69682 Federal Register / Vol. 79, No. 225 / Friday, November 21, 2014 / Proposed Rules 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 64 

[WCB: WC Docket No. 12–375; FCC 14– 

158] 

Rates for Interstate Inmate Calling 

Services; Second Further Notice of 

Proposed Rulemaking 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule. 

SUMMARY: In this document, the 

Commission seeks comment on 

additional measures it could take to 

ensure that interstate and intrastate 

inmate calling services are provided 

consistent with the statute and the 

public interest and the Commission’s 

authority to implement these measures. 

The Commission believes that 

additional action on inmate calling 

service will help maintain familial 

contacts stressed by confinement while 

still ensuring the critical security needs 

of correction facilities of various sizes. 

DATES: Comments are due on or before 

January 5, 2015. Reply comments are 

due on or before January 20, 2015. 

ADDRESSES: You may submit comments, 

identified by WC Docket 12–375, by any 

of the following methods: 

D Federal Communications 

Commission’s Web site: http://fjallfoss.

fcc.gov/ecfs2/. Follow the instructions 

for submitting comments. 

D People With Disabilities: Contact 

the FCC to request reasonable 

accommodations (accessible format 

documents, sign language interpreters, 

CART, etc.) by email: FCC504@fcc.gov 

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 Engledow, Pricing Policy 

Division, Wireline Competition Bureau, 

202–418–1520 or Lynne.Engledow@

fcc.gov. 

SUPPLEMENTARY INFORMATION: Pursuant 

to sections 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). 

D Electronic Filers: Comments may be 

filed electronically using the Internet by 

accessing the ECFS: http://fjallfoss.fcc.

gov/ecfs2/. 

D 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. 

D All hand-delivered or messengerdelivered 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. 

D 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. 

D 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 fcc504@fcc.gov or call 

the Consumer & Governmental Affairs 

Bureau at 202–418–0530 (voice), 202– 

418–0432 (tty). 

This is a summary of the 

Commission’s Second Further Notice of 

Proposed Rulemaking released on 

October 23, 2014. This document does 

not contain information collection(s) 

subject to the Paperwork Reduction Act 

of 1995 (PRA), Public Law 104–13. In 

addition, therefore, it does not contain 

any new or modified ‘‘information 

collection burden for small business 

concerns with fewer than 25 

employees,’’ pursuant to the Small 

Business Paperwork Relief Act of 2002. 

A full text of this document is available 

at the following Internet address: http:// 

www.fcc.gov/document/fcc-continuespush-rein-high-cost-inmate-calling-0. 

The complete text may be purchased 

from Best Copy and Printing, Inc., 445 

12th Street SW., Room CY–B402, 

Washington, DC 20554. Public and 

agency comments are due January 5, 

2015. 

I. Introduction 

1. In 2013, nearly ten years after 

Martha Wright, a grandmother from 

Washington, DC, petitioned the Federal 

Communications Commission 

(Commission or FCC) for relief from 

exorbitant long-distance calling rates 

from correctional facilities, the 

Commission took long overdue steps to 

provide relief to the millions of 

Americans paying unjust and 

unreasonable interstate inmate phone 

rates. These exorbitantly high rates 

discouraged phone calls and, at times, 

made it nearly impossible for inmates to 

maintain contact with their families, 

friends and communities, to society’s 

detriment. 

2. Reforming inmate calling service 

(ICS) benefits society by making it easier 

for inmates to stay connected to their 

families and friends. An April 2014 

report from the Department of Justice 

found that, of the 400,000 prisoners 

released over a five-year period, twothirds were rearrested within three 

years, and three-quarters were rearrested 

within five years. As a nation, we need 

to take all actions possible to reduce 

these recidivism rates. Studies have 

shown that family contact during 

incarceration is associated with lower 

recidivism rates. Lower recidivism 

means fewer crimes, decreases the need 

for additional correctional facilities, and 

reduces the overall costs to society. 

Reform also helps families and the 

estimated 2.7 million children of 

incarcerated parents in our nation, an 

especially vulnerable part of our society. 

In addition to coping with the anxiety 

associated with a parent who is not 

present on a daily basis, these young 

people are often suffering severe 

economic and personal hardships and 

are often doing poorly in school, all of 

which are exacerbated by the inability 

to maintain contact with their 

incarcerated parent due to unaffordable 

inmate calling rates. 

3. While the Commission prefers to 

promote competition to ensure rates are 

just and reasonable, it remains clear that 

in the inmate calling service market, as 

currently structured, competition is 

failing to do so. Evidence in the record 

indicates that, as of 2013, interstate ICS 

rates with comparable security features 

and protections varied from as low as 

$0.046 per minute to as high as $0.89 

per minute, plus a per call charge as 

high as $3.95. Even worse, rates are as 

high as $2.26 per minute for a call 

placed by a deaf or hard of hearing 

prisoner. Excessive rates are primarily 

caused by the widespread use of site 

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commission payments—fees paid by ICS 

providers to correctional facilities or 

departments of corrections to win the 

exclusive right to provide inmate calling 

service at a facility. These site 

commission payments, which have 

recently been as high as 96% of gross 

revenues, inflate rates and fees, as ICS 

providers must increase rates in order to 

pay the site commissions. This forces 

inmates and their friends and families, 

who use ICS and are forced to absorb 

the site commissions in the rates they 

pay, to subsidize everything from 

inmate welfare programs, to salaries and 

benefits of correctional facilities, states’ 

general revenue funds, and personnel 

training. The ICS market has been 

characterized by some as subject to 

‘‘reverse competition,’’ forcing providers 

to compete not on price or service 

quality but on the size of site 

commission payments—a dynamic that 

drives rates ever higher to cover greater 

and greater site commission payments. 

4. The 2013 Inmate Calling Report 

and Order and FNPRM tackled these 

issues for the first time and took 

important initial steps for reform. The 

Order adopted a cost-based approach 

with interim interstate rate caps and a 

Mandatory Data Collection to allow the 

Commission to evaluate ICS costs, 

including ancillary charge costs, in 

order to develop reforms such as 

permanent rate caps and to address the 

use of ancillary charges not reasonably 

related to the cost of providing service. 

With regard to site commission 

payments, the Order reaffirmed the 

Commission’s previous holding that site 

commission payments are an 

apportionment of profit. The Order also 

determined that site commission 

payments and other provider 

expenditures not reasonably related to 

the provision of interstate ICS are not 

recoverable through ICS rates. 

5. Although the rate caps adopted in 

the Order were interim in nature 

pending results of the Mandatory Data 

Collection, the reforms have already had 

a significant impact on contact between 

inmates and their families. Evidence 

indicates that as interstate rates have 

declined, there has been a 

corresponding increase in call volumes. 

For example, one provider indicates 

that, as a result of the Commissions’ 

reforms, its interstate ICS rates declined 

39 percent and interstate call volumes 

increased 20 to 30 percent. Praeses 

reports that it tracked interstate ICS call 

volume for its clients and that in 

comparing a four-month period prior to 

the Inmate Calling Report and Order 

and FNPRM with another period one 

year later, post-adoption, ‘‘call volume 

increased nearly seventy percent.’’ But 

interstate rates are only part of the ICS 

market. Although the Order set a 

framework for states to follow, few have 

done so. Many intrastate rates remain 

high, with some having even increased 

following the Order. There are 

indications that ancillary fees have also 

increased in number, price, or both, 

leading to further expense for ICS 

consumers in a manner that is often 

unrelated to the cost of providing ICS. 

These developments underscore the 

critical need for the Commission to 

move expeditiously to adopt 

comprehensive, permanent reforms. 

