[Federal Register Volume 78, Number 14 (Tuesday, January 22, 2013)]
[Proposed Rules]
[Pages 4369-4376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-01154]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[WC Docket No. 12-375; FCC 12-167]
Rates for Interstate Inmate Calling Services
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) seeks comment on the inmate calling services industry and
how to ensure just and reasonable rates for inmate calling services.
DATES: Comments are due on or before March 25, 2013. Reply comments are
due on or before April 22, 2013.
ADDRESSES: You may submit comments, identified by WC Docket No. 12-375,
by any of the following methods:
Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting
comments.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by email: [email protected] or phone: (202) 418-
0530 or TTY: (202) 418-0432.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Lynne Hewitt Engledow, Wireline
Competition Bureau, Pricing Policy Division, (202) 418-1520 or (202)
418-0484 (TTY), or via email at [email protected].
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking in WC Docket No. 12-375, FCC 12-167, adopted on
December 24, 2012, and released on December 28, 2012. The full text of
this document is available for public inspection during regular
business hours in the Commission's Reference Center, 445 12th Street
SW., Room CY-A257, Washington, DC 20554. The full text of this document
may be downloaded at the following Internet address: http://www.fcc.gov/document/rates-interstate-inmate-calling-services. The
complete text may be purchased from Best Copy and Printing, Inc., 445
12th Street SW., Room CY-B402, Washington, DC 20554. To request
alternate formats for persons with disabilities (e.g. Braille, large
print, electronic files, audio format, etc.) or reasonable
accommodations for filing comments (e.g. accessible format documents,
sign language interpreters, CARTS, etc.), send an email to
[email protected] or call the Commission's Consumer and Governmental
Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY).
I. Introduction
1. In this item we grant two longstanding petitions for rulemaking
filed in the docket that seek to ``secure the `just and reasonable'
interstate rates for prisoners required by Section 201(b) of the
Communications Act'' by initiating this Notice of Proposed Rulemaking
(NPRM or Notice) to
[[Page 4370]]
consider changes to our rules governing rates for interstate
interexchange inmate calling services (ICS). In the first petition for
rulemaking, filed in 2003, (First Wright Petition), Petitioners
requested that the Commission ``prohibit exclusive inmate calling
service agreements and collect call-only restrictions at privately-
administered prisons and require such facilities to permit multiple
long distance carriers to interconnect with prison telephone systems. *
* *'' In the second petition for rulemaking, filed in 2007,
(Alternative Wright Petition), Petitioners proposed that the Commission
require debit calling, prohibit per-call charges and establish rate
caps for all interstate, interexchange inmate calling services. The
Commission received significant comment on the two Petitions for
Rulemaking. Recently, there has been substantial renewed interest and
comment in this docket highlighting both the wide disparity among
interstate interexchange ICS rate levels and significant public
interest concerns. We believe it is appropriate to seek comment to
refresh the record and consider whether changes to our rules are
necessary to ensure just and reasonable ICS rates for interstate, long
distance calling at publicly- and privately-administered correctional
facilities.
II. Background
A. Description of Inmate Calling Services
2. Inmate calling services are typically limited to collect or
debit-based calling from payphones. Collect calls from a correctional
facility usually incur a two-part charge; a per-call set up charge and
a per-minute charge. Debit calling (charges are deducted from an
inmate's account), typically incurs a per-minute charge only. Based on
the record, the per-call charge can vary significantly from $0.50 to
$3.95 and per-minute charges can vary significantly from $0.05 to
$0.89. Some commenters state that ICS rates vary based on such factors
as facility size, call volume and the jurisdiction of the call. Local
and intrastate ICS rates are generally set by the states. The
Commission does not currently regulate interstate ICS rates. ICS rates
in federal prisons are set by the Federal Bureau of Prisons.
3. Public Policy Considerations. Petitioners and some commenters
argue that ICS rate reform is a public policy imperative because high
ICS rates limit the ability of most inmates to maintain contact with
their families. Commenters point to studies showing that regular
contact with family reduces inmate recidivism. Commenters note that
regular telephone contact with loved ones also benefits those receiving
the calls, including inmates' children, as inmates may be assigned to
correctional facilities far from their homes thus limiting in-person
visits. Commenters contend that regular telephone contact between
inmates and their loved ones at high rates places a heavy burden on
inmates' families because families typically bear the burden of paying
for the calls. In addition, they assert that the lack of regular
telephone contact between inmates and their loved ones is a hardship on
families because neither the inmates nor their families can afford the
high rates.
4. We note that the Government Accountability Office (GAO) has
twice recognized the conclusions of Federal Bureau of Prison officials
that contact with family ``aids an inmate's success when returning to
the community'' and thus lowers recidivism. Moreover, the GAO recently
found that ``crowded visiting rooms make it more difficult for inmates
to visit with their families'' and that ``[t]he infrastructure of the
facility may not support the increase in visitors as a result of the
growth in the prison population.'' As such, we believe that regular
telephone contact between inmates and their families is an important
public policy matter, and that we should consider the impact that
interstate ICS rates have.
