. Petitioners assert that
‘‘technical innovations in the provision
of prison phone services imply that
variation in costs at different facilities
has largely been eliminated.’’ Further,
the Commission previously has set a
uniform rate for other interstate
telecommunications services, including
for public payphones, the costs of which
also vary by location. Moreover, even if
we were to attempt to differentiate our
rate caps on the basis of size or type of
correctional facility, the record contains
conflicting assertions as to what those
distinctions should be. Some assert we

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should distinguish between jails and
prisons, while at least one other
commenter advocates distinguishing
between larger and smaller jails and
between prison, jails and other
‘‘specialty locations.’’ Given the interim
nature of our rate caps and the
accompanying Further Notice, providers
and other parties will have ample
opportunity to assert that we should
establish different rate caps for different
types of providers and more precisely
on what those distinctions should be
based.
(ii) Waivers
82. An ICS provider that believes that
it has cost-based rates for ICS that
exceed our interim rate caps may file a
petition for a waiver. Such a waiver
petition would need to demonstrate
good cause to waive the interim rate
cap. As with all waiver requests, the
petitioner bears the burden of proof to
show that good cause exists to support
the request. The following factors may
be considered in a request to waive the
interim rate caps: costs directly related
to the provision of interstate ICS and
ancillary services; demand levels and
trends; a reasonable allocation of
common costs shared with the
provider’s non-inmate calling services;
and general and administrative cost
data.
83. We reiterate that the interim rate
caps are set at conservative levels.
Accordingly, we expect that petitions
for waiver of the interim rate caps
would account for extraordinary
circumstances. Further, we will evaluate
waivers at the holding company level.
We conclude that reviewing ICS rates at
the holding company level is reasonable
for several substantive and
administrative reasons. First, the
centralization of security and other
functionalities provided by ICS
providers that serve multiple
correctional facilities has significantly
reduced the cost incurred on an
individual facility for some providers.
Moreover, the record indicates that ICS
providers often obtain exclusive
contracts for several facilities in a state,
rather than specific rates per facility.
Second, we have adopted interim
interstate safe harbor rates and interim
interstate rate caps at conservative
levels to ensure that all providers are
fairly compensated. As a result, we
believe it is appropriate to evaluate
waivers at a holding company level to
obtain an accurate evaluation of the
need for a waiver. Additionally,
reviewing petitions in this manner is
significantly more administratively
feasible and will allow the Commission
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expeditiously. Unless and until a waiver
is granted, an ICS provider may not
charge rates above the interim rate cap
and must comply with all aspects of this
Order including requirements that
ancillary services charges must be costbased as described.
84. We delegate to the Wireline
Competition Bureau (Bureau) the
authority to request additional
information necessary for its evaluation
of waiver requests and to approve or
deny all or part of requests for waiver
of the interim rate caps adopted herein.
We note that evaluation of these waiver
requests will require rate setting
expertise, and that the Bureau is well
suited to timely consider any waiver
requests that are filed. Because we will
consider waiver requests on a holding
company basis, waiver requests from the
three largest ICS providers would cover
over 90 percent of ICS provided in the
country. ICS provider waiver petitions
may be accorded confidential treatment
as consistent with rule 0.459.
c. Interim Rate Structure
85. Some ICS rates include per-call
charges—charges that are incurred at the
initiation of a call regardless of the
length of the call. The record indicates
concerns that these per-call charges are
often extremely high and therefore
unjust, unreasonable, and unfair for a
number of reasons. First, it is selfevident that per-call charges make short
ICS calls more expensive particularly if
evaluated at the effective per-minute
rate. For example, several state
departments of correction allow $3.95
per-call and $0.89 per-minute charges
for collect interstate ICS calls. Under
such an arrangement, the effective per
minute rate for a one minute call is
$4.84, whereas the effective per minute
rate for a 15 minute call is $1.15,
making the price for a shorter call
disproportionately high. Second,
commenters raise issues regarding percall charges that may be unjust,
unreasonable, and unfair because callers
are often charged more than one per-call
charge for a single conversation when
calls are dropped, which the record
reveals can be a frequent occurrence
with ICS. Although some ICS providers
contend that calls are usually
terminated when callers attempt either
to set up a three-way call or to forward
calls, practices that are generally
prohibited by correctional facilities,
other commenters maintain that calls
are dropped because of faulty call
monitoring software or poor call quality,
leaving consumers no alternative but to
pay multiple per-call charges for a
single conversation. Finally, some
commenters question whether high per-

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call charges are justified by cost. In
particular, Petitioners state that ‘‘[t]here
are very few cost components that
change with the number of call
initiations and that do not vary with the
length of the call,’’ and recommend
eliminating per-call charges.
86. We are concerned about the
evidence regarding current per-call rates
and associated practices. In particular,
we are concerned that a rate structure
with a per-call charge can impact the
cost of calls of short duration,
potentially rendering such charges
unjust, unreasonable and unfair. We
have particular concerns when calls are
dropped without regard to whether
there is a potential security or technical
issue, and a per-call charge is imposed
on the initial call and each successive
call. As a result, we conclude that
unreasonably high per-call charges and/
or unnecessarily dropped calls that
incur multiple per-call charges are not
just and reasonable.
87. At the same time, we recognize
that states that have reformed ICS rates
and rate structures have addressed such
concerns in different ways. Indeed, not
all such states have eliminated per-call
charges. Some have significantly
reduced or capped such costs in seeking
to bring the overall cost of a call to just,
reasonable and fair levels. Many of these
pioneering state efforts form the
foundation of the initial reforms we
adopt today, and we are reluctant to
disrupt those efforts pending our further
evaluation of these issues in the Further
Notice. As a result, we do not prohibit
all per-call charges in this Order.
Nonetheless, because our questions
about the ultimate necessity and
desirability of per-call charges remain,
particularly as we seek comment on
further reforming ICS rates more
generally, we ask questions about
whether rate structure requirements are
necessary to ensure that the cost of a
conversation is reasonable in the
Further Notice. We also require ICS
providers to submit data on the
prevalence of dropped calls and the
reason for such dropped calls as part of
their annual certification filing.
88. Our interim rate structure will
help address concerns raised about
unreasonable per-call charges while we
consider further reforms in the Further
Notice. As described above, we adopt
interim safe harbor rate levels and
interim rate caps to ensure the overall
cost of a 15-minute call is just,
reasonable, and fair. ICS providers have
the flexibility to satisfy the safe harbor
either through a certification that the
per-minute rate is at or below the safe
harbor, or by demonstrating that the cost
of a 15-minute call (including any per-

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connection charges) is at or below the
safe harbor per-minute rate times 15.
Thus, where an ICS provider elects to
take advantage of the interim safe harbor
rate levels described above, we allow
the provider flexibility to determine
whether its rate structure should
include per-call charges. Specifically,
we allow ICS providers to calculate
whether their rates are at or below the
interim safe harbor levels or the interim
rate caps by calculating their
compliance on the basis of a 15-minute
call. Because our interim safe harbors
constrain the cost of a 15-minute
conversation to a level we find to be
just, reasonable, and fair, we find it is
appropriate to afford ICS providers such
flexibility.
89. Providers electing not to use the
safe harbor but to charge rates at or
below the interim rate cap will have
similar flexibility but will not benefit
from the presumption that the rates and
charges are just and reasonable and, as
a result, could be required to pay
refunds in any enforcement action.
d. Ancillary Charges
90. In the 2012 ICS NPRM, the
Commission observed that ‘‘there are
outstanding questions with prepaid
calling such as: how to handle monthly
fees; how to load an inmate’s account;
and minimum required account
balance.’’ 78 FR 4369, Jan. 23, 2013. The
record indicates that ICS providers also
impose ancillary or non-call related
charges on end users to make ICS calls,
for example to set up or add money to
a debit or prepaid account, to refund
any outstanding money in a prepaid or
debit account, or to deliver calls to a
wireless number. These additional
charges represent a significant cost to
consumers. For example, prepaid
account users who accept calls from
prisoners and detainees in certain
facilities may incur a $4.95 monthly
‘‘inactivity fee’’ if their account
‘‘exceeds 180 days of no call activity
until the funds have been exhausted or
the call activity resumes.’’ End users
may also be assessed a $4.95 fee to close
their account, and a $4.95 ‘‘refund fee’’
when requesting a refund of money
remaining in an account. We question
whether such charges are reasonable in
and of themselves and note that the
levels of such charges do not appear to
be cost-based.
91. Although we are unable to find
ancillary charges per se unreasonable
based on the record, we have sufficient
information and authority to reach
several conclusions regarding ancillary
charges. First, as stated earlier, interstate
ICS rates must be cost-based, and to be
compensable costs must be reasonably

