Prison Phone Justice

Before The
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of:
Rates For Interstate Inmate
Calling Services

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WC Docket No. 12-375

REPLY COMMENTS
OF
MARTHA WRIGHT, ET. AL.,
THE D.C. PRISONERS’ LEGAL SERVICES PROJECT, INC.,
CITIZENS UNITED FOR REHABILITATION OF ERRANTS,
PRISON POLICY INITIATIVE, AND
THE CAMPAIGN FOR PRISON PHONE JUSTICE

Lee G. Petro
Jennifer L. Oberhausen
Jennifer M. Roussil
DRINKER BIDDLE & REATH LLP
1500 K Street N.W.
Suite 1100
Washington, DC 20005-1209
(202) 230-5857

April 22, 2013

SUMMARY
In January 1984, an elderly lady made a phone call and asked the unforgettable question
“Where’s The Beef?!”® While she was referencing a paltry burger patty on an oversized bun
when she asked the question of the “Flaky Bun” executives, she easily could have been asking the
same question after reviewing the ICS providers’ Comments filed in the instant proceeding.
Despite direct orders from the FCC for parties to provide specific evidence to support its
proposals, the ICS providers failed to provide any support for their arguments presented in their
Comments. Instead of supplying “most up-to-date information” and “specific analysis and facts”
the ICS providers complained that it would be “difficult” to provide this information, and
instead proffered only generalizations and inaccurate conclusions on questions of both law of
fact.
In the absence of any specific evidence to support their opposition to the adoption of a
benchmark rate for interstate ICS telephone calls, the FCC must accept the evidence supplied by
the Petitioners and other parties, and adopt the Petitioners’ proposal to impose a benchmark
ICS rate of $0.07, with no set-up fees or other ancillary charges. Moreover, the FCC can and
must direct all existing contracts to be reformed to integrate the proposed ICS rate within one
year of the effective date of the order in this proceeding.
Finally, the FCC must reject the call by CenturyLink to establish an advisory committee.
Simply put, the ICS providers have used every available option at hand to delay FCC action in
this proceeding over the past 12 years, and have had every opportunity to call for consensus.
Aided by the FCC’s inaction, millions of inmates and their families have endured usurious rates
and abusive practices while the ICS providers have reaped billions in revenue.
Further delay is no longer an option. The FCC requested specific data, and, while the
Petitioners provided specific cost data in support of the Petitioners, the ICS providers declared
that it would be too “time-consuming” to provide this information. In light of their failure, the
ICS providers must not be permitted to delay action any further.

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TABLE OF CONTENTS
SUMMARY....................................................................................................................................... i
TABLE OF CONTENTS .................................................................................................................. ii
DISCUSSION .................................................................................................................................. 2
I.

THERE IS OVERWHELMING SUPPORT FOR ICS REFORM. ........................................ 2

II.

THERE IS NO LEGITIMATE QUESTION THAT THE FCC HAS THE
AUTHORITY TO PROVIDE THE REQUESTED RELIEF.................................................. 4

III. ICS PROVIDERS FAILED TO PROVIDE SPECIFIC EVIDENCE TO SUPPORT
THEIR OPPOSITION TO THE ADOPTION OF BENCHMARK RATES. ........................... 7
IV. IN LIGHT OF ICS PROVIDERS’ FAILURE TO SUPPORT OPPOSITION, THE
FCC MUST ACCEPT THE PETITIONERS’ PROPOSAL AND ESTABLISH
BENCHMARK RATES. ...................................................................................................... 11
V.

THE FCC MUST MANDATE A FRESH LOOK PERIOD FOR ALL EXISTING
CONTRACTS...................................................................................................................... 14

VI. THE ICS PROVIDERS’ RESPONSE TO THE ISSUE OF DROPPED CALLS IS
NOT CREDIBLE. ............................................................................................................... 18
VII. A SIGNIFICANT AMOUNT OF REVENUE-SHARING FUNDS ARE NOT USED
BY STATES AND LOCAL AUTHORITIES FOR BENEFIT OF INMATES. .......................25
VIII. BENEFITS ASSOCIATED WITH ADOPTION OF BENCHMARK RATES FAR
OUTWEIGH ANY COGNIZABLE COSTS. ........................................................................27
CONCLUSION .............................................................................................................................. 30

ii

Before The
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of:
Rates For Interstate Inmate
Calling Services

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)
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)
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WC Dkt. 12-375

REPLY COMMENTS
Martha Wright, Dorothy Wade, Annette Wade, Ethel Peoples, Mattie Lucas, Laurie
Nelson, Winston Bliss, Sheila Taylor, Gaffney & Schember, M. Elizabeth Kent, Katharine Goray,
Ulandis Forte, Charles Wade, Earl Peoples, Darrell Nelson, Melvin Taylor, Jackie Lucas, Peter
Bliss, David Hernandez, Lisa Hernandez, Vendella F. Oura, along with The D.C. Prisoners’ Legal
Services Project, Inc., Citizens United for Rehabilitation of Errants, the Prison Policy Initiative,
and The Campaign for Prison Phone Justice (jointly, the “Petitioners”) hereby submit these
Reply Comments in connection with the above-captioned proceeding. 1
On March 25, 2013, the Petitioners submitted Comments calling for the FCC to establish
a benchmark Inmate Calling Service (“ICS”) rate at $0.07 per minute for debit, pre-paid, and
collect calls, with no per-call rate and no other ancillary fees or taxes, from all private, public,
state, county and local correctional and detention facilities.
As demonstrated in the Petitioners’ Comments, the cost to provide ICS is well below the
proposed rate, and the proposed rate will continue to provide the ICS providers a fair profit for
their services, regardless of the size of the institution or the volume of originating calls from any
given facility.

Rates for Interstate Inmate Calling Services, Notice of Proposed Rulemaking, 27 FCC
Rcd 16,629 (2013)(the “NPRM”). The NPRM was published in the Federal Register on January
22, 2013, and established April 22, 2013, as the deadline for filing Comments in this proceeding.
78 FED REG 4369 (rel. Jan. 22, 2013).
1

1

Nothing in the comments submitted by the ICS providers undermines this proposal. In
fact, despite the fact that the FCC requested specific evidence to support the ICS providers’
opposition to the adoption of a benchmark ICS rate, the ICS providers declined to provide any
specific data, claiming it would be “difficult” and “time-consuming.” 2 In light of their election
not to provide any evidence in support of their opposition to the proposed benchmark ICS rate,
the Commission must grant the Petitioners’ proposal, and provide immediate relief to millions
of inmates and their families.

DISCUSSION
I.

THERE IS OVERWHELMING SUPPORT FOR ICS REFORM.
Over the past 10 years, tens of thousands of interested parties have urged the FCC to take

action on reforming the ICS rates and practices. In response to the NPRM, the voice for reform
was even louder, with almost unanimous support for the FCC to step in and reduce the rates
affecting inmates and their families.

Commenters noted the high rates of recidivism, the

disproportionate impact on the poor, minorities, and immigrant detainees, and the need for
inmates and their families to maintain strong contact, and strongly urged the FCC to take action.
In particular, many parties focused on the positive benefits of low ICS rates to reduce the
high rate of recidivism among recently released inmates.

The Prisoners Legal Services of

Massachusetts noted that “97% of the prison population will be released to our communities”
and, with the Massachusetts recidivism rate is at 44%, “we simply cannot afford to compromise
support systems that are proven to contribute to successful reentry and lower recidivism.” 3 The
Vera Institute of Justice agreed, stating that “[r]egular phone contact is often the only way to

Comments of Global Tel*Link Corp., WC Dkt. 12-375, filed Mar. 25, 2013, pg. 26 (“GTL
Comments”).

2

3
Comments of Prisoners Legal Services of MA, WC Dkt. 12-375, filed Mar. 25, 2013, pg. 2
(internal citations omitted).

2

maintain an on-going connection with family members” and noted regular contact between
inmates and their children has “proven beneficial on a number of levels including being
associated with higher self-esteem, improved non-verbal IQ scores, better adjustment to school
and foster care, and few behavioral problems.” 4

Moreover, the Minority Media and

Telecommunications Council stated that “incarceration is concentrated among men, the young,
and uneducated and racial and ethnic minorities – especially African Americans.” 5
Comments filed by the Center on the Administration of Criminal Law also addressed
many of these same issues, noting:
•

The country’s leading provider of out-of-state incarceration services, which
houses more than 80,000 inmates in 60 plus facilities, ‘maintains a geographic
stronghold in Tennessee, housing inmates from as far afield as Montana, Hawaii,
and Puerto Rico.’ It would obviously be extremely expensive for an inmate’s
Hawaiian or Montanan family to make the trip to Tennessee to visit their
incarcerated loved one. 6

•

High inmate calling service rates incentivize the acquisition and use of cell
phones and, by doing so, set inmates up for failure. Several states expressly
prohibit cell phone use in prison. Using such a device can result in a loss of ‘good
time’ credits (meaning more time served) or a transfer to a ‘higher-security
institution.’ It can also result in additional jail time following a conviction for
contraband possession.” 7

•

Inmates that keep in touch with their loved ones are involved in fewer
disciplinary incidents—prison is a safer place for both prisoners and prison
employees. And, at least in some instances, the end result of frequent inmatefamily contact is that an inmate secures an early release through “good
behavior.” 8

•

When released inmates return to a life of crime, ‘they cost society all over
again’ in the form of more arrests, more prosecutions, increased prison
populations, and more victims. To the extent that reducing inmate calling

Comments of the Vera Inst. of Justice, WC Dkt. 12-375, filed Mar. 14, 2013, pg. 3
(internal citations omitted).
4

Comments of the Minority Media and Telecomms. Council, WC Dkt. 12-375, filed Mar.
25, 2013, pg. 8 (internal citations omitted).

5

Comments of the Ctr. on the Admin. of Criminal Law, WC Dkt. 12-375, filed Mar. 25,
2013, pg. 3.

6

7

Id., at pg. 12 (internal citations omitted).

8

Id., at pg. 8 (internal citations omitted).
3

service rates reduces recidivism, lowering rates promises to reduce these costs
as well.” 9
•

A child that stays in touch with an incarcerated mother or father is less likely
to drop out of school or be suspended. Keeping in contact with an
incarcerated parent can also reduce instances of child depression and feelings
of alienation that can lead a child to engage in antisocial behavior. Moreover,
maintaining the parent-child relationship during incarceration makes it more
likely that the parent will be an active participant in his or her child’s life upon
release, which is more often than not to the child’s benefit. 10

The Human Rights Defense Center tied many of these factors in its statement that “[w]hen
families cannot pay the cost of phone calls from their incarcerated loved ones, those same
families and their communities pay a different kind of price: isolation, stress, decreased
rehabilitation and increased recidivism rates.” 11
Based on the comments referenced herein, along with the tens of thousands of
comments entered into the record from inmates and their families, there can be no question of
the need for reform with respect to ICS rates and practices. Reducing ICS rates and eliminating
excessive ancillary fees imposed by ICS providers will encourage contact between inmates and
their families, friends and counsel, which has been shown to have direct and unquestioned
social benefits.
II.

THERE IS NO LEGITIMATE QUESTION THAT THE FCC HAS THE
AUTHORITY TO PROVIDE THE REQUESTED RELIEF.
As explained in Petitioners’ Comments, the FCC has authority to regulate ICS rates and

practices under Sections 276 and 201 of the Communications Act of 1934, as amended, as well
as under Title I ancillary jurisdiction. 12 Even the ICS providers agreed with the Petitioners with
respect to the FCC’s jurisdiction over interstate ICS rates.

9

Id., at pg. 10 (internal citations omitted).

10

Id., at pg. 11 (internal citations omitted).

11

Comments of the Human Rights Defense Ctr., WC Dkt. 12-375, filed Mar. 25, 2013, pg. 1.

12

Petitioners’ Comments, pg. 5.
4

For example, Securus acknowledged that the FCC has jurisdiction over interstate ICS
rates, and agreed that the FCC’s proposed actions are not an attempt to regulate the operations
of a correctional facility. 13 GTL acknowledged that Section 201(b) gives the FCC broad license to
regulate interstate calling to ensure just and reasonable rates and that Section 276 applies to all
service providers for all payphone calls. 14 CenturyLink conceded that the FCC has jurisdiction
“with respect to the rates charged for interstate ICS provided by service providers”, 15 and Pay Tel
Communications, Inc., stated that the FCC has the authority to address “all aspects of the ICS
environment.” 16 In fact, Pay Tel went one step further, affirming that:
[t]here is no question but that the Commission has jurisdiction over intrastate
inmate calling rates. In enacting Section 276, Congress unambiguously granted
the FCC authority “to establish regulations ‘to ensure that all payphone service
providers are fairly compensated for each and every completed intrastate and
interstate call.’” In the payphone service provider context, the Commission’s
authority pursuant to that statutory command has been construed such that the
Section 276(b)(1)(A) “fair compensation” requirement includes the rates paid for
local coin calls because they are part of the compensation that payphone service
providers receive for their services; accordingly, the Commission’s authority
extends to regulating such rates. 17
Thus, all interested parties in the proceeding agree that the Commission has the requisite
authority to regulate the ICS industry.
Despite their acknowledgement that the FCC has the requisite authority to ensure just,
reasonable and fair ICS rates and practices, certain ICS providers attempted to limit this
authority. For example, GTL cited Arsberry v. Illinois to argue that regulation of state and local
corrections facilities must be left to local authorities. 18 However, any fair reading of Arsberry
would acknowledge that the court explicitly stated that the claim under the Communications Act
See Comments of Securus Tech., Inc., WC Dkt. 12-375, filed Mar. 25, 2013, pgs. 8-10
(“Securus Comments”).

13

14

GTL Comments, pg. 32.

15

Comments of CenturyLink, WC Dkt. 12-375, filed Mar. 25, 2013, pg. 18.

16

Comments of Pay Tel Communs., Inc., WC Dkt 12-375, filed Mar. 25, 2013, pg. 3.

17

Id., pg. 6, nt. 17 (internal citations omitted)(emphasis added).

18

GTL Comments, pgs. 33-34.
5

that ICS providers charge unreasonably high rates and engage in rate discrimination is squarely
within the FCC’s jurisdiction. 19
Moreover, Securus attempted to raise several arguments in an effort to limit the FCC’s
regulatory authority, but each ultimately fails. First, Securus explained that interstate longdistance calls have been detariffed since 1996, and that the adoption of a benchmark ICS rate
would be a return to the pre-1996 regulatory scheme. 20 However, the Petitioners have not asked
the FCC to impose new tariff filing requirements on ICS rates and practices. The Petitioners,
along with an overwhelming number of other commenters in this proceeding, have requested
that the FCC establish a benchmark ICS rate. There would be no need for filing a tariff relating
to the benchmark ICS rate, because the ICS providers simply would be required to charge less
than the proposed rate.
Securus then argued that rate regulation should be imposed only if a demonstrable
market failure has occurred. Securus conceded that the FCC may establish rate regulation
where there are “unjust and unreasonable rate or rates”, and a “systemic, price-inflating harm to
the inmate telecommunications market.” 21 However, Securus concluded that there is no market
failure in the ICS industry, and cites to its Expert Report in support of this conclusion. 22

244 F.3d 558, 565 (7th Cir. 2001)(“A claim of discriminatory tariffed telephone rates is
precisely the kind of claim that is within the primary jurisdiction of the telephone regulators.
The plaintiffs are asking us to compare the rates on inmate calls with rates on comparable calls
of other persons; that is what we cannot do but the regulatory agencies can.”)(emphasis added).
19

Securus Comments, pg. 14 (citing Policy and Rules Concerning the Interstate
Interexchange Marketplace, Second Report and Order, 11 FCC Rcd 20730 (1996).

20

Securus Comments, pg. 14 (citing Petition of the State of Ohio for Authority to Continue
to Regulate Commercial Mobile Radio Services, Report and Order, 10 FCC Rcd 7842, 7851
(1995).
21

22

Securus Comments, pg. 15 (citing Expert Report of Stephen E. Siwek).
6

As noted in the NPRM, while competition exists among the providers for new ICS
contracts, once an ICS provider wins a contract, it becomes the sole ICS provider for that facility,
and inmates only have access to the ICS options proffered by a single provider at that location. 23
As such, the ICS industry is a text-book example of a “market failure.” The Petitioners
and the other parties supporting reform of the ICS industry have provided conclusive evidence
that, post-RFP grant:
i.

an ICS provider holds a monopoly on the ICS options at the prison or detention
center;

ii.

the rates charged to ICS customers (inmates and their families) are far beyond
any reasonable cost to provide such services; and

iii.

there is no incentive for either of the ICS contracting parties to voluntarily reduce
the charges imposed on ICS customers since the contracting parties split the
revenues through the payment of commissions.

Only through wishful thinking does such a regime not represent a market failure in its
purest sense. While there may be competition to earn the right to be each location’s monopolist,
the ICS consumer is not protected from unjust and unreasonable rates once the monopolist
signs the contract. As a result, the ICS consumer never benefits from the brief period of
competition among ICS providers during in the RFP process.
Instead, ICS consumers are forced to pay whatever per-minute rate is charged by the ICS
provider, all the while enduring repeated dropped calls, and paying all other usurious fees (i.e.,
$5.00 to receive a refund!). If this does not represent a “systemic, price-inflating harm,” then
the term has no meaning.
III.

ICS PROVIDERS FAILED TO PROVIDE SPECIFIC EVIDENCE TO SUPPORT
THEIR OPPOSITION TO THE ADOPTION OF BENCHMARK RATES.
In light of the substantial delay between the submission of the Alternative Proposal in

2007, and the release of the NPRM, the Commission sought updated information on every
aspect of the ICS industry. The Commission noted that some of this information would need to
23

NPRM, 16632.
7

come from the ICS providers, 24 and repeatedly called for the submission of detailed, specific
evidence from all parties.
For example, the FCC requested specific data and evidence on the following matters,
most of which could only come from the ICS providers:
•

what costs are associated with the per-call charge; ¶18

•

what are costs associated with call security; ¶19

•

support of or disproving per-minute rate caps are arbitrary and capricious; ¶21

•

provide alternate methodologies supported by sufficiently-detailed data; ¶25

•

what are current ratios of debit to collect calling in correctional facilities; ¶32

•

updated data on how much these site commissions are and how much they add to
the per-call costs; ¶37

•

provide data on the average number of calls that are blocked per month and the
reason for the blocking; ¶40

•

updated data from all interested parties and the public, but especially from ICS
providers; ¶43 (emphasis added)

•

most up-to-date information available regarding interstate ICS rates to aid us in
developing a clearer understanding of the ICS market. This includes per-call and
per-minute rates, information on commissions and what percentage of a rate they
comprise, the number of disconnected calls, the average length of calls, and how
calls break out by type, i.e. collect, prepaid and debit; ¶43

•

The ICS Provider Proposal also provides no information about the geographic
distribution of facilities in the sample, the distribution between state prisons and
local prisons (jails), and the distribution between public and privately
administrated facilities. Information about these facilities characteristics would
be relevant to analyzing whether the sample is representative; ¶44, nt. 148 and

•

specific analysis and facts to support any claims of significant costs or benefits
associated with the proposals herein. ¶48

Despite the clarity with which the FCC made these requests, almost all of the ICS providers
elected not to provide specific data and evidence, and clearly articulated their lack of interest in
responding to the FCC’s direct call to do so. 25

24

NPRM, 27 FCC Rcd at 16,645.
8

For example, GTL responded that it would not provide updated data because “it would
be extraordinarily difficult and time-consuming.” 26 Incredibly, while it took issue with the April
2011 Prison Legal News study, claiming it was “stale” and that “accurate and up-to-date
information is available,” 27 GTL then chose not to provide this accurate, up-to-date information,
even though it is in the best position to do so through its contracts with 30 state-run prison
systems, and 12 of the 20 largest prison systems. 28
While Securus provided a study prepared by Economists Incorporated, this study did
not provide the detailed information requested by the FCC. Instead, it merely disclosed the
average of expenses that Securus claims to incur at a select set of facilities. However, as noted
above, the FCC demanded to “see the ICS providers’ math” rather than just the end result.
Moreover, the attached Statement of Dr. Coleman Bazelon highlights several fundamental
problems with Securus’ study. 29
Other than its flawed study, Securus’ only other substantive disclosure was that the
company spent over $4.5 million in research and development in 2012. 30 While it is laudable
that the company is attempting to develop new products and upgrade its facilities, the amount it
spent on research and development in 2012 is less than one-half of what it earned from serving
the Florida state prison system during that same period!31 Since Securus boasted that it has

This excludes the most helpful comments of Network Communications International
Corp. (NCIC), filed March 25, 2013, WC Dkt. 12-375. As shown in the attached Declaration of
Dr. Coleman Bazelon, see Exhibit A, the information supplied by NCIC provided the only useful
cost data entered into the record by the ICS providers.

25

26

GTL Comments, pg. 26.

27

Id.

28

Id., pg. 27.

See Declaration of Dr. Coleman Bazelon, Exhibit A (failing to provide information on
“how costs change with facility size”, “whether there is a threshold size of a facility where costs
begin to decline”, and miscalculating the “gross margin.”).

29

30

Securus Comments, pg. 5.

Securus is obligated to share 35% of its revenue with the State of Florida. In 2012,
Securus paid Florida $5,156,269.19.
Therefore, Securus earned revenue of at least
31

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contracts with “1,800 correctional authorities”, one can reasonably assume that this research
and development budget is but a drop in the bucket compared to the revenues earned from the
other 1,799 correctional authorities. 32
Lest the Petitioners’ only focus on GTL and Securus, the other ICS providers also failed
to adequately respond to the FCC’s marching orders. Pay Tel urged the Commission to take “a

holistic view of ICS” but only provided two charts based on publicly-available information,
along with a statement that, for the jails it serves, “84% were local calls, but those calls
generated only 66% of that year’s revenue.” 33 The disproportionate contribution of interstate
ICS revenue to Pay Tel’s bottom line is clear evidence of the benefits arising from the FCC’s
adoption of the Petitioners’ proposal. Finally, CenturyLink did not provide any analysis of the
costs, nor did it provide updated data with respect to the ICS industry.
Thus, the ICS providers clearly declined the opportunity to supply to the FCC the
information that only they would have, i.e., the actual costs to provide their service. 34 In light of
this decision, and as discussed in more detail below, the FCC may rest its ultimate decision on
the information provided by the Petitioners and their supporters.

$8,507,843.85 before it sent its check to Florida. As noted in the Petitioners’ Comments, it is
common for the ICS providers to carve out from its revenue-sharing plan with the correctional
authorities classes of ancillary fees, such as adding money to a prepaid account, or requesting a
refund. Petitioners’ Comments, Exhibit H. Thus, it is likely that this $4.5 million expense is
even a smaller percentage of Securus’ overall revenue when these other sources are included.
32

Securus Comments, Hopfinger Declaration, pg. 1.

33

Pay Tel Comments, pg. 7.

The ICS providers were mostly uniform in their rejection of the marginal location
methodology utilized in the Wood Study, however. See, e.g., GTL Comments, pg. 17; Pay Tel
Comments, pg. 12. Neither Securus nor CenturyLink addressed it in their Comments, which
would lead one to believe that they do not support it as well.
34

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IV.

IN LIGHT OF ICS PROVIDERS’ FAILURE TO SUPPORT OPPOSITION, THE
FCC MUST ACCEPT THE PETITIONERS’ PROPOSAL AND ESTABLISH
BENCHMARK RATES.
Because the ICS providers flatly refused the FCC’s request to provide specific cost data

and detailed evidence of the costs associated with the imposition of a benchmark ICS rate, the
FCC must accept the Petitioners’ showing that the existing costs are prima facie unjust and
unreasonable, and adopt the proposed ICS benchmark rate set forth in the Petitioners’
Comments. As noted above, the FCC detailed, in no uncertain terms, the information to be
provided by the ICS providers in this proceeding, and specifically directed the parties that were
best positioned to provide this information to do so.
Also demonstrated above was the ICS providers’ surprising decision to take a pass on the
FCC’s request. In light of the long-pending proceeding (caused in no small part by the ICS
providers), the FCC gave the ICS providers yet another opportunity to counter the need for the
benchmark ICS rate proposed in the Alternative Proposal. Instead, the ICS providers simply
said, “Thanks, but no thanks.” As a result, well-established precedent obligates the FCC’s to use
the information provided by the Petitioners to adopt a benchmark ICS rate.
For example, in McLeodUSA Publishing Company v. Wood County Telephone
Company, Inc., the FCC adopted the complainant’s proposed rate for subscriber listing
information (SLI) because “Wood County has failed to meet its burden of providing credible and
verifiable cost data supporting a rate for base file SLI in excess of the presumptively reasonable
rate.” 35 In reaching its decision, the FCC noted that Wood County had “unique access to the
information concerning its costs” and imposed the burden of proof on “the party with unique
access to crucial information.” 36 The FCC also noted that the “[t]he need for information

35

Memorandum Opinion and Order, 17 FCC Rcd 6151 (2002).