5. Unique Characteristics of ICS. The Commission has recognized
that ICS differs from traditional payphone services in a number of
respects. First, although barriers to entry are low for payphone
providers in most locations, a correctional facility typically grants
an exclusive contract to a single ICS provider for a particular
facility, essentially creating a monopoly at that facility. As such,
competition exists for ICS contracts but once an ICS provider wins a
contract it becomes the sole ICS provider in that facility. Unlike non-
incarcerated customers who have access to alternative calling platforms
on public payphones, inmates only have access to payphones operated by
a single provider for all available services at that payphone. These
contracts additionally often include a site commission or location fee
paid to the correctional facility. The Commission has previously found
that ``[t]o have a realistic chance of winning a contract, the bidder
must include an amount to cover commissions paid to the inmate
facility.'' Five years ago Petitioners estimated that ``commissions add
an average of 43 percent * * * to all other costs before commissions.''
6. Security considerations also differentiate ICS from public
payphone services. For instance, correctional facilities typically use
an automated voice-processing system to screen and process inmate
collect calls rather than a pre-subscribed operator service provider.
ICS providers also employ blocking mechanisms to prevent inmates from
making direct-dialed (that is calls made without using the automated
voice-processing system) calls, access code calls, 800/900 number
calls, or calls to restricted individuals, such as judges or witnesses.
Correctional facilities also require that payphones be monitored for
frequent calls to the same number. Moreover, correctional facilities
often require periodic voice overlays that identify the call as being
placed from a correctional facility, as well as listening and recording
capabilities for all calls. Commenters note that the costs of these
security features, hardware and software costs, and training for
staffers make ICS more costly to provide than public payphone service.
7. The record to date indicates a wide disparity in ICS rates
between states. These rates reflect the higher security and network
costs that are inherent in ICS; the disparity thus may reflect whether
the rates in question include site commissions. For instance,
correctional facilities located in states that do not require
commissions from ICS providers often charge lower ICS rates. For
example, New York state prohibited site commissions in state prisons
and interstate per-minute rates in such prisons are as low as $0.048.
In contrast, in Colorado, a state that has site commissions, interstate
per-minute rates can be as high as $0.89. However, in Montana, another
state with site commissions, the interstate per-minute rate is $0.12.
Such record evidence raises questions about whether ICS rates
accurately reflect the costs of providing ICS and whether site
commission payments are a reasonable cost of providing ICS that
therefore should be recovered in the ICS rates inmates are charged.
8. We seek comment on the Commission's legal authority in Section
III.E below to address the issues raised by the Petitioners. While we
believe that we have jurisdiction to address interstate ICS calls we
believe those calls may be a relatively small subset of all inmate
telephone calls. However, several commenters argue that interstate
calls are often the most expensive and therefore Commission action,
such as establishing an interstate rate benchmark, would nevertheless
be effective in helping lower the cost of
[[Page 4371]]
contact between inmates and their families. In the interest of
developing a complete and current record, this Notice seeks comment on
the reasonableness of current ICS rates and what steps the Commission
can and should take to ensure reasonable ICS rates going forward.
B. Inmate Calling Order on Remand and NPRM
9. On February 12, 2002, the Commission adopted an order addressing
whether section 276 of the Communications Act of 1934, as amended,
(Act) requires the Commission either to preempt state rate caps on
local collect calls or permits ICS providers to collect an additional
per-call surcharge above state rate caps on local collect calls. In the
Inmate Calling Order on Remand and NPRM, the Commission concluded that
section 276 does not require either preemption or an additional
surcharge and also concluded that it was unnecessary to impose
nonstructural safeguards on the Bell Operating Companies' provision of
ICS services. In making these determinations, the Commission recognized
the unique nature of ICS, and concluded that the ``fair compensation''
requirement of section 276 did not necessarily mean that payphones with
higher costs should receive greater compensation than other payphones.
10. In the NPRM portion of the Inmate Calling Order on Remand and
NPRM, the Commission asked ``whether the current regulatory regime
applicable to the provision of inmate calling services is responsive to
the needs of correctional facilities, ICS providers, and inmates, and,
if not, whether and how we might address those unmet needs.''
Specifically, the Commission sought detailed comments on ICS rates,
commissions paid to the confinement facilities, cost and revenue data,
information from states on how they handle inmate calling, alternatives
to the current system, and information on call disconnections. The NPRM
also proposed methods to lower ICS rates, including allowing the use of
debit cards or commissary accounts.
C. Two Petitions for Rulemaking
1. First Wright Petition
11. In 2000, current and former inmates of Corrections Corporation
of America (CCA) confinement facilities, and the individuals that
receive their telephone calls, filed a class-action lawsuit against CCA
seeking relief from exclusive dealing arrangements CCA had with ICS
providers. The plaintiffs alleged that the exclusive dealing resulted
in restricted telephone service choices for inmates and caused rates
for those services to substantially increase, in violation of various
constitutional and statutory provisions, including section 201(b) of
the Act. On August 22, 2001, the United States District Court for the
District of Columbia dismissed the lawsuit. Pursuant to the doctrine of
primary jurisdiction, the court directed the parties to file the
appropriate pleadings with the Commission to resolve the issues the
plaintiffs raised.