6. The Commission was unable to 

adopt comprehensive reform in the 

Inmate Calling Report and Order and 

FNPRM due to the limited data in the 

record and administrative notice limited 

only to interstate ICS. Because we seek 

comment on a comprehensive 

solution—rather than just reforming 

interstate rates—we seek comment on 

moving to a market-based approach to 

encourage competition in order to 

reduce rates to just and reasonable 

levels and to ensure fair but not 

excessive ICS compensation. This 

approach was not feasible when the 

Commission previously addressed 

interstate rates because new intrastate 

rates and fees could circumvent such 

efforts. We therefore initiate this Second 

Further Notice of Proposed Rulemaking 

(Second Further Notice) to develop a 

record to adopt comprehensive, 

permanent ICS reforms as expeditiously 

as possible. In this item, we seek 

comment on adopting a simplified, 

market-based approach focused on 

aligning the interests of ICS providers 

and facilities to deliver high quality ICS 

with advanced security features at the 

lowest prices for end users. We seek 

comment on whether such an approach 

will significantly limit competitive 

distortions in the ICS marketplace. We 

seek comment on the Commission’s 

legal authority regarding site 

commissions and ask whether such 

payments should be prohibited. We seek 

comment on whether facilities incur 

costs in the provision of ICS and, if so, 

how facilities should recover these 

costs, as well as appropriate transition 

periods to enable facilities time to 

adjust. We seek comment on proposals 

in the record to establish permanent rate 

caps for all intrastate and interstate 

calls, limit ancillary charges, and adopt 

other measures to ensure that ICS rates 

are just, reasonable, fair, and accessible 

to all Americans. We believe that this 

market-based approach is only possible 

through a comprehensive reform effort 

dealing with all of the major portions of 

the ICS market, unlike when the 

Commission addressed only interstate 

ICS in the Inmate Calling Report and 

Order and FNPRM. We seek comment 

on alternative ways to promote 

competition in the ICS market. We seek 

comment on whether eliminating site 

commissions and capping rates and 

fees, on both interstate and intrastate 

ICS, better aligns the interests of both 

ICS providers and correctional 

institutions with the interests of 

consumers, allowing market forces to 

drive rates to competitive levels. 

II. Background 

7. In 2003, Mrs. Wright and her fellow 

petitioners (Wright Petitioners or 

Petitioners), who included current and 

former inmates at Corrections 

Corporations of America-run 

confinement facilities, filed a petition 

with the Commission seeking to initiate 

a rulemaking to address high longdistance ICS rates. The petition sought 

to prohibit exclusive ICS contracts and 

collect-call-only restrictions in 

correctional facilities. In 2007, the same 

petitioners filed an alternative 

rulemaking petition, asking the 

Commission to address high ICS rates 

by requiring a debit-calling option in 

correctional facilities, prohibiting percall charges, and establishing rate caps 

for interstate, interexchange ICS. The 

Commission sought and received 

comment on both petitions. 

8. In December 2012, the Commission 

adopted a notice of proposed 

rulemaking seeking comment on, among 

other things, the proposals in the Wright 

petitions. The 2012 ICS NPRM sought 

comment on the two petitions and 

proposed ways 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.’’ The 2012 ICS 

NPRM sought comment on other issues 

affecting the ICS market, including 

possible rate caps for interstate ICS; 

ancillary charges; data in the record; 

collect, debit, and prepaid ICS calling 

options; site commissions; issues 

regarding disability access; and the 

Commission’s statutory authority to 

regulate ICS. 

9. On August 9, 2013, the Commission 

adopted the Inmate Calling Report and 

Order and FNPRM, finding that 

interstate ICS rates were not just and 

reasonable as required by section 201 of 

the Act, and did not ensure fair, and not 

excessive, compensation for ICS 

providers as required by section 276 of 

the Act. In response, the Commission 

adopted reforms to ensure interstate 

rates were just, reasonable, and fair as 

required by Sections 201 and 276 and 

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69684 Federal Register / Vol. 79, No. 225 / Friday, November 21, 2014 / Proposed Rules 

focused on reforming interstate site 

commission payments, rates, and 

ancillary charges. The Commission 

concluded that, in the absence of 

competitive pressures, the default of 

cost-based regulation should apply to 

the ICS market. As discussed in the 

Order, this approach is consistent with 

Commission practice that ‘‘typically 

focuses on the costs of providing the 

underlying service when ensuring that 

rates for service are just and reasonable 

under section 201(b).’’ In addition, the 

Commission noted that ‘‘the cost of 

providing payphone service generally 

has been a key point of reference when 

[it] evaluates rules implementing the 

fair compensation requirements of 

section 276(b)(1)(A).’’ 

10. The Commission reaffirmed 

previous findings that site commission 

payments were not costs but ‘‘profit.’’ 

As a result, the Commission determined 

that site commission payments ‘‘were 

not part of the cost of providing ICS and 

therefore not compensable in interstate 

ICS rates’’ The Commission’s previous 

request for ‘‘updated data from all 

interested parties and the public, but 

especially from ICS providers . . . to 

aid . . . in developing a clearer 

understanding of the ICS market,’’ went 

largely unheeded. Therefore, the 

Commission analyzed the limited data 

submitted by ICS providers, in addition 

to publicly-available data, to establish 

interim per-minute interstate ICS safe 

harbor caps of $0.12 and $0.14 and hard 

rate caps of $0.21 for debit and prepaid 

calls and $0.25 for collect calls to ensure 

that all rates were reduced, and 

provided guidance about the waiver 

process for ICS providers that could 

show good cause. The Commission also 

required that ancillary charges be cost 

based. Finally, the Commission chose 

not to address intrastate ICS, noting 

instead that it had ‘‘structured [its 

reforms] in a manner to encourage . . . 

states to undertake reform.’’ It noted, 

however, that in the absence of state 

reform of intrastate ICS, unreasonably 

high rates would likely continue, which 

would require the Commission to ‘‘take 

action to reform unfair intrastate ICS 

rates.’’ 

11. The changes to interstate rates 

adopted by the Commission were 

significant but interim. To enable the 

Commission to adopt permanent ICS 

reform, the Commission adopted a 

Mandatory Data Collection for ICS 

providers to report costs and an Annual 

Reporting and Certification Requirement 

of ICS rates. In the FNPRM the 

Commission sought specific comment 

on multiple aspects of permanent ICS 

reform regardless of jurisdiction or call 

type. 

12. Prior to the effective date of the 

Order, the DC Circuit stayed three rules 

adopted by the Commission pending 

resolution of the appeal, including the 

rule requiring rates to be based on costs, 

the rule adopting an interim safe harbor, 

and the rule requiring ICS providers to 

file annual reports and certifications. 

The court allowed other aspects of the 

Order to take effect, including the 

interim interstate rate caps. 

13. Since the adoption of the Order, 

the Commission has continued to 

monitor the effect of its reforms on the 

ICS industry and pursue additional 

reform, including holding a workshop 

entitled ‘‘Further Reform of Inmate 

Calling Services’’ on July 9, 2014. The 

workshop evaluated options for 

additional ICS reforms, discussed the 

effects of the Order, the role ancillary 

charges play in the ICS market, the 

provision of ICS at different types of 

facilities, and communications 

technologies beyond traditional 

payphone calling being deployed in 

correctional facilities. 

14. On June 11, 2014, the Commission 

received approval for its Mandatory 

Data Collection from the Office of 

Management and Budget, and, after 

publication in the Federal Register, 

announced in a Public Notice that data 

responses were due on July 12, 2014, a 

date which was subsequently extended 

until August 18, 2014. In response, the 

Commission received significant cost 

and operational data, including 

ancillary charge cost data, from the 

following ICS providers: ATN, 

CenturyLink, Combined Public 

Communications, Correct Solutions, 

Custom Teleconnect, Encartele, GTL, 

Lattice, ICSolutions, NCIC, Pay Tel 

Communications, Protocall, Securus, 

and Telmate. Collectively, these 

providers represent the vast majority, 

well over 85 percent, of the ICS market. 

In this Second Further Notice, we seek 

comment on these data, including some 

reporting and cost allocation 

inconsistencies among the providers. 

We seek comment on these issues and 

generally on the data received as we 

propose to move forward and adopt 

permanent interstate and intrastate ICS 

reform. 

