Prison Phone Justice

THE PRICE TO CALL HOME:
STATE-SANCTIONED MONOPOLIZATION
IN THE PRISON PHONE INDUSTRY

PR ISON
POLICY INITIATIVE

ACKNOWLEDGEMENTS

I thank Barbara Fair, Alex Friedman, Stephen Healy, Kelsey Kauffman, Taren Stinebrickner-Kauffman, Nick Szuberla, and
Paul Wright for sharing their expertise on fighting the monopolistic prison telephone industry with me, and I thank Leah
Sakala and Peter Wagner for their assistance developing and distributing this report.

ABOUT THE AUTHOR

Drew Kukorowski has an M.A. in Philosophy from Tufts University and a J.D. from the University of North Carolina School
of Law. He is currently a research associate at the Prison Policy Initiative.

ABOUT THE PRISON POLICY INITIATIVE

The non-profit, non-partisan Prison Policy Initiative was founded in 2001 to demonstrate how the American system of
incarceration negatively impacts everyone, not just the incarcerated. The Easthampton, Massachusetts based organization is
most famous for its work documenting how mass incarceration skews our democracy. Other projects have included a
groundbreaking report about sentencing enhancement zones, and online resources giving activists, journalists and
policymakers the tools they need to participate in setting effective criminal justice policy.

FOR MORE INFORMATION

For more information, including copies of this report and links to additional resources, see http://www.prisonpolicy.org/
phones/ .

PR ISON
POLICY INITIATIVE

PO Box 127 Northampton MA 01061
http://www.prisonpolicy.org

THE PRICE TO CALL HOME: STATE-SANCTIONED MONOPOLIZATION
IN THE PRISON PHONE INDUSTRY
by Drew Kukorowski
September 11, 2012

1. INTRODUCTION

endorses “the institution of family-friendly policies . . .
[to] reduce the rate of recidivism, thus reducing the
enormous fiscal and social costs of incarceration.”8 And
the Democratic Party Platform for 2012 notes that the
party “support[s]. . . initiatives to reduce recidivism.”9
Lowering prison telephone rates would serve the
uncontroversial goal of reducing the likelihood that
incarcerated persons will commit another crime after
their release.

Exorbitant calling rates make the prison telephone industry
one of the most lucrative businesses in the United States
today. This industry is so profitable because prison phone
companies have state-sanctioned monopolistic control over
the state prison markets, 1 and the government agency with
authority to rein in these rates across the nation has been
reluctant to offer meaningful relief.

Prison phone companies are awarded these monopolies
Fortunately, government regulation can help achieve this
through bidding processes in which they submit contract
goal. The Federal Communications Commission is
proposals to the state prison systems; in all but eight states,
considering a modest regulation to impose price caps on
these contracts include promises to pay “commissions” —
long-distance prison telephone rates. This report finds
in effect, kickbacks — to states, in either the form of a
that such regulation, when considered against the
percentage of revenue, a fixed up-front payment, or a
backdrop of the corporate monopolization of the prison
2
combination of the two. Thus, state prison systems have
telephone market, would both reduce the price-gouging
no incentive to select the
that incarcerated persons’
telephone company that offers
families suffer and
the lowest rates; rather,
The prison telephone market is structured to be
simultaneously contribute to
correctional departments have
exploitative
because
it
grants
monopolies
to
the social good by reducing
an incentive to reap the most
recidivism.
producers, and because the consumers have no
profit by selecting the
telephone company that
comparable alternative ways of communicating.
provides the highest
commission.3

2. THE PRISON TELEPHONE MARKET
IS BROKEN

This market oddity — that the government entity has an
incentive to select the highest bidder and that the actual
consumers have no input in the bidding process — makes
the prison telephone market susceptible to prices that are
well-above ordinary rates for non-incarcerated persons.
This fact, coupled with what economists would label as the
“relative inelastic demand”4 that incarcerated persons and
their families have to speak with one another, leads to
exorbitant prices. The prison telephone market is structured
to be exploitative because it grants monopolies to
producers, and because the consumers — the incarcerated
persons and their families who are actually footing the bills
— have no comparable alternative ways of
communicating.5