12. On November 3, 2003, Petitioners filed the First Wright
Petition with the Commission pursuant to the court's directive.
Petitioners requested that the Commission address high ICS rates by
prohibiting exclusive ICS contracts and collect-call-only restrictions
at privately-administered prisons, and requiring such facilities to
permit multiple long-distance carriers to interconnect with prison
telephone systems. The Commission sought and received comment on the
First Wright Petition.
2. Alternative Wright Petition
13. On March 1, 2007, Petitioners filed an alternative rulemaking
petition proposing that the Commission address high ICS rates by
requiring debit calling, prohibiting per-call charges and establishing
rate caps for all interstate, interexchange ICS. The Commission sought
and received comment on the Alternative Wright Petition. On August 15,
2008, a group of ICS providers filed the Inmate Calling Services
Interstate Call Cost Study (ICS Provider Proposal), which included cost
information to support their proposed rate methodology and rate levels
for ICS.
14. As described fully below, in this Notice, we seek updated
information on the ICS market and request answers to questions raised
by the Petitioners. We specifically request comment from state
departments of corrections and state officials responsible for prison
telecommunications decision making. After the ICS Provider Proposal was
filed, a consensus appeared to be forming about how best to address
inmate calling; we hope to revive those discussions and consensus
building through our action today.
15. Since the Inmate Calling Order on Remand and NPRM was released
in 2002, the Commission has received numerous comments regarding ICS
reform. Responses to the NPRM and subsequent requests for comment on
the First Wright Petition and the Alternative Wright Petition have
provided an extensive record on ICS reform. We believe it is
appropriate at this time to open a new docket exclusive to ICS reform
in light of the lengthy record, as well as the fact that the ICS record
is part of the general payphone docket (CC Docket No. 96-128) which
relates to competition among payphone providers and the deployment of
payphone services. As such, comments and reply comments on this Notice
must be filed in WC Docket No. 12-375. We incorporate comments, reply
comments and ex parte filings from CC Docket No. 96-128 into WC Docket
No. 12-375.
III. Ensuring ICS Rates Are Just and Reasonable
16. There are multiple proposals to address ICS rates in the
record. We seek to balance the goal of ensuring reasonable ICS rates
for end users with the security concerns and expense inherent to ICS
within the statutory guidelines of sections 201(b) and 276 of the Act.
Ensuring just and reasonable ICS rates may be accomplished through
incentives or regulations, or a combination of both; we seek comment on
these proposals below.
A. Rate Caps in the ICS Market
17. In the Alternative Wright Petition, Petitioners requested that
the Commission set rate caps for interstate long distance ICS.
Specifically, Petitioners requested that the Commission ``establish a
benchmark rate for domestic interstate interexchange inmate debit
calling service of $0.20 per minute and a benchmark rate for domestic
interstate interexchange inmate collect calling service of $0.25 per
minute, with no set-up or other per-call charge.'' The Petitioners used
15 and 20 minute call durations to calculate the rate caps and based
their proposed rate caps on then current Federal Bureau of Prison and
several individual states' ICS rates. We seek comment on the elements
of the rate cap proposal and whether the criteria used to develop the
proposed caps are appropriate.
18. Per-Call Charge. Each time an inmate places a payphone call
there are typically two elements that make up its cost--a per-call set
up charge and a per-minute charge. We first seek comment on the per-
call charge. Petitioners propose eliminating the call set up or per-
call charge, which can be as much as $3.95, and allowing only per-
minute charges. We seek comment on this proposal. What costs are
associated with the per-call charge? Would the elimination of the per-
call charge help ensure just and reasonable ICS rates? Would a
prohibition on per-call charges result in below-cost service?
[[Page 4372]]
19. Petitioners note that inmates often incur multiple per-call
charges when calls are dropped after a pause in conversation. We seek
data on the average number of dropped calls that inmates experience. We
request that commenters suggest ways to prevent multiple per-call
charges for a single conversation that is disconnected by security
triggers and subsequently allowed to continue while maintaining
appropriate security measures. For example, if the per-call charge is
maintained, Petitioners suggest that if a disconnected call is
reinitiated within two minutes, it should not incur another per-call
charge. Should the Commission require such a measure? What other steps
could be taken to prevent inmates from being charged multiple per-call
charges for what amounts to one conversation? What are the costs
associated with call security and are they incurred on a fixed or per-
call basis?
20. Per-Minute Rate Caps. Would the per-minute rate cap approach
proposed by the Petitioners ensure just and reasonable rates? Are the
proposed rate caps just and reasonable consistent with sections 201 and
276 of the Act? If not, would different rate caps be appropriate? What
factors should the Commission consider in determining an appropriate
per-minute rate cap? Commenters advocating an alternative per-minute
rate cap should provide specific, detailed cost information and other
relevant data to support their proposed per-minute rate caps. Should
the domestic interstate interexchange ICS per-minute rate cap proposed
above apply to both publicly- and privately-administered correctional
facilities?