15. Proposals for Reform in the 

Record. Since the Order, we have 

received several proposals in the record 

urging comprehensive ICS reform. On 

September 15, 2014, GTL, Securus, and 

Telmate, who claim to be ‘‘the primary 

providers of inmate calling 

services . . . in the United States and 

representing 85% of the industry 

revenue in 2013,’’ jointly filed a 

proposal to comprehensively reform all 

aspects of ICS. First, the Joint Provider 

Reform Proposal urges the adoption of 

rate caps of $0.20 per minute for debit 

and prepaid interstate and intrastate 

ICS, and $0.24 per minute for all 

interstate and intrastate collect ICS, 

effective 90 days after adoption of a 

final order. The Joint Provider Reform 

Proposal supports ‘‘reductions in site 

commission payments’’ but does not 

specify exactly what such reductions 

would entail. The Proposal suggests the 

prohibition of ‘‘in-kind payments, 

exchanges, technology allowances, 

administrative, fees,’’ or anything ‘‘not 

directly related to, or integrated with, 

the provision of ICS.’’ These three ICS 

providers contend that the Commission 

does not have authority over ‘‘ancillary 

fees for transactions other than the 

provision of ICS’’ but propose to 

eliminate some ancillary fees, limit 

allowable ancillary fees to those 

specified in the document, and cap 

other ancillary fees. Finally, these three 

ICS providers ‘‘commit to continue to 

comply with their existing obligations’’ 

under the Americans with Disabilities 

Act and other statutes for inmates with 

disabilities, and suggest that the 

Commission require officers of ICS 

providers to certify compliance with all 

adopted rules under penalty of perjury. 

GTL, a signatory of the Proposal, later 

characterized the Proposal as ‘‘part of a 

new framework that is designed to 

respond to market forces’’ and noted 

that ‘‘[t]he proposed rates and fees are 

caps, which can vary by contract based 

on the correctional facility needs and 

the bidding process.’’ 

16. In addition to the Joint Provider 

Reform Proposal, several individual ICS 

providers also submitted proposals for 

reform. CenturyLink asserts that it could 

‘‘support a unified cap approximately at 

the current interstate cap levels,’’ which 

would apply ‘‘for both interstate and 

intrastate calls, with an additional 

allowance for collect calling.’’ 

CenturyLink supports a prohibition on 

‘‘all or all but a very narrow class of 

ancillary fees.’’ CenturyLink also asserts 

that the Commission should ‘‘allow 

reasonable commissions or 

administrative fees,’’ exempt from 

regulation high-cost facilities such as 

secure mental health facilities, and 

grandfather existing contracts. Pay Tel 

also submitted a proposal for reform, 

which it characterizes as a 

‘‘comprehensive solution to ICS reform 

that attempts to be fair to all affected 

parties, including inmates and their 

families, facilities, and vendors.’’ Pay 

Tel’s Proposal suggests ‘‘postalized’’ 

per-minute rate caps, at a rate to be 

determined, for both intrastate and 

interstate calls, separated between 

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prisons and jails, with no per-call 

charges allowed. Specific ancillary fees 

would be allowed, with some ‘‘premium 

calling options’’ for jails, and all other 

ancillary fees prohibited. Pay Tel 

proposes that all facilities would be 

required to comply with existing 

obligations and laws regarding people 

with disabilities. 

17. The Wright Petitioners, along with 

several public interest groups, urge the 

Commission to adopt a $0.07 per minute 

rate cap for all interstate debit, prepaid, 

and collect calls, with no per-minute 

rate, and no other ancillary fees or taxes 

allowed. Prisoners’ Legal Service of MA 

(PLS) contends that the interim safe 

harbors and caps that the Commission 

implemented in the Order are 

conservative and ‘‘exceed cost data that 

any party submitted in the record.’’ PLS 

opposes extending the interim safe 

harbor rates and caps, and instead 

proposes that the Commission adopt a 

flat all-distance rate of $0.07 per minute, 

regardless of the size of the facility or 

the call volume generated from the 

facility. To justify this rate, PLS points 

to the fact that ICS providers are 

charging as low as $0.04 and $0.05 per 

minute absent commissions in some 

states. 

18. A few states have undertaken ICS 

reform since the Commission’s Order. 

The Alabama Public Service 

Commission (Alabama PSC) recently 

adopted comprehensive ICS reforms 

that include intrastate rate caps as well 

as restrictions on the number and rates 

of ancillary charges it authorized. The 

Minnesota Department of Corrections 

initiated a pilot program in a limited 

number of correctional facilities in 

which a flat rate of $0.07 per minute is 

charged for all local and long-distance 

debit calls, bringing the cost of a 15- 

minute call to $1.05, plus applicable 

tax. New Jersey recently lowered ICS 

rates to $0.15 a minute for all interstate 

and intrastate calls from state prison 

facilities. We applaud these efforts and 

seek comment below on what more the 

Commission and states can do to enact 

comprehensive ICS reform. 

III. Discussion 

19. In this Second Further Notice, we 

take the following steps to reform and 

modernize interstate and intrastate ICS 

regulations while ensuring adequate 

security measures for correctional 

facilities. First, we seek comment on 

eliminating all site commission 

payments on both interstate and 

intrastate ICS to fulfill the Commission’s 

statutory obligations to promote 

competition and ensure just and 

reasonable rates and fair compensation. 

We also seek comment on whether 

facilities incur costs in the provision of 

ICS and, if so, how facilities should 

recover these costs, as well as 

appropriate transition periods for reform 

to allow correctional facilities time to 

adjust. We seek comment on adopting 

intrastate and interstate rate caps. We 

seek comment on reforming ancillary 

fees including adopting ancillary fee 

rate caps, and prohibiting certain 

ancillary charges. We also seek 

comment on alternative ways to 

promote competition in the ICS market. 

We seek comment on whether we 

should periodically review the ongoing 

impact of ICS rate reforms. Finally, we 

seek further comment on issues related 

to enforcement, disability access, 

advanced communications in the 

correctional setting, and the cost/benefit 

analysis of all of the proposals herein. 

A. Payments to Correctional Facilities 

20. The record, including data from 

the 2014 ICS Workshop and the 

Mandatory Data Collection, makes clear 

that the Order’s interim rate caps have 

significantly lowered the expense of 

interstate ICS calls to end users. On the 

positive side, the interim interstate rate 

caps have resulted in increased call 

volumes, evidence that unreasonable 

rates were discouraging 

communications and that reasonable 

rates foster communications between 

inmates and their families and friends. 

Yet failures in the ICS market continue. 

Interstate reform in some cases has been 

met by increased intrastate ICS rates and 

has not discouraged other practices that 

also increase the costs of ICS to 

consumers, such as excessive ancillary 

charges and an increase in the use of 

single call services. The pressure to pay 

site commissions that exceed the direct 

and reasonable costs incurred by the 

correctional facility in connection with 

the provision of ICS continues to 

disrupt and even invert the competitive 

dynamics of the industry. These and 

other market failures demonstrate that 

the interstate-only reforms adopted in 

the Order, while an important first step, 

did not completely address the 

problems in the ICS marketplace. This 

highlights the need for morecomprehensive reform of the ICS 

industry to address both interstate and 

intrastate ICS. 

1. Restrictions on Payments to 

Correctional Facilities 

21. In this section, we seek comment 

on prohibiting site commissions as a 

category, including all payments, 

whether in-kind payments, exchanges, 

allowances, or other fees. The record is 

clear that site commissions are the 

primary reason ICS rates are unjust and 

unreasonable and ICS compensation is 

unfair, and that such payments have 

continued to increase since our Order. 

Moreover, where states have eliminated 

site commissions, rates have fallen 

dramatically. We therefore predict that 

prohibiting such payments will enable 

the market to perform properly and 

encourage selection of ICS providers 

based on price, technology and services 

rather than on the highest site 

commission payment. Although we seek 

comment on prohibiting site 

commissions as a category, we seek 

comment on whether correctional 

institutions incur any costs in the 

provision of ICS and, if so, how to 

enable the facilities to recover such 

costs. We also seek comment on how 

best to proceed if a state has already 

prohibited site commission payments. 