36

Id., pg. 6155, nt. 36.
11

justifying [the rate]…is particularly important” where the purported cost “dramatically exceeds”
the presumptive reasonable rate. 37
The FCC concluded by finding that “[i]t is neither fair nor reasonable” for a service
provider “to earn a complete double recovery” of its costs, 38 especially where the service
provider fails to explain “what specific costs [its] charges were intended to cover.” 39 Thus, when
a service provider fails to provide justifications for specific costs, the FCC will find that its
showing is “unverifiable and unreliable”, and the FCC “will decline to consider these costs” in
determining the presumptively reasonable rates, 40 and grant the proponent’s request that the
service provider charges no more than a reasonable rate.
This decision followed a long line of cases that recognized the obligation of service
providers to “come forward with relevant information or evidence determined to be in the sole
possession or control of the carrier.” 41

In its Second Report and Order relating to

interconnection rates, the FCC took the local exchange carriers to task for failing to file the
justification for their pricing of interconnection rates, despite being requested by the FCC to
provide this information on several occasions. 42 Noting this failure, the FCC looked to the “best
currently available, verifiable and reasonable surrogate” for the information that the local
exchange carriers did not provide. 43 The FCC justified this action as a direct result of the local

37

Id., pg. 6157.

38

Id., pg. 6162.

39

Id., pg. 6163.

40

Id., pg. 6164.

See Implementation of the Telecommunications Act of 1996 – Amendment of Rules
Governing Procedures to Be Followed When Formal Complaints Are Filed Against Common
Carriers, Report and Order, 12 FCC Rcd 22,497, 22,615, nt. 782 (1997)(citing Gen. Servs.
Admin. v. AT&T, 2 FCC Rcd 3574 (1987).
41

See Local Exchange Carriers’ Rates, Terms, and Conditions for Expanded
Interconnection Through Physical Collocation for Special Access and Switched Transport,
Second Report and Order, 12 FCC Rcd 18,730 (1997).
42

43

Id., 12 FCC Rcd at 18,892.
12

exchange carriers’ failure “to provide adequate support” for their factors “[n]otwithstanding
these clear and specific filing requirements.” 44
Thus, where the FCC requests specific information from parties uniquely able to provide
the information, and the parties refuse to respond to the FCC’s request, the parties may no
longer protest the imposition of a benchmark ICS rate where the proposed rate is supported by
“currently available, verifiable, and reasonable” cost data. In its Comments, the Petitioners
demonstrated that the ICS rates are unjust and unreasonable by provide numerous examples of
the widely-divergent rates among the various states, and even among the same provider. This
fact also was noted in the NPRM, and, the FCC specifically requested that the ICS providers
submit specific data to justify this wide divergence.
The ICS providers’ response claiming fatigue or complexity is wholly insufficient, and
effectively removes them from the decision-making process. 45 The Petitioners and the other
commenters requesting relief established a prima facie case that the rates were unjust and
unreasonable, and the FCC must move forward immediately to adopt the proposed benchmark
ICS rate in light of the ICS providers’ abdication of its critical role.
Finally, CenturyLink’s call for the establishment of an advisory committee must be
rejected. CenturyLink proposed that a federal advisory committee be established to create a
“structured discussion of an agreed upon comprehensive framework and timeline for a
resolution of the legitimate concerns raised by the petitioners and previous commenters in this
proceeding.” 46 In support of this proposal, CenturyLink cited a 2009 ex parte submission by the
American Bar Association, which CenturyLink apparently understood to call for an advisory

44

Id., 12 FCC Rcd at 18,895.

45
Securus did include the helpful statement that “Costs of Service Have Decreased in Some
Respects But Increased in Others.” Securus Comments, pg. 4. GTL also offered the following
guidance “While it is accurate that certain telecommunications costs have declined over the past
10 years…many of the costs associated with providing inmate calling services have increased.”
GTL Comments, pg. 19.
46

CenturyLink Comments, pg. 2-3.
13

committee. 47

However, the cited letter did nothing of the sort.

Instead, it urged the

Commission to adopt a fair rate based in the record that had been established over the previous
eight years. Thus, the ABA did not support the creation of an advisory committee in 2005 when
it adopted a Resolution urging the FCC to resolve this matter then, nor did it call for an advisory
committee in 2009.
Incredibly, while CenturyLink would be interested in serving on an advisory committee
to resolve this proceeding, it did not see it fit to respond to a direct call from the FCC to supply
the cost data referenced above. There is simply no evidence that CenturyLink, nor any other ICS
provider, would come to the table of an advisory committee with any more interest in resolving
this proceeding than what the ICS providers have shown over the past 10 years. Instead, it is
plainly obvious that the creation of an advisory committee would only delay this matter for
many more years, all while the ICS providers and the correctional and detention authorities
continue to share in the spoils earned from the inmates and their families. In sum, if the ICS
providers would not respond to the direct requests from the FCC in the NPRM, what basis is
there to believe it would do so in an advisory committee that would be dominated by the very
same ICS providers?
V.

THE FCC MUST MANDATE A FRESH LOOK PERIOD FOR ALL EXISTING
CONTRACTS.
Many of the ICS providers ask the FCC to grandfather existing ICS contracts in the event

that a benchmark ICS rate is adopted. For example, Securus stated that the United States
Constitution, Article 1, Section 10 protects contracts from being abrogated or altered by new
regulations. 48 Securus also relied on the application of the Sierra-Mobile Doctrine to argue

Id. (citing Letter of Thomas M. Susman, American Bar Association, CC Dkt. 96-128,
filed Jan. 15, 2009).
47

48

Securus Comments, pgs. 11-12.
14

against the adoption of FCC-mandated fresh-look period for ICS agreements. 49 Both GTL and
CenturyLink requested that the FCC the proposed benchmark ICS rates only to new contracts
entered into after the effective date of the new rules. 50
First, Securus is simply incorrect that Article 1, Section 10 of the US Constitution
prohibits the FCC from taking the requested action. Instead, Article 1, Section 10 of the U.S.
Constitution states, “No State shall . . . pass any Bill of Attainder, ex post facto Law, or Law
impairing the Obligation of Contracts . . . .” 51 Article 1, Section 10 prevents a state from passing
a law impairing the obligation of contracts, 52 but does not apply to the federal government.
Therefore, Securus’ citation of Article 1, Section 10 in the context of FCC-mandated benchmark
ICS rates is simply false. 53
Moreover, Securus’ reliance on the Sierra-Mobile Doctrine is also misplaced.
Specifically, the Sierra-Mobile Doctrine was developed in the context of energy rate regulation,
and establishes a presumption of just and reasonable rates between the contracting parties who
have had the opportunity to freely negotiate the terms of the agreements. 54
The presumption can be rebutted, however, where it is shown that the freely-negotiated
terms “seriously harms the consuming public.” 55 In a recent case, inexplicably ignored by

Id. (citing Fed. Power Comm’n v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and
United Gas Pipe Line Co. v. Mobile Gas Svc. Corp., 350 U.S. 332 (1956).
49

50

GTL Comments, pg. 29; CenturyLink Comments, pg. 15.

51

U.S. Const. Art. 1, Sec. 10 (emphasis added).

Securus also quoted Arkansas Natural Gas. Co. v. Arkansas R.R. Comm’n, 261 U.S. 379
(1923). However, that case applied Article 1, Section 10 of the Constitution to prevent a state
from enacting a law that would invalidate an existing contract, not the federal government.
52

53

See, e.g., Ogden v. Saunders, 25 U.S. (12 Wheat.) 213 (1827).

See, e.g., Morgan Stanley Capital Group Inc., v. Public Util. Dist. No. 1 of Snohomish
Cty., 554 U.S. 527 (2008).
54

Id., 554 U.S.., at 545-546. See also Verizon Communs., Inc., v. FCC, 535 U.S. 467, 479
(2002)(“When commercial parties did avail themselves of rate agreements, the principal
regulatory responsibility was not to relieve a contracting party of an unreasonable rate, but to
protect against potential discrimination by favorable contract rates between allied businesses to
the detriment of other wholesale customers.”)(internal citations omitted).
55

15

Securus, the Supreme Court stated that the presumption not only applied to the contracting
parties, but it also applied to “consumers, advocacy groups, state utility commissions, [and]
elected officials acting parens patriae.” 56
Thus, while there may be a high threshold for satisfying the public interest standard of
the Sierra-Mobile Doctrine, it is clear that the Commission may not ignore the serious and
harmful effects caused by the “allied” contractual parties on the ICS consumer. As was the case
in Verizon, supra, the contracting parties to ICS agreements do not bear the ultimate burden of
the terms of ICS contracts. Instead, as extensively detailed in this proceeding, ICS consumers
experience serious harms from the contracts, and those harms will continue for years to come
absent action by the FCC to reform existing contracts to the new proposed benchmark ICS rates.
The

Commission

previously

acknowledged

this

difference

in

IDB

Mobile

Communications, Inc. v. COMSAT Corp., where it stated:
[A] carrier cannot obtain the remedy of contract reformation by showing only
that the contract requires it to pay an unduly high price for communications
services. Such private economic harm, standing alone, lacks the substantial and
clear detriment to the public interest required by the Sierra-Mobile doctrine.” 57
In the instant proceed case, the Petitioners have shown the requisite harm to the public
interest. 58 Thus, there is no legitimate question that the Commission has authority to impose
the “fresh look” period when adopting the proposed ICS benchmark rate.

56

NRG Power Mktg., LLC et al., v. Maine Pub. Util. Comm’n., 558 U.S. 165, 176 (2010).

Memorandum Opinion and Order, 16 FCC Rcd 11474, 11480 (2001) (emphasis in
original).

57

Each of the cases Securus cites under the Sierra-Mobile Doctrine involve parties seeking
to excuse themselves from performing under a contract after subsequent events rendered the
terms of the contract less favorable to the party seeking to abrogation. Securus also cites ACC
Long Distance Corp. v. Yankee Microwave, Inc., Memorandum Opinion and Order, 10 FCC Rcd
654 (1995) and Ryder Communs., Inc. v. AT&T Corp., Memorandum Opinion and Order, 18
FCC Rcd 13603 (2003) in support its contention that the Commission has not amended
contracts in the past. However, both cases involve private parties seeking to excuse themselves
from performing under the terms of an existing contract. The parties did not attempt to
demonstrate harm to the public from the existing contract, but merely argued that the terms of
the contract were unjust or unreasonable as to the contracting party. Finally, Securus cites
Echostar Communs. Corp. v. Fox/Liberty Networks LLC, Memorandum Opinion and Order, 13
58

16

Finally, while GTL and CenturyLink have requested that the new rates only apply to new
contracts, both parties note that the current term of existing contracts range from three to ten
years, and often have automatic renewal periods. CenturyLink also argued that “in most cases,
the ability to renegotiate rates is prohibited.” 59
However, the Petitioners previously demonstrated that the ICS agreements are regularly
amended, which includes changes in the rates charged to ICS customers. 60 In fact, CenturyLink
has amended its contract with the State of Kansas on three occasions in the past four years. 61 In
addition, GTL has amended its contract with the State of Iowa three times, its contract with the
State of Massachusetts four times, and the State of Virginia seven times. 62 Meanwhile, other
well-experienced ICS providers also supported the “fresh look” period, which further
undermines the position taken by Securus, CenturyLink and GTL. 63
Thus, it is not credible that “the ability to renegotiate rates is prohibited” as CenturyLink
would have the FCC believe, and instead, the Petitioners have demonstrated on numerous
occasions that such reformations occur on a regular basis. In light of the long-term nature of the
existing agreements, coupled with oft-used automatic renewal provisions, the ICS providers
must be required to modify their existing ICS agreements.
There is simply no legitimate justification for the FCC not to adopt a one-year, fresh-look
period, which would provide immediate relief from the serious public harms caused by the ICS
FCC Rcd 21,841 (1998) as an example of the Commission applying Sierra-Mobile in the context
of a contract to buy network programming. Securus Comments, pg. 13. However, EchoStar
was decided solely on procedural grounds. (“Because we are deciding this matter on procedural
grounds, we find that there is no need to reach the merits of this proceeding.”).
59

CenturyLink Comments, pg. 16.

See Petitioners Comments, pg. 29 (citing Letter of Lee G. Petro, CC Dkt. 96-128, dated
June 28, 2012, pg. 3.) (noting that Securus had amended its contract with the State of Florida on
four occasions).

60

61

See Exhibit B.

62

See Exhibit C.

See Comments of Telmate, LLC, WC Dkt. 12-375, filed Mar. 25, 2013, pg. 16; See
Comments of TurnKey Corrections, WC Dkt. 12-375, filed Mar. 25, 2013, pg. 5.

63

17

agreements. Such reformation would provide ICS customers immediate relief, while permitting
the current contracts to remain unamended would present an incentive for the contracting
parties to attempt to extend or renew the existing contracts for their own pecuniary benefit,
while ICS customers wait up to 10 years in the future for relief.
VI.

THE ICS PROVIDERS’ RESPONSE TO THE ISSUE OF DROPPED CALLS IS
NOT CREDIBLE.
One topic bears special mention because of the remarkable claims made by the ICS

providers. Specifically, the ICS providers argued that the responsibility for dropped calls is to be
placed squarely on the customers.
Incredibly, the ICS providers argued that dropped calls are to be expected for anyone
with a wireless phone, and that the recipients of ICS calls must obtain a landline to ensure a
reliable connection. 64 Moreover, Securus’ Mr. Hopfinger went so far to say that he has “firsthand knowledge that inmate calls are not ‘dropped’ without cause” and that the calls are
dropped only because the Securus “system detects that the inmate or the called party is
attempting to create a three-way call or to forward the call to some third party.” 65
Setting aside whether it is even credible that Mr. Hopfinger has “first-hand knowledge”
of each and every dropped call experienced by Securus’ customers, the unsubstantiated
allegation that each and every dropped call is the result of an attempt by the caller to violate
prison rules is not reflected in the extensive record in this proceeding, nor in proceedings before
state public utility commissions.
For example, in addition to the thousands of letters filed in the record of this proceeding,
the experiences of Massachusetts attorneys, as recorded in their testimony and affidavits from
the state’s recent Department of Telecommunications proceedings, provide specific accounts of

GTL Comments, pg. 30 (“To avoid dropped calls, GTL advises its customers that call
recipients should use landline telephones.”).

64

65

Securus Comments, Hopfinger Declaration, pgs. 9-10.
18

dropped calls which undermine the ICS providers’ apparent “first-hand knowledge.” 66 The
testimony and sworn affidavits of these attorneys is especially relevant as many of the largest
ICS providers, including Securus and GTL, provide inmate phone services to various
correctional facilities within the state.
In its comments, Securus averred that the issue of dropped calls were “baseless”
accusations, and asserted that inmate calls are dropped only when parties are attempting to
make illegal three-way calls or forward a call to a third-party. 67 The sworn affidavits of criminal
defense attorneys in Massachusetts flatly contradict this claim. One attorney stated that every
month, about one in every five calls to his office is dropped prematurely. 68 Despite the fact that
neither the attorney, “nor anyone at [his] office has ever attempted to add a third party or
forward a call from an incarcerated client,” the disconnection is almost always preceded by a
recording stating that the system detected an attempt to add a third party. 69 Another attorney
notes that, while “[v]ery few calls are dropped prematurely or cut-off in the office,” calls to both
his cellular phone and home phone were frequently dropped, and were generally preceded by a
message stating that the system detected an attempt at a three-way call. 70 Patricia Garin,
testifying on behalf of the Northeastern Prisoners’ Rights Project, also noted that one in every
three calls to her cell phone are dropped due to a “detected” third-party call attempt. 71
Securus also stated that calls are dropped “for cause” when inmates attempt to “thwart”
technology designed to detect third-party calls. 72 Mr. Hopfinger stated that inmates try to
“mask the sound of re-dialing the phone” by “scream[ing] or blow[ing] into the handset,” or by
MA Dep’t of Telecomms., Dkt. No. 11-16 (comments and other records in the proceeding
are available at: http://www.mass.gov/ocabr/government/oca-agencies/dtc-lp/dtc-11-16.html).

66

67

Securus Comments, pg. 17.

68

See Exhibit D (Amendment 1 and Supplement to Petition, Affidavit A-24, ¶ 4).

69

Id. (emphasis added).

70

Id.

71

Id. (Affidavit A-30, ¶ 5).

72

Securus Comments, pg. 18.
19

banging the handset against the wall. 73

Mr. Hopfinger’s allegations that these practices,

“developed by inmates” as a means of engaging in illegal activity, also are undermined by
numerous accounts from attorneys that regularly receive inmate calls of such poor quality the
inmate must yell into the phone in order to be heard.
For example, Carmen Guhn-Knight, provided sworn testimony on behalf of the firm
where she is a paralegal stating that “[s]ometimes our clients sound impossibly quiet . . . . I often
tell our clients to hang up and try calling again and maybe it’ll be better. Sometimes it works
and sometimes it doesn’t.” 74 Ms. Garin testified that she has talked to many fellow attorneys
who have to have their clients yell into the phone, making them “very concerned about the fact
that our clients have to be yelling their legal business so that we can hear them.” 75 Another
attorney described how during calls received on the office’s main telephone line it is “frequently
very difficult to hear what the prisoner is saying unless he or she shouts.” 76

Further

undermining Mr. Hopfinger’s conclusion is the statement by CenturyLink in its Comments that,
while the call detection features use “algorithms that analyze a variety of data points” and flag
suspicious activities, these “algorithms are capable of mistakenly flagging benign activities and
dropping calls.” 77
The last explanation Securus provided in its comments is that phone records showing a
“spate” of short phone calls are not evidence that calls are dropped, but instead, reflects a
“phenomenon” developed by inmates to avoid paying for phone services. 78 Mr. Hopfinger stated

73

Securus Comments, Hopfinger Declaration, at pg. 10.

74

See Exhibit E (Testimony of Carmen Guhn-Knight, 133:11-16).

75

Id. (Testimony of Patricia Garin, 51:19-24).

76

See Exhibit D (Affidavit A-29 ¶ 3).

CenturyLink Comments, at 7 n. 16 (CenturyLink noted that “all but one of CenturyLink’s
customers requires flagging the call record within the database, but not disconnecting the call in
progress. CenturyLink’s single customer that does require immediate termination of the call is a
state correctional system with per-minute-only calling rates.).
77

78

Securus Comments at 18, Hopfinger Declaration, pg. 10.
20

that inmates “attempt to avoid billing altogether by having multiple phone calls, one after the
other, in the hopes that they billing system will not be activated by such short calls, or that they
can falsely claim that the system cut off their calls.” 79
Securus’ assertion is countered by common-sense logic. Why would an ICS customer,
who already has difficulty affording the excessive per-call and per-minute rate, run the risk of
having one’s account being charged successive connection fees of $2.00 or more, simply in the
hopes of having to pay connection fee only once? Further, Securus’ claim is contradicted by
testimony and affidavits stating that when calls from inmates have connections that are so poor
that the inmate cannot be heard, the parties often disconnect the call and reinitiate in the hopes
of getting a better connection. 80 Elizabeth Matos, an attorney with Prisoners’ Legal Services,
also testified that when the connection is so bad she can’t hear the client, she tells clients to
reinitiate a call in an effort to get a better connection. 81
By far the most popular explanation proffered by ICS providers for dropped calls is that
the devices the consumer uses to answer inmate calls, specifically cordless and cellular phones,
are to blame. Providers are quick to “warn” consumers that calls to wireless and cordless
phones are likely to cause enough static to cause a disconnect, and that calls to wireless phones
are more likely to be disconnected due to a loss in signal. 82

79

GTL’s comments state that

Id.

Ms. Guhn-Knight’s sworn testimony is again illustrative here. “The connection is
frequently poor. Sometimes our clients sound impossibly quiet and other times there is
constant static on the line. I often tell our clients to hang up and try calling again and maybe it’ll
be better. Sometimes it works and sometimes it doesn’t.” See Exhibit E (Testimony of Carmen
Guhn-Knight, 133:9-16).

80

81

See Exhibit E (Testimony of Elizabeth Matos,14:1-7).

See Securus, Friends and Family Telephone Service Guide, http://www
.securustech.net/downloads/guide_english.pdf (last visited April 19, 2013) (Calls may be
disconnected due to the “[u]se [of] a cordless phone (static could cause a disconnect)” and “Due
to the nature of cell phone service, there is no credit to on dropped calls on cell phones”); GTL,
Friends and Family Support, http://www.gtl.net/familyandfriends/index.shtml (last visited
April 19, 2013) (“The quality of telephone calls to wireless devices and cordless phones that
receive voice transmission via frequencies as opposed to wires may vary” and “[a]ccordingly, the
quality and integrity of calls to cell phones and cordless phones cannot be guaranteed.”); Pay

82

21

“[a]nyone that uses a wireless phone is susceptible to dropped calls - it is not an experience
unique to the inmate calling environment.” 83 Further, while most ICS providers, invoking the
“nature of cell phone service” do not reimburse, or “take responsibility for” dropped calls to
cellular phones, 84 many also warn that something as simple as pauses in the conversation, even
short ones, can cause a disconnection. 85
While cell phone service can be certainly more unreliable than calls to landline phones,
the testimony and sworn affidavits discussed above demonstrate that static and poor call
quality, while more prevalent on wireless phones, is not an experience unique to cellular phone
use. One attorney stated that, of the three hundred inmate calls her office receives every month,
“[a]pproximately 15-20% of the calls have too much static to hear the other party.” 86 Another
attorney acknowledged that while phone calls to his home phone and cellular phone were
“markedly worse: at least one call in three received at home had a terrible connection,” and calls

Tel, Why Are Some Calls Disconnected?, http://www.paytel.com/faq-ftc-14.html (last visited
April 19, 2013) (Calls may be disconnected due to “[u]se of a cordless phone (static),” “[u]se of a
wireless phone (dropped cell tower or static)” and “PAY-TEL does not accept responsibility for
dropped wireless phone calls.”).
Comments of Global Tel-Link Corp., 30 (filed March 25, 2013) (internal citations
omitted). GTL also stated in its comments that “[d]ropped calls can result from a variety of
circumstances wholly unrelated to the inmate calling platform, such as when an inmate calls a
person using a wireless phone, a home portable phone, or background noise or static triggers the
security system that is designed to detect and deter three-way calling.” Id.

83

See Global Tel*Link Billing Support, (last visited April 19, 2013) (“Delivery of
correctional calls to any cell phone is not guaranteed. If calls to cell phones are dropped,
disconnected, or of poor quality, GTL will not issue credit for those calls.”).

84

See Securus, Friends and Family Telephone Service Guide, (Calls may be disconnected if
the parties “[s]top [the] conversation for any length of time (a period of silence may cause a
disconnect)”); GTL, Friends and Family Support, (“DON’T stop the conversation for any length
of time, even short pauses may result in disconnection.”); Pay Tel, Why Are Some Calls
Disconnected? (Calls may be disconnected if the parties “[s]top talking without hanging up”).
85

See Exhibit D (Affidavit A-27 ¶ 3) (“there are occasions when there is feedback or an
echo, when what the speaker says is echoed back after a very slight delay. This also interferes
with conversations. In addition, about 10% of the calls we receive are cut off when we press “0”
to answer the call.”); (Affidavit A-28 ¶ 3) (In an office that receives an average of 450 calls from
incarcerated individuals a month, “[w]e estimate that one call per week from the state facilities
have bad connections and are hard to hear, and approximately three calls per week from county
facilities have the same problem.”).