21. Some commenters argue that the proposed per-minute rate caps
are arbitrary and capricious because they would preclude providers from
recovering their legitimate costs of providing service. Others argue
that the Alternative Wright Petition proposal is confiscatory or may
otherwise put ICS providers out of business. We seek evidence in
support of or disproving such arguments. Commenters also argue that the
adoption of per-minute rate caps would chill innovation and ultimately
result in reductions in service levels because the proposed caps will
not adequately compensate the providers, thus making ICS a less
attractive service to offer. Others note that new providers are
entering the ICS market. Commenters supporting such assertions are
asked to provide specific, detailed information about the ICS market to
support their positions and describe how market trends influence ICS
rates.
22. In the Alternative Wright Petition, Petitioners argue that
several benefits would accrue from setting per-minute rate caps, such
as administrative ease and the absence of jurisdictional challenges. We
seek comment on this argument. Can commenters identify any other
benefits to introducing per-minute rate caps? What are the perceived
problems or challenges associated with introducing per-minute rate
caps? For example, parties argue that differences between correctional
facilities including size, location, security levels, facility age and
staffing levels will not allow a one size fits all solution, such as
per-minute rate caps. Is this accurate? How can the Commission
establish a solution that addresses the many variations among
confinement facilities?
23. If the Commission decides to implement rate caps in the ICS
market how should we? What additional data, if any, does the Commission
require to set rates? Would a rate cap approach require the Commission
to conduct rate cases, as some commenters suggest? We seek comment on
the best ways to determine just and reasonable caps for ICS rates.
24. Marginal Location Methodology. In 2008, ICS providers submitted
the ICS Provider Proposal for ICS rates. The ICS Provider Proposal uses
the ``marginal location'' methodology, previously adopted by the
Commission to calculate public payphone rates, to calculate proposed
ICS rates. The ICS providers believe the ``marginal location''
methodology provides a ``basis for rates that represent `fair
compensation' as set forth in'' section 276(b)(1)(A) of the
Communications Act. The ICS Provider Proposal advocates a two-part rate
structure that includes both a fixed per-call charge and a per-minute
rate, arguing that per-call charges must be maintained to cover such
expenses as equipment costs and monthly line charges. The ICS providers
determined that the methodology and data yield a requisite fixed per-
call charge of $1.56 with a per-minute rate of $0.06 for debit calls,
and a fixed per-call charge of $2.49 with a per-minute rate of $0.07
for collect calls, applicable to all ICS providers. In response,
Petitioners point out that the ICS Provider Proposal ``largely supports
Petitioners' requested benchmark rates.'' Petitioners calculate that
the ICS Provider Proposal two-part rate structure equals rate caps of
$0.16 per minute for a 15-minute debit call and $0.24 per minute for a
15-minute collect call.
25. We seek comment on whether the ICS Provider Proposal
methodology would result in a just and reasonable rate. We also
encourage commenting parties that disagree with the ICS Provider
Proposal or proposed methodology to provide alternative methodologies
supported by sufficiently-detailed data. We seek comment on whether the
ICS Provider Proposal has provided sufficient cost, demand, and revenue
detail to allow the Commission to determine whether the proposed rates
are just and reasonable.
26. We also seek comment on whether the underlying cost and demand
factors for public payphones and ICS are similar enough to justify
using a cost methodology designed for public payphones to set ICS
rates. In particular, we seek comment on the extent to which ICS rates
and call volumes vary among prisons across the country, and how the
rates and call volumes compare with the variation that occurs with
public payphones. We seek comment on whether an additional
justification exists for adopting this cost methodology.
27. Impact of Rate Reductions on Call Volumes. We seek comment on
whether call volumes have increased where rates have been lowered, and
the resulting impact on ICS providers' revenues. We note that the 2011
GAO Report found that only approximately 25 percent of inmates in the
Federal Bureau of Prisons use their entire monthly allotted minutes for
calls and that if rates were lowered it would encourage greater
communications with families, which the Bureau of Prisons ``has stated
facilitates the reintegration of inmates into society upon release from
prison.'' Do other correctional facilities find that incarcerated
individuals are not using all their allotted time to make calls? How
much time is allotted, and what is the percentage of individuals who
use all their time?
28. Tiered Pricing. A recent ex parte filing by Petitioners
attached a transcript from a New Mexico Public Service Commission
hearing that described the possible use of a tiered, by monthly volume
of minutes, pricing structure in the state. Do commenters believe a
per-minute rate set by usage volume is a viable option? Would tiered
pricing address concerns over a one size fits all reform approach such
as rate caps? What factors should the Commission consider in
establishing pricing tiers? What are potential problems with tiered
pricing?