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and directly related to provision of ICS.
Ancillary service charges are no
exception; they also fall within this
standard and the Commission has the
jurisdiction and authority to regulate
them. Section 201(b) of the Act requires
that ‘‘all charges, practices,
classifications, and regulations for and
in connection with’’ communications
services be just and reasonable. Section
276 of the Act defines ‘‘payphone
service’’ to encompass ‘‘the provision of
inmate telephone service in correctional
institutions, and any ancillary services,’’
and requires that providers be ‘‘fairly
compensated.’’ The services associated
with these ancillary charges are ‘‘in
connection with’’ the inmate payphone
services for purposes of section 201(b)
and ‘‘ancillary’’ for purposes of section
276. As such, they fall within the
standards we articulate above for
determining which costs are
compensable through interstate ICS
rates. Therefore, even if a provider’s
interstate ICS rates are otherwise in
compliance with the requirements of
this Order, the provider may still be
found in violation of the Act and our
rules if its ancillary service charges are
not cost-based.
92. Therefore, parties concerned that
any ancillary services charge is not just,
reasonable and fair can challenge such
charges through the Commission’s
complaint process. The ICS provider
will have the burden of demonstrating
that its ancillary services charges are
just, reasonable, and fair. We also
caution ICS providers that the Bureau
will review data submissions critically
to ensure that providers are not
circumventing our reforms by
augmenting ancillary services charges
beyond the costs of providing such
services.
93. In addition, we will take
additional steps to gather further
information that will inform how we
address ancillary services. As part of the
mandatory data request we initiate
below, we require ICS providers to
submit information on every ancillary
services charge, and identify the cost
basis for such charges. In our
accompanying Further Notice, we seek
comment on additional steps the
Commission can take to address
ancillary services charges and ensure
that they are cost-based. We note that
section 201 governs unjust and
unreasonable practices and section 276
governs payphones, which expressly
includes ancillary services, and seek
comment in the Further Notice as to
whether the imposition of ancillary
services charges is a just, reasonable,
and fair practice.

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D. Inmate Calling Services for the Deaf
and Hard of Hearing
94. The Commission sought comment
in the 2012 ICS NPRM on deaf or hard
of hearing inmates’ access to ICS during
incarceration. 78 FR 4369, Jan. 23, 2013.
Our actions today will be of significant
benefit to deaf and hard of hearing
inmates and their families. First, the
per-minute rate levels we adopt in this
Order will result in a significant rate
reduction for most, if not all, interstate
calls made by deaf and hard of hearing
inmates.
95. Second, we clarify that ICS
providers may not levy or collect an
additional charge for any form of TRS
call. Such charges would be
inconsistent with section 225 of the Act,
which requires that ‘‘users of
telecommunications relay services pay
rates no greater than the rates paid for
functionally equivalent voice
communication services with respect to
such factors as the duration of the call,
the time of day, and the distance from
point of origination to point of
termination.’’
96. Third, we seek comment in the
Further Notice below on additional
issues relating to ICS for the deaf and
hard of hearing, including: (i) Whether
and how to discount the per-minute rate
for ICS calls placed using TTYs, (ii)
whether action is required to ensure that
ICS providers do not deny access to TRS
by blocking calls to 711 and/or state
established TRS access numbers, (iii)
the need for ICS providers to receive
complaints on TRS service and file
reports with the Commission, and (iv)
actions the Commission can take to
promote the availability and use of
Video Relay Service (VRS) and other
assistive technologies in prisons.
97. We decline to take other actions
related to deaf and hard of hearing
inmates requested by commenters at
this time. While we strongly encourage
correctional facilities to ensure that deaf
and hard of hearing inmates are afforded
access to telecommunications that is
equivalent to the access available to
hearing inmates, we decline at this time
to mandate the number, condition, or
physical location of TTY and other TRS
access technologies (e.g., devices and/or
applications used to access VRS) or the
times they are physically available to
inmates, allowed call durations for deaf
and hard of hearing inmates, or the
types of TRS access technologies made
available to inmates.
E. Existing ICS Contracts
1. Background
98. The record indicates that contracts
for the provision of ICS usually are

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exclusive contracts between ICS
providers and correctional facilities to
serve the relevant correctional facility.
The ICS end users (i.e., the inmates and
outside parties with whom they
communicate via ICS) are not parties to
such agreements. Contracts between ICS
providers and facilities typically
establish an initial term of three to five
years, with one-year extension options.
Such contracts may include change-oflaw provisions, although some such
provisions can be vague. In the 2012 ICS
NPRM, the Commission sought
comment on whether it would be
appropriate to mandate a ‘‘fresh look’’
period for existing contracts, or whether
any new ICS rules should apply only to
contracts entered into after the adoption
of the new rules. 78 FR 4369, Jan. 23,
2013. The Commission also sought
comment on typical ICS contract terms,
as well as how change-of-law contract
provisions would interact with any new
Commission rules or obligations.
99. The record in response was
mixed. Several commenters advocate for
a ‘‘fresh look’’ period to review and
renegotiate existing contracts; some urge
us to avoid delaying rate reform; and
others assert that any new rules should
apply only to contracts entered into
after the effective date of the rules.
2. Discussion
100. The reforms we adopt today are
not directed at the contracts between
correctional facilities and ICS providers.
Nothing in this Order directly overrides
such contracts. Rather, our reforms
relate only to the relationship between
ICS providers and end users, who, as
noted, are not parties to these
agreements. Our statutory obligations
require us to ensure that rates and
practices are just and reasonable, and to
ensure that payphone compensation is
fair both to end users and to providers
of payphone services, including ICS
providers. We address, for example, ICS
providers’ responsibility to charge just,
reasonable and fair rates to inmates and
the friends and family whom they call
via ICS, and we find that certain
categories of charges and fees are not
compensable costs of providing ICS
reasonably and directly related to the
provision of ICS and hence may not be
recovered in ICS rates.
101. Agreements between ICS
providers and correctional facilities—to
which end users are not parties—cannot
trump the Commission’s authority to
enforce the requirements of the
Communications Act to protect those
users within the Commission’s
jurisdiction under sections 201 and 276.
We thus do not, by our action, explicitly
abrogate any agreements between ICS