22. As part of its reform of 

unreasonable and unjust interstate ICS 

rates in the Inmate Calling Report and 

Order and FNPRM, the Commission 

addressed site commissions and 

concluded that they were an 

apportionment of profits between 

service providers and correctional 

facilities and were not, in and of 

themselves, a cost of ICS. The payment 

of site commissions distorts the ICS 

marketplace by creating ‘‘reverse 

competition’’ in which the financial 

interests of the entity making the buying 

decision (the correctional institution) 

are aligned with the seller (the ICS 

provider) and not the consumer (the 

incarcerated person or a member of his 

or her family). 

23. This ‘‘reverse competition’’ is 

reflected in data in the record. 

Aggregated data from the Mandatory 

Data Collection from 14 ICS providers 

show that over $460 million in site 

commission payments were paid to 

facilities in 2013. This means that ICS 

users and their families, friends and 

lawyers spent over $460 million to pay 

for programs ranging from inmate 

welfare to roads to correctional 

facilities’ staff salaries to the state or 

county’s general budget. These are passthrough payments from the provider to 

the facility, absent which, rates would 

be lower. Moreover, the magnitude of 

payments is significantly higher than 

previous estimates in the record. For 

example, using publicly available data 

in 2012, the Human Rights Defense 

Center (HRDC) estimated ICS providers 

paid over $123 million in site 

commissions to correctional facilities. 

To put the number in context, however, 

the record and data from the Mandatory 

Data Collection suggest that these 

payments represented just 0.3 percent of 

prison facilities total budgets in 2012. 

Similarly, one ICS provider estimated 

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that site commission payments 

represented 0.4 percent of total prison/ 

jail operating budgets in 2013. What 

appears to be of limited relative 

importance to the combined budgets of 

correctional facilities has potentially 

life-altering impacts on prisoners and 

their families. 

24. Despite their limited overall 

budget impact, site commission 

payments are the chief criterion many 

correctional institutions use to select the 

ICS provider for their facilities and are 

thus the main cause of the dysfunction 

of the ICS marketplace. The demand for 

site commission payments generates 

pressure on ICS providers to raise rates 

and assess additional ancillary charges, 

which are typically not subject to site 

commissions. The existing contract 

proposal process (RFP, or request for 

proposal) often focuses the competition 

between bidding ICS providers on who 

can pay higher site commissions to 

correctional institutions instead of 

creating incentives for ICS providers to 

provide the lowest rates to consumers. 

25. The Alabama PSC articulated an 

alternative perspective on the cause of 

increased site commissions, stating that 

‘‘the proliferation of excessive ancillary 

fees, not call rates, is the most 

significant contributor toward escalating 

site commission offerings.’’ It further 

asserted that ‘‘to effectively constrain 

excessive site commissions, it is 

essential to first address the excessive 

revenue sources [from ancillary fees].’’ 

In this Second Further Notice we seek 

comment on proposals to address both 

site commissions and ancillary fees. We 

also seek comment on the Alabama 

PSC’s perspective on the cause of 

increases in site commissions. 

26. At the time the Commission 

adopted the Inmate Calling Report and 

Order and FNPRM, the highest 

commission amount in the record was 

88 percent. Since the Order, despite the 

Commission’s decision to not permit 

site commission payments to be 

included in interstate rates, the record 

indicates that site commissions have 

continued to increase, with recent 

contracts including site commission 

payments as high as 96 percent of gross 

revenues. Moreover, there is evidence 

that site commission payments on 

intrastate ICS revenue, which were not 

addressed by the Order, have increased. 

Absent further action, we are concerned 

that the market will continue to fail to 

promote competition and ensure rates 

are just, reasonable and ensure fair 

compensation consistent with the 

dictates of the Communications Act. 

Indeed, several commenters urge the 

Commission to adopt an approach that 

‘‘will lead to lower, market-based rates.’’ 

Securus has suggested that if the 

Commission does anything short of 

completely banning site commission 

payments, it will allow gaming. 

27. We seek comment on prohibiting 

all site commission payments for 

interstate and intrastate ICS to enable 

market-based dynamics to ensure just 

and reasonable ICS rates and fair ICS 

compensation. Eliminating the 

competition-distorting role site 

commissions play in the marketplace 

should enable correctional institutions 

to prioritize lower rates and higher 

service quality as decisional criteria in 

their RFPs, thereby giving ICS providers 

an incentive to offer the lowest end-user 

rates. Indeed, when states such as 

Missouri, New York and New Mexico 

eliminated site commission payments, 

ICS rates decreased significantly. We 

therefore seek comment on such an 

approach and on whether it will foster 

a competitive market that will ensure 

just and reasonable rates and fair 

compensation for ICS while minimizing 

regulatory burdens on ICS providers and 

the Commission. We also seek comment 

below on whether the Commission 

should undertake periodic review to 

verify this. 

28. We seek comment on a two-year 

transition away from site commissions 

to avoid flash cuts and permit 

correctional institutions time to adjust. 

In addition, we seek comment on 

whether correctional facilities incur 

costs for provisioning ICS. We request 

data that demonstrate the costs that 

facilities bear that are directly related to 

the provision of ICS. We seek comment 

on the magnitude of these costs and 

how to enable facilities to recover such 

demonstrated costs in a manner that 

does not disrupt a market-based 

approach to lowering rates for end users 

of ICS. 

2. Legal Authority 

29. We seek comment on the 

Commission’s legal authority to restrict 

the payment of site commissions in the 

ICS context pursuant to sections 276 

and 201(b) of the Act. We begin with a 

review of the authority accorded the 

Commission under section 276. In 

relevant part, section 276(b)(1) states: 

In order to promote competition among 

payphone service providers and promote the 

widespread deployment of payphone 

services to the benefit of the general public, 

within 9 months after the date of enactment 

of the Telecommunications Act of 1996, the 

Commission shall take all actions necessary 

(including any reconsideration) to prescribe 

regulations that— 

(A) establish a per call compensation plan 

to ensure that all payphone service providers 

are fairly compensated for each and every 

completed intrastate and interstate call using 

their payphone. . . . 

30. As discussed herein, the 

Commission has previously concluded 

that site commission payments are a 

significant cause of ever increasing 

rates. This fact was recently 

underscored by the Joint Provider 

Reform Proposal, which stated that the 

rate caps they propose ‘‘are feasible for 

the parties only if implemented in 

conjunction with corresponding 

reductions in site commission 

payments.’’ We seek comment on the 

assertion that absent reform, achieving 

the statutory mandate of just and 

reasonable ICS rates and fair ICS 

compensation would be difficult, if not 

impossible, to achieve. At the same 

time, we are mindful that ICS providers 

should receive ‘‘fair’’ but not excessive 

compensation, and seek comment on 

implementation and transition below to 

ensure that this occurs. We therefore 

seek comment on whether the payment 

of site commissions would be an 

appropriate object of regulation under 

this statutory provision. Would a 

prohibition on site commission 

payments ensure ‘‘fair compensation’’ as 

that term is used in section 276? While 

the Commission has previously found 

the phrase ‘‘fairly compensated’’ to be 

ambiguous, and acknowledged that a 

range of compensation rates could be 

considered fair, it has treated the 

concept of fairness as encompassing 

both the compensation received by ICS 

providers and the cost of the call paid 

by the end user. As the record continues 

to show that the payment of site 

commissions causes ICS rates to be set 

at excessive levels, could the 

Commission under section 276 find that 

site commissions result in unfair 

compensation and therefore should be 

prohibited or otherwise restricted? 

31. We seek comment on our 

prediction that a prohibition on the 

payment of site commissions would 

foster a more competitive marketplace 

for the provision of ICS. If site 

commissions hinder and distort 

competition among ICS providers, 

hinder the widespread deployment of 

payphone services, or both, would that 

support the Commission’s exercise of 

section 276 authority ‘‘to prescribe 

regulations’’ to ensure that ICS 

providers are ‘‘fairly compensated’’? If 

so, would the statutory duty to ensure 

fair compensation encompass an 

outright ban on the payment of site 

commissions by ICS providers? We 

note, for example, that if a correctional 

institution were to self-provision ICS 

and seek to charge rates that include an 

amount that would be deemed a site 

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commission as part of its profits, above 

and beyond a normal return, such 

conduct could be directly addressed by 

Commission regulation of ICS rates to 

limit rates to a level that ensures fair 

compensation, but no more. Does this 

approach support the view that 

Commission regulation directly 

targeting site commissions likewise can 

be justified to the extent providers 

ensure that ICS rates provide no more 

than fair compensation? 