29. Market Forces. Petitioners note that telecommunications costs
in general, and long distance costs in particular, are decreasing and
therefore, they believe, ICS rates should follow the market and
decrease as well. Some participants in this proceeding note that
[[Page 4373]]
``rates in the largest majority of correctional facilities are moving
in a downward trend.'' Is this accurate? Can commenters provide
concrete examples of decreases in ICS rates?
30. Collect Calling v. Debit Calling. The Alternative Wright
Petition suggests two different rate caps: one for collect calling and
one for debit calling. A collect call is a call in which the called
person pays for the call and a debit call deducts the cost of the call
from a prepaid account. Petitioners argue that collect calling is more
expensive because its costs include billing costs and uncollectibles,
while debit calling is less expensive because it reduces staff
responsibilities and uncollectibles. Do commenters agree that there
should be different per-minute rate caps for collect and debit calling?
What are the benefits of debit calling? For example, do commenters
believe that debit calling will exert downward pressure on collect
calling rates?
31. Some commenters have expressed concern about the expense and
difficulty of implementing debit calling. Specifically, they cite
difficulty in blocking restricted telephone numbers, the expense of
purchasing new equipment and the challenges of establishing new
processes and procedures and verifying calling party identities.
Parties have also expressed safety concerns related to debit calling.
Some prisons already allow for debit calling. For example, the Federal
Bureau of Prisons allows debit calling in some of its facilities and
the state of Iowa offers debit calling only. What safety concerns are
raised by debit calling service, and how have those concerns been
addressed where debit calling already is permitted? Commenters also
note the increased administrative workload and cost associated with
debit calling caused by such tasks as issuing PINs to each inmate in
facilities with high turnover. Have commenters experienced such
challenges, and how have they been overcome? What are the other pros or
cons of debit calling? We seek comment on ICS providers' overall
experiences with offering debit calling.
32. How many correctional facilities currently offer debit calling?
Has debit calling become more common? What are the current ratios of
debit to collect calling in correctional facilities? Should the
Commission mandate debit calling in privately- and publicly-
administered correctional facilities? One commenter says it offers
debit calling to all of the facilities it serves, but it is not
practical to mandate debit calling because not all correctional
facilities want the service. What are other challenges to mandating
debit calling?
33. Prepaid Calling. Commenters suggest prepaid calling as an
alternative to collect and debit calling. Prepaid calling allows
inmates or their family members to prepay for minutes, usually at a
discount. This is different from debit calls, in which money is
deducted from an account, but the minutes are not purchased in advance.
Commenters argue that the benefits of this approach may include
administrative ease for the providers, increased safety, controlled
costs for call recipients, and eliminating the need to block calls
because of a call recipients' credit standing. However, Petitioners
note that there are outstanding questions with prepaid calling such as:
how to handle monthly fees; how to load an inmate's account; and
minimum required account balance. If these issues can be sufficiently
addressed, is prepaid calling a viable ICS option? Do any ICS providers
currently offer prepaid calling? What are some other concerns or
considerations with prepaid calling?
34. Intrastate-Interstate Parity. Another alternative would be to
adopt an intrastate-interstate parity principle that would require that
rates for interstate, long-distance calls not exceed rates for
intrastate, long-distance calls. Rates for intrastate, long-distance
calls are typically set by state public utility commissions, and those
commissions may set rates that take into account the varying cost of
providing inmate calling services within each state given the security
and other features required by state law. To the extent that interstate
rates for inmate calling services are significantly higher than
intrastate rates, how would a requirement that ICS providers set
interstate rates at a level no higher than intrastate, long-distance
rates affect the justness and reasonableness of those rates? How many
states set rates specifically for ICS? What is the rate structure for
ICS calls in those states, and what are the rates for intrastate, long-
distance calls? How do states that set specific ICS rates ensure that
ICS providers are ``fairly compensated?'' How do intrastate, long-
distance rates differ between states that establish general rate caps
and those that set specific caps for ICS? If the Commission adopts a
parity principle, should there be any exceptions to that principle?
B. Additional Proposals in the Record
35. There are multiple other proposals in the record that do not
directly address per-call and per-minute ICS rates. We seek comment on
any other proposals parties contend address the concerns raised in this
proceeding, including any proposals in the record that are not
addressed below.
36. Competition in the ICS Market. The First Wright Petition
requested that the Commission mandate the opening of the ICS market to
competition and prohibit collect call only restrictions in privately-
administered correctional facilities. ICS contracts are typically
exclusive; competition appears to exist in winning an ICS contract but
once an ICS provider wins a contract it becomes the sole provider. How
do exclusive contracts influence ICS rates? How would competitive ICS
services be provided? The First Wright Petition also argued that the
collect calling-only limitations imposed by many confinement facilities
increase costs to both ICS providers and inmates that are not
outweighed by corresponding benefits and that such limitations should
therefore be prohibited. To the extent ICS is still limited to collect
calling in some correctional facilities, we seek comment on the
rationale behind this restriction.