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providers and correctional facilities. To
the extent that any particular agreement
needs to be revisited or amended (a
matter on which we do not take a
position), such result would only occur
because agreements cannot supersede
the Commission’s authority to ensure
that the rates paid by individuals who
are not parties to those agreements are
fair, just, and reasonable.
102. To the extent that any contracts
are affected by our reforms, we strongly
encourage parties to work cooperatively
to resolve any issues. For example, ICS
providers could renegotiate their
contracts or terminate existing contracts
so they can be rebid based on revised
terms that take into account the
Commission’s requirements related to
inmate phone rates and services. We
find that voluntary renegotiation would
be in the public interest, and observe
that the record reflects that, at least in
some instances, contracts between ICS
providers and correctional and
detention facilities are updated and
amended with some regularity. To the
extent that the contracts contain
‘‘change of law’’ provisions, those may
well be triggered by the Commission’s
action today. We further note that the
reforms we adopt today will not take
effect immediately but, rather, will take
effect 90 days after the Order and
FNPRM are published in the Federal
Register. Parties therefore will have
time to renegotiate contracts or take
other appropriate steps.
F. Commission Action Does Not
Constitute a Taking
103. We reject arguments that our
reforms adopted herein effectuate
unconstitutional takings. It is well
established that the Fifth Amendment
does not prohibit the government from
taking lawful action that may have
incidental effects on existing contracts.
Although we do not concede that any
incidental effects would ‘‘frustrate’’ the
contractual expectations of ICS
providers, even if that were the case,
such ‘‘frustration’’ would not state a
cognizable claim under the Fifth
Amendment. In Huntleigh USA Corp. v.
United States, for instance, the court
found that Congress’s decision to create
the Transportation Security Agency
‘‘had the effect of ‘frustrating’ [a private
security company’s] business
expectations, which does not form the
basis of a cognizable takings claim.’’ The
court reached this finding even though
the relevant legislation effectively
eliminated the market for private
screening services. Here, far from
eliminating the ICS market, our
regulations are designed to allow
providers to recover their costs of

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providing ICS, including a reasonable
return on investment. In this context,
any incidental effect on providers’
contractual expectations does not
constitute a valid property interest
under the Fifth Amendment.
104. Moreover, even assuming,
arguendo, that a cognizable property
interest could be demonstrated by ICS
providers, we still conclude that our
actions would not give rise to
unconstitutional takings without just
compensation. As an initial matter, our
ICS regulations do not involve the
permanent condemnation of physical
property and thus do not constitute a
per se taking. Nor do our actions
represent a regulatory taking. The
Supreme Court has stated that in
evaluating regulatory takings claims,
three factors are particularly significant:
(1) The economic impact of the
government action on the property
owner; (2) the degree of interference
with the property owner’s investmentbacked expectations; and (3) the
‘‘character’’ of the government action.
None of these factors suggests a
regulatory taking here.
105. First, our regulation of end-user
ICS rates and charges will have minimal
adverse economic impact on ICS
providers. As explained elsewhere in
this Order, ICS providers are entitled to
collect cost-based rates and will have
opportunities to seek waivers to the
extent the framework adopted in this
Order does not adequately address their
legitimate costs of providing ICS. Under
these circumstances, any cognizable
economic impact will not be sufficiently
significant to implicate the takings
clause. Even beyond that, the record
supports the notion that lower rates are
likely to stimulate additional call
volume, enabling ICS providers to offset
some of the impacts of lower rates
without incurring commensurate added
costs.
106. Second, our actions do not
improperly impinge upon investmentbacked expectations of ICS providers.
The Commission has been examining
new ICS regulations for years, and
various proposals—including rate caps
and the elimination of compensation in
ICS rates for site commissions—have
been raised and debated in the record.
In addition, some states have already
taken action consistent with what we
adopt here today. Given this
background, any investment-backed
expectations cannot reasonably be
characterized as having been upset or
impinged by our actions today.
107. Third, our action today
substantially advances the legitimate
governmental interest in protecting enduser consumers from unjust,

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unreasonable and unfair interstate ICS
rates and other unjust and unreasonable
practices regarding interstate ICS—an
interest Congress has explicitly required
the Commission to protect. Moreover,
the Commission is taking a cautious
approach in lowering end-user ICS
rates, and is carefully calibrating that
approach to ensure that all parties are
compensated fairly for their part of the
ICS while simultaneously lowering ICS
rates for all end users. In short, the rules
at issue here are consistent with takings
jurisprudence and will not wreak on ICS
providers the kind of ‘‘confiscatory’’
harm—i.e., ‘‘destroy[ing] the value of
[providers’] property for all the
purposes for which it was acquired’’—
that might give rise to a tenable claim
under the Fifth Amendment’s Takings
Clause.
G. Collect Calling Only and BillingRelated Call Blocking
108. In the First Wright Petition, the
Petitioners requested that the
Commission require ICS providers and
prison administrators to offer debit
calling, the rates for which Petitioners
assert are typically lower than collect
calling. In the 2012 ICS NPRM, the
Commission requested comment on
various issues related to prepaid calling
and debit calling issues, including
issues related to the security of debit
calling and any increased cost or
administrative workload associated with
debit and prepaid calling. 78 FR 4369,
Jan. 23, 2013. Calling options other than
collect calling appear to have increased
since the Alternative Wright Petition
was filed. The record indicates that
some facilities require the ICS provider
to offer debit or prepaid calling for
inmates, and other facilities or
jurisdictions preclude options other
than collect calling.
109. The 2012 ICS NPRM also sought
comment on Petitioners’ claims that ICS
providers block collect calls to numbers
served by terminating providers with
which they do not have a billing
arrangement. 78 FR 4369, Jan. 23, 2013.
The 2012 ICS NPRM noted that in
facilities where collect calling is the
only calling option available, inmates
may be unable to complete any calls.
For example, if an inmate tries to call a
family member whose phone service
provider does not have a billing
relationship with the ICS provider, then
the ICS provider will prevent the call
from going through, and the inmate
cannot call his or her family member.
The 2012 ICS NPRM asked if this
blocking practice existed and whether
there are ways, while other than
mandating debit calling, to prevent
billing-related call blocking. 78 FR 4369,

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Jan. 23, 2013. Commenters agreed that
billing-related call blocking occurs.
110. Availability of Debit and Prepaid
Calling. We believe the availability of
debit and prepaid calling in correctional
facilities will address the problem of
call blocking associated with collect
calling by enabling service providers to
collect payment up front, which
eliminates the risk of nonpayment and
renders billing-related call blocking
unnecessary. We find that debit or
prepaid calling yield significant public
interest benefits and facilitate
communication between inmates and
the outside world. For example, the
record indicates that debit and prepaid
calling can be less expensive than
collect calling because they circumvent
the concerns of bad debt associated with
collect calling and the expense of
subsequent collection efforts. We
establish lower interim rate caps and
safe harbor rate levels for debit and
prepaid calling herein. Additionally, the
use of prepaid calling helps the called
parties to better manage their budget for
ICS, thus making inmate contact with
loved ones more predictable. We note
that the record indicates the increased
availability of calling options other than
collect calling. In the accompanying
Further Notice we seek comment about
these options. Additionally, we strongly
encourage correctional facilities to
consider including debit calling and
prepaid calling as options for inmates,
so they can more easily and affordably
communicate with friends and family.
111. Call Blocking. The Commission
has a long-standing policy that largely
prohibits call blocking. Specifically, the
Commission has determined that the
refusal to deliver voice telephone calls
‘‘degrade[s] the nation’s
telecommunications network,’’ poses a
serious threat to the ‘‘ubiquity and
seamlessness’’ of the network, and can
be an unjust and unreasonable practice
under section 201(b) of the
Communications Act. Throughout this
proceeding ICS providers have offered
various justifications for their blocking
practices.
112. Some ICS providers claim that
they block calls to terminating providers
with whom they do not have prior
billing relationships to avoid potentially
significant uncollectibles. They assert
that uncollectible revenue associated
with collect calls drives up providers’
costs, which are ultimately passed along
through ICS rates charged to consumers.
Some commenters suggest that
encouraging debit or prepaid calling is
necessary to eliminate the issue of
billing-related call blocking. Other ICS
providers note, however, that due to
technical advancements and new