32. If, as the record currently shows, 

the payment of site commissions leads 

to ICS rates that are set at unreasonably 

high, even exorbitant, levels, then, as 

has occurred in states that have 

eliminated site commissions, we predict 

that a prohibition on making these 

payments would lead to significantly 

lower ICS rates. We seek comment on 

the reasonableness of this presumption 

and whether there are criteria other than 

site commissions that might discourage 

correctional institutions from 

prioritizing lower rates and better 

service quality in their RFPs. If the 

elimination of site commissions does 

lead to lower rates, we seek comment on 

whether lower ICS rates would lead to 

greater ICS usage. How should we 

interpret the word ‘‘deployment’’ in this 

context? For instance, is ‘‘deployment’’ 

limited to installation of new physical 

infrastructure that would enable the 

provision of ICS, or can ‘‘deployment’’ 

reasonably be construed to include new 

incentives or opportunities for end users 

to access existing payphone services? 

Similarly, can ‘‘payphone service’’— 

which section 276 defines to include 

‘‘any ancillary services’’—reasonably be 

construed to include new features that 

might be offered to accommodate greater 

demand? We seek comment on this 

analysis. 

33. We seek comment on any other 

relevant language in section 276 that 

may bear upon our authority to prohibit 

site commissions. For instance, what is 

the relevance of section 276(b)(1)(A)’s 

requirement that regulations adopted by 

the Commission ensure that payphone 

service providers are compensated ‘‘per 

call’’ and for ‘‘each and every completed 

intrastate and interstate call’’? More 

generally, are there alternative 

interpretations or theories for 

implementing section 276 that counsel 

for or against particular approaches to 

addressing site commission payments? 

34. We seek comment on the proposal 

that site commission payments 

undermine the achievement of section 

276’s goals in the ICS context, even 

though the Commission previously has 

permitted location rents in the context 

of public payphones. For example, as to 

public payphones, the Commission 

found that ‘‘[p]ayphones in many 

locations are likely to face a sufficient 

level of competition from payphones at 

nearby locations to ensure that prices 

are at the competitive level,’’ and thus 

‘‘[a]s a result, we believe that payphones 

at such locations are unlikely to need 

additional scrutiny.’’ The Commission 

recognized, by contrast, that there could 

be ‘‘locations where . . . no ‘off 

premises’ payphone serves as an 

adequate substitute for an ‘on premises’ 

payphone.’’ As the Commission 

observed: 

In such locations, the location provider can 

contract exclusively with one PSP [payphone 

service provider] to establish that PSP as the 

monopoly provider of payphone service. 

Absent any regulation, this could allow the 

PSP to charge supra-competitive prices. The 

location provider would share in the 

resulting ‘‘location rents’’ through 

commissions paid by the PSPs. To the extent 

that market forces cannot ensure competitive 

prices at such locations, continued regulation 

may be necessary. 

35. We seek comment on whether 

market conditions for ICS differ 

sufficiently from those the Commission 

previously found in the case of public 

payphones as to warrant different 

treatment under section 276. Are ICS 

providers inherently ‘‘monopoly 

providers of payphone service’’ and 

therefore able ‘‘to charge supracompetitive prices?’’ Do inmates have 

access to competing alternatives? One 

way to mitigate this problem would be 

to require correctional institutions to 

enter into service contracts with 

multiple ICS providers instead of 

awarding a monopoly to a single 

provider, as the Wright Petitioners 

initially suggested. However, the record 

suggests that requiring multiple 

providers at correctional institutions, 

and thereby enabling competition, could 

present significant practical challenges 

and potentially could increase costs and 

therefore drive up rates. Further, it is 

unclear whether allowing multiple 

providers at correctional institutions 

would substantially lower ICS costs to 

consumers if facilities were still able to 

receive site commission payments. We 

seek comment on these views, and 

whether action on site commissions 

thus can be reconciled with 

Commission precedent under section 

276 for public payphones, or if action to 

prohibit or restrict site commissions for 

ICS locations would require the 

Commission to change course in any 

respect. 

36. We also seek comment on any 

other sources of Commission authority 

to regulate site commissions. For 

example, section 201(b) of the Act 

requires all charges and practices ‘‘for 

and in connection with’’ an interstate 

common carrier service to be ‘‘just and 

reasonable.’’ We seek comment on 

whether section 201(b), independent of 

any authority under section 276, gives 

us jurisdiction to prohibit the payment 

of site commissions for interstate ICS. Is 

the payment of site commissions a 

‘‘practice’’ under section 201(b)? 

Conversely, could it be viewed as a 

‘‘rate,’’ or component of a ‘‘rate,’’ under 

section 201(b)? Under either alternative, 

is the payment of site commissions ‘‘for 

and in connection with’’ interstate ICS? 

To what extent would a prohibition of 

site commissions under section 201(b) 

differ from a prohibition under section 

276? Are there circumstances under 

which section 201(b) would support the 

regulation of site commissions in 

connection with intrastate, as well as 

interstate, ICS? For example, would 

declining to prohibit or restrict site 

commissions in connection with 

intrastate ICS undermine the 

Commission’s ability to ensure lawful 

interstate ICS rates? Do other statutory 

provisions inform how the Commission 

can or should approach the issue of site 

commissions in the ICS context? The 

possible reforms that we seek comment 

on would apply to site commissions on 

both interstate and intrastate ICS traffic. 

In what ways would the Commission’s 

legal basis for its actions differ based on 

the jurisdiction of the traffic under 

particular legal theories? In addition to 

regulating ICS providers’ payment of 

site commissions, does section 276 or 

other Commission authority enable us to 

regulate the conduct of correctional 

institutions or other third parties if they 

seek to induce ICS providers to make 

such payments? If so, what is that 

authority? 

3. Possible Reforms to Site Commissions 

37. We seek comment on prohibiting 

site commission payments for all ICS as 

part of comprehensive reform and 

whether transitioning away from site 

commission payments is essential to 

achieving the statutory requirements of 

just and reasonable ICS rates and fair 

ICS compensation. We seek comment on 

a definition of site commission 

payments that are subject to any 

prohibition or restriction to include 

‘‘payments in money or services from 

ICS providers to correctional facilities or 

associated government agencies, 

regardless of the terminology the parties 

to the agreement use to describe them.’’ 

We seek comment on interpreting this 

language to include any products or any 

other thing of value such as, for 

example, so-called ‘‘contract 

administration’’ fees. This is consistent 

with the approach in the Order where 

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the Commission noted that it would 

treat in-kind payments as site 

commissions. 

38. The Joint Provider Reform 

Proposal supports the elimination of site 

commissions and proposes a similar 

definition of impermissible site 

commission payments to include a 

comprehensive range of ‘‘in-kind 

payments, exchanges, technology 

allowances, administrative fees, or the 

like.’’ It proposes that ‘‘the Commission 

define as impermissible: Any payment, 

service, or product offered to, or 

solicited by an agency (or its agent) that 

is not directly related to, or integrated 

with, the provision of communications 

service in a correctional facility.’’ We 

seek comment on these definitions and 

on any other ways to define ICS 

provider payments to correctional 

institutions that would be subject to any 

regulation discussed herein. We also 

seek comment on whether we should 

prohibit gifts or charitable contributions 

from ICS providers to correctional 

facilities to ensure they are not used to 

undermine a potential site commission 

prohibition. In an analogous context, the 

Commission included in its E-rate 

program rules a prohibition on gifts by 

service providers to schools or libraries 

to ensure that such gifts do not 

‘‘circumvent competitive bidding and 

other E-rate program rules.’’ 