37. Site Commissions. ICS contracts frequently include a site
commission or location rent which is paid to the facility and in some
instances may go to fund inmate services at the facility. What types of
inmate services or other services do site commissions fund? How do site
commissions in ICS contracts vary by facility? Petitioners argue that
ICS rates are inflated to cover commissions, which can be as much as 65
percent of gross revenues, causing the rates to be unreasonable in
violation of section 201(b). Is this accurate? We seek updated data on
how much these site commissions are and how much they add to per-call
costs. The FCC has previously found that ``under most contracts, the
commission is the single largest component affecting the rates for
inmate calling service'' and ``because the bidder who charges the
highest rates can afford to offer the confinement facilities the
largest location commissions, the competitive bidding process may
result in higher rates.'' Do commenters believe this is still accurate?
The Commission has also found that ``location rents are not a cost of
payphones, but should be treated as profit.'' Do commenters agree with
that conclusion?
38. Some site commissions are mandated by state statute, while
several states have reduced or eliminated commissions in ICS contracts.
If a state has reduced or eliminated site commissions, how has any
resulting rate transition been handled? How has the lowering or
elimination of site commissions impacted rates? Is this evidence that
site commissions are not
[[Page 4374]]
necessary, or is it evidence that the market is working and the
Commission need not intervene? Must the Commission address site
commissions and the effect they have on ICS rates in order to ensure
just and reasonable ICS rates?
39. Offer No-Cost Calling. In the Alternative Wright Petition,
Petitioners include a suggestion they contend will advance the
Commission's universal service goals and provide all inmates valuable
contact with the outside world. Specifically, Petitioners suggest that
ICS providers provide a certain amount of no-cost calling per inmate
per month in each of the facilities they serve in exchange for the
right to charge a higher per-minute rate. Petitioners suggest
implementing rate caps of $0.22 per minute for debit calling and $0.275
per minute for collect calling if ICS providers offer 20 minutes of
free calling per inmate per month. Can or should the Commission mandate
a certain amount of free calling per inmate per month, or should this
be offered at the providers' discretion? What legal questions are
raised by this proposal? What other considerations are raised by this
proposal?
40. Billing-Related Call Blocking. Petitioners also express concern
over billing-related call blocking in correctional facilities.
Specifically, Petitioners note that ICS providers are increasingly
unable or unwilling to enter into agreements with LECs to provide for
ICS providers' billing the LECs' customers receiving collect calls from
inmates. As a result, ICS providers cannot bill for an increasing
percentage of inmate calls and thus ``block inmate collect calls to
numbers served by LECs with which the service providers have no billing
arrangements.'' Petitioners argue that in facilities where collect
calling is the only option, this practice may ultimately prevent
inmates from being able to make any telephone calls. Commenters note
that many ICS providers have solutions to ``ensure that inmates can
contact customers served by these CLECs that refuse to bill for collect
calls.'' Does this practice continue? Petitioners argue that debit
calling, which requires pre-payment, may prevent the need to block
calls when the ICS provider does not have a billing arrangement with
the terminating LEC. Is this accurate? Do commenters have experience
with billing-related call blocking? Can commenters provide data on the
average number of calls that are blocked per month and the reason for
the blocking? Are there ways, other than mandating debit calling, to
deter or prevent billing-related call blocking?
41. Non-Geographic Numbers. ICS providers have argued that lowering
interstate calling rates may create an incentive for call recipients to
obtain telephone numbers from other states, perhaps from wireless or
VoIP providers, to take advantage of the lowered interstate rates.
Petitioners counter that the opposite is currently happening; call
recipients are obtaining telephone numbers, from wireless or VoIP
providers, that are local to the prison to take advantage of lower
local calling rates. Have commenters experienced either of these
practices? Do these practices raise any security concerns and if so
what are those concerns?
42. Disabilities Access. There is evidence in the record to
indicate that inmates with hearing disabilities may not have access to
ICS at reasonable rates using TTYs. The record suggests that because
the average length of a telephone conversation using a TTY is
approximately four times longer than a voice telephone conversation,
deaf and hard of hearing inmates who use TTYs have to pay more than
their hearing counterparts. The record also suggests that TTY users
have had to pay additional fees for connecting to a TTY relay operator.
We seek comment on the types of ICS access that individuals who are
deaf or hard of hearing experience during their incarceration. Where
such access to ICS is provided, are the rates the same as those
available to those without a disability? If the rates differ, what is
that difference and what are the explanations for such difference? We
note that section 276(b)(1)(A) specifically exempts
``telecommunications relay service calls for hearing disabled
individuals'' from the Commission-established ``per call compensation
plan'' ensuring that ICS providers are ``fairly compensated.'' How
should the Commission take this exemption into account in examining
rates?
43. Updated Data. We seek updated data from all interested parties
and the public, but especially from ICS providers. Commenters note that
the record regarding nationwide interstate ICS rates is limited to an
``analysis of prison phone contracts nationwide'' that was conducted by
Prison Legal News in April 2011. As such, we seek comment on the
accuracy and reliability of the study. In addition, from independent
research we have found more-current state rates, which continue to
demonstrate a range of prices for ICS calls among states. For example,
for a 15-minute interstate call, we found the following rates: $6.65 in
California; $2.04 in Montana; $6.45 in Texas; and $16.55 in Idaho. We
encourage commenters to submit the 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.