86

22

to his office phone experience a terrible connection one in every six or seven calls. 87 Ms. Garin
testified that when she takes calls on her cell phone because she cannot be in the office, she only
uses her cellular phone “from a sitting still position in a place where reception was strong” but
calls are still cut-off about one in every three times. 88
Regardless of whether the frequency of dropped calls is unavoidable for calls made to
cellular phones, the ICS provider’s policies with respect to ICS calls to wireless phones have a
heightened impact on the parties that are least able to afford the additional reconnection and
wireless calling fees. For example, a 2012 Center for Disease Control report shows that 51.8% of
poor households are wireless-only households, where “wireless-only” households are defined as
“at least one wireless phone and no working landline telephones inside the household.” 89
Further, 42.3% of “near poor” households were wireless-only. 90 These statistics demonstrate
that the majority of families that are affected by dropped calls are of low income, and are least
able to afford the reconnection fees imposed by ICS providers. 91
Further, according to a Pew Report, the incarceration of a father lowers a family’s
income an average of 22% a year. 92 The data on wireless-only households as broken down by
See Exhibit D (Affidavit A-30 ¶ 4); (Affidavit A-29 ¶ 3) (on one office line, “about one-inten calls have voices on the line, static or echoes.”).

87

88

See Exhibit E (Testimony of Patricia Garin, 52:9-13).

Stephen J. Blumberg & Julian V. Luke, Wireless Substitution: Early Release of
Estimates From the National Health Interview Survey, January—June 2012, Center for
Disease Control, Table 2 (Dec. 2012), available at http://www.cdc.gov/nchs/data/nhis/
earlyrelease/wireless200905.htm. The study’s “Household Poverty Status” is based on
household income and household size using the U.S. Census Bureau’s poverty thresholds.
“‘Poor’ persons are defined as those below the poverty threshold. ‘Near poor’ persons have
incomes of 100% to less than 200% of the poverty threshold. ‘Not poor’ persons have incomes of
200% of the poverty threshold or greater.” Id. at p. 10.

89

90

Id. at Table 2.

Mindy Herman-Stahl, et al., Incarceration and the Family: A Review of Research and
Promising Approaches for Serving Fathers and Families, § 3.3 (2008), available at
http://aspe.hhs.gov/hsp/08/mfs-ip/incarceration&family/index.shtml).
91

92
Bruce Western and Becky Pettit, Collateral Costs: Incarceration’s Effect on Economic
Mobility, The Pew Charitable Trusts (2010) pg.5, www.pewtrusts.org/uploadedFiles/
wwwpewtrustsorg/Reports/Economic_Mobility/Collateral%20Costs%20FINAL.pdf.

23

racial demographics further shows that many customers of ICS providers are likely to be
wireless-only households. For example, one in every thirty-six Hispanic men and one in every
twelve African American men are in prison or jail. 93 The CDC’s report shows that 46.5% of
Hispanic or Latino households and 37.7% of African American households did not have access to
a landline. 94
As a recent New York Times article pointed out, there are many reasons for the
prevalence of wireless-only homes among the poor. 95 One reason for this is that they cannot
afford both a landline and a cellular phone and they are increasingly choosing to keep only their
cellular phone. 96 This may be because, at least in part, cellular phones have become more
affordable, because the “barrier to owning one is lower with pay-as-you-go plans.” 97 Further,
the FCC and some states have programs that allow subsidies to be applied to wireless bills for
low-income residents. 98
Thus, the ICS policies have a dramatic effect on the customers without landlines, which
disproportionately falls on the parties that are the least-able to afford paying additional
reconnection fees. The attempt by ICS providers to place the blame on its customers for an
apparent deficiency in the ICS technology adds insult to injury.
Certainly, the sworn testimony by members of the bar lend significant credibility to the
conclusion that (1) dropped calls happen on a regular basis; (2) the reason for the dropped calls
does not rest with the ICS customers; and (3) the dropped calls are not caused by call forwarding
93

Id., at 4.

Wireless Substitution, Table 2. The exact breakdown for wireless-only households in the
demographic categories as used by the CDC are as follows: Hispanic or Latino, any race(s):
46.5; Non-Hispanic black, single race: 37.7; Non-Hispanic other, single race: 43.4?; NonHispanic multiple race: 40.2. Id.
94

Sabrina Tavernise, Youth, Mobility and Poverty Help Drive Cellphone-Only Status, N.Y.
Times, (April 20, 2011), http://www.nytimes.com/2011/04/21/us/21wireless.html?_r=0.
95

96

Id.

97

Id.

98

Id.
24

or other nefarious intentions. In light of this evidence, the FCC must ensure that ICS customers
are not unjustly charged for reconnection fees by the ICS providers, especially when it has been
shown that the problem rests squarely with the ICS providers themselves.
VII.

A SIGNIFICANT AMOUNT OF REVENUE-SHARING FUNDS ARE NOT USED
BY STATES AND LOCAL AUTHORITIES FOR BENEFIT OF INMATES.
Several parties filed comments discussing the beneficial nature of the revenue-sharing

relationship among ICS providers, states, and local authorities. These parties point to the need
of sharing of ICS revenue to provide educational services to inmates though inmate welfare
funds.
For example, the California Department of Corrections stated that the benchmark ICS
rates would have a “significantly negative impact” and the California State Sheriffs’ Association
highlighted the fact that inmates do not “pay for the costs associated with their incarceration” so
the collection of revenue for the inmate welfare fund “is one of their only opportunities to
directly contribute to the programs designed to assist them.” 99 The California State Sheriffs’
Association also stated that “the law requires any revenue received from inmate telephone
contracts to be deposited in an Inmate Welfare Fund, which in turn, funds programs and
services that directly benefit the inmates.” 100
Setting aside for a moment whether inmates actually desire an “opportunity” to make a
contribution to the state’s incarceration expenses, it bears mentioning that the full text of the
“law” does not require that all funds of the Inmate Welfare Fund be used for the “benefit of the
inmates.” Instead, the law actually states that:
[a]ny funds that are not needed for the welfare of the inmates may be expended
for the maintenance of county jail facilities” and permits “inmate welfare funds

See Comments of California Department of Corrections and Rehabilitation, WC Dkt. 12375, filed Mar. 25, 2013, pg. 1. See also Comments of California State Sheriffs’ Association, WC
Dkt. 12-375, filed Mar. 22, 2013, pg. 2.
99

100

See California State Sheriffs’ Association Comments, pg. 1 (emphasis in original).
25

[to] be used to augment those required county expenses as determined by the
sheriff to be in the best interests of inmates.” 101
Therefore, despite the fact that Los Angeles County receives a minimum guaranteed payment of
$15 million under its current ICS agreement, only 51 percent of those funds are allocated for the
Inmate Welfare Fund, while the other 49 percent is allocated “to jail facility maintenance.” 102
A similar arrangement exists in Orange County, California. As shown in Exhibit G, the
Inmate Welfare Fund had a budget of $5,016,429 in 2010. Of that amount, an incredible 74
percent of the funds were used for staff salaries, and only 0.8 percent was used for the actual
services, supplies and training for inmate educational programs, and 0.06 percent was used for
services, supplies and training for inmate re-entry programs. 103
Moreover, the Comments submitted by the Louisiana Department of Corrections
highlighted the fact that only $997,000 of the more than $3.8 million received from ICS
revenue-sharing goes to the benefit the inmates, with the remaining funds going towards
“operations.” 104 As shown in Exhibit H, other states and counties also extract revenues shared
with ICS providers for non-inmate educational needs, including:
•

Alabama – all profits directed to salaries, equipment and supplies for the county jail;

•

Arizona – $500,000 transferred to building renewal fund on an annual basis;

•

Arkansas – funds are transferred to other department funds or for disbursements in
support of department operations or debt service;

•

Colorado – Jefferson County – 80 percent of the inmate welfare fund in 2012 went to
salaries and benefits.

•

Connecticut - $350,000 set aside for inmate educational services and reentry initiatives;

•

Florida – all funds transferred to state’s general revenue fund;

101

Cal. Penal Code § 4025 (2012).

102

See Exhibit F.

103

See Exhibit G, pg. 5

104

See Comments of State of Louisiana, Dpt. of Public Safety and Corrections, pgs. 2-3.
26

•

Maryland – only 10 of 23 counties report that they dedicate 100% earned from revenuesharing to county inmate welfare fund;

•

Massachusetts – all funds transferred to state’s general revenue fund.

•

Ohio – permits funds to be used for building maintenance and employee salaries;

•

Tennessee – counties use all funds for certification training of local correctional
personnel;

•

Texas – 50 percent of revenues deposited in state’s general revenue fund;

•

Virginia – spending of funds left to discretion of local Sherriff; and

•

Wisconsin – Two-thirds of revenue is deposited in state’s general revenue fund.

Therefore, while it may be correct that some of funds derived from the revenue-sharing
arrangements between correctional and detention authorities and the ICS providers are being
used for the benefit of inmates, it is obvious that a significant portion of these revenue-sharing
arrangements do not directly benefit the inmates’ education or rehabilitation, and instead are
often used for general expenses of the governmental entity and deposited in its general fund.
VIII. BENEFITS ASSOCIATED WITH ADOPTION OF BENCHMARK RATES FAR
OUTWEIGH ANY COGNIZABLE COSTS.
As discussed in the Petitioners’ Comments, the FCC’s interest in conducting a costbenefit analysis before implementing the proposed benchmark ICS rate must not undermine its
obligations to enforce the requirement under Section 201(b) that:
All charges, practices…in connection with…communication service shall be just
and reasonable, and any…charge, practice…that is unjust or unreasonable is
hereby declared to be unlawful. 105
Under the Act, an unjust or unreasonable rate cannot be justified through a cost-benefit
analysis.

The Petitioners’ Comments provided overwhelming evidence that a “cost-benefit

analysis” cannot replace an analysis as to whether “rates are just and reasonable in accordance

105

Petitioners’ Comments, at pg. 30 (citing 47 U.S.C. §201(b) (2012)).
27

with Section 201(b).” 106

However, to ensure a full record, Petitioners also submitted

overwhelming evidence through its cost-benefit analysis that the proposed reforms to the ICS
industry would yield significant benefits with the only cost being a reduction in the funds to be
divided up between the ICS providers and the correctional and detention facilities.
As noted above, several correctional institutions argued that the reduction in their
revenue-sharing regime with the ICS providers would eliminate inmate education and other
beneficial programs. However, even if the state, county and local authorities actually dedicated
the funds referenced in their comments for inmate education and re-entry programs, the
attached Declaration from Dr. Coleman Bazelon demonstrates that it would be more efficient to
reform the ICS rates.
Dr. Bazelon’s Declaration demonstrates that even a slight reduction of the recidivism
rates would save the states more money than they earn through the revenue-sharing programs
with ICS providers. 107 For example, Dr. Bazelon notes that, for Mississippi, “a reduction in
recidivism of less than 4% would offset any lost revenues from reduced commissions from
prisoner calling services.” 108 A similar result would occur in Louisiana if its recidivism rate is
reduced by the same amount. 109
As discussed above, the connection between recidivism and strong ties among inmates
and their community has been demonstrated in many different settings. The Vera Institute
noted that increased contact between prisoners and their families in Minnesota led to a 13%
reduction in felony reconvictions in that state. 110 The Petitioners previously cited the significant

Petitioners’ Comments, at pg. 31 (citing Connect America Fund, Report and Order and
Further Notice of Proposed Rulemaking, 26 FCC Rcd 17,663, 17,876 (2011)).
106

See Exhibit A, pg. 5 (even a one percent reduction in recidivism rates would save $250
million).

107

108

Id.

Id., at pg. 6 (“if only 219 fewer prisoners returned to prison as a result of lower prison
calling rates, there would be no net cost impact for the state.”).
109

110

Vera Comments, at pg. 4.
28

growth in ICS calls when New York reduced its rates, supporting the conclusion that lower rates
lead to increased contact between inmates and their families and friends. 111 Moreover, Telmate
cited a 233% growth in ICS calls in one state when it began charging a uniform rate for all types
calls, and also noted that the adoption of a uniform rate resulted in the reduction of “rate
arbitrage” since there was no incentive for inmates’ families to obtain local numbers to take
advantage of the lower rates. 112
In light of the direct connection between reduced ICS rates and increased contact
between inmates and their community, which, in turn, has been proved conclusively to reduce
recidivism and lead to better lives for the children of inmates, there should not be any question
that the benefits associated with the adoption of the proposed benchmark ICS rate and practices
will overwhelm any “cost” cited by the parties to the current revenue-sharing regime.
The Petitioners have proposed a rate which has been proven to provide an adequate pool
of revenue to share among the parties, and have also demonstrated that the proposed
benchmark ICS rate will lead to substantial savings for the state, county and local correctional
and detention facilities. While the ICS providers would assuredly prefer to have a larger pool of
profits to share with the correctional and detention authorities, this pecuniary interest cannot
outweigh the enormous benefits arising from the proposed ICS rates and practices. 113

111

Petitioners’ Comments, pg. 36

112

Comments of Telmate, LLC, pg. 13.

Cf. Bobby Strong, Look At the Sky, Urinetown, The Musical, Greg Kotis, Mark Hollmann
(Macmillan 2003) (“And we keep filling moneybags, With broken lives and dreams, But what's it
for? I can't ignore, These black immoral, Profit-making schemes”).

113

29

CONCLUSION
There is no question that reform is needed, nor is there any question that the FCC has
the requisite authority to provide the relief requested herein. The evidence supporting the need
for a benchmark ICS rate is overwhelming, and the ICS providers’ only justification for the
exorbitant rates is that they need higher rates to properly divide up the spoils with the
authorities seeking ICS services. Nothing filed by the ICS providers or their supporters alters
these conclusions.
The FCC is the only agency that can provide respite from this extraordinary situation.
The Communications Act provides the FCC with the requisite statutory authority, and the record
in this proceeding demonstrates the urgent need for relief. ICS customers literally cannot afford
to endure more delay.

Therefore, the Petitioners respectfully request immediate action

consistent with the evidence offered.

Respectfully submitted,

By:

Lee G. Petro
Jennifer L. Oberhausen
Jennifer M. Roussil i
DRINKER BIDDLE & REATH LLP
1500 K Street N.W.
Suite 1100
Washington, DC 20005-1209
(202) 230-5857

April 22, 2013

Admitted in Maryland only. District of Columbia Bar application pending; practice
supervised by partners of the firm who are active D.C. Bar members pursuant to D.C. Bar Rule
49(c)(8).
i

30

Before The
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of:
Rates For Interstate Inmate
Calling Services

}
}
}
}
}
}

WC Docket No. 12-375

REPLY COMMENTS
OF
MARTHA WRIGHT, ET. AL.,
THE D.C. PRISONERS’ LEGAL SERVICES PROJECT, INC.,
CITIZENS UNITED FOR REHABILITATION OF ERRANTS,
PRISON POLICY INITIATIVE, AND
THE CAMPAIGN FOR PRISON PHONE JUSTICE

EXHIBITS A-H

Lee G. Petro
Jennifer L. Oberhausen
Jennifer M. Roussil
DRINKER BIDDLE & REATH LLP
1500 K Street N.W.
Suite 1100
Washington, DC 20005-1209
(202) 230-5857

April 22, 2013

EXHIBIT A

Before the
Federal Communications Commission
Washington, D.C. 20554

In the Matter of
Rates for Interstate Inmate
Calling Services

)
)
)
)

WC Docket No. 12-375

REPLY DECLARATION OF COLEMAN BAZELON
Coleman Bazelon, being duly sworn, declares as follows:
I.

PURPOSE
My name is Coleman Bazelon. Previously, I filed a Declaration in this Proceeding. 1

1.

This Reply Declaration briefly reviews the major points of my original Declaration, noting
relevant information filed by Commenters that pertain to that analysis. I also comment on the
analysis submitted by Stephen Siwek of Economists Incorporated on behalf of Securus
Technologies, Inc. 2

II.
2.

ANALYSIS FROM PREVIOUS DECLARATION
In my original Declaration, I provided analysis supporting two propositions. The first

was that a fair, just, and reasonable benchmark rate for prison calling services would be $0.07
per minute for debit and collect calls, with no per call or set up fees. 3 The second was that any
revenue lost by correctional facilities from reduced commissions would almost certainly be more

1

“Declaration of Coleman Bazelon,” Martha Wright, et al, D.C. Prisoners’ Legal Services Project, Inc., Cure,
Prison Policy Initiative, and the Campaign for Prison Phone Justice, Implementation of the Pay Telephone
Reclassification and Compensation Provisions of the Telecommunications Act of 1996 et al., WC Docket
No. 12-375, March 25, 2013, Exhibit C. (Hereinafter, “Bazelon Declaration”)

2

“Expert Report of Stephen E. Siwek,” On Behalf of Securus Technologies, Inc., WC Docket No. 12-375,
March 25, 2013. (Hereinafter, “Siwek Report”)

3

Bazelon Declaration, ¶ 26.

1

than made up for in lower prisoner costs as a result of reduced recidivism rates. 4 Here I briefly
review these two findings and address additional information in the record that supports my
original conclusions.
A $0.07 PER MINUTE BENCHMARK RATE IS FAIR, JUST, AND REASONABLE
3.

Given market failures in the provision of prison phone services, competition in the

industry does not lead to lower prices and better service for prisoners, but rather to higher prices
and larger commissions for correctional institutions. 5 Consequently, setting a benchmark rate is
a reasonable regulatory approach to assure fair, just, and reasonable rates are charged for prison
phone services. Rather than establishing such a benchmark rate based on detailed, firm specific
cost analysis, the rate should be based on the costs of competitively provided
telecommunications services, with prison specific adjustments made where necessary. By basing
the benchmark rate on competitively provided components, market forces assure the resulting
rate meets the Communication Act’s fair, just and reasonable standards.
4. My original analysis divided the proposed benchmark rate into three component parts.
1) The cost of commercially provided debit calling services,
2) the added prison specific costs above the costs of commercial debit calling services,
and
3) additional billing and collection costs associated with collect calling.
5.

The first component—the cost of providing debit calling services, including all

switching, transport, billing and costs as well as profit—is well measured by commercially
provided debit calling services offered to individuals.

Those services are provided in a

competitive market and meet the fair, just, and reasonable standard for rates. After reviewing

4

Bazelon Declaration, ¶ 55.

5

“Comments of Verizon and Verizon Wireless,” In the Matter of Rates for Interstate Inmate Calling Services,
WC Docket No. 12-375, March 25, 2013, p. 2.

2

retail rates, I estimated this component of the total cost of prison calling services was $0.03 per
minute. 6
6.

The second component—the added costs of providing debit calling services in a prison

setting, including caller access restrictions and call monitoring, recording and storage costs—was
estimated based on cost modeling of the services provided. I estimated a reasonable update of
pervious analysis in the record was a prison specific cost component of $0.02 per minute. 7
Although portions of the required prison specific services can be found to be provided
commercially—for example call monitoring, recording and storage services for call centers—no
evidence was introduced in the record supporting market based estimates of these cost
components. Should such evidence be introduced, it could further inform the estimate of the
prison specific costs.
7.

Although no market based estimates of these costs were introduced, some commenters

did introduce evidence related to these costs. For example, NCIC submitted that storage costs
were $0.005 per call per month. 8 For a 15 minute call, this would be $0.0003 (3 one-hundredths
of a penny) per minute per month for storage. 9 Even 2 years of storage would add less than
$0.01 per minute to the cost of a call. 10 NCIC also submitted that its solution for biometric
identification costs an average of $0.10 per call. 11 On a per minute basis, this cost would also be
less than $0.01 per minute. 12

Overall, the specific cost data submitted in the record are

consistent with my initial estimate of $0.02 per minute for prison specific costs of providing
prison calling services.
8.

The third component of costs—additional billing and collections costs associated with

collect calling, over and above the costs of debit calling—was also derived from industry data.

6

Bazelon Declaration, ¶ 19.

7

Bazelon Declaration, ¶ 23.

8

Network Communications International Corp., “Comments on Notice of Proposed Rulemaking,” In Re: Rates
for Interstate Inmate Calling Services, WC Docket No. 12-375, p. 6. (Hereinafter “NCIC Comments”)

9

$0.005/15 = $0.0003.

10

$0.0003x24= $0.0072.

11

NCIC Comments, pp.6-7.

12

$0.10/15 = $0.0066.

3

The estimate I provided in my original Declaration was $0.02 per minute. 13 Whether or not the
costs associated with collect calling are decreasing or not, 14 what is clear is that collect calling
has become a much less important part of the prison payphone service mix.15 Telemate reports
that its collect calling is only 8% of its paid calling volume. 16 Pay Tel reports that 80% of
inmate calls are placed to wireless phones. 17 This is consistent with higher debit calling rates
because debit calls can more easily be made to wireless numbers. Collect calls to wireless
numbers require third-party payment facilitators, suggesting payment issues for the ICS
providers are reduced. 18
9.

My review of comments filed in this proceeding only reinforces the conclusion I came to

in my original Declaration that a benchmark rate of $0.07 per minute meets the fair, just, and
reasonable standard set out in the Communications Act.
A LOWER PRISON POPULATION WILL MAKE UP FOR ANY LOST REVENUE FROM
REDUCED OR ELIMINATED COMMISSIONS
10.

In my initial Declaration, I noted it would only take a very small reduction in recidivism

to result from the better family contacts that would be encouraged by lower prison calling rates
to more than make up any revenues lost from reduced or eliminated commissions that penal
institutions receive. In that analysis, I calculated that a one percent reduction in recidivism
would be equivalent to about 2,800 fewer prisoners, nationwide. 19 At a little more than $31,000
average per prisoner cost and an average term of incarceration of 3 years, the national savings

13

Bazelon Declaration, ¶ 25.

14

At least one commenter pointed to some increased costs associated with billing and collecting collect calls.
See, NCIC Comments, p. 5. However, some of the evidence provided was anecdotal and it was not clear
how widely applicable it was.

15

“Ten years ago, prepaid calling was very rare.” This implies the relative importance of collect calling has
decreased. “Comments of Securus Technologies, Inc.,” Rates for Interstate Calling Services, WC Docket
No. 12-375, p. 22.

16

Comments of Telmate, LLC, In the Matter of Rates for Interstate Inmate Calling Services, WC Docket No.
12-375, March 25, 2013, p. 15. (Hereinafter, “Telmate Comments”)

17

“Comments of Pay Tel Communications, Inc.,” In the Matter of Rates for Interstate Inmate Calling Services,
WC Docket No. 12-375, p. 8.

18

Bazelon Declaration, ¶ 24. Also, as an example, see the services provided by V-Connect. Available at:
http://www.myvconnect.com/index-2.aspx.

19

Bazelon Declaration, ¶ 48.

4

from a 1% reduction in incarceration rates would be about $250 million, far more than the
commissions collected by penal institutions. 20
11.

Concern over lost revenue was expressed in Comments filed by two State DOCs. In both

cases, however, a very small reduction in the state’s recidivism rate would more than make up
for the lose revenue.
•

The Mississippi Department of Corrections reports that the total commission it

received in its fiscal year 2012 was $1,651,805. 21 Mississippi’s average annual
prisoner costs of $15,151 22 suggests that if lower prison calling rates in Mississippi
resulted in just 112 fewer prisoners, the State of Mississippi would be no worse off
financially. Based on analysis from the 2004-2007 timeframe, Mississippi released
8,428 prisoners in a year and 33.3% (or 2,807) returned to prison within 3 years. 23
This suggests that in Mississippi (a state with one of the lowest prisoner costs in the
nation 24) a reduction in recidivism of less than 4% would offset any lost revenues
from reduced commissions from prisoner calling services. 25
•

The Louisiana Department of Public Safety & Corrections reports that for the

2012-2013 fiscal year they expect to receive $3,817,051 in commissions.26
Louisiana’s average annual inmate cost was $17,486 in Fiscal Year 2010. 27 This

20

Bazelon Declaration, ¶¶ 48 & 55.

21

“Initial Comments of the Mississippi Department of Corrections,” Commission Seeks Comment on Rates
for Inmate Calling Services, WC Docket No. 12-375, February 14, 2013.

22

The
Mississippi
DOC
reports
its
daily
prisoner
costs
at
$41.51.
See,
http://www.mdoc.state.ms.us/Research%20and%20Statistics/OffenderCostPerday/Cost%20Per%20Inmate
%20Day%20FY%202012.pdf. This suggests annual costs of $15,151.