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product developments, they do not
block calls due to lack of a billing
arrangement, and describe solutions
they have implemented to address the
problem of billing-related call blocking.
For example, Pay Tel offers a ‘‘prepaid
collect’’ service which allows an inmate
to initiate a free call and at its
conclusion, Pay Tel offers to set up a
direct billing arrangement with the call
recipient to pay for any future calls.
Securus has implemented a similar
strategy by allowing ‘‘a short
conversation with the called party, after
which the called party is invited to set
up a billing arrangement with Securus
via oral instructions. CenturyLink has
implemented a similar ‘‘prepaid collect’’
solution.
113. Based on the availability of these
‘‘prepaid collect’’ services, the
Commission’s long-standing position
against unreasonable call blocking, and
the public interest benefits realized from
encouraging inmates connecting with
friends and families, we find billingrelated call blocking by interstate ICS
providers that do not offer an alternative
to collect calling to be an unjust and
unreasonable practice under section
201(b). As such, we prohibit ICS
providers from engaging in billingrelated call blocking of interstate ICS
calls unless the providers have made
available an alternative means to pay for
a call, such as ‘‘prepaid collect,’’ that
will avoid the need to block for lack of
a billing relationship or to avoid the risk
of uncollectibles. We also note that the
rates for these types of calls are subject
to the debit/prepaid interim rate caps or
safe harbor rate levels adopted in this
Order. We expect this prohibition to
have less of an impact on ICS providers
serving facilities that make prepaid and
debit calling available as an alternative
means to pay for a call than it will have
on ICS providers serving facilities where
collect calling is the only option offered.
114. Absent these requirements,
inmates at facilities that impose collectonly restrictions and are served by ICS
providers that block calls to providers
with whom they do not have a billing
relationship would have no way to
place calls to friends or family served by
providers lacking such a billing
relationship. The Commission has the
authority to mandate that ICS providers
implement solutions to address billingrelated call blocking under section
201(b). The ‘‘prepaid collect’’
requirement regulates the manner in
which ICS providers bill and collect for
inmate calls. With regard to common
carriers, the Commission and courts
have routinely indicated that billing and
collection services provided by a

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H. Enforcement
115. In this section, we explain the
enforcement procedures to ensure
compliance with the Act, our rules, and
requirement that all ICS interstate rates
and charges, including ancillary
charges, be cost-based. First, we require
that ICS providers file annually with the
Commission information on their ICS
rates as well as a certification of
compliance with the requirements set
forth in this Order. Second, we remind
ICS providers of the requirement to
comply with existing Commission rules.
Finally, we remind parties that our
enforcement and complaint process may
result in monetary forfeiture and/or
refunds to ICS end users.
1. ICS Provider Certification
Requirement
116. We establish annual certification
requirements to facilitate enforcement
and as an additional means of ensuring
that each and every ICS providers’ rates
and practices are just, reasonable, and
fair and remain in compliance with this
Order. First, we require all providers of
ICS to file annually by April 1st data
regarding their interstate and intrastate
ICS rates, with local or other categories
of rates broken out separately to the
extent they vary, and minutes of use by
correctional facility, as well as average
duration of calls. Having comprehensive
ICS rate information available in a
common format will simplify the
Commission’s task of reviewing these
rates and will provide consumers and
advocates with an additional resource
for understanding them. We require ICS
providers to submit annually, by state,
their overall percentage of calls
disconnected by the provider for
reasons other than expiration of time,
such as security, versus calls that the
inmate or called party disconnected
voluntarily. We also require ICS
providers to file with the Commission
their charges to consumers that are
ancillary to providing the
telecommunications piece of ICS. These
include, for example, charges to open a
prepaid account, to add money to a
prepaid account, to close a prepaid
account, to receive a paper statement, to
receive ICS calls on a wireless phone, or
any other charges to inmates or other
end users associated with use of ICS.
These data will assist the Commission
in monitoring the effectiveness of the
reforms we adopt today and in
addressing the issues raised in the
attached Further Notice.
117. We further require an officer or
director of each ICS provider annually

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to certify the accuracy of the data and
information in the certification, and the
provider’s compliance with all portions
of this Order, including the requirement
that ICS providers may not levy or
collect an additional charge for any form
of TRS call, and the requirement that
ancillary charges be cost-based. We find
this to be a minimally burdensome way
to ensure compliance with this Order.
To ensure consistency with other
reporting requirements and to minimize
burden on ICS providers, we delegate to
the Bureau the authority to adopt and
implement a template for submitting the
required data, information, and
certifications.
2. Compliance With Existing Rules
118. We remind ICS providers of their
ongoing responsibilities to comply with
our existing rules. For example,
providers of inmate operator services
are required to make certain oral
disclosures prior to the completion of
the calls. Specifically, section 64.710 of
our rules requires providers of inmate
operator services to disclose to the
consumer the total cost of the call prior
to connecting it, including any
surcharges or premise-imposed fees that
may apply to the call as well as methods
by which to make complaints
concerning the charges or collection
practices. Additionally, ICS providers
that are non-dominant interexchange
carriers must make their current rates,
terms, and conditions available to the
public via their company Web sites.
Any violation of such responsibilities or
failure to comply with existing rules
may subject ICS providers to
enforcement action, including, among
other penalties, the imposition of
monetary forfeitures. In the case of
carriers, such penalties can include
forfeitures of up to $160,000 for each
violation or each day of a continuing
violation, up to a maximum of
$1,575,000 per continuing violation.
Where the Commission deems
appropriate, such as in particularly
egregious cases, a carrier may also face
revocation of its section 214
authorization to operate as a carrier. We
caution ICS providers that, in order to
avoid the potential imposition of these
and other penalties, they must comply
with all existing rules and requirements.
3. Investigations
119. In this Order, we require ICS
providers to charge cost-based rates and
charges to inmates and their families,
and establish ‘‘safe-harbor’’ rates at or
below which rates will be presumed just
and reasonable. Specifically, we adopt
interim safe harbor rates of $0.12 per
minute for debit and prepaid interstate

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calls and $0.14 per minute for collect
interstate calls. Based on the evidence
in this record, we also set an interim
hard cap on ICS providers’ rates of $0.21
per minute for interstate debit and
prepaid calls, and $0.25 per minute for
collect interstate calls. This upper
ceiling ensures that the highest rates are
reduced without delay. Although we
expect the vast majority of providers to
be at or below our safe harbor rate
levels, we provide this cap to
accommodate unique circumstances.
ICS providers may elect to charge costbased rates between the interim safe
harbor and the interim cap. We delegate
to the Bureau the authority to
investigate ICS provider rates and take
appropriate actions in such
investigations, including the ordering of
refunds.
4. Complaints
120. As discussed above, we require
all interstate ICS rates and charges to be
cost-based, including ancillary charges,
per-call or connection charges, and perminute rates. We note that ICS
providers’ interstate rates that are at or
below the relevant safe harbor rate
levels will be treated as lawful until the
Commission has issued a decision
finding otherwise. Parties can file a
complaint challenging the
reasonableness of interstate ICS rates
and ancillary charges under sections
201 and 276 of the Act, but to the extent
that any such complaint challenges rates
that are within our safe harbor, the
complainant must overcome a
rebuttable presumption that such rates
are just, reasonable, and fair.
Accordingly, those rates may be
challenged but any rate prescription
rising out of such a proceeding will be
forward-looking and will not include
refunds.
121. Formal Complaints. Complaints
against ICS providers under the rules we
adopt herein should follow the process
set forth in the Commission’s formal
complaint rules. Compliance with our
safe harbor ICS rates will establish a
presumption that such rates are just,
reasonable, and fair. An ICS provider
will bear the burdens of production and
persuasion in all complaints challenging
whether its ICS rates and/or ancillary
charges are just, reasonable, and fair in
compliance with sections 201 and 276
of the Act.
122. Informal Complaints. Parties may
submit informal complaints to the
Commission pursuant to section 1.41 of
the Commission’s rules. Unlike formal
complaints, no filing fee is required. We
recommend that complaining parties
submit any complaints through the
Commission’s Web site, at http://