Markets for goods and services work best when
consumers have the freedom to select the best seller. In
the prison phone market, though, the consumers have no
choice as to which telephone company to use. That
choice is made for them by the state prison system. But
state prison systems cannot be expected to advocate for
lower phone rates because they don’t have consumer
interests in mind. And prison telephone companies have
little incentive to provide reasonable rates to their
customers because they do not answer to those
customers.
These state-sanctioned monopolies prey upon people
who are least able to select alternative methods of
communication and who are least able to sustain
additional expenses. Incarcerated persons have below
average literacy rates that make it less practical for them
to communicate in writing. 10 It is difficult for families of
incarcerated persons to pay for phone calls because
people in prison tend to come from low-income
households. 11 A study of recently released people from
Illinois prisons found that the price of phone calls from
prison was one of the two most significant barriers to

Exorbitant telephone rates are not only bad for incarcerated
persons and their families, but are bad for society at large.
High phone rates reduce incarcerated persons’ ability to
communicate with family, and family contact has been
consistently shown to lower recidivism. 6 Currently, there is
public debate about reducing the costs of mass
incarceration by focusing on ways to lower the likelihood
that incarcerated persons will re-offend after their release. 7
For example, the Republican Party Platform for 2012
1

family contact during incarceration. 12 Therefore, prison
phone companies not only have monopolies, but their
customers have no comparable alternatives to telephone
communication.

such as call monitoring. 19 But this argument is refuted
by phone rates charged in New York. New York law
bans kickbacks and requires that “the lowest possible
cost to the user shall be emphasized.”20 Currently,
Global Tel*Link charges incarcerated persons and their
In addition to these structural problems with the prison
families about $0.05 per minute, local and long-distance,
telephone industry, corporate agglomeration has
in the New York prison system. Thus, low rates in the
exacerbated the already exorbitant rates. Over the past few
prison phone market are entirely consistent with call
years, three corporations have
monitoring and other security
emerged to dominate the
measures.
market. 90% of incarcerated
The combination of corporate consolidation in the
persons live in states with
Correctional departments argue
prison phone industry, state-granted monopolies,
prison phone service that is
that revenue from kickbacks
and inelastic demand for prison telephone service
exclusively controlled by
provides for prison amenities
has led to exorbitant rates.
Global Tel*Link, Securus
that would otherwise go
Technologies, or
CenturyLink. 13 The largest of these corporations, Global
Tel*Link, currently has contracts for 27 state correctional
departments after its acquisition of four smaller prison
phone companies between 2009 and 2011. 14 Global
Tel*Link-controlled states contain approximately 57% of
the total state population of incarcerated people in the
United States. 15 Government regulation was designed to
control this kind of corporate domination over a captive
market.

unfunded by state
legislatures. 21 This argument fails to stand up to scrutiny
when considering that the federal prison system charges
comparatively low rates: $0.06/minute local and $0.23/
minute long-distance, and still generates enormous
revenue. As a recent Government Accountability Office
report points out, the federal prison phone rates were
sufficient to cover costs and generate $34 million in
profit in 2010. 22 Thus, profits can still be generated
when prices are capped at relatively low levels. Both
prison phone companies and state prison systems would
be able to cover costs and generate revenue even with
price caps.

3. EXORBITANT PRISON PHONE
RATES RESULT FROM THE
MONOPOLISTIC MARKET

4. EXORBITANT PRISON PHONE
PRICES HARM SOCIETY

The combination of corporate consolidation in the prison
phone industry, state-granted monopolies, and inelastic
demand for prison telephone service has led to exorbitant
rates. In many states, someone behind bars must pay about
$15 for a fifteen minute phone call. 16 For families trying to
stay in touch on a regular basis, such prices are often
backbreaking.