23

The PEW Center on the States, “State of Recidivism, The Revolving Door of America’s Prisons” (April
2011),
p.
10,
available
at:
http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/sentencing_and_corrections/State_Re
cidivism_Revolving_Door_America_Prisons%20.pdf.

24

http://blogs.clarionledger.com/politics/2013/01/10/state-prison-population-continues-to-soar/.

25

112/2,807 = 0.0399.

26

“Comment on Proposed Rule Making by the Louisiana Department of Public Safety & Corrections,” Rates
for Interstate Inmate Calling Services, WC Docket No. 12-375, FCC 12-167, March 22, 2013, p. 3.

27

Christian Henrichson & Ruth Delaney, “The Price of Prisons, What Incarceration Costs Taxpayers,” VERA
Institute
of
Justice
(July
20,
2012),
p.
10,
available
at:

5

suggests that if only 219 fewer prisoners returned to prison as a result of lower prison
calling rates, there would be no net cost impact for the state. 28 Based on analysis
from the 2004-2007 timeframe, Louisiana released 13,391 prisoners in a year and
39.3% (or 5,263 29) returned to prison within 3 years. 30 This suggests that if the
recidivism rate dropped by about 4%, there would be no revenue impact on
Louisiana. 31
Mississippi has one of the highest calling rates and Louisiana’s rate is still in the top two-thirds
of calling rates 32 and receives relatively large amounts of revenue from calling commissions. In
fact, these two states are the only two DOCs that filed comments in this proceeding, suggesting
they have the greatest vested interest in keeping commissions at current levels. Nevertheless, a
relatively small reduction in recidivism—on the order of 4%—would completely offset any lost
revenues these states receive from commissions.
12.

A reduction in recidivism of 4% based on increased family and community contacts as a

result of lower prison calling rates seems modest. One commenter, the VERA Institute, reports a
finding from Minnesota that receiving contact between prisoners and their families leads to a
13% reduction in recidivism rates. 33 A significant reduction in phone calling rates has
historically led to a significant increase in prisoner calls. In my initial report I reported on the
experience in New York where a 57.5% price decrease led to a 36% increase in calling. 34
Telemate reports that in one state, reducing its calling rates to $0.12 per minute resulted in a

http://www.vera.org/sites/default/files/resources/downloads/Price_of_Prisons_updated_version_072512.pd
f.
28

$3,817,051/$17,486 = 218.29.

29

13,391x0.393 = 5262.663.

30

The PEW Center on the States, “State of Recidivism, The Revolving Door of America’s Prisons” (April
2011), p. 10, available at:
http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/sentencing_and_corrections/State_Re
cidivism_Revolving_Door_America_Prisons%20.pdf.

31

219/5,263 = .0416.

32

Bazelon Declaration, Table 2.

33

VERA Institute of Justice, In the Matter of Rates for Interstate Inmate Calling Services, WC Docket No. 12375, March 14, 2013, p. 4.

34

Bazelon Declaration, ¶ 44.

6

233% increase in call volumes. 35 Such significant increases in call volumes indicate the amount
of increased family and community contact that can be expected from reduced prison calling
rates. States with higher prison phone rates currently can expect to see greater increases in
calling volumes from calling rate reductions, suggesting they will see the biggest increases in
family contact and, therefore, benefit the most in reduced recidivism rates.

III.
13.

SIWEK ANALYSIS
Stephen Siwek of Economists Incorporated submitted an Expert Report on behalf of

Securus Technologies, Inc. 36 His assignment from Securus was to “present cost and traffic data
from sites that Securus served in 2012.” 37 Instead of providing cost and traffic data for all of
Securus’ facilities, Mr. Siwek provides data for the state DOCs served by Securus and a sample
of 10 facilities in each of a high, medium and low volume grouping of facilities. The presentation
of the data in the 4 groupings is less transparent than simply presenting all of the data and
summary statistics based on the entire population of facilities where Securus provides calling
services. Nevertheless, the vast majority of Securus’ business is in the DOC and “High 10”
facilities and the statistics about these facilities are most informative.
14.

The data seem to have some anomalies that raise questions (unanswered by Mr. Siwek.)

For example, the variation in the cost data by category raises questions about how costs change
with facility size, but without more information about the sample Mr. Siwek chose to present, it
is not possible to assess how those costs change with facility size or whether there is a threshold
size of a facility where costs begin to decline. Perhaps more puzzling is the data reported on
margins in his Table 7b. There Mr. Siwek reports margins of -16.3% and -83.3% for the
“Medium 10” and “Low 10” categories, respectively. This suggests that Securus loses money on
these facilities—a -83.3% margin suggests Securus receives $0.5455 in revenue for every $1 in
costs it incurs.

35

Telmate Comments, p. 13.

36

Siwek Report.

37

Siwek Report, ¶ 1.5.

7

15.

Nevertheless, the information provided by Mr. Siwek about the majority of Securus’

business in the DOC and “High 10” categories confirms that ICS providers such as Securus earn
remarkably high profits.
•

For the DOC category of facilities, Mr. Siwek reports an average gross margin 38 of
19.8%, 39 suggesting that Securus keeps one in 5 dollars in revenue it takes in from state
DOCs. He also reports that for this category commissions are 59.3% of costs. 40 This
suggests that for state DOCs commissions are 47.6% of revenues. 41

Treating

commissions as a pass through from prisoners to institutions and focusing on Securus’
business operations, the above information indicates that Securus keeps 37.8% of its noncommission revenue. 42

Put another way, of the revenue unrelated to commissions,

Securus keeps almost $2 of every $5 collected.
•

For the “High 10” category of facilities, Mr. Siwek reports that the average gross margin
of 22.2%, 43 suggesting that Securus again keeps one in 5 dollars in revenue it takes in
from facilities in the “High 10” category.

He also reports that for this category

commissions are 75.4% of costs. 44 This suggests that for this category commissions are
58.7% of revenues. 45

Treating commissions as a pass through from prisoners to

institutions and focusing on Securus’ business operations, the above information
indicates that Securus keeps 53.8% of its non-commission revenue. 46 Put another way, of
the revenue unrelated to commissions, Securus keeps more than half of the revenue
collected.

38

Mr. Siwek appears to include cost items in his calculation of gross margin, including items such as billing,
that usually are not included in a gross margin, but fall under net income. A properly calculated gross
margin would be even higher than those discussed here.

39

Siwek Report, Table 7a.

40

Siwek Report, Table 5.

41

(1-19.8%)x59.3% = 47.6%.

42

19.8%/(1-47.6%) = 37.8%.

43

Siwek Report, Table 7b.

44

Siwek Report, Table 5.

45

(1-22.2%)x75.4% = 58.7%.

46

22.2%/(1-58.7%) = 53.8%.

8

16.

For these two categories of facilities reported by Mr. Siwek which account for the vast

majority of Securus’ business, if Securus no longer had to collect and pay commissions, its
profits would still be (before accounting for increased sales induced by the lower commissionfree rates) between about 40% and 50% of its revenue from providing prison payphone services.
This is clearly a market that is not enjoying the disciplining effects of competition.

Respectfully submitted,

By:
Coleman Bazelon
THE BRATTLE GROUP, INC.
1850 M Street, NW
Suite 1200
Washington, DC 20036
April 22, 2013

9

EXHIBIT B

AMENDMENT
Amendment Date:

November 29, 2011

Amendment Number:

3

Contract ID:

10481

Procurement Officer:
Telephone:
E-Mail Address:
Web Address:

Greg Davis
785-296-2770
greg.davis@da.ks.gov
http://da.ks.gov/purch

Agency:
Location(s):

Dept. of Corrections
Various KDOC Facilities

Period of Contract:

December 17, 2007 through December 16, 2012

Contractor:

CenturyLink Correctional Markets
Formerly (EMBARQ Payphone Services, Inc.)
SMART ID:
0000155806
9300 Metcalf Avenue
Overland Park, KS 66212
E-Mail: michael.p.hynes@embarq.com
Toll Free Telephone: 877-907-7774
Local Telephone: 913-534-5699
Fax: 913-397-3591
FEIN: 59-3268090
Contact Person: Mike Hynes
Telephone: 866-224-5139
Cell: 724-612-6249

Amendment: ??
Page 2

Amendment No. 3
to
No. 10481
Agreement Between
Kansas Department of Corrections (KDOC) and
CenturyLink Correctional Markets (CCM) for
Inmate Telephone Service
This Amendment is made this 14th day of October, 2011 by and between the KDOC and
CenturyLink Correctional Markets1.
WITNESSETH:
WHEREAS, the parties entered into an Agreement for Inmate Telephone Service
(Agreement) dated December 16, 2007; and,
WHEREAS, the parties entered into Amendment No. 1 to the Agreement dated January
15, 2009; and,
WHEREAS, the parties entered into Amendment No. 2 to the Agreement dated
September 9, 2010; and,
WHEREAS, the parties have determined that the Agreement requires further amendment;
NOW, THEREFORE, the parties hereby agree to amend the Agreement as follows:
1. All terms and conditions of the Agreement, Amendment No. 1, Amendment No. 2
and Agreement shall remain in full force and effect except as specifically amended
herein.
2. Section C. Agreement Term and Termination, Subsection 1. Agreement Term of
the Agreement is amended to reflect that the Agreement is extended through
December, 16, 2012, with the option to extend this Agreement on a month to
month basis thereafter.

1

Embarq Payphone Services changed its name to CenturyLink Correctional Markets effective June 1, 2009.

CONTRACT AWARD
Date of Award:

September 21, 2007

Contract Number:

10481

PR Number:

014621

Replaces Contract:

05221

Procurement Officer:
Telephone:
E-Mail Address:
Web Address:

Greg Davis
(New Procurement Officer)
785-296-2770
greg.davis@da.ks.gov
http://da.ks.gov/purch

Item:

Telephone Services - Inmate

Agency:
Location(s):

Dept. of Corrections
Various KDOC Facilities

Period of Contract:

December 17, 2007 through December 16, 2012

Contractor:

CenturyLink Correctional Markets
Formerly (EMBARQ Payphone Services, Inc.)
SMART ID:
0000155806
9300 Metcalf Avenue
Overland Park, KS 66212
E-Mail: michael.p.hynes@embarq.com
Toll Free Telephone: 877-907-7774
Local Telephone: 913-534-5699
Fax: 913-397-3591
FEIN: 59-3268090
Contact Person: Mike Hynes
Telephone: 866-224-5139
Cell: 724-612-6249

Prices:

See Attached

Payment Terms:

Net 30

Political Subdivisions:
Procurement Cards:

Pricing is available to the political subdivisions of the State of Kansas.
Agencies may use State of Kansas Business Procurement Card for purchases
from this contract.
No Administrative Fee will be assessed against purchases from this contract.

Administrative Fee:

(Updated November 29, 2011)

Contract Number: 10481
Page 2

AGREEMENT FOR INMATE TELEPHONE SERVICE
BETWEEN
KANSAS DEPARTMENT OF CORRECTIONS
AND
EMBARQ PAYPHONE SERVICES
CONTRACT NO. 10481
AND NOW, on this 16th day of December, 2007, this Agreement is made by and between the
Kansas Department of Corrections, by and on behalf of the State of Kansas, and as approved by the
Kansas Department of Administration Division of Purchases, (hereafter, “State”) and Embarq
Payphone Services, a firm incorporated under the laws of the State of Kansas (hereafter,
“Contractor”).
WITNESSETH:
WHEREAS, the Kansas Department of Corrections (KDOC) desires to acquire inmate telephone
service in order to replace an existing contract for its adult offender facilities, as listed in Attachment
B of this Agreement, which may be increased or decreased by KDOC during the term of the
contract; and
WHEREAS, State duly issued Request for Proposal No. 10481, on the date of June 13, 2007
soliciting bids from vendors for inmate telephone service; and
WHEREAS, Contractor, a qualified provider of telecommunications services for the corrections
industry, submitted a proposal in response to the RFP; and
WHEREAS, ensuing negotiations between a Procurement Negotiating Committee representing
KDOC, the Department of Administration, and the State of Kansas, and Contractor have resulted in
a determination by State that it is in the best interest of KDOC and the State to enter into an
agreement with Contractor for acquisition of inmate telephone service.
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises contained herein,
it is mutually agreed as follows:
I.

GENERAL TERMS
A. Scope:
State grants Contractor the exclusive right and privilege to install and operate prison inmate
telephones and related telephone equipment at State’s Facilities listed in Attachment B of
this Agreement (hereafter, “Facilities). Contractor shall, at no cost to State, provide all inside
wiring for the inmate telephones, install the inmate telephones, and the related hardware and
software/firmware specifically identified herein, to enable inmates at the Facilities to make
auto-collect local and long distance calls, debit local, long distance and international calls,
and/or pre-paid local, long distance and international calls from the Facilities pursuant to the
terms set forth herein.

Contract Number: 10481
Page 16

ADDENDUM
June 8, 2009
Addendum Number:

1

Contract Number:

10481

PR Number:

014621

Item:

Telephone Services-Inmate

Agency:

Kansas Department of Corrections

Period of Contract:

December 17, 2007 through January 1, 2010
With two (2) one (1) year renewal options

Contractor:

EMBARQ Payphone Services, Inc.
9300 Metcalf Avenue
Overland Park, Kansas 66212
Toll Free Telephone: 877.907.7774
Local Telephone: 913.534.5699
Fax: 913.397.3591
FEIN: 59.3268090
Mike Hynes
michael.p.hynes@embarq.com
Telephone: 866.224.5139
Cell: 724.612.6249

Contact Person:

Conditions:
Please see the attached
Charles E. Miller
Procurement Officer
CEM:nl

Contract Number: 10481
Page 17

.

Amendment No. 1
10

AgTeeme.nt #11H81 Bctweal
Kansas Department of Correctionl aDd
En:ab:u q Payphone
ervices for
Itlllbarq
hyphOJl o S
Sei'Yka

hurulte Telepbou
Telephone Service
.t.m.le.

ThU Fint.Ameudmcnt
(".Ameodment'j has lID ecffcetive
ffective date of JIIIIIWy
IS, 2009 ("Ame:ndmcm
Thi.
First Amczdmcn1{""Ameodmsll'')
JIIDUat)' 1',
("AmaIdma:l1
Effectiyc DIItcj by and
Coa«::tioou with its
iu principal place
business
Effectiye
and. betweo::o
bctwec:u K.amas
K.ansu Dcpar1IllCl1l
Ocpan:meal of Corrcc:tioas
plaoo of businessklcatcd
at 900 SW Jacbon
JaclcIon SIreeI,
Street. ...
Topclca, KS
K.S 66612.
66612 C'KIX>Cj
EmbarqPayphone
kx:Btc:cl .t
4- Floor,
Flool, Topc!b.
("KDOC') and Qri)arq
P'tIypooSavica,.lnc:.
place: of
ofbuliness
Joealed at
III 9)00
AVCZNc. Overland
Overlaod hdc,
Pan:. K.S
KS
Servi<:el,
Inc. with its principal place
blaine" loeaud
9300 Metcalf Avenue.

Date,

~~.
('~.

WITNESSE1R:
WHERl!AS, 011
Do;ember 16, 2007, KDOC am
and Comractor
entcrod. iDlo
intO an
WHEREAS,
011 Doccmbc:r
~ entem1
III Ajp"CeIIICUt
AaJee:tDCZlt for
fur
Inmate Telephone Service
which COntractOT
agreed to inRalllllld
in.staJl and opente
lnmatc
Sen.ic:e ("Agn:cmc:ntj
("AgJCCUIalt") under
undCI" wtlich
CoDlnK:tor- asrccd
opcD:c prisoo
pruOl1
inmate
and additianalloptiaoal
additional/optional ICMca
sc:rvica funher
de.::ribed in
inmau: tekpOOnc:a.
t.dephor-. related
relaed I!IqUipmeut
equlpmeo1 ;and
f'ID'Ibc:r cSuct1bod
iu Secdoo
SKdcla n
II
upon
tile pro::mi_
premises ofKDQC',
oflCDOC's Facilities; and,
upocllbe

-

WHEREAS,
have ""ermi
determined
WHER.EAS. the parties
paniell hllve
at'll tbar.
tha( !he
the Agrccmem
Agrcc:mcm cequU"es
requlru Amcn~
Amen~

-< NOW. TIiEREFORE,
ntEREFORE., in contiideration of the:
the mutual
nmtuaI COvenatllS herein,
bInin, and !]hc:r ~
....
luable cons.ideration,
and CQotTactor
(throufih itl
valuable
coosidcntion. KpOC IIIld
CootI'llCUlf (1hrouih
111 IlUbcomractar,
JUbeoatraeIor, !Pay
Way Inc.,)
lne..J fij:reb~~
~~
follows:
0~
,I
rn
foDows:
m

~

CO'\.~

and ~ ~ ?til
~

-

-

,
~
~
~
~
~ and:pRcl~
1.
ContnK:tor Responsibilities
L Attac:h.m..,at
AU.~ D, ContnIctor
ReJponsibiUtic:s COT
Cot" Kiock
1Oosl:: Featwec
Features and Functioualit§
Punc:uonaliug
~J~
Appli~
E, Required
TnDsaetion Fees
AppIic:atiDDl,. and
aDd Attac:h.m.eDt
Attnb.mod £,
~uirad Eqwpmem.
Equjpmcru. Trmsaetioo
F_ and
:and Co§x:n~
Co§oem~ ~
baeby
f;,
_
bcrcby addec:I
added lO
to tile
the Agreement.
A.grccmClll.
~
_

15

:;:
~

0

ATIACllMLVI'D
CONTRACTOR RESPONS1BUTIfJi FOR KIOSK, fEATllRES MV

FUNClJONAUlJES AND REI.ATEP APPLICADON$
LL

GeneraL
~enl R.equi.remeats
R.eqainuQc.U

A..
A.. Conlra::tOI"
Cootr.:tor will
wiU provide
pn:Md.c: all
&l1 services
seMea desctibed
daoc:nOod in
in this
this AI1Kndmect
AmaIdmcct
subcontracto.r,
f\Ibconoxlor. JPay
!Pay,, Inc.
Inc. ("JPay'').
(" .11'IY").

throuih

throu~

ils
in

EXHIBIT C

AGREEMENT 06-015
FOR INMATE CALLING SERVICES (ICS) TELECOMMUNICATIONS SERVICES

L\

This Agreement is effective on
,
nl I
, 2007, and is entered into by and between
the State of Iowa, Iowa Department of Corrections (DOC) and Public Communications Services, Inc. (peS).
WHEREAS , pes desires to provide service to the DOC with the support of provisioning of telecommunications
services to inmates (Inmate Calling) in the correctional institutions of the Iowa Department of Corrections
(DOC) provided by the Iowa Telecommunications and Technology Commission operating the Iowa
Communications Network (leN), pursuant to an agreement between DOC and the leN : and
WHEREAS, DOC desires to use the services of pes to support the ICN's provisioning of Inmate Calling to the
DOC, where such pes services are appropriate and where the parties have agreed to the provision of such
services; and

WHEREAS, the parties desire to set forth a framework for the provisioning of such services by PCS and the
payment therefore by the leN; and
WHEREAS , the DOC has requested the assistance of the ICN in negotiating and administration the Agreement
with PCS:
NOW, THEREFORE, in the consideration of the mutual covenants contained in this Agreement, the sufficiency
of which is acknowledged, DOC and pes agree as follows :

SECTION 1. IOENTITY OF THE PARTIES.
1.1 The Iowa Department of Corrections is an agency of the State of Iowa and is responsible for the
management, and operation of the State of Iowa prison system. DO C's principal office address is 510 East
12th Street. Des Moines, Iowa 50319.
1.2 Public Communications Services is a California corporation organized under the laws of the state of
Califomia and is authorized to do business in the State of Iowa. PCS's Address is 11859 Wilshire Blvd., Suite
600, Los Angeles, CA 90025.
SECTION 2. TERM. The term of this Agreement sha ll commence on the effective date of the Agreement and
continue for three (3) years from the service start date of October 1. 2007. Upon mutual agreement of PCS,
DOC and the ICN the Agreement may be renewed upon the same terms and conditions for three (3) additional
one-year (1 year) periods.
2.1 At the end of the service term or any renewals provided for above, the ICN may extend the
Agreement on a month-to-month baSIS for up to six months to ensure the ICN and DOC retain an
operational system at all times . PCS shall agree to this possible extension at the same rates and terms
as agreed to in the previously agreed to contract term ,

SECTION 3. DOCUMENTS INCORPORATED BY REFERENCE.
3.1 Incorporation of Bid Proposal Documents. The Request for Proposa l RFP #06-015 for Inmate Calling
System (RFP). and PCS Bid Proposal in response to the RFP together with any clarifications, attachments,
appendices, amendments or other writings of the leN or PCS (collectively "Bid Proposal") are incorporated into
this Agreement by this reference as if fully set forth in the Agreement, except that no objection or amendment
by PCS to the RFP requirements shall be incorporated by reference into the Agreement unless the ICN has
explicitly accepted pes's objection in writing .

1

Amendment 1
leN Contract 06-015

THIS AMENDMENT is made by and between the IOWA TELECOMMUNlCA nONS AND
TECHNOLOGY COMMISSION operating the Iowa Communications Network (collectively,
l eN) and on behalf of the Iowa Department of Corrections (DOC), and PUBLIC
COMMUN1CATIONS SERVICES, INC. (peS). In consideration of the mutual promises herein
made, ICN and pes agree as follows:

SECTION 1. PURPOSE OF AMENDMENT. DOC has identified the need for an additional
Tl interface at the DOC Oakdale location. The parties intend to amend the Scope of Services
sect ion of the Agreement to add the following:
EffectiYe October 1, 2007, pes will invoice ICN S800/month for an additional TJ
inlerface at the DOC Oakdale location which revises the monthly invoice amount for the Inmate
Calling System to $42,800.00. This monthly invoice total covers aU costs for 21 Tl interfaces.

SECTION 2. AMENDMENT ALLOWED. Sections 5.3 and 20.3 of the Agreement provide
fm amendments with mutual written consent of the parties.

SECTION 3. EXECUTION. In full consideration of the mutual covenants set forth above and
for other good and valuable consideration the receipt,. adequacy and sufficiency of which are
heleby acknowledged, the parties have entered into this Amendment and have caused their duly
authorized representatives to execute this Amendment. All previous telms and conditions of the
Agreement shall remain in full force and effect except as modified by this Amendment.

PUBLIC COMMUNICATIO

, VICES, INC.

Title:
Date:

IOWA TELECOMMUNICATIONS AND TECHNOLOGY COMMISSION Operating tbe
IOWA COMMUNICATION;; NETWORK

By/~It:2 ~ _ £

Title:
Date:

4-£-&..; ,/

leN C£'f1~Cnl""fJ (oFFILL' S

9-/.3 -0 7

Ameuci.cent 2
ICN CoolTa<t 06-015

THIS AMEI'jDMENT is made by am between the IOWA TELECOMMUNICATrONS AND
:CCHNOLOGY COMM1SSlON operating the low. Communications Network (collectively.
"ICN") 2nd 00 bcbalf of the Iowa :xpartment of Com:crions ("DOC'), and PUBLIC
COMMUNICATIONS SERVICES. INC. , ·PCS,). 10 consideration of the mUluai promises
herein made. TCN and pes agree as foHows:
SEcnON 1. PU RPOSE OF AMENDMENT.

.4.) The Partics shall exercise a one year Agreement renewal. The renewal term shall start
October 1, 2010, and end Seplcmber 30. 2011. The Agreement may be extended with mutual
written consent for three additional one·year periods.
8) Anacbment A, Scope of Services, is amended as follow. effective September 7, 2010:
PCS escalation conI2Ct infnml2lion listed io Sectioo 10 is delcred in its entirety am "Placed
with the following:

Escalation to

pes

ICN· Inmate Calling Service - Cbangcl!nfonnation
This service is provided from 0800 to J63 0~.
Issues that go beyood the Target ~ an: """,Igted in1crnaIly far di=:tion.
lCN-Inmate Calling Service -Iocidcnt
This service is provided 24 hour a day 17 Days a week. Support Requests for incideIn
Rcsollllioo will be worked accruding \0 the following staodanIs:
ICNSP 2030 - Service Des.\ Support Request Management

IL'"NSP 2002 - Op.n.tions Notification and r.scalation
If the Target Date is exceeded on an Inciderrt ResoJution Support Request. the following
contacts shan be made 1.IDtil a satisfactory result is obtained- (24 hours a: day 17 Days a
week). If at any time there are questions on an escalation. the ICN Service Desk should
escalate internally for support.