Additionally, we seek comment on 

whether any certification required of 

ICS providers should include a 

certification of compliance with any 

prohibition on site commissions and 

gifts the Commission may impose. 

39. Costs Incurred by Correctional 

Facilities. Although we seek comment 

on eliminating site commissions as a 

category, the Commission 

acknowledged in the Order that some 

portion of payments to correctional 

facilities ‘‘may, in certain 

circumstances, reimburse correctional 

facilities for . . . costs,’’ such as 

security costs, that the Commission 

would likely consider reasonably and 

directly related to the provision of ICS. 

Consistent with the Order, we seek 

comment on whether correctional 

institutions incur any costs in the 

provision of ICS and, if so, how to 

quantify them and how the facilities 

should recover such costs. We seek 

comment on the idea that any recovery 

by facilities for costs reasonably and 

directly related to making ICS available 

be built into any per-minute ICS rate 

caps set by the Commission. 

40. We seek comment on any filings 

in the record attempting to demonstrate 

‘‘legitimate costs incurred by 

correctional facilities . . . related to the 

provision of inmate calling services.’’ 

The Joint Provider Reform Proposal 

states that ‘‘[t]he parties recognize . . . 

that correctional facilities may incur 

administrative and security costs to 

provide inmates with access to ICS,’’ 

referencing them as ‘‘admin-support 

payments.’’ Yet, the participating 

providers ‘‘have not reached agreement 

as to what amount or what percentage 

(if any) should be required, or how such 

admin-support payments can accurately 

be measured.’’ Some parties suggest that 

costs to facilities may include 

monitoring calls, submitting trouble 

tickets on equipment, handling billing 

disputes that inmates may have with the 

provider, and infrastructure and 

security costs. Praeses asserts that 

‘‘correctional facilities incur real costs 

to enable inmate calling’’ and lists a 

number of functions they assert are 

related to such costs. However, other 

parties question whether the facilities 

incur any additional costs for the 

provision of ICS. Also, Securus notes 

that correctional facilities benefit 

significantly from having ICS in terms of 

reduced recidivism, solving and 

preventing crimes and inmate control 

and satisfaction suggesting that any 

costs are far outweighed by the benefits. 

Should the Commission be concerned 

that prohibiting or restricting site 

commission payments or prohibiting 

rates that include recovery of site 

commissions will lead correctional 

facilities to stop allowing inmates access 

to ICS altogether, or else to restrict 

inmates’ access to ICS? We seek 

comment on whether correctional 

institutions in states that have 

prohibited site commissions bear any 

costs and, if so, whether such costs are 

recovered through ICS rates or are 

recovered through the general budget of 

the correctional institution. 

41. We note that because the 

Mandatory Data Collection applied to 

ICS providers, not correctional 

institutions, the costs submitted by the 

providers do not include any costs that 

may be incurred by facilities. We seek 

comment on the actual costs, if any, 

incurred by correctional facilities in 

providing ICS, the amounts associated 

with these costs, and the appropriate 

vehicle for enabling facilities to recover 

such costs. Is an allocation of a guard’s 

time for walking a prisoner to an ICS 

facility necessary and appropriate to 

include in ICS costs? Do facilities 

monitor calls for security purposes or is 

such monitoring done by ICS providers? 

If facilities monitor calls, should such 

costs be considered a cost recoverable 

through ICS rates? The Allegany 

County, NY Sheriff asserted that his 

facility ‘‘does experience real costs in 

administering these services,’’ but did 

not quantify or otherwise provide a 

context for understanding the relative 

magnitude of these costs as compared to 

the county’s correctional budget. 

42. The record is mixed on whether, 

and if so, how much facilities spend on 

ICS. For example, GTL provides 

research that suggests significant 

variations in how facilities apportion 

costs. For example, one department of 

correction that GTL serves allocates 42 

full time employees to the provision of 

security for ICS, whereas a second, 

similarly sized, department of 

correction allocates only 0.5 full time 

employees to the provision of security 

for ICS. GTL estimates prisons’ ICSrelated costs at $0.005 per minute of use 

and jails’ costs at $0.016 per minute of 

use, or 3.4 percent of total ICS revenue 

at prisons and 7.6 percent in jails. In 

contrast, CenturyLink asserts that to 

‘‘monitor just ten percent of the calls 

placed by inmates at either a prison or 

a jail would cost the facility 5.28 cents 

per minute applied to all calls placed by 

inmates at the facility.’’ We seek 

comment on these estimated costs, 

particularly on why they vary so 

significantly, and the underlying 

assumptions, i.e., staffing costs and time 

commitments. For example, 

CenturyLink provides a list of 

‘‘administrative and security functions’’ 

that correctional facilities commonly 

perform,’’ such as ‘‘responding to other 

law enforcement requests for records/

recordings,’’ validating attorney or other 

privileged numbers, ‘‘blocking/

unblocking numbers blocked for 

security issues,’’ and ‘‘administration of 

debit purchase.’’ We seek comment on 

this list of functions and whether, in 

commenters’ experiences, it accurately 

represents costs that correctional 

facilities incur in the provision of ICS. 

Other comments contend that ICS 

facilities do not incur costs in the 

provision of ICS. For example, is it 

appropriate for any portion of a salary 

of a full-time guard to be considered a 

cost of ICS? 

43. To the extent the record indicates 

that facilities incur costs related to the 

provision of ICS, we seek comment on 

allowing cost recovery through a perminute rate cap included in any rate cap 

adopted by the Commission, or some 

other approach. The per-minute 

approach presumes that facilities’ costs 

vary with usage. We seek comment on 

the variable or fixed nature of 

correctional institutions’ costs. GTL 

estimates prisons’ ICS-related costs at 

$0.005 per minute of use and jails’ costs 

at $0.016 per minute of use. We seek 

comment on whether a per-minute 

amount between $0.005 and $0.016 or at 

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some other per minute amount would 

ensure that correctional facilities 

recover their costs. Would allowing cost 

recovery based on a per-minute amount 

give correctional facilities an incentive 

to increase ICS usage? What would be 

the policy advantages or disadvantages 

of such an approach? Would 

correctional facilities be likely to select 

ICS providers with lower rates and fees, 

so as to increase usage and, depending 

on the elasticity of demand, thereby 

increase cost recovery to the facilities? 

We seek comment on whether any such 

cap should be reevaluated and adjusted 

as minutes of use (MOU) change. 

44. We seek comment on using a perminute approach over one that would 

set such payments at a capped 

percentage of ICS revenues. This 

approach would promote simplicity and 

deter possible improper incentives tied 

to a percentage of revenues approach, as 

occurs today. If, however, we used a 

percentage-based approach, we seek 

comment on the appropriate level of any 

recovery percentage. GTL estimates 

prisons’ ICS-related costs at 3.4 percent 

of total ICS revenue and jails’ costs at 

7.6 percent. We seek comment on 

whether a percent of gross revenues 

between 3.4 percent and 7.6 percent or 

some other percent amount would 

ensure correctional facilities recover 

their costs. Would basing cost recovery 

on a percentage of ICS revenues 

encourage gaming and provide no or 

less incentive to facilities to lower ICS 

rates? For example, would basing cost 

recovery amounts on a percentage of 

revenues give ICS providers incentives 

to maintain rates at the highest 

allowable level in order to maximize 

site commission revenues? Will 

correctional facilities structure their 

RFPs so as to require such an outcome? 

We seek comment below on a transition 

period to achieve any cost recovery 

level. Praeses suggests that the 

Commission should consider 

developing ‘‘a safe harbor payment level 

in addition to a payment cap—in much 

the same way that the Commission 

regulated interstate ICS rates in the ICS 

Report and Order in light of the varying 

ICS costs borne by ICS providers with 

respect to the different types of 

correctional facilities served.’’ We seek 

comment on these and any other 

alternative regulations that could govern 

the relationship between any restriction 

on site commissions and ICS rate 

regulations. 