44. We also seek comment on whether the Alternative Wright Petition
and ICS Provider Proposal are grounded in sufficiently-reliable data.
For example, the ICS Provider Proposal contains data for less than 30
correctional facilities, none of which impose site commissions. Is this
too small a sample, or a non-representative sample, on which to base a
nationwide solution? ICS providers argue that in calculating their
proposed rate caps the Petitioners relied on data from facilities with
low cost calling. We therefore invite parties to comment on whether the
data supporting the First Wright Petition, the Alternative Wright
Petition and the ICS Provider Proposal is representative of
correctional facilities across the country.
45. Existing Contracts. Petitioners suggest that if the Commission
implements a rate cap it should also mandate a one-year fresh look,
transition period for existing ICS contracts. Petitioners envision that
this transition period would allow for any necessary review and
termination or renegotiation of existing ICS contracts in order to
introduce rate caps which would be effective by the end of the
transition period. Commenters argue that the Commission cannot insert
itself into the procurement decisions of correctional agencies, and
that any new ICS-related rules should not be applied to existing
contracts but only to contracts entered into after the adoption of new
rules.
46. Would it be appropriate to mandate a fresh look period or
should any new ICS rules apply only to contracts entered into after the
adoption of new rules? With renegotiated contracts, how long should the
transition period last? What are typical ICS contract terms? Do such
contracts usually have change of law provisions that would be triggered
by a Commission order? How does the length of existing contracts affect
the implementation of any of the proposals discussed above? If
commenters provide alternative proposals not discussed above, they
should include information on how the contractual process will function
with each specific proposal. After implementing a new ICS regime,
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should the Commission require a periodic rate review to ensure that the
rates remain just and reasonable?
47. We encourage comment on any new issues that have arisen in the
ICS market or issues that have not been addressed above. We request
that commenters provide evidentiary support for their comments and
suggestions in this proceeding.
C. Cost/Benefit Analysis of Proposals
48. Acknowledging the potential difficulty of quantifying costs and
benefits, we seek to determine whether the proposals above will provide
public benefits that outweigh their costs, and we seek to maximize the
net benefits to the public from any proposals we adopt. For example,
commenters have argued that inmate recidivism is decreased with regular
family contact. Accordingly, we seek specific comment on the costs and
benefits of the proposals above and any additional proposals received
in response to this Notice. We also seek any information or analysis
that would help us to quantify these costs or benefits. Further, we
seek comment on any considerations regarding the manner in which the
proposals could be implemented that would increase the number of people
who benefit from them, or otherwise increase their net public benefit.
We request that interested parties discuss whether, how and by how much
they will be impacted in terms of costs and benefits of the proposals
included herein. We recognize that the costs and benefits may vary
based on such things as the correctional facility served and ICS
provider. We request that parties file specific analysis and facts to
support any claims of significant costs or benefits associated with the
proposals herein.
D. Legal Authority
49. We seek comment on the scope of the Commission's legal
authority to regulate ICS. Section 276 of the Communications Act of
1934 (Act) requires that all payphone providers, including ICS
providers, be ``fairly compensated.'' We seek comment on our authority
to address interstate interexchange ICS rates under section
276(b)(1)(A), which directs the Commission to ``establish a per call
compensation plan to ensure that all payphone service providers
[(PSPs)] are fairly compensated for each and every completed intrastate
and interstate call.'' We also seek comment on our authority to address
interstate interexchange ICS rates under section 201(b) of the Act,
which requires common carriers to provide service at ``just and
reasonable'' rates and authorizes the Commission to ``prescribe such
rules and regulations as may be necessary in the public interest to
carry out the provisions of this chapter.'' Does the Commission have
the jurisdiction to establish per-minute rate caps for privately- and
publicly-administered facilities? We encourage commenters to discuss
additional sources of legal authority for the Commission to address ICS
rates.
50. We note that only a portion of the telephone calls inmates make
from correctional facilities are interstate, interexchange ICS. Many
calls made from correctional facilities are intrastate local or long
distance calls, which are regulated by the states. We therefore seek
comment on how the Commission can encourage states to reevaluate their
policies regarding intrastate ICS rates.
51. We also seek comment on how and whether use of VoIP
technologies by ICS providers impacts our analysis under section 276 of
the Act. To what extent are providers currently utilizing VoIP
technology to provide ICS? Would the use of VoIP technology affect the
authority of state regulators to address intrastate ICS rates? What
authority regarding ICS rates would control in that circumstance?
52. We recognize the important role that states play in managing
correctional facilities and in contracting with private correctional
management companies. Some parties believe ICS is exclusively a state
issue because it involves management of correctional facilities and
therefore its regulation should be left to state correctional
officials. How would such a conclusion be reconciled with the
Commission's obligations under sections 201 and 276 and the fact that
the question of the reasonableness of ICS rates was referred to the
Commission under the doctrine of primary jurisdiction? Would the
Commission's fulfillment of its obligations under sections 201 and 276
potentially result in preemption of states' exercise of regulatory or
police power authority?