The link between family contact during incarceration
and reduced recidivism is well-documented.23 Indeed,
the federal Bureau of Prisons states that “telephone
privileges are a supplemental means of maintaining
community and family ties that will contribute to an
inmate’s personal development.”24 Congress itself has
found, in the context of
Because rates vary widely
enacting the Second Chance
between states — even
Both prison phone companies and state prison
Act of 2007, that “there is
between states that use the
evidence to suggest that
systems would be able to cover costs and
same prison phone company
inmates who are connected to
— nationwide regulation
generate revenue even with price caps.
their children and families are
appropriate. For example, a
more likely to avoid negative
fifteen minute long-distance
incidents
and
have
reduced
sentences.”25 And the
phone call from Global Tel*Link costs $2.36 in
American Correctional Association, the world’s largest
Massachusetts, but that same call costs more than $17 in
professional corrections association and an accreditation
17
Georgia. This large difference in rates originates in large
agency for correctional facilities, has repeatedly resolved
part from the wide range — anywhere from 15% to 60% —
that “sound correctional management” requires that
in the size of kickbacks that prison phone companies pay to
“adult/juvenile offenders should have access to a range
18
state governments.
of reasonably priced telecommunications services” and
that rates for such services should be “commensurate
The phone companies and state prison systems use
with those charged to the general public for like
different arguments to defend the high rates. Prison phone
services.”26 Thus, a variety of stakeholders and policycompanies argue that rates must be high in order to cover
making bodies agree that high phone prices are harmful,
costs associated with providing secure telephone service,
and yet high prison phone prices persist.
2

AMERICAN SECURITIES: A PRIMER
Who is American Securities?
A New York private equity firm that purchased prison telephone behemoth Global Tel*Link last year.
How did American Securities acquire Global Tel*Link?
By purchasing the prison phone company from two other New York private equity firms, Veritas and Goldman Sachs
Direct, for $1 billion in 2011. Veritas and Goldman Sachs purchased Global Tel*Link in 2009 for $345 million. That’s a
$655 million return on their investment in two years.
What kinds of companies does American Securities invest in?
According to its website, American Securities specializes in “stable demand industries.” And it doesn’t get much more
stable than a monopoly over the prison telephone industry with a captive consumer market.
Never heard of American Securities before?
Aside from Global Tel*Link, their investments include Oreck Vacuums and Potbelly Sandwich Works.
Sources: David Carey, THE DEAL PIPELINE, American Securities Buys Global Tel*Link from Veritas, (Oct. 31,
2011), http://www.thedeal.com/content/private-equity/american-securities-buys-global-tellink-from-veritas.php (last
visited Sept. 10, 2012); American Securities, http://www.american-securities.com (last visited Sept. 5, 2012).
In addition to reducing recidivism, lower telephone prices
that lead to increased contact between incarcerated people
and their children increase incarcerated persons’
involvement with their children after release.27 As of 2007,
52% of people incarcerated in state prisons and 63% of
people incarcerated in the federal system were parents of
minor children. 28 Lowering the cost of communications for
these incarcerated persons and their children would
improve parent-child relationships by permitting more
frequent communication.

Finally, lower prison telephone rates would also lessen
the recent problem of contraband cell phones.30 The
connection between high prison phone rates and
contraband cell phone spurred Congress to order a
government study into the effect of high prison phone
rates on the demand for contraband cell phones. 31 And
even TIME Magazine notes that the “notoriously
expensive” cost of using prison telephones contributes to
the demand for cell phones in prison. 32 Lowering prison
telephone rates would improve safety by providing less
incentive for incarcerated people to acquire contraband
cell phones.

The economic consequences of high prison phone rates are
harmful, as well. The apparent revenues generated by high
prison phone rates are offset by the costs of larger prison
populations caused by increased rates of re-offending.
Foregoing revenue from exorbitant phone rates now will
decrease correctional departments’ costs in the future
because fewer people will find themselves back in prison.
If state governments are serious about lowering costs by
reducing prison populations, lowering prison phone rates
provides a simple, straightforward, and evidence-based
way to achieve that goal.

5. GOVERNMENT REGULATION IN
THE PRISON PHONE INDUSTRY

Currently, prison phone companies are subject to
minimal governmental regulation. Pressuring state utility
agencies, which regulate local and in-state long-distance
phone rates, to lower prison phone rates has been
successful in a few places, but is unlikely to succeed
everywhere. The commissions that states receive from
prison phone companies give states little incentive to
enact affordable rates. At the federal level, the Federal
Communications Commission (FCC) currently limits its
regulation of the prison phone industry to disclosure
requirements mandating that prison phone companies

High prison phone rates also function as a regressive tax on
communities that experience higher incarceration rates. 29
This is the opposite of our generally progressive tax
structure where tax burdens increase as income rises. In
this context, low-income families pay exorbitant phone
rates that fund state revenues. But taxpayers are already
paying for prisons. It is unfair that taxpayers whose family
members are incarcerated should be subject to an additional
tax, especially one that also enriches prison phone
corporations and makes incarcerated people more likely to
return to prison.

