HRDC comment to FCC re MI DOC phone rates June 2011
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HUMAN RIGHTS DEFENSE CENTER Dedicated to Protecting Human Rights www.prisonlegalnews.org firstname.lastname@example.org Please Reply to Tennessee Office: Direct Dial: 615-495-6568 5331 Mt. View Rd. #130 Antioch, TN 37013 June 16, 2011 Ms. Marlene H. Dortch, Secretary Federal Communications Commission Office of the Secretary 445 12th Street S.W. Washington, DC 20554 RE: Comment Regarding CC Docket No. 96-128 (“Wright Petition”) Dear Ms. Dortch: I am the associate editor of Prison Legal News (PLN), a nationally-distributed monthly publication that reports on criminal justice and corrections-related issues, and a project of the Human Rights Defense Center (HRDC). This letter and the related attachments are submitted as a formal comment relative to CC Docket No. 96-128. CC Docket No. 96-128, commonly known as the “Wright Petition,” requests that the FCC enact rules to require competition among prison phone service providers by prohibiting such providers from entering into exclusive service agreements with contracting government agencies, and that the FCC impose caps on interstate prison phone rates. The FCC has the authority to implement such rules pursuant to 47 U.S.C. § 201(b). PLN has previously submitted formal comments regarding the Wright Petition, on April 18, 2007, May 14, 2007, September 21, 2008 and April 25, 2011. Our last comment included the results of our comprehensive multi-year research project on prison phone services, including a state-by-state comparison of prison phone rates, commission (kickback) percentages, and dollar amounts of commission payments from prison phone contracts nationwide. We now want to bring to your attention additional information regarding the actual cost of prison phone services provided by telecommunications companies, which has been a point of heated contention in the Wright Petition as evidenced by filings made by both the petitioners and by companies that provide prison and jail phone services. PLN is a project of the Human Rights Defense Center Secretary Marlene H. Dortch June 16, 2011 Page 2 As indicated in our April 25, 2011 comment, prison phone rates vary widely among different states and even within the same state. Local collect calls cost as much as $2.75 + $.23/minute (Colorado), intrastate collect calls cost as much as $3.95 + $.69/minute (Oregon) and interstate collect calls range up to $4.95 + $.89/minute (Washington). This is despite the fact that prison phone services all provide essentially the same service with the same security features. Recently, in February 2011, the Michigan Department of Corrections (MDOC) entered into a phone service contract with Public Communications Services, Inc. (PCS), which is now owned by Global Tel*Link – the nation’s largest prison telecommunications company, which provides prison phone services in more than half the states. Michigan is one of 8 states that do not accept commission “kickbacks” from prison phone service firms. Under the terms of the MDOC contract, the charged rates are $.0393/minute for collect calls and $.0343/minute for debit calls regardless of whether the calls are local, intrastate or interstate. See Exhibit 1, attached – excerpts from contract between the State of Michigan and PCS, effective February 9, 2011 (first page and exhibits 5P and 6Pof the contract). The contract also provides for “optional” services that can be added for an additional charge; such options include a “key word search” feature and a “special equipment fund” charge. On April 23, 2011, the MDOC executed Change Notice No. 1 to the PCS phone contract (see Exhibit 2, attached). The change added the optional key word search feature for an additional $.0075/minute and the optional special equipment fund charge for $.1532 to $.2430/minute, resulting in total per-minute charges of $.20/minute for collect local and intrastate calls, $.23 per minute for collect interstate calls, $.18/minute for local and intrastate debit calls, and $.21 per minute for interstate debit calls. It is important to note that the base per-minute rates under the MDOC contract ($.0393/minute for collect calls and $.0343/minute for debit calls) are the lowest in the nation. According to MDOC spokesman John Cordell in a June 10, 2011 email, the “[b]ase rate charged by PCS” covers “the cost of operating expense and their capital costs.” The optional features that the MDOC added in the April 2011 Change Notice are just that – optional. The word search option is an extra security feature and the special equipment fund “will be used to install the latest cell phone detection, jamming or managed signal technologies.” (see Exhibit 3, attached). That is, the optional features are above and beyond the operational and capital costs of PCS, which can generate profit at the contractual base rates of $.0393/minute for collect calls and $.0343/minute for debit calls. These low rates demonstrate the actual cost (plus an unspecified profit margin for PCS) in providing phone services to the MDOC, despite the claims of prison phone service companies that their costs are much higher due to security features, specialized equipment, etc. If PCS could not generate a sufficient amount of profit at the low base rates specified in the MDOC contract, it would not have entered into that contract. Secretary Marlene H. Dortch June 16, 2011 Page 3 Further, since PCS is owned by Global Tel*Link, the largest prison phone service company in the nation, such low rates could be offered in most other state prison systems, but are not. As we found during our research into this issue, included with our April 25, 2011 comment submitted to your office, prison phone rates are usually much higher due to commission “kickbacks” paid to the contracting agency, averaging 42% of gross revenue generated by prison phone calls. And since prison phone contracts tend to be awarded based on the highest kickback percentage rather than the lowest phone rates, the usual competitive forces that result in lower prices to consumers are largely absent in the prison phone service market. We submit that the low base rates in the MDOC contract of $.0393/minute for collect calls and $.0343/minute for debit calls demonstrate that prison phone companies are perfectly capable of charging such low rates while still generating profit (despite protestations that their operating costs are higher which they claim justifies higher rates). This is particularly true given that the MDOC says the base rates cover PCS’s “cost of operating expense and their capital costs.” Consequently, the caps on interstate prison phone rates requested in the March 2007 alternative rulemaking proposal submitted in the Wright Petition would not unduly burden prison phone service companies, as the MDOC contract evidences that such companies can generate profit at rates of less than $.04/minute for both collect and debit prison phone calls. Thank you for your continued time and attention in this regard; Sincerely, Alex Friedmann Associate Editor, PLN cc: Paul Wright, PLN Editor Attachments: Exhibits 1-3 EXHIBIT 1 EXHIBIT 2 EXHIBIT 3