I. Onc hour past the T&get Date:
Technical Services Supervisor. Matthew McFalls
Direct :'iDe: (817) 491 -5!63
Cell Phone: (424) &32-4787
2. '1'..-0 hours past the Ta;get Date:
Field Service Manager-East Coast. M = O'Gorman
Direct Line: (910) 646-3177
Cell Phone: (603) 738-4555

I

3. Thee hours pas11hc target Date:
J'v"..anaga of Technica1 Services, George McNitt
Direct :.inc, (817) 491-5160

4. Four hours past:he taIgd Date,
Vice President of Operations, Doyle Schaefer.;
Direct Line: (800) 35a- looo, x 3027
Cell Pbooc: (3! 0) 600-6433

5. Five hollIS past the -:-argd Date:
Chief Opcr.rting Officer, Tommie Joe
Direct Line: (800) 35ll-10c0, x 3037
Cell Phone: (3 [0) 922-3037
6. Six hour.; pas! lhe T argd Dale:
Chief Executive Officer, Paul Jennings
Direct Line: (800) 35ll-1ooo, x 3101
Cell Phone: (310)600-3540
C) Section 26 is cielded in its entirety and replaced wilh the foUowing:
26_ Coolnd C ..ts. Pertaining to this AgJccment 06-015.
1) >!xed monthly cost to lease a turnkey sySlCm: S42,lIOO.oo
Detail of cost components that are included in the monthly cost:
Fixed Monthly Cost Detail:
Equipment Rental
SII,950
Site !uiminisuator*·
S 3,250
MPLS
S 500
Platform ChaIges
526,300

nyv ariable costs:
2 ) MonIhl
Hardware:

58OO1month for every additiooal T-1 port added

Software:

All upgr.!des included in Platform ChaIses

Billing! Invoicing Services:

Cost for debit services included in Platform cbargc:s

Per call Fees:

S03l per completed call over 60,000

Adminislration:

Included in Platform ChaIges

3) There shall be no o4her charges and/or other costs or fees associated with this
Agn:e:menL

2

SEcnON 2. AMENDMENT ALLOWED. Sections 5.3 aud 20.3 of the A!lJ=DClI! provilk
for amendment> with mutual written
of the parties.

=

SEcnON 3. EXECUTION. In full consideration of the mutual covenants set fonh above and
for other good and valuable consideration the reccipL adequacy and sufficiency of v..-hich are
hereby acknowledged, the partics have cnt<:red into Ibis Amendment aud bave caused their duly
authorized leptesenlativcs to execute this Amendment All previous tem1S ana cond!tions of the
Agreement sbaIJ =in in full force aud effect except as modified by Ibis Amendment.

PUBLIC COMMUNICATION SERVICES, INC.

BY: cC;?~~

Till::

~-'\"..,.......,

Date:

c...0C)

/q 7 (0
I /

Date:

"Iltle:

cT-

lUi

t.OnTg.~Crl'-l6

OfflC£R

9·ze ·Ie

3

Amendment 3
ICN Agreement OS-015

THIS AMENDMENT is made by and between Ihe IOWA TELECOMMUNICATIONS AND TECHNOLOGY
COMMISSION operating the Iowa Communications Network (collectively, "ICW) and on behalf of the
Iowa Department of Corrections ("DOC"), and Public Communications Services, Inc. ("PCS"). In
consideration of the mutual promises herein made, ICN and PCS agree as follows:
SECTION 1.
follows:

PURPOSE OF AMENDMENT. The Parties hereby agree to amend the Agreement as

A) Section 2. Tenm is amended to provide a month to month renewal option.
B) Effective October 1, 2011 , the Agreement shall automatically renew on a month to month basis unless
terminated according to Section 14. The automatic month to month extensions shall not extend the term
of the Agreement beyond September 30, 20 13.
SECTION 2.
AMENDMENT ALLOWED. Sections 5.3 and 20.3 of the Agreement provide for
amendments with mutual written consent of the parties.
SECTION 3.
EXECUTION. In full consideration of the mutual covenants set forth above and for other
good and valuable consideration the receipt, adequacy and sufficiency of which are hereby
acknowledged , the parties have entered into this Amendment and have caused their duly authorized
representatives to execute this Amendment. All previous terms and cond itions of the Agreement shall
remain in full force and effect except as modified by this Amendment.

By:

--~J~~~
. ~H;ai~d~in~g~er~\-----t----------------Title:
President. Services

z.- {"

Date:

l(

'Z..-

IOWA TELECOMMUNICATIONS AND TECHNOLOGY COMMISSION
Operating the IOWA COMMUNICATIONS NETWORK

By:
Title

.
I)~

"

'--'" ' l - ?>-",,

Ex~~v~ ) .!M'Jl.Re...~

Date: .:} -,

~

-

I CJ---

FIRST AMENDMENT TO
CONTRACT FOR A SECURE INMATE CALLING SYSTEM AND RELATED
SERVICES
DOC FILE NO.1000-PHONE2006

C

THIS FIRST AMENDMENTTO CONTRACT FOR A SECURE INMATE CALLING
S'JlEM
RELATED SERVICES, DOC File No. 1000-Phone2006, dated
~I
, 2007 ("Amendment"), amends and revises that certain Contract,
DOC File No. 1000-Phone2006 (the "Contract"), dated February 10, 2006, by and
between Massachusetts Department of Correction, with an address at 50 Maple
Street, Suite 3, Milford, MA 017S7 ("MA DOC"), and Global Tel*Link Corporation, a
Delaware corporation having its principal place of business at 2609 Cameron Street,
Mobile, AL 36607 ("GTL").
MA DOC and GTL hereby agree to amend and revise the Contract as follows:
A new Section 5.13.7.1 is added to the Contract to provide for the establishment of
calling rates and commission rates for domestic prepaid debit calling.
Section 5.13.7.1

Domestic Prepaid Debit Calling:

A.

Commission: The MA DOC's adjusted commission rate for inmate debit
calling, both domestic and international, will be twenty percent (20%) of
gross billable inmate debit revenue, commencing on December 1st , 2007.

B.

Call Rate-Domestic: The adjusted call rate for inmate domestiC debit calling
will be twenty-five percent (25%) off the collect call rate as indicated in the
table below.

C.

Call Rate-International: The adjusted call rate for inmate international debit
calling will be twenty-five percent (250/0) off the current international
voucher debit rate, which is indicated in the attached MA DOC international
rate chart.

Except as set forth above, there is no other revision or amendment to the
Contract or the obligations of MA DOC and GTL, and the Contract remains in full
force and effect.

[[Signature Page Follows]]

12 OEC'07 3i30PM

Page 1 of3

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have duly executed this Amendment as of the date first written above, which is
entered by the second party to sign.

MASSACHUSETTS DEPARTMENT
OF CO.RRECTION

ting Commissioner

Date:

_--,-J-f'!_~-Iol,-O-,7,--__
I

GLOBAL TEL*UNK CORPORATION

By: -'=,..L!.&'J{J~J:.'..£~}d<:=A--­
Name: Teresa Ridgeway
Title: Secretary of the Cor ration

Date:

Page 2 of3

Id/as10r

SECOND AMENDMENT TO
CONTRACT FOR A SECURE INMATE CALliNG SYSTEM AND RELATED
SERVICES
DOC FILE NO. 1000"PHONE2006

THIS SECOND AMENDMENT TO CONTRACT FOR A SECURE INMATE
CALlING...sYSTEM AND RELATED SE.RVICES DOC File No.1 000-Phone2006,
dated
,2009, ("Second Amendment"), amends. and
revises that certain Contract between the Massachusetts Department of
Correction, with an address at 50 Maple Street, Suite 3, Milford, MA 01717 ("MA
DOC") and Global Tel*Unk Corporation, a Delaware corporation, having its
principle place of business at 2609 Cameron Street, Mobile, AL 36607 ("GTL").

Gclc\.v......-.

MA DOC and GTL hereby agree to amend and revise the Contract as
follows:
Section 5.13.7.1 in Amendment #1 is amended to replace subsection A
with:
A. Commission: The MA DOC adjusted commission rate for inmate debit
calling, both domestic and intemational shall be 18.5% of gross billable
inmate debit revenue. The MA DOC adjusted commission rate for .
collect calls & Advance Pay collect calls is 33.5%. These adjustments
in commission rates will commence on the November, 2009 billing
cycle.
Subsection B is replaced with:
B. Call Rate-Domestic shall be in accordance with Attachment A.

Section 2.20 is amended to include the statement:
"Pursuant to the exercise of the first of three one (1) year renewal options,
the current expiration date of the Contract shall be March 2, 2011."
All other terms and conditions of the Standard Contract between GTL and
the DOC remain in full force and effect.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have duly executed this Amendment as of the date first written above, which is
entered by the second party to sign.
Global Tel'Link Corporation