The apparent revenues generated by high prison
phone rates are offset by the costs of larger
prison populations caused by increased rates of
re-offending.
3

inform collect call recipients of prices before family
members accept calls from incarcerated persons. 33
In 2000, a group of plaintiffs brought a class action lawsuit
against the Corrections Corporation of America and several
prison phone companies, alleging that the prison phone
agreements between the parties violated, among other
things, federal anti-trust law. The federal district court
referred the case to the FCC, stating that the FCC was
better suited to addressing the concerns raised by the
lawsuit. The plaintiffs then petitioned the FCC to enact
regulations that would introduce competition to the prison
phone market in the hopes of lowering prison phone rates
by breaking up the monopolistic prison phone industry.
After several years of little movement from the FCC, the
plaintiffs shifted their request by petitioning the FCC to
impose price caps or benchmark rates of $0.20 - $0.25 per
minute for interstate long-distance rates. 34 This petition —
known as the Wright Petition, after original plaintiff
Martha Wright — is still pending before the FCC.

The telephone is one of the few ways that people in
prison can remain in touch with their children. (Photo:
Lucy Nicholson/Reuters, 2012)

Federal regulation of interstate long-distance prison
phone rates would bring much-needed relief to
incarcerated persons and their families, and it would
increase public safety by reducing recidivism through
increased family communications. While such regulation
would not necessarily affect prison phone long-distance
rates within a single state, 36 the highest prison phone
rates currently apply to interstate phone calls.37 Setting
price caps for interstate prison long-distance rates would
bring rates more in line with rates in the non-prison
market while still enabling prison phone companies to
earn profits. 38 In sum, federal regulation of this market is
imperative.

The rates requested by the Wright Petition would be more
affordable and would still permit phone companies to earn
profits. As demonstrated by the example of the federal
prison system discussed in section 3, rates as low as $0.06
per minute can still generate significant revenue. Despite
widespread consensus that prison phone rates should be
lower, the FCC has failed to impose price caps in this
market because of obstructionism by prison phone
companies. Prison phone companies continue to resist a
regulation that is eminently reasonable and that would
permit them to make handsome profits while
simultaneously reducing crime. This is corporate greed and
disregard for public welfare at its worst.

7. SUMMARY &
RECOMMENDATIONS

State-sanctioned monopolies for prison telephone
companies encourage exorbitant phone rates for
incarcerated persons and their families. High prison
phone rates — effectively regressive taxes — reduce
communication between incarcerated persons and their
families. Criminological research undeniably
demonstrates that increased communication with family
during incarceration reduces the risk that incarcerated
persons will re-offend after their release. But neither
prison phone corporations nor state prison systems have
a strong incentive to lower rates. As a result,
incarcerated persons, their families, and the public at
large suffer while a few select corporations reap the
profits.

6. WHY FEDERAL REGULATION
WOULD AMELIORATE THE PROBLEM

The Federal Communication Commission’s statutory
purpose, stated in the law that created the commission in
1934, is to regulate telecommunications such that service is
available nationwide at “reasonable charges.”35 Under no
circumstances can the current prison phone rates be
deemed reasonable.
The FCC is ideally situated to regulate this broken market.
The FCC already has consumer protection capabilities such
that it can field consumer complaints and resolve disputes
with phone companies without the time and costs
associated with litigation.

Government regulation of this predatory industry is the
best solution. The Federal Communications Commission
should set price caps on prison phone rates by approving
the Wright Petition. State governments should refuse to
engage in the collusive and pernicious practice of
accepting kickbacks from prison phone revenue. And the
public should exercise its political power to ensure that

Despite widespread consensus that prison phone
rates should be lower, the FCC has failed to impose
price caps in this market because of obstructionism
by prison phone companies.
4

12

justice is brought to the prison phone industry by
participating in the relentless advocacy campaigns for this
issue, such as those organized by Citizens United for the
Rehabilitation of Errants (CURE), and the Center for
Media Justice.

See La Vigne et al., supra note 6, at 323 (2005).

