On August 9, 2013, the Federal Communications Commission (“Commission”) voted 2–1 to lower the cost of phone calls made from correctional facilities.  The Commission will now require rates be based on the cost of providing the service.  The Report and Order and Further Notice of Proposed Rulemaking (“Order”), which applies only to interstate calls, also sets interim maximum rates for pre-paid calls at $0.21 per minute and $0.25 per minute for collect calls.

The Commission initiated this proceeding in response to petitions filed by Martha Wright in 2003 and subsequent petitioners in 2007.  The petitioners protested the high cost of interstate calling rates from correctional facilities, which could reach as high as $17 for a 15-minute phone call and impose per-call connection fees of up to $4.

In the Order, the Commission notes that research showed that inmates who maintain contact with family members while in prison have lower rates of recidivism upon release but that the current prices for interstate calls from correctional facilities discourage such contact.  In addition, the Commission observes that an “estimated 2.7 million children would benefit from increased communication with an incarcerated parent.”

The Commission provides immediate relief by adopting an interim cap on rates of $0.21 per minute for debit and pre-paid calls and $0.25 per minute for collect calls.  Going forward, all interstate inmate calling rates must be based on the cost of providing the service, which can include the cost of security features such as call blocking mechanisms, real-time recording, and biometric caller verification.  However, “site commission” payments from providers to correctional facilities may not be included in the rate cost-basis.  “Safe harbor” rates of $0.12 per minute for pre-paid calls and $0.14 per minute for collect calls will be presumed to be cost-based and reasonable.

The Order also clarifies that “inmates or their loved ones who use Telecommunications Relay Services because of hearing and speech disabilities may not be charged higher rates.”  In addition, the Order provides for mandatory data collection, requires annual certification, and includes enforcement provisions to ensure compliance.

Commission Pai dissented, stating that while he supported taking action, he could not support the Commission’s Order.  He argued that the Commission was not competent to micromanage the prices of inmate calling services and that the one-size-fits-all “safe harbor” rates would result in some facilities receiving limited or no phone service.  Commissioner Pai concluded by questioning if the Order can withstand a court challenge on the grounds that the Order was not foreseeable and was not supported by the record.

The Commission’s Order also includes a Further Notice of Proposed Rulemaking (“FNPRM”), which seeks comment on reforming rates and practices for intrastate inmate calls and on how to foster competition to further reduce rates.  Comment deadlines for the FNPRM have not yet been announced.