45. To ensure our reforms produce 

just and reasonable rates and fair 

compensation, we seek comment on 

whether state statutes or regulations that 

require any site commission payment, 

as we sought comment on defining here, 

are inconsistent with the possible 

regulation herein and would therefore 

be preempted, pursuant to section 

276(c) as discussed below. What criteria 

should the Commission use to 

determine which state actions are 

consistent? For example, should state 

actions to eliminate or restrict site 

commissions be considered consistent 

with any reforms that the Commission 

adopts? Should such an approach also 

preempt state statutes that only mandate 

how site commissions are to be used, 

but not require them in the first 

instance? Or would such statutes simply 

be rendered moot to the extent that 

correctional institutions elect not to 

seek, or ICS providers elect not to pay, 

site commissions in those states? 

46. We also seek comment on possible 

state roles to address the issues 

discussed above. Are there 

circumstances where states might be 

better positioned to engage in oversight? 

Would states be limited to oversight in 

the context of intrastate ICS or could 

they also play some role in the context 

of interstate ICS? If so, what might that 

role be? Finally, we seek comment on 

setting interstate and intrastate ICS rates 

at levels that do not include the 

recovery of site commission payments 

instead of prohibiting site commission 

payments directly. If the Commission 

determines that it does not have 

authority over site commission 

payments, does such an approach still 

allow for just and reasonable ICS rates 

as well as fair compensation? Would 

such an approach help satisfy the goals, 

provided in section 276 of the Act, of 

promoting competition and widespread 

deployment of payphone services? 

B. Interstate and Intrastate ICS Rate 

Reform 

47. A goal of ICS reform is to move 

to a market-based solution to reduce 

rates. While we continue to see the 

benefits of a the approach adopted in 

the Order last year, now that we are 

seeking comment on comprehensively 

reforming all aspects of ICS (including 

intrastate rates and site commissions) 

this allows the Commission to ask about 

a more market-based approach to 

promoting competition and just and 

reasonable rates and to ensure fair 

compensation. Given the high rates, 

excessive compensation and market 

failure we see today, we seek comment 

on adopting permanent rate caps to 

ensure that ICS rates are just and 

reasonable. These rate caps will serve as 

a backstop to the market-based solution 

described above. We seek comment on 

how to set those rate caps. Specifically, 

we seek comment below on the data 

submitted by ICS providers pursuant to 

the Mandatory Data Collection. We also 

seek comment on the proposals for rate 

reform filed in the record. In addition, 

we seek comment on prohibiting perconnection or per-call charges. Should 

any such expenses be collected through 

a per-minute rate? We seek comment on 

the best ways to address flat-rate charges 

for ICS. 

48. We seek comment on adopting 

permanent rate caps for interstate and 

intrastate debit/prepaid and collect ICS 

calls. In the Order, the Commission 

adopted a requirement that rates be costbased. At that time, because reform was 

limited to interstate rates, market forces 

alone would not bring all rates down to 

just and reasonable levels because 

intrastate rates, ancillary charges and 

site commission payments on intrastate 

rates would still thwart market forces. 

While we continue to see the benefits of 

a cost-based approach as adopted in the 

Order last year, the Commission prefers 

to allow market forces to ensure that 

rates are just and reasonable. Now that 

we seek comment on comprehensively 

reforming all aspects of ICS, including 

intrastate rates, will the elimination of 

site commissions facilitate the market 

moving to just and reasonable rates? We 

also seek comment on adopting 

permanent rate caps to ensure that ICS 

rates are just and reasonable and ICS 

compensation is fair, particularly while 

we transition away from site 

commissions. We ask about the 

advantages and disadvantages of this 

approach as compared to setting safe 

harbors or simply requiring cost-based 

rates. We seek comment above on a 

possible cost recovery amount for 

correctional facilities and seek comment 

on including an amount for correctional 

facility cost recovery in any rate caps 

ultimately adopted by the Commission. 

49. Data Analysis. We seek comment 

on the data filed by the 14 ICS providers 

in response to the Mandatory Data 

Collection. The data filed by ICS 

providers include cost, site commission 

and ancillary services data, which are 

informative and useful, and we take this 

opportunity to remind all ICS providers 

of the filing requirement. These data 

include the cost of the full spectrum of 

safety and security features, including 

verification, monitoring and other 

advanced security capabilities that 

ensure that correctional facilities have 

the security necessary for the provision 

of ICS. We generally seek comment on 

the data and invite parties to analyze the 

data and submit any analysis consistent 

with the terms of the Protective Order. 

We also invite parties to submit 

concerns or alternative proposals for the 

Commission to consider as it evaluates 

further reforms. Throughout this section 

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we use 2012 and 2013 actual data filed 

by the responding ICS providers. 

50. While the data are useful to the 

Commission’s evaluation of further ICS 

reforms, we seek comment on some 

apparent inconsistencies and anomalies. 

For example, differing cost allocations 

by providers were particularly notable 

and could affect the consistency and 

reliability of the data as reported. The 

Wright Petitioners noted several 

anomalies based on their analysis of the 

data, including the fact that ‘‘[t]he 

average cost per minute of use is 

substantially less than the interim 

Interstate ICS hard rate caps adopted in 

August 2013; [t]he ICS providers 

inconsistently allocated their costs 

among the four cost categories 

(Telecom, Equipment, Security, Other); 

[t]he ICS providers used different 

methodologies to allocate costs to 

facilities and payment methods.’’ We 

seek comment on these apparent 

inconsistencies and how the data may 

be analyzed to make an allowance for 

such variances. 

51. A large proportion of costs 

reported by ICS providers are common 

costs, which is consistent with the fact 

that ICS providers typically use 

centralized calling platforms to process 

calls from the different facilities they 

serve. The Commission’s Mandatory 

Data Collection did not dictate a 

particular methodology for allocating 

common costs—and, indeed, doing so 

could have greatly increased the 

administrative burden of providing the 

data. As a result, the providers took 

varied and often inconsistent 

approaches to allocating common costs 

among types of facilities and types of 

services. Given the preponderance of 

common costs in ICS providers’ data 

submissions, analysis of the data is 

particularly sensitive to such varied and 

inconsistent common cost allocation 

methodologies. 

52. We note that, as a whole, ICS 

providers allocated common costs 

among types of facilities and types of 

services differently as compared to the 

volumes of traffic those facilities and 

services experienced. Specifically, ICS 

providers that served both jails and 

prisons generally allocated a higher 

proportion of their common costs to 

jails than would otherwise be warranted 

given the minutes of use from those 

jails. Although the exact allocation 

varied by provider, on average about 

two thirds of common costs were 

allocated to jails, whereas only about 

half the reported total traffic volume 

originated from jails. The data evidence 

similar discrepancies between the 

allocation of common costs to types of 

service and the volume of traffic for 

those services. For example, ICS 

providers as a whole allocated about 16 

percent of their common costs to collect 

calls, whereas collect calls represented 

only about eight percent of total traffic. 

It is not readily apparent why common 

costs (as opposed to direct costs) would 

not follow usage more closely. And the 

results of the data from these allocations 

show costs for jails that are higher than 

proposals for comprehensive reform that 

the providers themselves submitted, 

which raises concerns about the 

accuracy of their methodology and 

whether alternative allocation methods 

would more accurately represent costs. 

53. One possible approach to 

addressing apparent inconsistencies in 

the providers’ common cost allocation 

methodologies would be to use minutes 

of use for each provider as an alternative 

basis on which to allocate providers’ 

common costs. Given the high 

proportion of common costs reported by 

the industry and the centralized nature 

of its networks, using minutes of use to 

allocate common costs would seem 

likely to reflect the providers’ 

operational realities. We seek comment 

on whether employing a usage-based 

allocation of common costs would more 

closely reflect cost causation and 

provide more consistent and reliable 

data. We further seek comment on how 

these data should inform the rate cap 

levels for interstate and intrastate debit/ 

prepaid and collect calls. The following 

table shows the costs per minute for 

jails and prisons when using three 

different methods to allocate common 

costs: As submitted by ICS providers, as 

reallocated using total minutes of use, 

and as reallocated using the providers’ 

cost allocations between jails and 

prisons prior to reallocating those costs 

by minutes of use for each type of and 

facility. 