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esupport.fcc.gov/complaints.htm. The
Consumer and Governmental Affairs
Bureau will also make available
resources explaining these rules and
facilitating the filing of informal
complaints. Although individual
informal complaints will not typically
result in written Commission orders, the
Enforcement Bureau will examine
trends or patterns in informal
complaints to identify potential targets
for investigation and enforcement
action.
123. If, after investigation of an
informal or formal complaint, it is
determined that ICS providers interstate
rates and/or charges, including ancillary
charges, are unjust, unreasonable or
unfair under sections 201 and 276 lower
rates will be prescribed and ICS
providers may be ordered to pay
refunds. In addition to refunds,
providers may be found in violation of
our rules and face additional forfeitures.
We also interpret the language in
section 276 that ICS providers be ‘‘fairly
compensated’’ for each and every
completed call to require that an ICS
provider be fairly compensated on the
basis of either the whole of its ICS
business or by groupings that reflect
reasonably related cost characteristics,
and not on the basis of a single facility
it serves. Indeed, we doubt that a party
could reasonably claim that the
Commission must individually
determine the costs of each call. Some
averaging of costs must occur, and there
is no logical reason that it must occur
at the facility level. Finally, we note that
this approach is consistent with our
traditional means of evaluating
providers’ costs and revenues for
various types of communications
services.
I. Mandatory Data Collection
124. To enable the Commission to
take further action to reform rates,
including developing a permanent cap
or safe harbor for interstate rates, as well
as to inform our evaluation of other rate
reform options in the Further Notice, we
require all ICS providers to file data
regarding their costs to provide ICS. All
such information should be based on
the most-recent fiscal year data at the
time of Office of Management and
Budget approval, may be filed under
protective order, and will be treated as
confidential. Such information will also
ensure that rates, charges and ancillary
charges are cost-based.
125. Specifically, we require all ICS
providers to provide data to document
their costs for interstate, intrastate long
distance and intrastate local ICS for the
past year. The collection of intrastate
data is necessary to allow us to assess

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what costs are reasonably treated as
jurisdictionally interstate. We have
identified five basic categories of costs
that ICS providers incur: (1)
Telecommunications costs and
interconnection fees; (2) equipment
investment costs; (3) equipment
installation and maintenance costs; (4)
security costs for monitoring, call
blocking; (5) costs of providing ICS that
are ancillary to the provision of ICS,
including any costs that are passed
through to consumers as ancillary
charges; and (6) other relevant cost data
as outlined in the data template
discussed below. For each of the first
four categories, we require ICS
providers to identify the fixed costs, the
per-call costs and the per-minute costs.
Furthermore, for each of these categories
(fixed, per-call and per-minute costs),
we require ICS providers to identify
both the direct costs, and the joint and
common costs. For the joint and
common costs, we require providers to
explain how these costs, and rates to
recover them, are apportioned among
the facilities they serve as well as the
services that they provide. For the fifth
category, we require ICS providers to
provide their costs to establish debit and
prepaid accounts for inmates in
facilities served by them or those
inmates’ called parties; to add money to
those established debit or prepaid
accounts; to close debit or prepaid
accounts and refund any outstanding
balance; to send paper statements; to
send calls to wireless numbers; and of
other charges ancillary to the provision
of communications service. We also
require ICS providers to provide a list of
all ancillary charges or fees they charge
to ICS consumers and account holders,
and the level of each charge or fee. We
require all ICS providers to provide data
on their interstate and intrastate long
distance and local demand (i.e., minutes
of use) and to apportion the minutes of
use between interstate and intrastate
calls. Finally, we will require ICS
providers to submit forecasts, supported
by evidence, of how they expect costs to
change in the future.
126. These data will guide the
Commission as it evaluates next steps in
the Further Notice. To ensure
consistency and to minimize the burden
on ICS providers, we delegate to the
Bureau the authority to adopt a template
for submitting the data and provide
instructions to implement the data
collection. We also delegate to the
Bureau authority to require an ICS
provider to submit additional data that
the Bureau deems necessary to
determine cost-based rate levels for that
provider.

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IV. Severability
127. All of the rules that are adopted
in this Order are designed to work in
unison to ensure just, reasonable, and
fair interstate ICS rates. However, each
of the reforms we undertake in this
Order serves a particular function
toward this goal. Therefore, it is our
intent that each of the rules adopted
herein shall be severable. If any of the
rules is declared invalid or
unenforceable for any reason, it is our
intent that the remaining rules shall
remain in full force and effect.
V. Procedural Matters
A. Paperwork Reduction Act Analysis
128. This Report and Order contains
new or modified information collection
requirements subject to the Paperwork
Reduction Act of 1995 (PRA), Public
Law 104–13. It will be submitted to the
Office of Management and Budget
(OMB) for review under section 3507(d)
of the PRA. OMB, the general public,
and other Federal agencies are invited to
comment on the new or modified
information collection requirements
contained in the proceeding. In
addition, we note that pursuant to the
Small Business Paperwork Relief Act of
2002, Public Law 107–198, see 44 U.S.C.
3506(c)(4), we previously sought
comment on how the Commission might
further reduce the information
collection burden for small business
concerns with fewer than 25 employees.
B. Congressional Review Act
129. The Commission will send a
copy of this Report and Order and
Further Notice of Proposed Rulemaking
in a report to be sent to Congress and
the Government Accountability Office
pursuant to the Congressional Review
Act (CRA). See 5 U.S.C. 801(a)(1)(A).
C. Final Regulatory Flexibility Analysis
130. The Regulatory Flexibility Act
(RFA), requires that an agency prepare
a regulatory flexibility analysis for
notice and comment rulemakings,
unless the agency certifies that ‘‘the rule
will not, if promulgated, have a
significant economic impact on a
substantial number of small entities.’’
Accordingly, we have prepared a Final
Regulatory Flexibility Analysis (FRFA)
concerning the possible impact of the
Report and Order on small entities.
131. As required by the Regulatory
Flexibility Act of 1980, as amended
(RFA), an Initial Regulatory Flexibility
Analysis (IRFA) was incorporated in the
Notice of Proposed Rulemaking (NPRM)
in WC Docket 12–375. The Commission
sought written public comment on the
proposals in the NPRM, including

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comment on the IRFA. The Commission
did not receive comments directed
toward the IRFA. This Final Regulatory
Flexibility Analysis (FRFA) conforms to
the RFA.