By:

~~~~~------------­

Jeffrey B. Haidinger
President, Services

Massachusetts Department of Corrections

By:

Pete-r~M:-:-a-cc-;h-;i-.- - - - - - -

Director Administrative Services
Division

THIRD AMENDMENT TO
CONTRACT FOR A SECURE INMATE CALLING SYSTEM AND RELATED
SERVICES
DOC FILE NO. 1000·PHONE2006

THIS THIRD AMENDMENT TO CONTRACT FOR A SECURE INMATE
CALLING SYSTEM AND RELATED SERVICES DOC File NO.1000-Phone2006,
dated Sc..fh.ln 6(("' 9
,2010, ("Third Amendment"), amends and revises
that certain Contract between the Massachusetts Department of Correction, with
an address at 50 Maple Street, Suite 3, Milford, MA 01717 ("MA DOC") and
Global Tel'Link Corporation, a Delaware corporation, having its principle place of
business at 2609 Cameron Street, Mobile, AL 36607 ("GTL").
MA DOC and GTL hereby agree to amend and revise the Contract as
follows:
Section 5.13.7.1 in Amendment #2 is amended to replace subsection A
with:

A Commission: The MA DOC adjusted commission rate for inmate debit
calling, both domestic and international shall be 15% of gross billable
inmate debit revenue, commencing on the October 2010 billing cycle.
The MA DOC adjusted commission rate for collect calls & Advance
Pay collect calls is 30%.
Subsection C is replaced with:
C. Call Rate-International shall be in accordance with Attachment A

Section 2.20 is amended to include the statement:
"Pursuant to the exercise of the second (2) of three one (1) year renewal
options, the current expiration date of the Contract shall be March 2. 2012."
All other terms and conditions of the Standard Contract between GTL and
the DOC remain in full force and effect.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have duly executed this Amendment as of the date first written above, which is
entered by the second party to sign.
Global Tel·link Corporation

BY:~
Jeffrey B. Haidinger
President, Services

Massachusetts Department of Corrections

B~~£L»-

KyrasJa
Director, Administrative Services
Division

FOURTH AMENDMENT TO
CONTRACT FOR A SECURE INMATE CALliNG SYSTEM AND RELATED
SERVICES

DOC fiLE NO.1000-PHONE2006

THIS FOURTH AMENDMENT TO THE CONTRACT FOR A SECURE
INMATE CALLING SYSTEM AND RELATED SERVICES DOC File No.1000, 2011, ("Fourth Amendment"), amends
Phone2006, dated Octobu l'-f
and revises the Contract between the Massachusetts Department of Correction,
with an address at 50 Maple Street, Suite 3, Milford, MA 01717 ("MA DOC") and
Global Tel*Link Corporation, a Delaware corporation, having its principle place of
business at 2609 Cameron Street, Mobile, AL 36607 ("GTL").
MA DOC and GTL hereby agree to amend and revise the Contract as
follows:
Section 2.20 is amended to include the statement:
"Pursuant to the exercise of the third (3) and final of three one (1) year
renewal options, the current expiration date of the Contract shall be March 2,
2013."
All other terms and conditions of the Standard Contract between GTL and
the DOC remain in full force and effect.
Current inmate domestic debit and collect calling rates are attached.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have duly executed this Amendment as of the date first written above, which is
entered by the second party to sign.
Global Tel*Link Corporation

By:

-:-~==,,-,-=,..--:-c:-:-:"-------L----­
Jeffrey B. Haidinger
President, Services

Massachusetts Department of Corrections

BiJIt:!I Svw-

Kyr S a
Director, Administrative Services
Division

DEPARTMENT OF CORRECTIONS
6900 ATMORE DRIVE
RICHMOND, VIRGINIA 23225
CONTRACT #DOC-05-005
This contract entered into this 18th day of October 2005, by MCI Worldcom Communications Services,
Inc. hereinafter called the “Contractor or MCI” and the Commonwealth of Virginia, on behalf of the
Virginia Department of Corrections and the Department of Juvenile Justice, hereinafter called “DOC,
DJJ or DOC/DJJ.”
WITNESSETH that the Contractor and the Department, in consideration of the mutual covenants,
promises and agreements herein contained, agree as follows:
SCOPE OF CONTRACT: The Contractor shall provide the Services to the Purchasing Agency as set
forth in the Contract Documents.
PERIOD OF PERFORMANCE: January 1, 2006 through December 31, 2007 and renewable for six
(6) one-year periods.
The contract documents shall consist of:
1.

This signed Contract including the attached Memorandum of Understanding, Attachment
1: General Terms and Conditions, Attachment 2: Special Terms and Conditions, and
Attachment 3: Negotiated Service Terms and Conditions;

2.

The Request for Proposal # DOC-05-005 dated August 20, 2004 sections and
attachments as follows: Section II: Minority Participation, Section III: Statement of
Needs, Attachment B: Minority Participation, Attachment D: Security Standards,
Attachment E: Telephone Count - DOC, and Attachment G: Telephone Count – DJJ; and

3.

The Contractor’s Proposal dated November 15, 2004

To the extent that the terms of the contract documents as listed above are in conflict, the specific
provisions as stated in this Contract, Memorandum of Understanding and Attachments 1, 2 and 3 shall
prevail. Other contract documents listed in #2 and #3 above shall take precedence based upon the order
in which they are listed.
IN WITNESS WHEREOF, the parties have caused this Contract to be duly executed intending to be
bound thereby.

Signature:

CONTRACTOR:

PURCHASING AGENCY:
Signature:

Title:

Title:

Date:

Date:
1

DEPARTMENT OF CORRECTIONS
6900 ATMORE DRIVE
RICHMOND, VA 23225
CONTRACT MODIFICATION AGREEMENT
Date:

January 19, 2006

Contract Number:

DOC-05-005

Modification Number:

001

Issued By:

Department of Corrections
Procurement and Risk Management
6900 Atmore Drive
Richmond, VA 23225

Contractor:

MCI Worldcom Communications Services, Inc.
1945 Old Gallows Road
Vienna, Virginia 22182

Commodity:

Inmate Telephone Services

This contract modification is entered into pursuant to Contact Attachment 1 section K.of the
Contract.
Description of Modification:
1.

Section II: Call Fees and Surcharge Rates shall be deleted in its entirety and shall
be replaced with the following:
The Contractor shall offer rates that do not exceed dominant inter-exchange
carrier rates or dominant local exchange carrier rates or local state tariff rates,
when applicable and shall utilize a least cost routing system to minimize costs to
inmates. No additional charge for services shall be added to the cost of a call
placed by an inmate. With the exception of applicable taxes, no additional charge
for service shall be added to the cost of a call placed by an inmate. The
Contractor will provide the DOC/DJJ with written notice of pending rate changes
thirty (30) days prior to the rate change. The Contractor will provide the
Purchasing Agency with written notice of pending rate changes thirty (30) days
prior to the rate change. In addition, the Contractor will provide the Purchasing
Agency a copy of the draft tariff on the date of execution of the contract. The
Contractor will provide the DOC/DJJ Contract Administrators a copy of all
relevant tariffs filed after contract execution within ten (10) days of the effective
date of the tariff.
The Collect Call and Prepay rates and surcharges shall be as follows for all calls
(Local, Intralata, Interlata and Interstate) made using the inmate phone system:
Page 1

Local
Intralata
Interlata
Interstate

Collect Call Payment Option
Rate Per Minute
Surcharge
_
$1.00
$0.15
$1.50
$0.25
$2.25
$0.43
$2.40

Local
Intralata
Interlata
Interstate

Prepaid Call Payment Option
Rate Per Minute
Surcharge
_
$0.90
$0.14
$1.25
$0.23
$1.75
$0.40
$2.40

Prepay Payment Option:
The Prepay payment option is a new payment option in the Commonwealth of
Virginia’s Inmate Telephone System. The Contractor shall be fully responsible
for the administration of the prepay program to include but not limited to:
providing materials detailing operations of the prepay payment option to all
DOC/DJJ facilities to be made available to inmates and families & friends of
inmates; and collection of all prepay funds and monitoring of prepay accounts.
The Prepay payment option will allow families and friend of inmates to set-up a
prepaid account with the Contractor. Once a prepaid account is set-up, an inmate
may only call the party named on the prepay account and a deduction will be
made against available funds in the prepay account. When funds in the prepaid
account are depleted, the Contractor will notify the account holder.
These rates and payment options shall go into effect February 1, 2006.
2.

Section III of the Contract shall be amended to reflect that the Commission rate
shall be amended effective February 1, 2006, whereby the Commission Rate shall
be 35% of Commissionable Revenue.

3.

Section I. H. 1. of the Contract shall be amended such that the DOC call limit is
increased for fifteen (15) minutes to twenty (20) minutes effective February 1,
2006.

Except as provided herein, all terms and conditions of Contract DOC-05-005, dated October 18,
2005 shall remain unchanged and in full force and effect.

CONTRACTOR:
BY:

PURCHASING AGENCY:
BY:
Page 2

TITLE:

TITLE:

DATE:

DATE:

Note: This public body does not discriminate against faith-based organizations in accordance with the Code
of Virginia, §§2.2-4343.1 or against a bidder or offeror because of race, religion, color, sex, national origin,
age, disability, or any other basis prohibited by state law relating to discrimination in employment.

Page 3

DEPARTMENT OF CORRECTIONS
6900 ATMORE DRIVE
RICHMOND, VA 23225
CONTRACT MODIFICATION AGREEMENT
Date:

November 15, 2007

Contract Number:

DOC-05-005

Modification Number:

002

Issued By:

Department of Corrections
Procurement and Risk Management
6900 Atmore Drive
Richmond, VA 23225

Contractor:

Global Tel*Link
12021 Sunset Hills Road, Suite 100
Reston, Virginia 20190

Commodity:

Inmate Phone Services

This contract modification is entered into pursuant to Section IV., Paragraph O., of the Contract.
Description of Modification:
1.

Whereas the Commonwealth desires to renew the performance period of the
contract; now therefore it is agreed that the contract performance period shall be
renewed from January 1, 2008 through December 31, 2008.

2.

Reference letter dated March 2, 2007; effective November 7, 2006, Global
Tel*Link Corporation acquired certain assets and operations from MCI
Communications Services, Inc. including the business of providing managed
telecommunication services to inmates.

3.

Reference pgs. 42-44, attachment 3, assigned staff; replace in its entirety with the
following :

GTL Virginia DOC Account Management Team
Name:
Mr. Jeff Haidinger
Job Responsibility:
GTL President of Services
Location:
Reston, VA
Tenure:
Over 29 years experience in Telcom sales and business development. Jeff
has been with GTL for over 2 years.
Name:
Job Responsibility:
Location:

Mr. Tom Sweeney
GTL Senior Vice President of Sales
Boiling Springs, SC
DOC-05-005 Inmate Phone Services
1 of 2

Tenure:

Over 29 years experience in the telcom and corrections market. Tom has
been with GTL for over 2½ years.

Name:
Job Responsibility:
Location:
Tenure:

Mr. Tim Miller
Area Sales Director – Eastern Region
Jackson, NJ
Over 27 years experience in the telcom and corrections market. Tim has
been with GTL for over 2½ years

Name:
Job Responsibility:
Location:
Tenure:

Mr. Jim Beamer
Virginia DOC Account Executive
Reston, VA
Over 17 years in the computer and telcom markets. Jim has been an
Account Executive with GTL for over 3 years

Name:
Job Responsibility:
Location:
Tenure:

Mr. Pat Pline
Director Northeast Field Service
Albany, NY
Over 22 years with MCI. Pat has been a Director with GTL since July 2007.

Dedicated GTL On-Site Support
Name:
Job Responsibility:
Location:
Tenure:

Mr. Tom Zidar
GTL Field Service Manager and VA DOC project Manger
DOC Headquarters, Richmond VA
Over 7 years with MCI and 30 years in the Telcom industry. Tom has been
a Field Service Manager with GTL since July 2007.

Except as provided herein, all terms and conditions of contract DOC-05-005, dated October 18,
2005, and Modification 001, dated January 19, 2006, as heretofore changed, remain unchanged
and in full force and effect.
CONTRACTOR:

PURCHASING AGENCY:

BY:

BY:

TITLE:

TITLE:

DATE:

DATE:

Note: This public body does not discriminate against faith-based organizations in accordance with the Code
of Virginia, §§2.2-4343.1 or against a bidder or offeror because of race, religion, color, sex, national origin,
age, disability, or any other basis prohibited by state law relating to discrimination in employment.

DOC-05-005 Inmate Phone Services
2 of 2

DEPARTMENT OF CORRECTIONS
6900 ATMORE DRIVE
RICHMOND, VA 23225
CONTRACT MODIFICATION AGREEMENT
Date:

August 27, 2008

Contract Number:

DOC-05-005

Modification Number:

003

Issued By:

Department of Corrections
Procurement and Risk Management
6900 Atmore Drive
Richmond, VA 23225

Contractor:

Global Tel*Link
12021 Sunset Hills Road, Suite 100
Reston, Virginia 20190

Commodity:

Inmate Phone Services

This contract modification is entered into pursuant to Section IV., Paragraph O. and Section V.,
Paragraph P., of the Contract.
Description of Modification:
Whereas the Commonwealth desires to renew the performance period of the contract;
now therefore it is agreed that the contract performance period shall be renewed from
January 1, 2009 through April 30, 2009.

Except as provided herein, all terms and conditions of contract DOC-05-005, dated October 18,
2005, Modification 001, dated January 19, 2006, and Modification 002 dated November 15,
2007, as heretofore changed, remain unchanged and in full force and effect.
CONTRACTOR:

PURCHASING AGENCY:

BY:

BY:

TITLE:

TITLE:

DATE:

DATE:

Note: This public body does not discriminate against faith-based organizations in
accordance with the Code of Virginia, §§2.2-4343.1 or against a bidder or offeror because
of race, religion, color, sex, national origin, age, disability, or any other basis prohibited by
state law relating to discrimination in employment.
DOC-05-005 Inmate Phone Services

DEPARTMENT OF CORRECTIONS
6900 ATMORE DRIVE
RICHMOND, VA 23225
CONTRACT MODIFICATION AGREEMENT
Date:

December 15, 2008

Contract Number:

DOC-05-005

Modification Number:

004

Issued By:

Department of Corrections
Procurement and Risk Management
6900 Atmore Drive
Richmond, VA 23225

Contractor:

Global Tel*Link
12021 Sunset Hills Road, Suite 100
Reston, Virginia 20190

Commodity:

Inmate Phone Services

This contract modification is entered into pursuant to Section IV., Paragraph O. and Section V.,
Paragraph P., of the Contract.
Description of Modification:
Whereas the Commonwealth desires to renew the performance period of the contract;
now therefore it is agreed that the contract performance period shall be renewed from
May 1, 2009 through August 31, 2009.

Except as provided herein, all terms and conditions of contract DOC-05-005 dated October 18,
2005, Modification 001 dated January 19, 2006, Modification 002 dated November 15, 2007,
and Modification 003 dated August 27, 2008, as heretofore changed, remain unchanged and in
full force and effect.
CONTRACTOR:

PURCHASING AGENCY:

BY:

BY:

TITLE:

TITLE:

DATE:

DATE:

Note: This public body does not discriminate against faith-based organizations in accordance with the Code
of Virginia, §§2.2-4343.1 or against a bidder or offeror because of race, religion, color, sex, national origin,
age, disability, or any other basis prohibited by state law relating to discrimination in employment.
DOC-05-005 Inmate Phone Services

DEPARTMENT OF CORRECTIONS
6900 ATMORE DRIVE
RICHMOND, VA 23225
CONTRACT MODIFICATION AGREEMENT
Date:

February 12, 2009

Contract Number:

DOC-05-005

Modification Number:

005

Issued By:

Department of Corrections
Procurement and Risk Management
6900 Atmore Drive
Richmond, VA 23225

Contractor:

Global Tel*Link
12021 Sunset Hills Road, Suite 100
Reston, Virginia 20190

Commodity:

Inmate Phone Services

This contract modification is entered into pursuant to Memorandum of Understanding,
Attachment 2, Paragraph J. of the Special Terms and Conditions of the Contract.
Description of Modification:
Whereas the Commonwealth desires to renew the performance period of the contract;
now therefore it is agreed that the contract performance period shall be renewed from
September 1, 2009 through December 31, 2009.

Except as provided herein, all terms and conditions of contract DOC-05-005 dated October 18,
2005, Modification 001 dated January 19, 2006, Modification 002 dated November 15, 2007,
Modification 003 dated August 27, 2008, and Modification 004 dated December 15, 2008, as
heretofore changed, remain unchanged and in full force and effect.
CONTRACTOR:

PURCHASING AGENCY:

BY:

BY:

TITLE:

TITLE:

DATE:

DATE:

Note: This public body does not discriminate against faith-based organizations in accordance with the Code
of Virginia, §§2.2-4343.1 or against a bidder or offeror because of race, religion, color, sex, national origin,
age, disability, or any other basis prohibited by state law relating to discrimination in employment.
DOC-05-005 Inmate Phone Services

DEPARTMENT OF CORRECTIONS
6900 ATMORE DRIVE
RICHMOND, VA 23225
CONTRACT MODIFICATION AGREEMENT
Date:

December 22, 2009

Contract Number:

DOC-05-005

Modification Number:

006

Issued By:

Department of Corrections (DOC)
Procurement and Risk Management
6900 Atmore Drive
Richmond, VA 23225

Contractor:

Global Tel*Link (GTL)
12021 Sunset Hills Road, Suite 100
Reston, Virginia 20190

Commodity:

Inmate Phone Services

This contract modification is entered into pursuant to Memorandum of Understanding,
Attachment 1, Paragraph K. of the General Terms and Conditions and Attachment 2, Paragraph
J. of the Special Terms and Conditions.
Description of Modification:
1. Whereas the Commonwealth desires to renew the performance period of the contract; now
therefore it is agreed that the contract performance period shall be renewed from January 1,
2010 through December 31, 2013.
2. Effective January 1, 2010:
a. GTL (the Contractor) agrees to fund a minimum of $150,000 annually, or $600,000 in
advance, towards DOC technology initiatives.
b. If the Contractor receives annual revenue exceeding $13,000,000 from the DOC, the
Contractor will increase the technology funding to the DOC, by February 28 of the
subsequent year (2/28/11, 2/28/12, 2/28/13, and 2/28/14), as listed below:
Supplemental Technology Funding
Supplemental Technology Funding Available
If Total Revenue Per Year is Greater Than:
at the Beginning of Each Year:
$13,000,000
$100,000
$13,500,000
$150,000
$14,000,000
$200,000
$14,500,000
$250,000
$15,000,000
$300,000

DOC-05-005 Inmate Phone Services; Modification# 006
Page 1 of 2

c.

The DOC will identify and notify GTL of the technology initiative(s), and GTL will pay
all resulting invoices associated with the technology initiative(s), providing the amount
does not exceed the above funding formula.

3. Effective on, or before, February 28, 2010:
a. The Contractor and the DOC will allow phone calls to cellular phones in accordance
with DOC Procedure 803.3.
b.

The Contractor and the DJJ will allow phone calls to cellular phones in accordance with
DJJ procedures.

c.

The Contractor and the DOC will allow debit calling at the below rates and in
accordance with DOC procedures.

Local
Intralata
Interlata
Interstate

Debit Call Payment Option
Rate Per Minute
Surcharge
_
$0.90
$0.14
$1.25
$0.23
$1.75
$0.40
$2.40

Except as provided herein, all terms and conditions of contract DOC-05-005 dated October 18,
2005, Modification 001 dated January 19, 2006, Modification 002 dated November 15, 2007,
Modification 003 dated August 27, 2008, and Modification 004 dated December 15, 2008, as
heretofore changed, remain unchanged and in full force and effect.
CONTRACTOR:

PURCHASING AGENCY:

BY:

BY:

NAME:

NAME:

TITLE:

TITLE:

DATE:

DATE:

Note: This public body does not discriminate against faith-based organizations in accordance with the Code of Virginia,
§§2.2-4343.1 or against a bidder or offeror because of race, religion, color, sex, national origin, age, disability, or any other
basis prohibited by state law relating to discrimination in employment.

DOC-05-005 Inmate Phone Services; Modification# 006
Page 2 of 2

DEPARTMENT OF CORRECTIONS
6900 ATMORE DRIVE
RICHMOND, VA 23225
CONTRACT MODIFICATION AGREEMENT
Date:

March 16, 2012

Contract Number:

DOC-05-005

Modification Number:

007

Issued By:

Department of Corrections (DOC)
Procurement and Risk Management
6900 Atmore Drive
Richmond, VA 23225

Contractor:

Global Tel*Link (GTL)
12021 Sunset Hills Road, Suite 100
Reston, Virginia 20190

Commodity:

Inmate Phone Services

This contract modification is entered into pursuant to Memorandum of Understanding, Attachment 1, Paragraph
K, of the General Terms and Conditions.
Description of Modification:
Effective April 1, 2012:
1. GTL and the DOC agree to allow debit calling via the GTL online e-commerce web site and telephone
Interactive Voice Response (IVR) system. Deposits of funds into an inmate’s trust fund account that are
made by a credit card transaction originated via web payment or any other payment method will be processed
by GTL as the authorized agent of the DOC. In its capacity as agent, GTL will:
a. Process credit card funds for transfer to the applicable inmate trust account established and
maintained by the DOC via Automated Clearing House (ACH); and
b. Operate the systems or software managing the inmate trust funds. Money applied to the inmate debit
account shall be made in increments of $10.00.
2. Credit card transactions processed via the GTL web payment option (Debit II) will be charged standard GTL
fees to cover such items as credit card charge-backs and credit card usage fees. Standard GTL credit card fees
are listed below:
Transaction Amount
#
Low End
Upper End
Fee
1
$0.00
$25.00 $3.75
2
$25.00
$50.00 $4.50
3
$50.01
$100.00 $5.75
4
$100.01
$150.00 $7.25
5
$150.01
$200.00 $8.50
DOC-05-005 Inmate Phone Services; Modification# 007
Page 1 of 2

Except as provided herein, all terms and conditions of contract DOC-05-005 dated October 18, 2005, as
heretofore changed, remain unchanged and in full force and effect.
CONTRACTOR:

PURCHASING AGENCY:

BY:

BY:

NAME:

NAME:

TITLE:

TITLE:

DATE:

DATE:

Note: This public body does not discriminate against faith-based organizations in accordance with the
Code of Virginia, §§2.2-4343.1 or against a bidder or offeror because of race, religion, color, sex, national
origin, age, disability, or any other basis prohibited by state law relating to discrimination in employment.

DOC-05-005 Inmate Phone Services; Modification# 007
Page 2 of 2

EXHIBIT D

Exhibit A-24
AFFIDAVIT

I, Beverly Chorbajian, Esq., do hereby affirm that:
1. I am a lawyer duly licensed to practice law in the Commonwealth of
Massachusetts. My mailing address is 390 Main St., Suite 659, Worcester,
MAO]608.

2. I represent and receive telephone calls from clients who are incarcerated in
state and county correctional facilities in the Commonwealth. I requested and
utilize collect and/or direct bill telephone service with Global Tel*Link (GTL)
and Evercom Systems, Inc. (Evercom) (or affiliates) so that I can
communicate with my incarcerated clients by telephone. I am the customer of
record on accounts with GTL and Evercom and am responsible for paying for
the telephone services they render to me .
3. My office receives between 25 and 35 telephone calls per week from clients in
Massachusetts correctional institutions. Approximately one-third of the calls
are from cOlmty institutions serviced by Evercom and two-thirds are from
clients in state institutions serviced by GTL.
4. I conservatively estimate that half the calls we receive from correctional
institutions have poor reception and that one out of five calls are dropped
prematurely. The calls dropped by Evercom every month are almost all
preced ed by a recorded message that the system detected an attempt to add a
third party. Neither I nor anyone in my office has ever attempted to add a
third party or forward a call from an incarcerated client.
Signed under the penalties of perjury this

i

day

Of~, 20]0.

Exhibit A-26

AFFIDAVIT
I, Peter T. Sargent, Esq., do hereby affinn that:
I. I am a lawyer duly licensed to practice law in the Commonwealth of
Massachusetts. My mailing address is P.O. Box 425, Gardner, MA 01440.

2. I represent and receive telephone calls from clients who are incarcerated in
state and county correctional facilities in the Commonwealth. I requested and
utilize collect and/or direct bill telephone service with Global Tel*Link (GTL)
and Evercom Systems, Inc. (Evercom) (or affiliates) so that I can
communicate with my incarcerated clients by telephone. I am the customer of
record on accounts with GTL and Evercom and am responsible for paying for
the telephone services they render to me.
3. I have two ongoing problems with prisoner telephone calls. First, every other
month or so I get a call from a county institution answered by my assistant
and put on hold that is terminated when I pick up the receiver. The system
appears to perceive this as a third-party call. Second, clients at county
institutions have told me that they cannot get through to me with collect calls
in months when I have run over some preset spending limit. I am given no
warning of the cut-off before it happens, and am not offered an opportunity to
payoff any balance to make it possible to receive more calls.
Signed under the penalties of peljury this 29 th day of April, 2010.

':xhibit A-27

AFFIDAVIT
I, Debra Beard-Bader, Esq., do hereby affinn that:
1. I am a lawyer duly licensed to practice law in the Commonwealth of
Massachusetts. I am the attorney in charge of the Alternative Commitment
Unit of the Committee for Public Counsel Services CCPCS). Our mailing
address is 144 Main St., 4th floor, Brockton, MA 02301.
2. This office represents and receives telephone calls from clients who are
incarcerated in state correctional facilities in the Commonwealth.
Approximately 95% of the calls come from the Massachusetts Treatment
Center operated by the Massachusetts Department of Correction. Global
Tel*Link provides telephone service that allows us to receive telephone calls
from clients incarcerated at the Treatment Center. CPCS is the customer of
record for GTL telephone call charges.
3. On average this office receives 300 calls per month. Approximately 15-20%
of the calls have too much static to hear the other party. Also, there are
occasions when there is feedback or an echo, when what the speaker says is
echoed back after a very slight delay. This also interferes with conversations.
In addition, about 10% of the calls we receive are cut off when we press "0"
to answer the call.
Signed under the penalties of perjury this

Debra B!ard-Badef

f/i day of ¥, 2010.

Exhibit A-28

AFFIDAVIT
I, John S. Redden, Esq., do hereby affirm that:
1. I am a lawyer duly licensed to practice law in the Commonwealth of
Massachusetts. I am the attorney in charge of the Brockton Superior Trial
Unit of the Committee for Public Counsel Services. Our mailing address is
144 Main St., 4tl' floor, Brockton, MA 02301.
2. This office represents and receives telephone calls iimn clients who are
incarcerated in state and county correctional facilities in the Commonwealth.
The office utilizes collect call telephone services provided by Global Tel*Link
(GTL) and Evercom Systems, Inc. (Evercom) (or affiliates) that allow our
incarcerated clients to call us. CPCS is the customer of record on the GTL
and Evercom telephone accounts.
3. This office receives approximately 450 telephone calls from incarcerated
individuals each month. Approximately 10% of those calls come from
individuals in DOC facilities, and approximately 90% come from individuals
in county facilities. We estimate that one call per week from state facilities
have bad connections and are hard to hear, and approximately three calls per
week from county facilities have the same problem.
Signed under the penalties of perjury this

S-i1r

day of ~, 2010.

oxhibit A-29
AFFIDAVIT
I, Patricia C. Voorhies, do hereby affirm that:
1. I am the Managing Director of Clinical and Experiential Education at
N0l1heastern University School of Law. Our mailing address is 360
Huntington Ave., Boston, MA 02115.

2. The Prisoners' Rights Clinic (the Clinic) represents and receives telephone
calls from clients who are incarcerated in state correctional facilities in the
Commonwealth operated by the Massachusetts Department of Correction.
The Clinic utilizes collect call telephone services provided by Global
Tel*Link (GTL) that allow our incarcerated clients to call the Clinic.
Northeastern University is the customer of record on the GTL telephone
account. Calls are broken out by "budget centers," including the Clinic. The
Clinic is responsible for payment of the calls billed to it including prisonerinitiated calls.
3. This office receives approximately 40-50 telephone calls from incarcerated
individuals each week. On the main telephone line, which receives 30-40
calls per week, it is frequently very difficult to hear what the prisoner is
saying unless he or she shouts. On the second line to the clinic administrator,
with about 10 calls per week, about one-in-ten calls have other voices on the
line, static or echoes.
Signed under the penalties of perjury this 3'd day of May, 2010.

""

4&&(!Jm~

Patricia C. Voorhies

Exhibit A-30
AFFIDAVIT
I, Patricia Garin, Esq., do hereby affirm that:
1. I am a lawyer duly licensed to practice law in the Commonwealth of Massachusetts. I
am a partner in the law firm Stern Shapiro Weisberg & Garin, LLP. Our mailing
address is 90 Canal St., Boston, MA 02114.
2. The firm represents and receives telephone calls from clients who are incarcerated in
state and county correctional facilities in the Commonwealth. We requested and
utilize collect and/or direct bill telephone service with Global Tel*Link (GTL) and
Evercom Systems, Inc. (Evercom) (or affiliates) so that we can communicate with our
incarcerated clients by telephone. Stern Shapiro Weisberg & Garin LLP is thc
customer of record on accounts with GTL and Evercom. Tnc firm is responsible for
paying for the telephone services rendered by these providers to us.
3. Our office receives between approximately 40 and more than 75 telephone calls per
month from clients in Massachusetts correctional institutions. The number of calls
depends Oil the number of incarcerated clients and the status of legal proceedings,
among other factors. We receive from 30 to more than 60 calls per month from state
correctional institutions serviced by GTL. We receive from 10 to 15 calls per month
from county correctional facilities serviced by Evercom.
4. The sound quality of telephone calls received from incarcerated clients varies. For
calls received in the office from clients in state correctional institutions, I estimate
that one in every six or seven calls had a connection or reception problem. But
connection problems with calls from incarcerated clients that I received at home on
my personal cellular phone were markedly worse: at least one call in three received at
home had a terrible connection and was hard to hear versus one in six or seven
problem calls in the office.
5. With respect to dropped or cut-off calls, I had a similar experience: calls at home on
my personal cellular phone from incarcerated clients in state correctional institutions
were much more likely to be dropped or cut-off prematurely than calls received at the
office. Vcry few calls are dropped or prematurely cut off in the office. But calls
received on my personal phone at home were freqnently dropped, generally preceded
by a message that an attempt to make a three-way call was detected. I never
attempted to add a third party to such a call nor did I ever attempt to forward such a