13

Note that this data only reflects state prison contracts, not
local jail contracts or contracts with private prisons. Thus, it is
likely that these companies control phone service for even
more incarcerated persons. Percentage was calculated by
consulting Dannenberg (2011) and U.S. DEPT. OF JUSTICE,
BUREAU OF JUSTICE STATISTICS, PRISONERS IN 2010 14 (2012),
available at http://bjs.ojp.usdoj.gov/index.cfm?
ty=pbdetail&iid=2230 (last visited Sept. 5, 2012).

ENDNOTES
1

Paul R. Zimmerman & Susan M.V. Flaherty, Location
Monopolies and Prison Phone Rates, 47 QUARTERLY REVIEW OF
ECONOMICS AND FINANCE 261, 262 (2007). Specifically,
Zimmerman & Flaherty identify prison telephone companies as
having ‘location monopolies,’ i.e., the telephone service provider
is the exclusive provider for all of the prisons in a state.

14

See Dannenberg, supra note 2, at 16, and Global Tel*Link
website, available at http://www.gtl.net/ (noting that Global
Tel*Link owns the contracts for Conversant Technologies,
Value-Added Communications, Public Communications
Services, and Inmate Telephone Inc.) (last visited Sept. 10,
2012).

2

See John E. Dannenberg, Nationwide PLN Survey Examines
Prison Phone Contracts, Kickbacks, 22 PRISON LEGAL NEWS 1,
4-5 (2011); see also Steven J. Jackson, Ex-Communication:
Competition and Collusion in the U.S. Prison Telephone Industry,
22 CRITICAL STUDIES IN MEDIA COMMUNICATION 263, 269
(2005). Dannenberg’s article is a tour de force that is required
reading for this issue.
3

15

See note 13, supra.

16

In Mississippi, for example, someone behind bars in the state
Department of Corrections pays $14.55 for a 15-minute phone
call. See U.S. GOVERNMENT ACCOUNTABILITY OFFICE,
IMPROVED EVALUATIONS AND INCREASED COORDINATION
COULD IMPROVE CELL PHONE DETECTION 14 (2011), available
at http://www.gao.gov/assets/330/322805.pdf (last visited Sept.
5, 2012). In Georgia, that price rises to more than $17. See
GEORGIA DEPARTMENT OF CORRECTIONS, INMATE TELEPHONE
SYSTEM: GLOBAL TEL LINK CUSTOMER USER GUIDE 4,
available at http://www.dcor.state.ga.us/pdf/
GDC_GTL_user_manual.pdf (last visited on Sept. 3, 2012).

See Jackson, supra note 2, at 269.

4

Roughly, demand for a specific product is inelastic when
changes in the product’s price do not have a corresponding effect
on the demand for that good.
5

See Zimmerman & Flaherty, supra note 1, at 262 (arguing that
mail and email are not close substitutes of telephone
communication because of the high rate of illiteracy among
incarcerated persons).
6

See Nancy G. La Vigne, Rebecca L. Naser, Lisa E. Brooks, &
Jennifer L. Castro, Examining the Effect of Incarceration and InPrison Family Contact on Prisoners’ Family Relationships, 21
JOURNAL OF CONTEMPORARY CRIMINAL JUSTICE 314, 316 (2005).

17

See Dannenberg, supra note 2, at 16.

18

See id. at 2.

19

See Zimmerman & Flaherty, supra note 1, at 263.

20

N.Y. CORR. LAW § 623.

21

See Zimmerman & Flaherty, supra note 1, at 263; see also
Justin Carver, An Efficiency Analysis of Contracts for the
Provision of Telephone Services to Prisons, 54 FED. COMM.
L.J. 391, 400 (2002).

7

There is also significant action by states to consider new ways to
reduce recidivism. See CHRISTIAN HENRICHSON & RUTH
DELANEY, VERA INSTITUTE OF JUSTICE, THE PRICE OF PRISONS:
WHAT INCARCERATION COSTS TAXPAYERS 12 (2012) (noting that
several states have increased efforts to reduce recidivism through
improved reentry programs), available at http://www.vera.org/
download?file=3542/Price%2520of%2520Prisons_updated
%2520version_072512.pdf (last visited Sept. 5, 2012).

22

See U.S. GAO, supra note 16, at 15.

23

REPUBLICAN PARTY PLATFORM 38 (2012), available at http://
www.gop.com/wp-content/uploads/
2012/08/2012GOPPlatform.pdf (last visited Sept. 4, 2012).