53. We also seek comment specific to the proposals discussed above.
Does the Commission have the authority to disallow an additional call
set up charge when inmates' calls are disconnected? Does the Commission
have the legal authority to mandate that ICS providers offer debit
calling? What legal authority does the Commission have to address the
site commissions common in ICS contracts?
IV. Procedural Matters
A. Filing Instructions
54. Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's
rules, 47 CFR 1.415, 1.419, interested parties may file comments and
reply comments on or before the dates indicated on the first page of
this document. Comments may be filed using the Commission's Electronic
Comment Filing System (ECFS). See Electronic Filing of Documents in
Rulemaking Proceedings, 63 FR 24121 (1998). Comments and reply comments
on this NPRM must be filed in WC Docket No. 12-375.
Electronic Filers: Direct cases and other pleadings may be
filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing. If more than one docket
or rulemaking number appears in the caption of this proceeding, filers
must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail. All filings must be addressed to the Commission's Secretary,
Office of the Secretary, Federal Communications Commission.
All hand-delivered or messenger-delivered paper filings
for the Commission's Secretary must be delivered to FCC Headquarters at
445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together
with rubber bands or fasteners. Any envelopes and boxes must be
disposed of before entering the building.
Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743.
U.S. Postal Service first-class, Express, and Priority
mail must be addressed to 445 12th Street SW., Washington DC 20554.
People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an email to [email protected] or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
B. Ex Parte Requirements
55. The proceeding this Notice initiates shall be treated as a
``permit-
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but-disclose'' proceeding in accordance with the Commission's ex parte
rules. Persons making ex parte presentations must file a copy of any
written presentation or a memorandum summarizing any oral presentation
within two business days after the presentation (unless a different
deadline applicable to the Sunshine period applies). Persons making
oral ex parte presentations are reminded that memoranda summarizing the
presentation must (1) list all persons attending or otherwise
participating in the meeting at which the ex parte presentation was
made, and (2) summarize all data presented and arguments made during
the presentation. If the presentation consisted in whole or in part of
the presentation of data or arguments already reflected in the
presenter's written comments, memoranda or other filings in the
proceeding, the presenter may provide citations to such data or
arguments in his or her prior comments, memoranda, or other filings
(specifying the relevant page and/or paragraph numbers where such data
or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with Sec. 1.1206(b). In proceedings governed by
Sec. 1.49(f) or for which the Commission has made available a method
of electronic filing, written ex parte presentations and memoranda
summarizing oral ex parte presentations, and all attachments thereto,
must be filed through the electronic comment filing system available
for that proceeding, and must be filed in their native format (e.g.,
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding
should familiarize themselves with the Commission's ex parte rules.
C. Initial Regulatory Flexibility Analysis
56. As required by the Regulatory Flexibility Act of 1980 (RFA),
the Commission has prepared an Initial Regulatory Flexibility Analysis
(IRFA) for this Notice, of the possible significant economic impact on
small entities of the policies and rules addressed in this document.
Written public comments are requested on this IRFA. Comments must be
identified as responses to the IRFA and must be filed by the deadlines
for comments on the Notice provided on or before the dates indicated on
the first page of this Notice. The Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, will send a
copy of this Notice of Proposed Rulemaking, including the IRFA, to the
Chief Counsel for Advocacy of the Small Business Administration (SBA).
D. Initial Paperwork Reduction Act of 1995 Analysis
57. This document does not contain proposed information collection
requirements subject to the Paperwork Reduction Act of 1995, Public Law
104-13. In addition, therefore, it does not contain any proposed
information collection burden for small business concerns with fewer
than 25 employees, pursuant to the Small Business Paperwork Relief Act
of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).
V. Ordering Clauses
58. Accordingly, it is ordered that, pursuant to sections 1, 2,
4(i)-(j), 201(b) and 276 of the Communications Act of 1934, as amended,
47 USC 151, 152, 154(i)-(j), 201(b) and 276, this Notice of Proposed
Rulemaking is adopted.
59. It is further ordered, that the Petition of Martha Wright et
al. for Rulemaking or, in the Alternative, Petition to Address Referral
Issues in Pending Rulemaking is GRANTED IN PART.
60. It is further ordered, that the Petitioners' Alternative
Rulemaking Proposal is granted in part.
61. It is further ordered, that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of the Notice of Proposed Rulemaking, including the Initial
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration.
62. It is further ordered, that pursuant to Sec. Sec. 1.4(b)(1)
and 1.103(a) of the Commission's rules, 47 CFR 1.4(b)(1) and 1.103(a),
that the Notice of Proposed Rulemaking shall be effective on the date
of publication of a summary thereof in the Federal Register.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2013-01154 Filed 1-18-13; 8:45 am]
BILLING CODE 6712-01-P