call to a third party.
Signed under the penalties ofpe,jury this

Patricia Garin

L,./
30'fJ'day of~, 2010.

EXHIBIT E

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
1
1

COMMONWEALTH OF MASSACHUSETTS

2

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE

3
4

DOCKET NO.:

DTC11-16

5
6

* * * * * * * * * * * * * * * * * * * * * * * * *

7

PETITION OF RECIPIENTS OF COLLECT CALLS FROM

*

8

PRISONERS AT CORRECTIONAL INSTITUTIONS IN

*

9

MASSACHUSETTS SEEKING RELIEF FROM THE UNJUST

*

10

AND UNREASONABLE COST OF SUCH CALLS

*

11

* * * * * * * * * * * * * * * * * * * * * * * * *

12
13
14

BEFORE:

HEARING OFFICER KALUN LEE

15
16

OFFICE OF THE DIVISION OF INSURANCE

17

First Floor, Hearing Room E

18

1000 Washington Street

19

Boston, Massachusetts

20

Thursday, July 19, 2012 10:00 a.m. – 5:00 p.m.

21
22
23

Laurie J. Jordan

24

Professional Court Reporter

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
9
1

statement.

2

Would any of the petitioners or

3

respondents like to make a statement?

4

start with Prisoners Legal Services.

5

MS. MATOS:

Yes, we will

Yes, that's okay.

There

6

are other petitioners here on behalf of the

7

petitioners and organizations, if they would like to

8

make a comment.

9

THE HEARING OFFICER:

If I could get

10

you to come up to the microphone then.

11

Good morning, Ms. Matos.

12

MS. MATOS:

13

Good morning.

Thank you.

Thank you

for having us here today.

14

THE HEARING OFFICER:

Before you

15

begin, if you could spell your name for the court

16

reporter.

17

MS. MATOS:

Sure.

First name is

18

Elizabeth, E-L-I-Z-A-B-E-T-H, last name is Matos,

19

M-A-T-O-S.

20
21

THE HEARING OFFICER:
represent Prisoners Legal Services?

22

MS. MATOS:

23

THE HEARING OFFICER:

24

You are here to

Yes.
Your contact

information is a matter of record in the filings,

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
14
1

poor.

At Prisoners Legal Services, we receive calls

2

from prisoners in all of these facilities regularly.

3

I can attest personally that calls are frequently

4

dropped, connections are often so bad that you can't

5

understand anything that your client is saying on the

6

other line.

7

incur those fees.

And they often have to call back and we

8

Aside from the fees, it compromises our

9

ability to get accurately and timely facts from our

10

clients.

And the fact that the rates are so high

11

should account for this service.

12

why -- You'll hear this from others today and I'm sure

13

you received it in your comments that

14

across-the-board the quality of service is so poor

15

and it just doesn't correlate with the rates that we

16

are paying.

There is no reason

17

High phone rates and commissions

18

unfairly penalize families of prisoners and do

19

nothing to improve public safety in our communities.

20

Family ties while incarcerated are proven to lower

21

recidivism and the phone is a lifeline for prisoners

22

and their families.

23

communication open, it's imperative that the DTC take

24

this matter, investigate what a reasonable rate would

To keep those lines of

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
44
1

believe that is the substance of all of his testimony

2

today.

3
4

THE HEARING OFFICER:

Mr. Dawson, are

you going to be available during the day?

5

MR. DAWSON:

Yes, Sir.

6

THE HEARING OFFICER:

Then if he is

7

going to be available, I am just going to ask him to

8

save his comments until the end of the day when we

9

anticipate more time.

10

He will have an opportunity to speak on

11

the record, but I would just like to give a lot of

12

the working folks a chance to speak first.

13

MS. TENNERIELLO:

Thank you very much.

14

THE HEARING OFFICER:

The next person

15

I have on the list is Patricia Garin.

16

MS. GARIN:

Good morning, I am one of

17

the attorneys on the case who signed the petition.

18

I also am here to speak on behalf of several of the

19

petitioners.

20
21

THE HEARING OFFICER:

phone calls from one of these facilities?

22

MS. GARIN:

23

THE HEARING OFFICER:

24

Do you receive

Yes.
I note that you

provided the court reporter with your business card?

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
45
1

MS. GARIN:

Yes, I did.

2

THE HEARING OFFICER:

Thank you very

3

much.

4

your statement to be sworn or unsworn?

5

MS. GARIN:

6

Ms. Garin, before we get started, do you want

Swearing in is fine.

I am

also one of the attorneys of record on this case.

7

THE HEARING OFFICER:

I think we can

8

forgo the swearing in.

9

record the facilities from which you receive phone

10

If you could identify for the

calls.

11

MS. GARIN:

I am going to be testifying

12

on behalf of the Northeastern Prisoners Rights

13

Project and we receive phone calls from all of the

14

18 DOC facilities in the State.

15

by telecom, collect phone calls.

16

They are serviced

I am going to be testifying on behalf

17

of my law firm.

It was one of the petitioners.

We

18

also receive phone calls from State and county

19

facilities.

20

Mass. Association of Criminal Defense Attorneys and

21

those are all or most of the criminal defense

22

attorneys in the State.

23

1062 members certainly receive calls from all of the

24

facilities in the State.

I am testifying on behalf of MACDA, the

There is 1062 members.

The

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
51
1

to call every day.

2

It's just too expensive.

I think those two clients are

3

representative of what happens to a great number of

4

clients and families in the system.

5

I just want to comment briefly about

6

the quality of the service.

It's inconsistent from

7

prison to prison.

8

some prisons you cannot hear the calls at all.

9

client who is in Bridgewater State Hospital -- My

Some princes you can hear better,
My

10

client is already mentally ill.

11

State Hospital the echo in the calls is so loud that

12

you cannot speak without hearing the echo come back

13

at you and shake in your ears.

14

At Bridgewater

This is really hard for any person to

15

deal with it day in and day out.

16

if you already have mental health issues to have to

17

put up with that hammering echo in your head when you

18

are trying to talk to your family.

19

It is very tough

I have talked to many people who have

20

to have their clients yell into the phone.

Those of

21

us who are attorneys are very concerned about the fact

22

that our clients have to be yelling their legal

23

business so that we can hear them on these telephone

24

calls.

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
52
1

The quality of service is

2

inconsistent.

3

a year and a half ago I decided to get a GTL account

4

on my cell phone for when I went out of town so that

5

prisoners could call me in an emergency because I

6

wouldn't be at my

7

emergency, I wouldn't be using it so often.

8

a disaster.

9

I want to tell you that at one point

office.

Sometimes if there is
It was

The calls to my office don't get cut off

10

that often.

On my cell phone, I would say one out

11

of every third call would get cut off and a recording

12

would come on and say a third-party call has been

13

detected.

14

I never connected with a third-party

15

ever.

I only use the call from a sitting still

16

position in a place where reception was strong.

17

didn't matter.

18

recording coming on saying third-party call

19

detected.

20

we would have another connection fee, get cut off,

21

call again, get cut off.

It

The calls got cut off with the

And then the client would call again and

22

The other problem was that I didn't use

23

it that often.

24

out of town.

I only used the account when I went
So, it would go months without being

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
131
1

know about per minute, that's what I know it costs.

2

So, for one minute to connect, it's

3

$2.77.

For 30 minutes it's $5.85.

It's ridiculous.

4

And I don't have a choice.

5

I speak to customer service and they say thank you

6

for choosing Securus.

7

have no choice.

8

about the research.

9

kickbacks.

When I call Securus and

What choice did I make?

They are a monopoly.

I don't know

I don't know about the

I don't know about the commissions.

10

don't know where the money goes.

11

prison for private is new to this society.

12

I

I

But I know that

These phone calls are just one part of

13

it.

It's outrageous.

14

can't even begin to put it into words what happens

15

-- It is just ridiculous.

16

say, but thank you.

17

The outrage that I feel, I

THE HEARING OFFICER:

18

Ma'am.

19
20

Guhn-Knight.
MS. GUHN-KNIGHT:

23
24

Thank you,

The next person I have on the list is Carmen

21
22

I don't know what else to

Good afternoon.

THE HEARING OFFICER:

You are an

attorney?
MS. GUHN-KNIGHT:

I am not.

I am a

paralegal at the Law Offices of Howard Friedman.

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
132
1

Howard Friedman is one of the petitioners.

2

speaking on behalf of the firm.

So, I am

3

THE HEARING OFFICER:

4

you to spell your name and provide your contact

5

information for reporter, please.

6

MS. GUHN-KNIGHT:

If I could get

Yes.

My name is

7

Carmen Guhn-Knight.

It is spelled C-A-R-M-E-N, last

8

name G-U-H-N,-, K-N-I-G-H-T.

9

at the Law Offices of Howard Friedman is

10

617-742-4100.

11

Boston, Massachusetts.

12
13

Contact information

It's 90 Canal Street, Fifth Floor,

THE HEARING OFFICER:

statement you are giving is under oath today?

14

MS. GUHN-KNIGHT:

15

THE HEARING OFFICER:

16

And the

Yes.
Can you tell us

which facilities you are receiving phone calls from.

17

MS. GUHN-KNIGHT:

We accept all calls

18

that come to our office, so calls from across the

19

State.

20
21
22

THE HEARING OFFICER:

Thank you.

You

may begin.
MS. GUHN-KNIGHT:

The Law Offices of

23

Howard Friedman is a civil rights firm that brings

24

lawsuits including class action lawsuits on behalf

DEPARTMENT OF TELECOMMUNICATIONS AND CABLE
133
1

of prisoners.

2

across the State.

3

We have numerous clients incarcerated

The telephone is the most practical way

4

for us to communicate with our clients.

5

depends upon reliable phone service with prisoners.

6

Prisoners depend on the phone to inform us of

7

important developments and to seek legal advice in

8

a timely manner.

9

we pay extravagantly is not reliable.

10

Our work

However, the service we pay for and

Calls are occasionally dropped.

The

11

connection is frequently poor.

Sometimes our

12

clients sound impossibly quiet and other times there

13

is constant static on the line.

14

clients to hang up and try calling again and maybe

15

it'll be better.

16

it doesn't.

I often tell our

Sometimes it works and sometimes

17

The high cost of prisoner phone calls

18

places burdens on attorneys, prisoners and in some

19

instances all taxpayers.

20

another financial disincentive, and there are many,

21

for private attorneys to represent prisoners whose

22

civil legal needs are greatly underserved.

23

prisoners are typically liable for the cost of a

24

lawsuit when it is successful, any recovery they

The cost imposes yet

Because

EXHIBIT F

EDUCATIONBASEDINCARCERATION

A MESSAGE FROM THE SHERIFF

•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
As the Sheriff of Los Angeles County, I am charged with running the nation’s largest jail system in a fair and
impartial way. We know, from the documented high rates of recidivism across the nation, that traditional
incarceration with punishment at the core, does not work. In Los Angeles County we have adopted a philosophy
within the jails called Education-Based Incarceration. This system works well within the boundaries of our
Departmental Mission statement and Core Values, by providing dignity in the jails.
Creating a system that supports reducing the risks and needs of its offenders through education and rehabilitation
has shown success. These successes can be seen in reduced rates of recidivism, increased employability, and family
reunification, which, in totality, are reinvestments in the communities within Los Angeles County.
People agree that education is a better option than incarceration. Unfortunately, some people make choices in their
lives that land them in jail. The values needed to succeed in jail are often in direct conflict with societal norms.
Education-Based Incarceration creates a safe and empowering environment, conducive to learning and selfretrospection; it, allows the offenders to reprioritize their lives and opt for success!
It is a great honor to present this publication highlighting the successes of Education-Based Incarceration through
the Offender Services Bureau, Correctional Services Division, of the Los Angeles County Sheriff’s Department.
Sincerely,

	

II

Leroy D. Baca
Sheriff

INMATE WELFARE COMMISSION
The Inmate Welfare Commission was formed in 1951 by Los Angeles County Sheriff Eugene Biscailuz. The concept
of the Inmate Welfare Fund was established in law with the enactment of California Penal Code Section 4025 in
1949.
The funds... “shall be expended by the Sheriff primarily for the benefit, education and welfare of the inmates
confined within the jail. Any funds that are not needed for the welfare of the inmates may be expended for the
maintenance of county jail facilities. Maintenance of county jail facilities may include, but is not limited to, the
salary and benefits of personnel used in the programs to benefit the inmates, including, but not limited to, education, drug and alcohol treatment, welfare, library, accounting, and other programs deemed appropriate by the
sheriff.”

Education-Based Incarceration

••••••••••••••••••••••••••••••••••••••••••••

The Inmate Welfare Commission
is an advisory body. This is a
non-delegated duty, and the final
decision to make expenditures
rests with the Sheriff. The Inmate
Welfare Commission’s authority
is derived solely from the Sheriff,
while, by law, the Sheriff retains the
responsibility for the expenditure
of funds.

• Inmate Welfare Fund

•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
The Inmate Welfare Commission’s primary
duty is to provide meaningful assistance to
the inmate population of the Los Angeles
County jail system by reviewing and making
recommendations to the Sheriff regarding
funding for education, recreation, vocational
training, counseling, and community
transition. Funds for the Inmate Welfare
Fund (IWF) are derived from revenue
sharing contracts such as inmate telephones, commissary and vending. The Inmate Welfare Fund allocates 51
percent of the funds to be spent on inmate programming and services and 49 percent to jail facility maintenance. In
addition, the IWF also assists with funding needs for the forty-eight (48) courthouse lock-ups and twenty-three (23)
station jails within Los Angeles County.

•••••••••••••••••••••••••••••••••
20

EXHIBIT G

INTERNAL CONTROL AUDIT:
SHERIFF-CORONER
INMATE WELFARE FUND AND
SELECTED JAIL COMMISSARY PROCESSES

N
U

t h e

O
C

C o u n t y

E

We audited internal controls and processes over the administration and use of
the Sheriff-Coroner’s Inmate Welfare Fund. Specifically, we audited fund receipts
and disbursements to ensure they are valid, supported, timely, and made in
accordance with California Penal Code Section 4025, and with County and SheriffCoroner policies and procedures. We also assessed the effectiveness and
efficiency of administering the Inmate Welfare Fund. In addition, we audited
selected controls and processes over Jail Commissary funds and operations
because profits from the Jail Commissary are a revenue source for the Inmate
Welfare Fund. During the audit period, the Inmate Welfare Fund had $3.5 million
in revenues and $4.4 million in expenditures.
Our audit found that internal controls and processes over Inmate Welfare Fund
receipts and disbursements are adequate and effective to ensure they are valid,
timely, supported and in compliance with the Penal Code and County policies.
However, we found where improvement is needed over the administration of the
Inmate Welfare Fund and Jail Commissary Fund, specifically involving
reconciliations of inmate accounts, declining fund balances available, price
determinations of commissary merchandise, commissary order forms and
physical inventories. We identified four (4) Significant Control Weaknesses and
three (3) Control Findings where controls and processes can be further enhanced.
The Sheriff-Coroner agreed with the findings and recommendations.

AUDIT NO: 1123
REPORT DATE: MAY 16, 2012

A

6

t h

N

G

L a r g e s t

i n

U S A

T

Y

For the Period July 1, 2010
through June 30, 2011

Director: Dr. Peter Hughes, MBA, CPA, CIA
Deputy Director: Eli Littner, CPA, CIA
Senior Audit Manager: Michael Goodwin, CPA, CIA
Audit Manager: Michael Dean, CPA, CIA
Audit Manager: Kenneth Wong, CPA, CIA

R
O

Internal Audit Department

4th District – Shawn Nelson, Vice Chairman 5th District – Patricia C. Bates
3rd District – Bill Campbell

o f
B o a r d
O C

1st District – Janet Nguyen 2nd District – John M.W. Moorlach, Chairman

S u p e r v i s o r s

Exhibit D, Board Date 6/26/12, Page 2 of 28

RISK BASED AUDITING
GAO & IIA Peer Review Compliant – 2001, 2004, 2007, 2010
American Institute of Certified Public Accountants Award to Dr. Peter Hughes
as 2010 Outstanding CPA of the Year for Local Government
GRC (Government, Risk & Compliance) Group 2010 Award to IAD as MVP in Risk Management
2009 Association of Certified Fraud Examiners’ Hubbard Award to
Dr. Peter Hughes for the Most Outstanding Article of the Year – Ethics Pays
2008 Association of Local Government Auditors’ Bronze Website Award
2005 Institute of Internal Auditors’ Award for Recognition of
Commitment to Professional Excellence, Quality, and Outreach

Exhibit D, Board Date 6/26/12, Page 8 of 28

OC Internal Auditor’s Report
BACKGROUND
The mission of the Sheriff-Coroner is to protect the residents of Orange County and provide exceptional
law enforcement services with leadership, integrity and respect. The Sheriff-Coroner has four major
“commands” or divisions – (1) Field Operations & Investigative Services Command; (2) Custody and
Court Services Command; (3) Professional Services Command; and (4) Administrative Services
Command. The Inmate Services Division, which oversees and administers the Inmate Welfare Fund
and Jail Commissary, is under the Custody and Court Services Command. The Administrative Services
Command and Financial/Administrative Services provide financial support to the department.
Inmate Services Division Overview
The Inmate Services Division, established in 2004, contains 200 professional staff, 2 sworn staff and
1,100 volunteer staff. The Inmate Services Division’s annual budget is approximately $37 million. The
division assures inmate needs are met based on compliance with State Correction Standards found in
Title 15 of the California Code of Regulations by providing supporting services, including meals,
commissary, educational, vocational, and recreational programs to foster rehabilitation and reduce
recidivism (repeat offenders) of inmates once they leave the Sheriff’s custody. The Inmate Services
Division consists of the following units:
 Commissary Operations has an operating budget of $8.8 million and 39 employees, whose
goal is to provide high quality products and services to those incarcerated in the Sheriff’s jail
facilities, and secondly to provide funding to the Sheriff’s Inmate Welfare Fund to support
vocational and educational training programs. Each year, up to $1 million in profit from
commissary operations is transferred to the Inmate Welfare Fund.
 Food Services Unit provides three daily nutritional meals to each inmate housed in the County’s
four jail facilities. A staff of 83 operates four kitchens, three inmate dining halls, four
warehouses, and prepares approximately 5.2 million meals annually. Their annual operating
budget is $15 million.
 Correctional Programs Unit was created to minimize the number of inmates who recommit
crimes after release. It provides opportunities for inmates to participate in effective rehabilitative
experiences while incarcerated in the County’s four jail facilities. The unit is comprised of 39
employees and has an operating budget of $12 million.
 Inmate Re-Entry Unit was created to combat the high recidivism rates. Any staff member can
work in the Re-Entry Unit, and annual expenditures for services and supplies were about $2,900.
 Division Support Unit contains 29 employees and provides professional support including
recruiting, clerical, accounts payable, purchasing, revenue forecasting, auditing, legislative
analysis, safety, inmate rights training, research and analysis, and the Inmate Law Library.
Inmate Welfare Fund
Under the California Penal Code Section 4025, an Inmate Welfare Fund is mandated to provide services
essential for the benefit, welfare, and educational needs of inmates confined in detention facilities. This
code section governs the establishment, use and reporting requirements for the Inmate Welfare Fund.
The section states:
“The Sheriff may operate a store in connection with the County jail and for this purpose
may purchase confectionery, tobacco, and tobacco users’ supplies, postage and writing
materials, and toilet articles and supplies and sell these goods, articles and supplies for
cash to inmates in the jail…any profit shall be deposited in an inmate welfare fund to be
kept in the treasury of the County.”
The Inmate Welfare Fund is administered by the Sheriff-Coroner’s Inmate Services Division, and is
recorded under Fund 144. As of June 30, 2011, the Inmate Welfare Fund had $3.5 million in revenues
and $4.4 million in expenditures, and required an $875,000 fund balance transfer to cover the
difference.
Internal Control Audit: Sheriff-Coroner Inmate Welfare
Fund and Selected Jail Commissary Processes
Audit No. 1123

Page 3

Exhibit D, Board Date 6/26/12, Page 9 of 28

OC Internal Auditor’s Report
Inmate Welfare Fund Revenues
The Inmate Welfare Fund’s primary revenue source is from telephone commissions. Based on a
contract with Global-Tel Link (formerly AT&T), the contractor pays the County a minimum annual
guarantee of $2.6 million that is allocated between the Sheriff-Coroner’s Inmate Welfare Fund and the
Probation Department based on inmate collect-only telephone calls at the Central Jail Complex, Theo
Lacy, James Musick, Juvenile Hall (Probation), Youth Guidance Center (Probation), Los Pinos
Conservation Camp (Probation) and Western Medical Center Ward.
The second main revenue source comes from Jail Commissary profit transfers. California Penal Code
Section 4025 requires commissary profits to be deposited into the Inmate Welfare Fund. Commissary
profits are monitored by Sheriff-Coroner budget staff and are transferred annually to the Inmate Welfare
Fund. See below for further discussion of the Jail Commissary and profit transfers.
Other revenue sources for the Inmate Welfare Fund come from education services, rental revenue,
interest income, bankruptcy repayments, sale of capital assets, and other miscellaneous
revenue. The table below shows all revenue components of the Inmate Welfare Fund for Fiscal Years
09/10 and 10/11:
TYPE
Service Revenue
Miscellaneous Revenue
Service Revenue
Service Revenue
Miscellaneous Revenue
Miscellaneous Revenue
Miscellaneous Revenue
Miscellaneous Revenue
TOTAL REVENUE
FUND BALANCE AVAILABLE
TOTAL REVENUE AND FBA

NAME
Telephone Commissions
Commissary Profit Transfer
Education Services
Rental Revenue
Interest Income
Bankruptcy Repayment
Sale of Capital Assets
Other

6/30/10
AMOUNT
$ 2,406,001
700,000
337,779
194,316
74,062
44,876
4,046
696
$3,761,776
$1,254,653
$5,016,429

6/30/10
%
64%
19%
9%
5%
2%
1%
<1%
<1%
100%

6/30/11
AMOUNT
$2,476,372
500,000
285,932
194,316
34,681
40,777
0
6,752
$3,538,830
$874,574
$4,413,404

6/30/11
%
70%
14%
8%
5%
1%
1%
0%
<1%
100%

Inmate Welfare Fund Expenditures
Penal Code Section 4025 states: “The money and property deposited in the inmate welfare fund shall be
expended by sheriff primarily for the benefit, education, and welfare of the inmates confined within a jail.
Any funds that are not needed for the welfare of the inmates may be expended for the maintenance of
county jail facilities. Maintenance of county jail facilities may include the salary and benefits of personnel
used in the programs to benefit the inmates, including, but not limited to, education, drug and alcohol
treatment, welfare, library, accounting, and other programs deemed appropriate by the Sheriff.”
The largest expenditures from the Inmate Welfare Fund are salary and benefit costs for all SheriffCoroner employees that work in inmate welfare programs. The second largest expenditures result from
staff support – services, supplies, training & equipment that includes operational costs for telephone
service, office supplies and equipment, equipment repair & maintenance, property casualty insurance,
inmate service liaison, training costs, validated parking and other expenses related to volunteers, and
any fixed asset purchases. Other fund expenditures are for hot water systems, audio-visual,
recreation, library services, and minor construction. These purchases are requested by personnel
in the inmate programs and are approved by Inmate Services Division management. Expenditures can
be made by contract, revolving funds or purchasing cards. The table below shows Inmate Welfare
Fund expenditures for Fiscal Years 09/10 and 10/11:

Internal Control Audit: Sheriff-Coroner Inmate Welfare
Fund and Selected Jail Commissary Processes
Audit No. 1123

Page 4

Exhibit D, Board Date 6/26/12, Page 10 of 28

OC Internal Auditor’s Report

TYPE
Staff Support
Staff Support
General Inmate Welfare
Inmate Education
Inmate Resources
Inmate Resources
Inmate Resources
Inmate Re-Entry
Construction
TOTAL EXPENDITURES

NAME
Salaries
Services, Supplies, Training
Hot Water System
Services, Supplies & Equip.
Audio Visual
Recreation
Library
Services, Supplies, Training
Warehouse & Musick Bldg.

6/30/10
AMOUNT
$ 3,716,411
875,569
29,150
40,930
39,268
25,508
144,693
2,981
141,919
$5,016,429

6/30/10
%
74%
17%
<1%
<1%
<1%
<1%
3%
<1%
3%
100%

6/30/11
AMOUNT
$3,334,505
862,996
14,800
21,962
37,905
21,948
116,326
2,826
136
$4,413,404

6/30/11
%
76%
20%
<1%
<1%
<1%
<1%
3%
<1%
<1%
100%

Jail Commissary Operations
The Inmate Services Division operates a commissary for inmates and federal detainees held at three
County jail facilities. The commissary is located in a warehouse in Anaheim. Profits from the jail
commissary operations are deposited in the Inmate Welfare Fund. Uniform prices for commissary items
are established at a level to support the Sheriff-Coroner’s Inmate Welfare Fund program. All
commodities sold in the jail commissary are approved items for that purpose. A price list of items
available is established, kept current, and posted on printed order forms. Copies of the order forms are
made available to inmates and federal detainees. The Jail Commissary Fund is Fund 143 in the
County’s General Ledger.
Jail Commissary Profit Transfers and Operating Reserves
Penal Code Section 4025 states that any profits resulting from commissary sales shall be deposited into
the Inmate Welfare Fund. Sheriff-Coroner’s Budget & Administrative Support tracks the annual jail
commissary profits/losses and the profit transfers to the Inmate Welfare Fund.
The Sheriff-Coroner maintains an operating reserve for the jail commissary. The reserve is divided into
two components:
Reserve Designated for Operations and Reserve Designated for Inventory
Material/Supplies. During our audit period, the reserve balance was $481,000. A five-year analysis of
the Jail Commissary Operating Reserve since FY 06-07 shows the reserve balance between $481,000
and $580,000 with minor annual fluctuations.
SCOPE AND METHODOLOGY
Our audit evaluated internal controls and processes over the administration and use of the Inmate
Welfare Fund and selected Jail Commissary processes for the period July 1, 2010 through June 30,
2011. Our methodology included inquiry, auditor observation and testing of relevant documents over the
following:
1. Evaluated controls and processes over all revenue categories of the Inmate Welfare Fund and
tested a sample of transactions.
2. Evaluated controls and processes over all expenditure categories of the Inmate Welfare Fund
and tested a sample of transactions.
3. Analyzed Inmate Welfare Fund financial statements for FY 09-10 and 10-11, including the trend
of declining fund balances in the Inmate Welfare Fund and Jail Commissary Fund.
4. Evaluated cash receipting and reconciliation processes for inmate accounts.
5. Evaluated selected aspects of Jail Commissary operations including profit transfers, use of
operating reserves, pricing methodology, commissary order forms, and controls over physical
inventories.

Internal Control Audit: Sheriff-Coroner Inmate Welfare
Fund and Selected Jail Commissary Processes
Audit No. 1123

Page 5

EXHIBIT H

STATE STATUTES
State
Alabama

Alaska

Arizona

Arkansas

Statute
For County Jails, statutes have language reflecting
the principle that: “All profits realized in the
operation of the jail canteen and inmate telephone
system shall be expended at the discretion of the
sheriff for salaries, equipment, and supplies for the
county jail and other law enforcement purposes in
[named] County that are in the interest of the
public.”
Ala. Code §§ 45-1-232; 45-3-231.20; 45-5-231; 4511-234; 45-13-231; 45-18-230; 45-25-231 (2011).
Commission is excluded from the state’s general
revenue fund:
“(b) The program receipts listed in this subsection
are accounted for separately, and appropriations
from these program receipts are not made from the
unrestricted general fund: . . . .
(43) receipts of the Department of Corrections from
the inmate telephone system . . . .”
Alaska Stat. § 37-05-146 (2012).
“A. A special services fund is established in the state
department of corrections. The department shall
administer the fund.
B. The director shall transfer five hundred thousand
dollars from the special services fund annually to
the department of corrections building renewal
fund established by section 41-797. Any remaining
monies in the special services fund, including the
inmate recreation fund, may be used for the
following purposes:
1. The benefit, education and welfare of committed
offenders, including the establishment,
maintenance, purchase of items for resale and other
necessary expenses of operation of canteens and
hobby shops.
2. To pay the costs of a telephonic victim
notification system. Revenues that are generated by
the inmate telephone system and the automated
public access program shall be deposited in the
special services fund.”
Ariz. Rev. Stat. Ann. § 41-1604.03 (2012).
“(a) There is created . . . a cash fund entitled the
Department of Correction Nontax Revenue Receipts
Fund to consist of receipts for telephone calls from
coinless telephones located on Department of
Correction grounds, and from other nontax receipts
not previously identified to a fund of deposit.
(b) Funds held in this special fund are to be

Notes*
Applies to Counties.

State received
$85,438.58 from
revenue-sharing with
Securus in 2012.

State received $4.3
million from revenuesharing with Securus
in 2012.

State received $2.0
million from revenuesharing with GTL in
2012.

State

California

Colorado

Connecticut

Statute
administered and expended by the Director of the
Department of Correction within guidelines
established by the Board of Corrections for periodic
transfers to other department funds or for
disbursements in support of department operations