See La Vigne et al., supra note 6, at 316; see also Rebecca L.
Naser & Christy A. Visher, Family Members’ Experiences with
Incarceration and Reentry, 7 WESTERN CRIMINOLOGY REVIEW
20, 21 (2006) (noting that “a remarkably consistent association
has been found between family contact during incarceration
and lower recidivism rates”).

9

DEMOCRATIC NATIONAL PLATFORM (2012), available at http://
assets.dstatic.org/dnc-platform/2012-National-Platform.pdf (last
visited Sept. 7, 2012).

24

28 C.F.R. § 540.100(a).

25

42 U.S.C. § 17501(b)(6).

10

26 AMERICAN

8

CORRECTIONAL ASSOCIATION, PUBLIC
CORRECTIONAL POLICIES, PUBLIC CORRECTIONAL POLICY ON
ADULT/JUVENILE OFFENDER ACCESS TO TELEPHONES 2001-1
(amended 2011), available at https://www.aca.org/government/
policyresolution/PDFs/Public_Correctional_Policies.pdf (last
visited Sept. 8, 2012). This Policy Statement was unanimously
adopted in 2001, and was amended and endorsed in 2006 and
2011.

See ELIZABETH GREENBERG, ERIC DUNLEAVY, MARK KUTNER,
& SHEIDA WHITE, U.S. DEPT. OF EDUCATION, NATIONAL CENTER
FOR EDUCATION STATISTICS, LITERACY BEHIND BARS: RESULTS
FROM THE 2003 NATIONAL ASSESSMENT OF ADULT LITERACY
PRISON SURVEY 29 (2007), available at http://nces.ed.gov/
pubs2007/2007473.pdf (last visited Sept. 5, 2012).
11

See generally BRUCE WESTERN, PUNISHMENT AND INEQUALITY
IN AMERICA 85-107 (2006) (Ch.4).

27

5

See La Vigne et al., supra note 6, at 328.

28

LAUREN E. GLAZE & LAURA M. MARUSCHAK, BUREAU OF
JUSTICE STATISTICS, PARENTS IN PRISON AND THEIR MINOR
CHILDREN 1 (2008; revised 2010), available at http://
bjs.ojp.usdoj.gov/index.cfm?ty=pbdetail&iid=823 (last visited
Sept. 6, 2012).
29

See Carver, supra note 21, at 400 (2002).

30

See, e.g., TODD W. BURKE & STEPHEN S. OWEN, FBI LAW
ENFORCEMENT BULLETIN, CELL PHONES AS PRISON CONTRABAND
(2010), available at http://www.fbi.gov/stats-services/
publications/law-enforcement-bulletin/july-2010/cell-phones-asprison-contraband (last visited Sept. 6, 2012). This FBI bulletin
also acknowledges that part of correctional administrators’
objection to cell phones lies in the fact that cell phone use reduces
revenue from prison-approved phones. See also DAVID R. SHAW,
CALIFORNIA OFFICE OF THE INSPECTOR GENERAL, SPECIAL
REPORT: INMATE CELL PHONE USE ENDANGERS PRISON SECURITY
AND PUBLIC SAFETY 6 (2009) (noting that a correctional officer in
the California prison system earned $150,000 in a single year
smuggling cell phones).
31

Cell Phone Contraband Act of 2010, Pub. L. No. 111-225, 124
Stat. 2387 (2010).
32

Tom McNichol, TIME MAGAZINE, Prison Cell Phone Use a
Growing Problem, available at http://www.time.com/time/nation/
article/0,8599,1900859,00.html (May 26, 2009) (last visited Sept.
3, 2012).
33

47 C.F.R. § 64.710.

34

Federal Communications Commission, Implementation of Pay
Telephone Reclassification and Compensation Provisions of
Telecommunications Act of 1996. Petitioners’ Alternative
Rulemaking Proposal, CC Docket No. 96-128 (Feb. 28, 2007).
Given that this request was submitted in 2007, and the low longdistance rates that prevail today, the requested rates would already
seem too high.
35

47 U.S.C. § 151.

36

FCC jurisdiction only extends to interstate telecommunications.

37

See Dannenberg, supra note 2, at 16.

38

See Zimmerman & Flaherty, supra note 1, at 277.

6