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1. Need for, and Objectives of, the
Report and Order
132. The Report and Order (Order)
adopts rules to ensure that interstate
inmate calling service (ICS) rates in
correctional institutions are just,
reasonable, and fair. In the initiating
NPRM, the Commission sought
information on issues related to the ICS
market, ICS rates, and provider costs
and ancillary fees. In this Order, the
Commission addresses interstate ICS
rates, site commission payments,
ancillary fees, ICS for deaf and hard-ofhearing inmates, ICS call types, and
enforcement and data collection
requirements.
133. Evidence in the Commission’s
record demonstrates that ICS rates today
vary widely, and in far too many cases
greatly exceed the reasonable costs of
providing the service. In the Order, the
Commission has found that a significant
factor driving these excessive rates is
site commission payments: Fees paid by
ICS providers to correctional facilities or
departments of corrections in order to
win the exclusive right to provide ICS.
The Commission’s actions in the Order
are required by the Communications
Act, which mandates that the
Commission ensure that interstate rates
are just and reasonable for all
Americans. Similarly, Congress made
clear in the Act that any compensation
under Section 276 should be fair and
‘‘benefit . . . the general public,’’ not
just some segment of it.
134. In the Order, the Commission
sets an interim cap on interstate ICS
rates and establishes safe harbor rates.
Additionally, the Commission mandates
that any site commission payments
recovered in end-user rates must be
based upon ICS related costs. Similarly,
in the Order, the Commission concludes
that ancillary charges, such as account
set-up fees, fees to receive a paper
statement, or fees to refund an
outstanding account balance, must also
be cost-based. The Further Notice of
Proposed Rulemaking (FNPRM) seeks
comment on additional ICS issues.
2. Summary of Significant Issues Raised
by Public Comments in Response to the
IRFA
135. The Commission did not receive
comments specifically addressing the
rules and policies proposed in the IRFA.

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3. Description and Estimate of the
Number of Small Entities to Which
Rules Will Apply
136. The RFA directs agencies to
provide a description of, and, where
feasible, an estimate of, the number of
small entities that may be affected by
the rules adopted herein. The RFA
generally defines the term ‘‘small
entity’’ as having the same meaning as
the terms ‘‘small business,’’ ‘‘small
organization,’’ and ‘‘small governmental
jurisdiction.’’ In addition, the term
‘‘small business’’ has the same meaning
as the term ‘‘small business concern’’
under the Small Business Act. A ‘‘small
business concern’’ is one which: (1) Is
independently owned and operated; (2)
is not dominant in its field of operation;
and (3) satisfies any additional criteria
established by the Small Business
Administration (SBA).
137. Small Businesses. Nationwide,
there are a total of approximately 27.9
million small businesses, according to
the SBA.
138. Wired Telecommunications
Carriers. The SBA has developed a
small business size standard for Wired
Telecommunications Carriers, which
consists of all such companies having
1,500 or fewer employees. According to
Census Bureau data for 2007, there were
3,188 firms in this category, total, that
operated for the entire year. Of this
total, 3,144 firms had employment of
999 or fewer employees, and 44 firms
had employment of 1,000 employees or
more. Thus, under this size standard,
the majority of firms can be considered
small.
139. Local Exchange Carriers (LECs).
Neither the Commission nor the SBA
has developed a size standard for small
businesses specifically applicable to
local exchange services. The closest
applicable size standard under SBA
rules is for Wired Telecommunications
Carriers. Under that size standard, such
a business is small if it has 1,500 or
fewer employees. According to
Commission data, 1,307 carriers
reported that they were incumbent local
exchange service providers. Of these
1,307 carriers, an estimated 1,006 have
1,500 or fewer employees and 301 have
more than 1,500 employees.
Consequently, the Commission
estimates that most providers of local
exchange service are small entities that
may be affected by the Commission’s
action.
140. Incumbent Local Exchange
Carriers (incumbent LECs). Neither the
Commission nor the SBA has developed
a size standard for small businesses
specifically applicable to incumbent
local exchange services. The closest

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applicable size standard under SBA
rules is for Wired Telecommunications
Carriers. Under that size standard, such
a business is small if it has 1,500 or
fewer employees. According to
Commission data, 1,307 carriers
reported that they were incumbent local
exchange service providers. Of these
1,307 carriers, an estimated 1,006 have
1,500 or fewer employees and 301 have
more than 1,500 employees.
Consequently, the Commission
estimates that most providers of
incumbent local exchange service are
small businesses that may be affected by
the Commission’s action.
141. The Commission has included
small incumbent LECs in this present
RFA analysis. As noted above, a ‘‘small
business’’ under the RFA is one that,
inter alia, meets the pertinent small
business size standard (e.g., a telephone
communications business having 1,500
or fewer employees), and ‘‘is not
dominant in its field of operation.’’ The
SBA’s Office of Advocacy contends that,
for RFA purposes, small incumbent
LECs are not dominant in their field of
operation because any such dominance
is not ‘‘national’’ in scope. The
Commission has therefore included
small incumbent LECs in this RFA
analysis, although it emphasizes that
this RFA action has no effect on
Commission analyses and
determinations in other, non-RFA
contexts.
142. Competitive Local Exchange
Carriers (competitive LECs), Competitive
Access Providers (CAPs), Shared-Tenant
Service Providers, and Other Local
Service Providers. Neither the
Commission nor the SBA has developed
a small business size standard
specifically for these service providers.
The appropriate size standard under
SBA rules is for the category Wired
Telecommunications Carriers. Under
that size standard, such a business is
small if it has 1,500 or fewer employees.
According to Commission data, 1,442
carriers reported that they were engaged
in the provision of either competitive
local exchange services or competitive
access provider services. Of these 1,442
carriers, an estimated 1,256 have 1,500
or fewer employees and 186 have more
than 1,500 employees. In addition, 17
carriers have reported that they are
Shared-Tenant Service Providers, and
all 17 are estimated to have 1,500 or
fewer employees. In addition, 72
carriers have reported that they are
Other Local Service Providers. Of the
72, 70 have 1,500 or fewer employees
and two have more than 1,500
employees. Consequently, the
Commission estimates that most
providers of competitive local exchange

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service, competitive access providers,
Shared-Tenant Service Providers, and
Other Local Service Providers are small
entities that may be affected by the
Commission’s action.
143. Interexchange Carriers (IXCs).
Neither the Commission nor the SBA
has developed a size standard for small
businesses specifically applicable to
interexchange services. The closest
applicable size standard under SBA
rules is for Wired Telecommunications
Carriers. Under that size standard, such
a business is small if it has 1,500 or
fewer employees. According to
Commission data, 359 companies
reported that their primary
telecommunications service activity was
the provision of interexchange services.
Of these 359 companies, an estimated
317 have 1,500 or fewer employees and
42 have more than 1,500 employees.
Consequently, the Commission
estimates that the majority of
interexchange service providers are
small entities that may be affected by
the Commission’s action.
144. Local Resellers. The SBA has
developed a small business size
standard for the category of
Telecommunications Resellers. Under
that size standard, such a business is
small if it has 1,500 or fewer employees.
According to Commission data, 213
carriers have reported that they are
engaged in the provision of local resale
services. Of these, an estimated 211
have 1,500 or fewer employees and two
have more than 1,500 employees.
Consequently, the Commission
estimates that the majority of local
resellers are small entities that may be
affected by the Commission’s action.
145. Toll Resellers. The SBA has
developed a small business size
standard for the category of
Telecommunications Resellers. Under
that size standard, such a business is
small if it has 1,500 or fewer employees.
According to Commission data, 881
carriers have reported that they are
engaged in the provision of toll resale
services. Of these, an estimated 857
have 1,500 or fewer employees and 24
have more than 1,500 employees.
Consequently, the Commission
estimates that the majority of toll
resellers are small entities that may be
affected by the Commission’s action.
146. Other Toll Carriers. Neither the
Commission nor the SBA has developed
a size standard for small businesses
specifically applicable to Other Toll
Carriers. This category includes toll
carriers that do not fall within the
categories of interexchange carriers,
operator service providers, prepaid
calling card providers, satellite service
carriers, or toll resellers. The closest