or debt service.”
Ark. Code Ann. § 12-27-128 (2012).
“(d) There shall be deposited in the inmate welfare
fund any money, refund, rebate, or commission
received from a telephone company or pay
telephone provider when the money, refund, rebate,
or commission is attributable to the use of pay
telephones which are primarily used by inmates
while incarcerated.
(e) The money and property deposited in the
inmate welfare fund shall be expended by the
sheriff primarily for the benefit, education, and
welfare of the inmates confined within the jail. Any
funds that are not needed for the welfare of the
inmates may be expended for the maintenance of
county jail facilities. Maintenance of county jail
facilities may include, but is not limited to, the
salary and benefits of personnel used in the
programs to benefit the inmates, including, but not
limited to, education, drug and alcohol treatment,
welfare, library, accounting, and other programs
deemed appropriate by the sheriff. Inmate welfare
funds shall not be used to pay required county
expenses of confining inmates in a local detention
system, such as meals, clothing, housing, or medical
services or expenses, except that inmate welfare
funds may be used to augment those required
county expenses as determined by the sheriff to be
in the best interests of inmates. An itemized report
of these expenditures shall be submitted annually to
the board of supervisors.”
Cal. Penal Code § 4025 (2012).
‘Any profits arising from the operation of the
canteen and vending machines shall be expended
for the educational, recreational, and social benefit
of the inmates and to supplement direct inmate
needs.’
Colo. Rev. Stat. Ann. § 17-24-126(3) (West 2013).
“For the fiscal year ending June 30, 2007, and each
fiscal year thereafter, the sum of $350,000 from
revenue derived by the Department of Information
Technology from the contract for the provision of
pay telephone service to inmates of correctional
facilities shall be transferred to the Department of

Notes*

Applies to Counties.
Los Angeles County –
15 million guaranteed
payment – 49% used
for jail maintenance.
Orange County – 74%
of $5 million inmate
fund used for staff
salaries.

Jefferson County –
86% of inmate welfare
fund used for staff
salaries and benefits.
(see attached).
State received $4.2
million from revenuesharing with Securus
in 2012.

State

Florida

Hawaii

Illinois

Indiana

Iowa

Maryland

Statute
Correction, for Other Current Expenses, for
expanding inmate educational services and reentry
program initiatives.”
Conn. Gen. Stat. § 18-81x (2011).
“All proceeds from contracted telephone
commissions must be deposited in the General
Revenue Fund.”
Fla. Stat. § 945.215(b) (2012).
“(c) All proceeds or revenues that are derived from
any commission that is realized pursuant to a
telephone service agreement executed by the
department for the provision of telephone services
for inmates shall be deposited into the automated
victim information and notification system special
fund.”
Haw. Rev. Stat. § 353-136 (West 2012).
“The moneys deposited into the Department of
Corrections Reimbursement and Education Fund
shall be appropriated to the Department of
Corrections for the expenses of the Department.
The following shall be deposited into the
Department of Corrections Reimbursement and
Education Fund: . . . (iii) Moneys received by the
Department as commissions from inmate collect
call telephone systems.”
730 Ill. Comp. Stat. 5 / 3-4-1(b) (2012).
“The correctional facilities calling system fund is
established for the purposes of improving,
repairing, rehabilitating, and equipping department
of correction facilities. The fund consists of the
following:
(1) Money deposited in the fund under section 5(d)
of this chapter.
(2) Money appropriated by the general assembly.
(3) Money received from any other source.” Ind.
Code § 5-22-23-7(a) (2012).
Ind. Code § 5-22-23-5 requires that commissions
received from the inmate telephone system be
deposited in the “correctional facilities calling
system fund.”
“The department is authorized to establish and
maintain an inmate telephone fund for the deposit
of moneys received for inmate telephone calls. All
funds deposited in this fund shall be used for the
benefit of inmates. The director shall adopt rules
providing for the disbursement of moneys from the
fund.”
Iowa Code § 904.508A (2013).
“Each inmate welfare] fund consists of:
1. profits derived from the sale of goods through the

Notes*

State received $5.2
million from revenuesharing with Securus
in 2012.
State received
$74,284 from
revenue-sharing with
Hawaii Telecom in
2008 (most recent
available).
State received $11.7
million from revenuesharing with CCPS in
2012.

State received $1.7
million from revenuesharing with GTL in
2012.

State received
$650,972 from
revenue-sharing with
GTL in 2012.

State received $5.1
million from revenue-

State

Statute
commissary operation and telephone and vending
machine commissions; and
2. subject to subparagraph (ii) of this paragraph,
money received from other sources.”
Md. Code Ann., Corr. Servs. § 10-503(2)(i).

Massachusetts Section 2. There shall be a General Fund of the
commonwealth, into which all revenue payable to
the commonwealth shall be paid, except revenue
required by law to be paid into a fund other than
the General Fund and revenue for or on account of
sinking funds, trust funds or trust deposits, which
funds shall be maintained and the revenue applied
in accordance with law or the purposes of the fund.
G.L. c. 29 § 2 (April 1, 2013).
Mississippi
“(1) The department is authorized to maintain a
bank account which shall be designated as the
Inmate Welfare Fund. All monies now held in a
similar fund for the benefit and welfare of inmates
shall be deposited into the Inmate Welfare Fund.
This fund shall be used for the benefit and welfare
of inmates in the custody of the department. . . .
(3) All inmate telephone call commissions shall be
paid to the department. Monies in the fund may be
expended by the department, upon requisition by
the commissioner or his designee, only for the
purposes established in this subsection.
(a) Twenty-five percent (25%) of the inmate
telephone call commissions shall be used to
purchase and maintain telecommunication
equipment to be used by the department.
(b) . . . Beginning on July 1, 2008, thirty-five
percent (35%) of the inmate telephone call
commissions shall be deposited into the Prison
Agricultural Enterprise Fund. . . .
(c) Forty percent (40%) of the inmate telephone call
commissions shall be deposited into the Inmate
Welfare Fund.”
Miss. Code Ann. § 47-5-158 (2013).
Montana
“(1) There is an account in the state special revenue
fund. The net proceeds from state prison inmate
canteen purchases and inmate telephone use, cash
proceeds from the disposition of confiscated
contraband, and any public money held for the
needs of inmates and their families and not
otherwise allocated must be deposited in the
account. Money in an account established under 531-107 may not be deposited in the account

Notes*
sharing with Securus
in 2010.
Only 10 of the 23
Maryland counties use
funds for inmate
welfare fund.
(see attached).
State received $1.7
million from revenuesharing with GTL in
2012.

State received $1.7
million from revenuesharing with GTL in
2012.

State received
$220,617 from
revenue-sharing with
Telmate in 2012.

State

Ohio

Oklahoma

Statute
established in this subsection.
(2) The money in the account is statutorily
appropriated, as provided in 17-7-502, to the
department of corrections, which may allocate the
money referred to in subsection (1) to the state
prisons in proportion to the amount that each state
prison contributed to the fund. The administrator of
each state prison shall consult with the inmates
about the use of the money allocated to the state
prison and may use the money for the needs of the
inmates and their families.”
Mont. Code Ann. § 53-1-109 (2011).
“(A) There is hereby created in the state treasury
the prisoner programs fund. The director of
rehabilitation and correction shall deposit in the
fund all moneys received by the department from
commissions on telephone systems and services
provided to prisoners in relation to electronic mail,
prisoner trust fund deposits, and the purchase of
music, digital music players, and other electronic
devices. The money in the fund shall be used only to
pay for the costs of the following:
(1) The purchase of material, supplies, and
equipment used in any library program, educational
program, religious program, recreational program,
or pre-release program . . . (2) The construction,
alteration, repair, or reconstruction of buildings
and structures owned by the department for use in
any . . . program . . . (3) The payment of salary,
wages, and other compensation to employees of the
department who are employed in any . . . program .
. . (4) The compensation to vendors that contract
with the department for the provision of services for
the benefit of prisoners in any . . . program . . . (5)
The payment of prisoner release payments in an
appropriate amount as determined pursuant to
rule;
(6) The purchase of other goods and the payment of
other services that are determined, in the discretion
of the director, to be goods and services that may
provide additional benefit to prisoners.”
Ohio Rev. Code Ann. § 5120.132 (2012).
“A. There shall be established a Canteen System
Board of Directors for all canteen system services . .
. . The overall canteen operation composed of all
correctional facility canteen operations, inmate
telephone systems and inmate electronic mail
systems shall be collectively called the Canteen
System and such system shall be required to be selfsupporting from sales receipts.

Notes*

State receives $15
million annual flatrate payment from
GTL.

State received $1
million from revenuesharing with GTL in
2012.

State

Oregon

Tennessee

Texas

Statute
E. . . . All revenues from canteen operations,
inmate telephone system services and inmate
electronic mail system operations shall be used
exclusively for the benefit of the inmates of the
various institutions and personnel of the
Department of Corrections as determined by the
Canteen System Board of Directors.”
Okla. Stat. tit. 57, § 537 (2012).
“(1) Revenues, less operating expenses, from the
following sources shall be deposited into an account
established by the Department of Corrections to
provide money to enhance inmate activities and
programs including education programs: . . . (c)
Operation of inmate telephones in correctional
institutions;
(2) The Department of Corrections shall limit use of
the fund to uses benefiting the general inmate
population and enhancing inmate activities and
programs including education programs.”
Or. Rev. Stat. § 421.068 (2011).
No statute on point for state prisons.
“A fee of ten cents (10cent(s)) shall be collected for
each completed telephone call made by an inmate
housed in a local jail or workhouse. Such fees shall
be remitted by the telephone service provider to the
state treasurer each quarter and credited to a
special account in the state general fund designated
as the local correctional officer training fund to be
used exclusively to fund certification training
provided through the institute for local correctional
personnel within the state. . . .”
Tenn. Code Ann. § 41-7-104(c) (2012).
“(b) The board shall award a contract to a single
private vendor to install, operate, and maintain the
inmate pay telephone service. The initial term of
the contract may not be less than seven years. The
contract must provide the board with the option of
renewing the contract for additional two-year
terms.
(c) The department shall transfer 50 percent of all
commissions paid to the department by a vendor
under this section to the compensation to victims of
crime fund established by Subchapter B, Chapter
56, Code of Criminal Procedure, and the other 50
percent to the credit of the undedicated portion of
the general revenue fund, except that the
department shall transfer the first $10 million of
the commissions collected in any given year under a
contract awarded under this section to the
compensation to victims of crime fund established

Notes*

State received $3
million from revenuesharing with Telmate
in 2012.

Applies to Counties:
State received $2.5
million from revenuesharing with GTL in
2012.

State received $5.9
million from revenuesharing with
CenturyLink in 2012.

State

Utah

Vermont

Virginia

West Virginia

Statute
by Subchapter B, Chapter 56, Code of Criminal
Procedure. This section does not reduce any
appropriation to the department.”
Tex. Gov’t Code Ann. § 495.027 (2012).
“(1) (a) There is created within the General Fund a
restricted account known as the Prison Telephone
Surcharge Account. . . .
(2) Upon appropriation by the Legislature, money
from the Prison Telephone Surcharge Account shall
be used by the department for education and
training programs for offenders and inmates as
defined in Section 64-13-1. . . .”
Utah Code Ann. § 64-13-42 (2012).
“The department shall accept monies generated by
commissions on telephone services, commissary
sales, and sales of approved items not available on
commissary by the department to inmates at its
correctional facilities and shall establish with such
monies an inmate recreation special fund. The fund
shall be used to provide postage to inmates in a
manner consistent with department policy. The
fund may be used for costs associated with the
oversight and accounting of inmate cash accounts.
The fund may be used, at the discretion of the
commissioner, to hire persons or purchase services,
equipment, and goods to establish or enhance
recreation activities for inmates confined in any of
the department's facilities, and for voluntary inmate
contributions that promote the restoration of crime
victims or communities. The inmates . . . may also
choose to create a loan fund . . . from which
offenders may borrow in order to help them obtain
housing upon release from incarceration.”
Vt. Stat. Ann. tit. 28, § 816 (2013).
For local correctional facilities:
“Each sheriff who operates a correctional facility is
authorized to provide for the establishment and
operation of a store or commissary to deal in such
articles as he deems proper. The net profits from
the operation of such store shall be used within the
facility for educational, recreational or other
purposes for the benefit of the inmates as may be
prescribed by the sheriff. The sheriff shall be the
purchasing agent in all matters involving the
commissary and nonappropriated funds received
from inmates. The funds from such operation of a
store or commissary and from the inmate telephone
services account shall be considered public funds. ”
Va. Code Ann. § 53.1-127.1 (2012).
‘(a) The Commissioner of Corrections shall

Notes*

State received
$765,858.16 from
revenue-sharing with
GTL in 2012.

State received
$44,781.29 from
revenue-sharing with
GTL in 2012.

Applies to Counties:
State received $3.2
million from revenuesharing with GTL in
2012.

State received

State

Wisconsin

Statute
establish an inmate benefit fund for each of the
institutions under his or her jurisdiction. The
inmate benefit fund is a fund held by the
institutions for the benefit and welfare of inmates
incarcerated in state correctional facilities and for
the benefit of victims.
(b) . . . Moneys to be deposited into an inmate
benefit fund consist of: . . . (3) All proceeds from
contracted inmate telephone commissions; . . . .
(c) The inmate benefit fund may only be used for
the following purposes at correctional facilities: (1)
Open-house visitation functions or other
nonroutine inmate functions; (2) Holiday functions
which may include decorations and gifts for
children of inmates; (3) Cable television service; (4)
Rental of video cassettes; (5) Payment of video
license;
(6) Recreational supplies, equipment or area
surfacing; (7) Reimbursement of employee wages
for overtime incurred during open-house visitations
and holiday functions; (8) Postsecondary education
classes; (9) Reimbursement of a pro rata share of
inmate work compensation; (10) Household
equipment and supplies in day rooms or units as
approved by chief executive officers of institutions,
excluding supplies used in the daily maintenance
and sanitation of the unit; (11) Christmas or other
holidays gift certificates for each inmate to be used
at the exchange or commissary; (12) Any expense
associated with the operation of the fund; (13)
Expenditures necessary to properly operate an
automated inmate family and victim information
notification system; (14) Any expense for
improvement of the facility which will benefit the
inmate population that is not otherwise funded;
(15) Any expense related to the installation,
operation and maintenance of the inmate telephone
system; and (16) For restitution of any negative
balance on any inmate's trustee account for inmate
medical copay, legal and ancillary related postage,
and photocopy fees that are due the State of West
Virginia, if the balance is uncollectible from an
inmate after one calendar year from an inmate's
release on parole or discharge date.’
W. Va. Code § 25-1-3b (2012).
“The department shall collect moneys for
commissions from telephone companies for
contracts to provide telephone services to inmates. .
. . The secretary of administration shall do all of the
following:

Notes*
$696,374 from
revenue-sharing with
GTL in 2012.

State received $2.3
million from revenuesharing with
CenturyLink in 2012.

State

Statute
(1) Deposit two-thirds of all moneys collected
under this section in the general fund as general
purpose revenue-earned.
(2) Credit one-third of all moneys collected under
this section to the appropriation account [for Adult
Correctional Services].”
Wis. Stat. § 310.105 (2013).

* - Revenue information from Petitioners Comments, Exhibit E.

Notes*

Jefferson County 2012 Adopted Budget

Budget by Fund

Description of Fund Structure
Government entities follow basic fund accounting principles when structuring their financial systems.
Each fund is considered to be a separate fiscal and accounting entity with a self-balancing set of
accounts. This segregation allows for more accountability over special activities or revenues that are
restricted in some fashion. Funds are established based on statutory, regulatory or policy restrictions
and limitations imposed by the State of Colorado, the Board of County Commissioners, and/or
generally accepted accounting standards.
As a result, the County budget is developed to accommodate its own fund structure. Jefferson County
currently has 41 separate funds reported in its Comprehensive Annual Financial Report (CAFR). Of these,
the County is required to prepare and adopt an annual budget for 37 County funds (it does not
appropriate budget for the Forfeiture, Jeffco Finance Corp Debt and Jeffco Finance Capital Funds); in
addition, the Board of County Commissioners, acting as the Board of Directors, is required to prepare
and adopt an annual budget for the Meadow Ranch Public Improvement District. As required by
statute, each separate fund must balance - that is, total expenditures can not exceed the combined total
of current revenues anticipated to be collected plus the amount of available and unrestricted fund
balance - and each must be separately monitored to ensure that actual expenditures do not exceed
approved appropriations. The County budget is adopted at the fund level each year by the Board of
County Commissioners. The following schedules provide a three-year summary of revenues,
expenditures and fund balances for each individual fund along with a brief description of the purpose of
each fund. Funds included are:
 GENERAL FUND – (includes Boettcher Mansion, Clerk & Recorder Electronic Filing, Dog
Licensing and Public Trustee as sub-funds)
 SPECIAL REVENUE FUNDS
 Community Development Fund
 Contingent Fund
 Forfeiture Fund
 Inmate Welfare Fund
 Open Space – Cities Share Fund
 Road & Bridge Fund
 Solid Waste Emergency Response Fund
 Traffic Impact Funds (5 by region)
 Workforce Development Fund

 Conservation Trust Fund
 Developmentally Disabled Fund
 Head Start Fund
 Open Space Fund
 Patrol Fund
 Social Services Fund
 Solid Waste Management Fund
 Wildland Fire Fund

 ENTERPRISE FUNDS & COMPONENT UNIT FUNDS
 Airport Fund
 Health & Environment Fund
 Library Fund
 DEBT SERVICE FUNDS
 Jeffco Finance Corp Debt Service Fund
 Southeast Sales Tax Debt Service Fund

 Open Space Debt Service Funds
(3 by individual bond series)

 CAPITAL PROJECT FUNDS
 Capital Expenditures Fund
 Open Space Acquisition Fund

 Jeffco Finance Corp Capital Project Fund
 Southeast Sales Tax Capital Projects Fund

 INTERNAL SERVICE FUNDS
 Employee Benefits Fund
 Fleet Services Fund
 Insurance (Risk Management) Fund

 Facilities & Construction Mgmt. Fund
 Information Technology Services Fund
Workers Compensation Fund

 FIDUCIARY FUNDS
 Meadow Ranch Public Improvement District
Section 4 - Budget by Fund

Page 37

Jefferson County - 2012 Adopted Budget
Summary of Revenues and Expenditures by Fund
Inmate Welfare Fund - 200
The Inmate Welfare Fund accounts for monies received from commissions for telephone services and jail commissary sales. These
monies are spent for the welfare of incarcerated inmates/detainees.
2009 Actuals
2010 Actuals
2011 Adopted
2012 Adopted
Categories
Revenues
Charges for Services
$
662,721 $
677,877 $
674,000 $
674,000
Investment Income
30,526
23,602
16,482
16,264
Total Revenues and Transfers In:
$
693,247 $
701,479 $
690,482 $
690,264
Expenditures
Salaries & Benefits
$
533,038 $
509,347 $
596,905 $
551,971
Supplies
130,671
131,574
162,508
162,508
Services & Charges
8,130
5,894
58,350
58,350
Interdepartmental
16,282
35,615
18,347
15,235
AMENDED EXPENDITURE CURRENT FY
52,250
Total Expenditures and Transfers Out:
$
688,121 $
682,430 $
888,360 $
788,064
Net Change
$
5,126 $
19,049 $
(197,878) $
(97,800)
Beginning Fund Balance
$
1,616,281 $
1,621,407 $
1,640,456 $
1,442,578
Ending Fund Balance
$
1,621,407 $
1,640,456 $
1,442,578 $
1,344,778

Open Space Fund - 050
The Open Space Fund accounts for revenues generated from the ½ percent countywide sales tax, implemented in 1973 and expended
for the acquisition, development and maintenance of Open Space land.
Categories
Revenues
Taxes & Special Assessments
Intergovernmentals
Charges for Services
Fines & Forfeitures
Investment Income
Rental Income
Contributions & Donations
Miscellaneous
Claims & Judgements
Intra-County Transfers
Proceeds From Disposition of Assets
Total Revenues and Transfers In:
Expenditures
Salaries & Benefits
Supplies
Services & Charges
Operating Capital
Capital Projects & Equipment
Intergovernmental
Interdepartmental

2009 Actuals
$

$
$

AMENDED EXPENDITURE CURRENT FY

Total Expenditures and Transfers Out:
Net Change
Beginning Fund Balance
Ending Fund Balance

Page 44

$
$
$
$

2010 Actuals

13,142,872
29,250
244,357
11,369
609,752
16,622
3,631
51,244
389,004
14,498,101

$

6,863,894
409,525
475,165
54,469
3,812,670
2,793,213
1,740,909
16,149,845
(1,651,744)
32,736,632
31,084,888

$

$

$
$
$
$

2011 Adopted

18,579,080
29,920
295,739
16,315
445,413
16,439
3,568
52,874
6,387
86,000
19,531,735

$

7,002,263
409,791
628,759
1,138,156
1,900,446
1,810,400
12,889,815
6,641,920
31,084,888
37,726,808

$

$

$
$
$
$

2012 Adopted

10,241,699
244,979
9,500
333,087
22,612
37,000
50,000
86,000
1,000
11,025,877

$

7,004,442
545,640
741,983
82,500
2,970,000
2,000,000
1,819,119
1,198,105
16,361,789
(5,335,912)
37,726,808
32,390,896

$

$

$
$
$
$

11,006,846
247,883
9,500
309,012
20,672
17,500
50,000
86,000
1,000
11,748,413
7,229,979
546,995
649,132
82,000
5,200,000
1,220,000
1,898,831
16,826,937
(5,078,524)
32,390,896
27,312,372

Section 4 - Budget by Fund

SB 778
Department of Legislative Services
Maryland General Assembly
2013 Session

FISCAL AND POLICY NOTE
Senate Bill 778
Judicial Proceedings

(Senator Pugh)

Correctional Services - Inmate Welfare Fund - Telephone Financial Assistance
This bill requires the Department of Public Safety and Correctional Services (DPSCS)
and the managing official of a local correctional facility with an inmate welfare fund to
adopt regulations that require a portion of the profits derived from telephone
commissions that accrue to the funds to be used for telephone calls that take place
between an inmate and the minor child of an inmate. The bill specifies that distributions
must be made according to the financial need of an inmate. DPSCS and each local
correctional facility must report to the General Assembly by December 31 of each year
on the nature and dollar amount of any expenditure from each fund.

Fiscal Summary
State Effect: Special fund revenues to the inmate welfare funds decrease by $866,600 in
FY 2014 and by $1.2 million annually thereafter. DPSCS can handle the bill’s reporting
requirement with existing resources.
(in dollars)
SF Revenue
Expenditure
Net Effect

FY 2014
($866,600)
0
($866,600)

FY 2015
($1,155,500)
0
($1,155,500)

FY 2016
($1,155,500)
0
($1,155,500)

FY 2017
($1,155,500)
0
($1,155,500)

FY 2018
($1,155,500)
0
($1,155,500)

Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate effect

Local Effect: The bill is likely to present some operational and administrative
difficulties in most jurisdictions. For some, the monetary losses to the inmate welfare
funds may prove significant, and some jurisdictions may need additional staff. However,
to the extent that an inmate welfare fund currently exists within a county, most local
correctional officials should be able to implement the bill’s requirements with existing
resources. This bill may impose a mandate on a unit of local government.

Small Business Effect: None.

Analysis
Current Law/Background: Generally, State agencies do not contract directly with
telephone service providers. The Department of Budget and Management is responsible
for the contracts relating to the use of telephones at all State facilities, including State
correctional facilities. However, the inmate payphone contract is considered an
Information Technology procurement. As such, the procurement is handled by DPSCS
via a competitive sealed proposal process, which takes into consideration both technical
and financial aspects of each proposal. The selected proposal must be reviewed and
approved by the Department of Information Technology and the Board of Public Works.
DPSCS facilities are allowed to retain commissions to support inmate services.
The contract governing inmate calls from DPSCS facilities is structured to be a revenue
producing instrument for the agency. The funds are deposited into the inmate welfare
funds, special funds in each State correctional facility that are used by DPSCS for items
benefiting the inmate population, including education and vocational training, hygienic
supplies for indigent inmates, salaries relating to clergy and medical staff, special
recreational equipment and supplies, support of the inmate grievance process, and inmate
legal support. Inmate telephone commissions deposited into the funds totaled nearly
$5.0 million in fiscal 2012. The inmate welfare funds also receive about $2.0 million
annually from commissary activities, vending machines, and other nontelephone related
sources; in fiscal 2012, the total was $2.3 million.
Chapter 142 of 2002 (SB 271) authorized the establishment of an inmate welfare fund in
each local correctional facility. Each fund is a special, continuing, nonlapsing fund that
may be used only for goods and services that benefit the general inmate population, as
defined by regulations adopted by the managing official of each facility. Each fund
consists of profits derived from the sale of goods through the commissary operation and
telephone and vending machine commissions and money received from other sources.
Any investment earnings of a fund must be credited to the fund. The county chief
financial officer is required to pay out money from each fund as approved by the county
budget. In Dorchester County, pay outs may also be done by the managing official of the
local correctional facility.
Money from the State general fund or a county’s general fund, including any federal
funds, may not be transferred by budget amendment or otherwise to a county’s inmate
welfare fund.

SB 778/ Page 2

State Fiscal Effect: In fiscal 2012, the inmate welfare funds received $4,958,265 from
commissions on inmate telephone calls. DPSCS assumes that 4,938 qualifying inmates,
with one minor child, make two calls per month, lasting 15 minutes each. Based on that
information, and assuming a collect call local rate of 65 cents per minute, the bill reduces
deposits to the funds by $96,291 per month, and by $1,155,492 per year. In fiscal 2014,
due to the bill’s October 1, 2013 effective date, special fund revenues decrease by
$866,619. Actual decreases may vary depending on the number of eligible inmates, the
number and duration of calls, and the departmental methodology used to determine
financial need.
Local Fiscal Effect: In 2012, the Maryland Correctional Administrators Association
(MCAA) surveyed local correctional facilities regarding inmate telephone commissions
and whether the profits from the commissions are deposited to an inmate welfare fund, a
general fund, or another fund. Sixteen of the 23 counties responded, with 11 showing
deposits to an inmate welfare fund. Ten of the jurisdictions (Allegany, Caroline,
Dorchester, Garrett, Harford, Queen Anne’s, St. Mary’s, Talbot, Washington, and
Wicomico counties) reported sending 100% of profits to an inmate welfare fund.
Five jurisdictions (Baltimore, Calvert, Carroll, Charles, and Prince George’s counties)
reported sending 100% of profits to the general fund. Frederick County reported a 50/50
share between the general fund and an inmate welfare fund. It is possible that some of
the jurisdictions that did not respond to the MCAA survey also have inmate welfare
funds.
Montgomery County indicates that it is the only county in the State that accepts no
commissions for its inmate telephone program. Under the bill, Montgomery County and
any other county without an inmate welfare program would not have a fund to draw upon
to be used for telephone calls that take place between an inmate and the minor child of an
inmate.
Harford County estimates that the bill results in decreased telephone revenues for its
inmate welfare fund of about $27,800 in fiscal 2014, growing to about $37,200 by
fiscal 2018. Wicomico County estimates commission losses of only $2,000 annually, but
reports that is needs to hire one additional correctional officer to handle verification and
reporting responsibilities.
It is likely that the bill presents some operational and administrative difficulties for
correctional facilities in most jurisdictions. However, to the extent that an inmate welfare
fund currently exists within the county, most local correctional officials should be able to
implement the bill’s requirements with existing resources.

SB 778/ Page 3

Additional Information
Prior Introductions: Similar bills were introduced in 2012 addressing only local
correctional facilities. SB 910 of 2012 received a hearing by the Senate Judicial
Proceedings Committee, but no further action was taken. Its cross file, HB 1147,
received a hearing in the House Judiciary Committee but was subsequently withdrawn.
Cross File: Although HB 1138 (Delegate Carter, et al. – Judiciary) is identified as a
cross file, it is different.
Information Source(s): Harford and Wicomico counties, Maryland Correctional
Administrators Association, Baltimore City, Department of Public Safety and
Correctional Services, Department of Legislative Services
Fiscal Note History:
mc/lgc

First Reader - February 25, 2013

Analysis by: Guy G. Cherry

SB 778/ Page 4

Direct Inquiries to:
(410) 946-5510
(301) 970-5510

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