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Order, including that ICS providers may
not levy or collect an additional charge
for any form of TRS call and that
ancillary service charges be cost-based.
149. Data Collection. In order to allow
the Commission to establish a
permanent cap on interstate rates and to
inform the Commission’s evaluation of
other rate reform options in the Further
Notice, the Commission requires all ICS
providers to file data regarding their
costs to provide ICS. All such
information should be based on the
most-recent fiscal year at the time of
Office of Management and Budget
approval, may be filed under protective
order, and will be treated as
confidential.
150. The Commission has identified
five basic categories of costs that ICS
providers incur: (1)
Telecommunications costs, or
interconnection fees; (2) equipment
investment costs; (3) equipment
installation and maintenance costs; (4)
security costs for monitoring, call
blocking, (5) costs that are ancillary to
the provision of telecommunications
service and (6) other relevant cost data
as outlined in the Bureau-produced data
template discussed below. For each of
the first four categories, ICS providers
must identify the fixed costs, the percall costs and the per-minute costs to
provide each of these cost categories of
ICS. Furthermore, for each of these
categories (fixed, per-call and per4. Description of Projected Reporting,
minute costs), ICS providers must
Recordkeeping, and Other Compliance
identify both the direct costs, and the
Requirements for Small Entities
joint and common costs. For the joint
148. Monitoring and Certification. The and common costs, providers must
Order takes steps to reform ICS by
explain how these costs, and recovery of
requiring providers to charge cost-based them, are apportioned among the
rates, adopting interim rate caps for
facilities they serve, as well as the
collect calling and prepaid and debit
services to which they provide. For the
calling, and adopting safe-harbor rates,
fifth category, we require ICS providers
at or below which ICS rates will be
to provide their costs to establish debit
presumed to be just, reasonable, and
and prepaid accounts for inmates in
fair. The Order requires that all ICS
facilities served by them or those
providers file annually data on their
inmates’ called parties; to add money to
interstate and intrastate ICS rates and
those established debit or prepaid
minutes of use. The adopted monitoring accounts; to close debit or prepaid
requirements will facilitate enforcement accounts and refund any outstanding
and act as an additional means of
balance; to send paper statements; to
ensuring that ICS providers’ rates and
send calls to wireless numbers and
practices are just, reasonable, fair and in other charges ancillary to the provision
compliance with the Order. The
of telecommunications service. We also
Commission also requires ICS providers require ICS providers to provide a list of
to submit annually their overall
all ancillary charges or fees they charge
percentage of dropped calls versus
to ICS consumers and account holders,
completed calls, as well as the number
and the level of each charge or fee. All
of dropped calls by state. The
ICS providers must provide data on
Commission also requires ICS providers their interstate and intrastate demand
to file their charges to consumers that
and to apportion the minutes of use
are ancillary to providing the
between interstate and intrastate calls.
telecommunications portion of ICS. The The Commission delegates to the
Wireline Competition Bureau (Bureau)
Commission further requires each
the authority to adopt a template for
provider to annually certify its
submitting the data.
compliance with other portions of the
applicable size standard under SBA
rules is for Wired Telecommunications
Carriers. Under that size standard, such
a business is small if it has 1,500 or
fewer employees. According to
Commission data, 284 companies
reported that their primary
telecommunications service activity was
the provision of other toll carriage. Of
these, an estimated 279 have 1,500 or
fewer employees and five have more
than 1,500 employees. Consequently,
the Commission estimates that most
Other Toll Carriers are small entities
that may be affected by the
Commission’s action.
147. Payphone Service Providers
(PSPs). Neither the Commission nor the
SBA has developed a small business
size standard specifically for payphone
services providers. The appropriate size
standard under SBA rules is for the
category Wired Telecommunications
Carriers. Under that size standard, such
a business is small if it has 1,500 or
fewer employees. According to
Commission data, 535 carriers have
reported that they are engaged in the
provision of payphone services. Of
these, an estimated 531 have 1,500 or
fewer employees and four have more
than 1,500 employees. Consequently,
the Commission estimates that the
majority of payphone service providers
are small entities that may be affected
by the Commission’s action.

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Federal Register / Vol. 78, No. 219 / Wednesday, November 13, 2013 / Rules and Regulations
5. Steps Taken To Minimize the
Significant Economic Impact on Small
Entities, and Significant Alternatives
Considered
151. The RFA requires an agency to
describe any significant, specifically
small business, alternatives that it has
considered in reaching its proposed
approach, which may include the
following four alternatives (among
others): ‘‘(1) the establishment of
differing compliance or reporting
requirements or timetables that take into
account the resources available to small
entities; (2) the clarification,
consolidation, or simplification of
compliance and reporting requirements
under the rules for such small entities;
(3) the use of performance rather than
design standards; and (4) an exemption
from coverage of the rule, or any part
thereof, for such small entities.’’
152. The Commission needs access to
data that are comprehensive, reliable,
sufficiently disaggregated, and reported
in a standardized manner. The Order
recognizes, however, that reporting
obligations impose burdens on the
reporting providers. Consequently, the
Commission limits its collection to
information that is narrowly tailored to
meet its needs.
153. Monitoring and Certification. The
Commission requires ICS providers to
submit annually their overall percentage
of dropped calls versus completed calls,
as well as the number of dropped calls
by state. The Commission requires ICS
providers to file their charges to
consumers that are ancillary to
providing the telecommunications piece
of ICS. Providers are currently required
to post their rates publicly on their Web
sites. Thus, this additional filing
requirement should entail minimal
additional compliance burden, even for
the largest ICS providers.
154. The information on providers’
Web sites is not certified and is
generally not available in a format that
will provide the per-call details that the
Commission requires to meet its
statutory obligations. Thus, the
Commission further requires each
provider to annually certify its
compliance with other portions of the
Order, including the requirement that
ICS providers may not levy or collect an
additional charge for any form of TRS
call, and that ancillary service charges
are cost-based. The Commission finds
that without a uniform, comprehensive
dataset with which to evaluate ICS
providers’ rates, the Commission’s
analyses will be incomplete. The
Commission recognizes that any
information imposes burdens, which
may be most keenly felt by smaller

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providers, but concludes that the
benefits of having comprehensive data
substantially outweigh the burdens.
Additionally, some of these potential
burdens, such as the filing of rates
currently required to be posted on an
ICS provider’s Web site, are minimally
burdensome.
155. Data Collection. The Commission
requires ICS providers to provide their
costs for five basic categories of ICS
costs. These data will provide the
Commission with sufficient information
to establish permanent ICS rate caps.
The Commission delegates to the
Bureau the authority to adopt a template
for submitting the data.
156. The Commission is cognizant of
the burdens of data collections, and has
therefore taken steps to minimize
burdens, including directing the Bureau
to adopt a template for filing the data
that minimizes burdens on providers by
maximizing uniformity and ease of
filing, while still allowing the
Commission to gather the necessary
data. The Commission also finds that
without a uniform, comprehensive
dataset with which to evaluate ICS
providers’ costs, its analyses will be
incomplete, and its ability to establish
rate permanent ICS rate caps in the
future will be severely impaired. The
Commission thus concludes that
requiring ICS providers to report this
cost data appropriately balances any
burdens of reporting with the
Commission’s need for the data required
to carry out its statutory duties.
6. Report to Congress
157. The Commission will send a
copy of the Order, including this FRFA,
in a report to be sent to Congress
pursuant to the Small Business
Regulatory Enforcement Fairness Act of
1996. In addition, the Commission will
send a copy of the Order, including this
FRFA, to the Chief Counsel for
Advocacy of the Small Business
Administration. A copy of the Order
and FRFA (or summaries thereof) will
also be published in the Federal
Register.
VI. Ordering Clauses
158. Accordingly, it is ordered that
pursuant to sections 1, 4(i), 4(j), 201,
225, 276, and 303(r) of the
Communications Act of 1934, as
amended, 47 U.S.C. 151, 154(i)–(j), 201,
225, 276, 303(r), the Report and Order
and FNPRM in WC Docket No. 12–375
are adopted, effective 90 days after
publication in the Federal Register,
except those rules and requirements
involving Paperwork Reduction Act
burdens, as discussed below.

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159. It is further ordered that Part 64
of the Commission’s Rules, 47 CFR Part
64, is amended as set forth in Appendix
A. These rules shall become effective 90
days after publication in the Federal
Register, except for § 64.6060 of the
Commission’s Rules and the Mandatory
Data Collection requirement as
discussed in Section I of the Order,
which will become effective
immediately upon announcement in the
Federal Register of OMB approval.
160. It is further ordered that the
Commission’s Consumer and
Governmental Affairs Bureau, Reference
Information Center, shall send a copy of
this Order and FNPRM, including the
Final Regulatory Flexibility Analysis
and Initial Regulatory Flexibility
Analysis, to the Chief Counsel for
Advocacy of the Small Business
Administration.
List of Subjects in 47 CFR Part 64
Inmate calling services,
Telecommunications.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.

In consideration of the foregoing, the
Federal Communications Commission
amends 47 CFR part 64 as follows:
PART 64—MISCELLANEOUS RULES
RELATING TO COMMON CARRIERS
1. The authority citation for part 64
continues to read as follows:

■

Authority: 47 U.S.C. 154, 254(k);
403(b)(2)(B), (c), Pub. L. 104–104, 110 Stat.
56. Interpret or apply 47 U.S.C. 201, 218, 222,
225, 226, 227, 228, 254(k), 616, 620, and the
Middle Class Tax Relief and Job Creation Act
of 2012, Pub. L. 112–96, unless otherwise
noted.

2. Add new subpart FF to part 64 to
read as follows:

■

Subpart FF—Inmate Calling Services
Sec.
64.6000 Definitions.
64.6010 Cost-based rates for inmate calling
services.
64.6020 Interim safe harbor.
64.6030 Inmate calling services interim
rate cap.
64.6040 Rates for Telecommunications
Relay Service (TRS) calling.
64.6050 Billing-related call blocking.
64.6060 Annual reporting and certification
requirement.

Subpart FF—Inmate Calling Services
§ 64.6000

Definitions.

As used in this subpart:
Ancillary charges mean any charges to
Consumers not included in the charges
assessed for individual calls and that
Consumers may be assessed for the use

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of Inmate Calling Services. Ancillary
Charges include, but are not limited to,
fees to create, maintain, or close an
account with a Provider; fees in
connection with account balances,
including fees to add money to an
account; and fees for obtaining refunds
of outstanding funds in an account;
Collect calling means a calling
arrangement whereby the called party
agrees to pay for charges associated with
an Inmate Calling Services call
originating from an Inmate Telephone;
Consumer means the party paying a
Provider of Inmate Calling Services;
Debit calling means a calling
arrangement that allows a Consumer to
pay for Inmate Calling Services from an
existing or established account;
Inmate means a person detained at a
correctional institution, regardless of the
duration of the detention;
Inmate calling services means the
offering of interstate calling capabilities
from an Inmate Telephone;
Inmate telephone means a telephone
instrument or other device capable of
initiating telephone calls set aside by
authorities of a correctional institution
for use by Inmates;
Prepaid calling means a calling
arrangement that allows Consumers to
pay in advance for a specified amount
of Inmate Calling Services;
Prepaid collect calling means a calling
arrangement that allows an Inmate to
initiate an Inmate Calling Services call
without having a pre-established billing
arrangement and also provides a means,
within that call, for the called party to
establish an arrangement to be billed
directly by the Provider of Inmate
Calling Services for future calls from the
same Inmate;
Provider of Inmate Calling Services, or
Provider, means any communications
service provider that provides Inmate
Calling Services, regardless of the
technology used.
§ 64.6010 Cost-based rates for inmate
calling services.

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All rates charged for Inmate Calling
Services and all Ancillary Charges must
be based only on costs that are
reasonably and directly related to the
provision of ICS.

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§ 64.6020

Interim safe harbor.

(a) A Provider’s rates are
presumptively in compliance with
§ 64.6010 (subject to rebuttal) if:
(1) None of the Provider’s rates for
Collect Calling exceed $0.14 per minute
at any correctional institution, and
(2) None of the Provider’s rates for
Debit Calling, Prepaid Calling, or
Prepaid Collect Calling exceed $0.12 per
minute at any correctional institution.
(b) A Provider’s rates shall be
considered consistent with paragraph
(a) of this section if the total charge for
a 15-minute call, including any per-call
or per-connection charges, does not
exceed the appropriate rate in paragraph
(a)(1) or (2) of this section for a 15minute call.
(c) A Provider’s rates that are
consistent with paragraph (a) of this
section will be treated as lawful unless
and until the Commission or the
Wireline Competition Bureau, acting
under delegated authority, issues a
decision finding otherwise.
§ 64.6030
rate cap.

Inmate calling services interim

No provider shall charge a rate for
Collect Calling in excess of $0.25 per
minute, or a rate for Debit Calling,
Prepaid Calling, or Prepaid Collect
Calling in excess of $0.21 per minute. A
Provider’s rates shall be considered
consistent with this section if the total
charge for a 15-minute call, including
any per-call or per-connection charges,
does not exceed $3.75 for a 15-minute
call using Collect Calling, or $3.15 for a
15-minute call using Debit Calling,
Prepaid Calling, or Prepaid Collect
Calling.
§ 64.6040 Rates for Telecommunications
Relay Service (TRS) calling.

No Provider shall levy or collect any
charge in addition to or in excess of the
rates for Inmate Calling Services or
charges for Ancillary Charges for any
form of TRS call.
§ 64.6050

Billing-related call blocking.

No Provider shall prohibit or prevent
completion of a Collect Calling call or
decline to establish or otherwise
degrade Collect Calling solely for the

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reason that it lacks a billing relationship
with the called party’s communications
service provider unless the Provider
offers Debit Calling, Prepaid Calling, or
Prepaid Collect Calling.
§ 64.6060 Annual reporting and
certification requirement.

(a) All Providers must submit a report
to the Commission, by April 1st of each
year, regarding their interstate and
intrastate Inmate Calling Services for the
prior calendar year. The report shall
contain:
(1) The following information broken
out by correctional institution; by
jurisdictional nature to the extent that
there are differences among interstate,
intrastate, and local calls; and by the
nature of the billing arrangement to the
extent there are differences among
Collect Calling, Debit Calling, Prepaid
Calling, Prepaid Collect Calling, or any
other type of billing arrangement:
(i) Rates for Inmate Calling Services,
reporting separately per-minute rates
and per-call or per-connection charges;
(ii) Ancillary charges;
(iii) Minutes of use;
(iv) The average duration of calls;
(v) The percentage of calls
disconnected by the Provider for
reasons other than expiration of time;
(vi) The number of calls disconnected
by the Provider for reasons other than
expiration of time;
(2) A certification that the Provider
was in compliance during the entire
prior calendar year with the rates for
Telecommunications Relay Service as
required by § 64.6040;
(3) A certification that the Provider
was in compliance during the entire
prior calendar year with the
requirement that all rates and charges be
cost-based as required by § 64.6010,
including Ancillary Charges.
(b) An officer or director from each
Provider must certify that the reported
information and data are accurate and
complete to the best of his or her
knowledge, information, and belief.
[FR Doc. 2013–26378 Filed 11–12–13; 8:45 am]
BILLING CODE 6712–01–P

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