TABLE ONE

Facility type 

Common costs as 

allocated by providers 

Common costs allocated by MOU 

(in cents) 

Common costs allocated by 

facility type 

(in cents) 

Average debit/ 

prepaid cost 

Average collect 

cost 

Average debit/ 

prepaid cost 

Average collect 

cost Average debit/ 

prepaid cost 

Average collect 

cost 

Jails .............................................. 15.8 48.7 14.8 21.9 18.1 26.3 

Prisons ......................................... 10.0 13.7 14.0 17.2 9.9 14.3 

All ................................................. 13.3 28.3 14.5 19.2 N/A N/A 

54. We seek comment on the two 

reallocation methodologies in Table 

One, both of which use minutes of use 

in different ways as a means of 

reallocating common costs in manner 

tied more closely to usage. We initially 

examine and seek comment on the 

reallocation based on total minutes of 

use. This method uses the ratio of total 

industry minutes of use for jails to total 

minutes of use for all facilities to 

reallocate all common costs among 

facility and service types. Minutes of 

use for jails represent about 53 percent 

of all minutes of use, resulting in an 

allocation of about 53 percent of 

common costs to jails instead of the 

average of approximately 68 percent 

allocated to jails in the data as reported 

by providers. The results of this 

reallocation methodology are more 

consistent with provider proposals in 

the record, both from 2008 and more 

recently. For purposes of comparison, 

the 2008 ICS provider proposal reported 

costs of $0.164 per minute for debit calls 

and $0.236 per minute for collect calls, 

whereas the providers’ data reported 

costs of $0.133 per minute for debit and 

prepaid and $0.283 per minute for 

collect. Similarly, the Joint Provider 

Reform Proposal recommends a single 

per-minute rate cap of $0.20 for debit 

and prepaid and $0.24 for collect 

calling. CenturyLink’s proposal 

advocates unified rate caps at the 

current interstate caps ($0.21 for debit 

and prepaid and $0.25 for collect). We 

seek comment on these apparent 

allocational discrepancies. 

55. This alternative methodology 

would standardize common cost 

allocations among the five providers 

that serve a mix of jails and prisons. 

And the fact that providers that serve 

only jails have no prison minutes of use 

would ensure that their common costs 

would not be allocated to prisons. Does 

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this method more closely approximate 

the operational realities of the 

providers? Is it more effective in 

replicating cost causation in the 

industry? Does it have any disparate 

impacts on providers that only serve 

jails? 

56. We also examine and seek 

comment on a potential reallocation of 

providers’ common costs based on 

providers’ allocation of common costs to 

facility types (jails or prisons). This 

method accepts each individual 

provider’s allocation of common costs 

between jails and prisons and then 

allocates those costs among facility and 

service types based on total minutes of 

use for each type of facility. This 

method shifts fewer costs to prisons and 

results in higher costs for jails than the 

total minutes of use allocation due to 

the reliance on the 68 percent average 

allocation of common costs to jails by 

providers, as noted above. Is this 

method more appropriate because 

providers’ initial allocations of common 

costs are more accurate? Alternatively, 

is this method’s greater reliance on the 

accuracy of those allocations a potential 

vulnerability or flaw? 

57. The data provided by ICS 

providers also allocated costs to 

different subsets of facilities based on 

size of facility. This allocation resulted 

in a wider range of per-minute costs 

with some apparent anomalies, such as 

per-minute costs for certain facility size 

groups being well above the range of 

rate cap proposals submitted by any ICS 

provider, including those that 

exclusively serve purportedly highercost facilities such as jails. The cost data 

generated by facility size groups also 

resulted in some anomalies that raised 

questions about whether smaller 

facilities have higher costs than larger 

ones, and vice versa, as some 

commenters have asserted in this 

proceeding. Given confidentiality of the 

data, we cannot disaggregate all data for 

jails and prisons by size but we note 

that while the data indicate that smaller 

jails are most costly and the largest jails 

are less costly to serve, the data did not 

show the same correlation between size 

and cost for prisons. This raises 

questions about whether assumptions 

about facility size determining cost are 

accurate. Even if size were the 

appropriate measure, would the 

administrative burden of using rates 

tiered by size and type of facility 

outweigh the benefits of multiple rate 

tiers? Can rate caps for different types of 

services and facilities provide sufficient 

flexibility to ensure fair compensation 

short of resorting to size-based tiers? 

Does the Commission need to adopt 

such a regulatory approach? 

58. To the extent that particular 

facilities are more costly to serve than 

suggested by the rate cap proposals in 

the record, can the Commission more 

effectively ensure fair compensation and 

reduce administrative costs to providers 

by addressing such outliers through the 

use of the waiver process? We note that 

the Commission already granted a 

waiver of its interim rate caps to one ICS 

provider to address unique 

circumstances. Would using a waiver 

process be easier to manage than 

adopting and policing the multiple rate 

tiers the Commission would otherwise 

have to adopt? 

59. We also seek comment on other 

alternative methods of analyzing the ICS 

providers’ cost data. For example, 

would evaluating jail data separately 

from prison data be useful? We seek 

comment on any other methods of 

evaluating the data that commenters 

may want to propose that may prove 

useful to the Commission in its analysis 

of this data to ensure just and 

reasonable rates and fair, not excessive, 

compensation. 

60. Previous Data Submissions in the 

Record. ICS providers have previously 

filed data in the record throughout this 

proceeding. In 2008, seven ICS 

providers filed a cost study based on 

proprietary cost data for certain 

correctional facilities with varying call 

cost and call volume characteristics. 

The study indicated that the per-call 

cost for debit calls was $0.16 per minute 

and $0.24 per minute for collect calls. 

In response to the 2012 ICS NPRM, 

Securus filed data which showed, as 

discussed in the Order, ‘‘an average perminute cost for interstate calls from all 

facilities included in the report to be 

$0.12 per minute with commissions and 

$0.04 per minute without them.’’ Pay 

Tel filed financial and operational data 

for its ICS operations. The nonconfidential cost summary included in 

the filing reported actual and projected 

2012–2015 average total costs for collect 

and debit per-minute calling of 

approximately $0.23 and $0.21, 

respectively (including the cost of an 

advanced security feature known as 

continuous voice biometric 

identification). Although CenturyLink 

did not file a cost study at that time, it 

did file summary cost information for its 

ICS operations. Specifically, 

CenturyLink reported that its per 

minute costs to serve state departments 

of corrections facilities (excluding site 

commission payments) averaged $0.116 

and that its per-minute costs to serve 

county correctional facilities (excluding 

site commission payments) averaged 

$0.137. We seek comment on how to 

reconcile these data submissions with 

the data filed in response to the 

Mandatory Data Collection and the 

Commission’s analysis of that data 

described above, and how these data 

should inform our selection of rate caps. 

We also seek comment on and updates 

to intrastate rate data currently in the 

record. And we seek updated comment 

on international ICS and the need for 

Commission reform focused on such 

services. 

1. Proposals for a Unitary Rate 

61. Throughout this proceeding 

interested parties have filed in support 

of the Commission adopting unitary ICS 

rate caps for all intrastate and interstate 

debit/prepaid and collect calls in all 

facilities. We seek comment here on 

those proposals. 

62. Joint Provider Reform Proposal. 

The Joint Provider Reform Proposal 

supports a rate cap of $0.20 per minute 

for debit and prepaid interstate and 

intrastate calls, and a rate cap of $0.24 

per minute for all interstate and 

intrastate collect calls exclusive of percall or per-connection charges, 

exclusive of any facility cost recovery, 

and regardless of facility size. The 

providers that submitted this proposal 

assert that this ‘‘simplified rate 

structure’’ ‘‘will make ICS charges more 

transparent for inmates and their friends 

and family,’’ as well as ‘‘easy for ICS 

providers and correctional facilities to 

implement quickly, and will simplify 

oversight and enforcement.’’ 

63. Pay Tel and the Alabama PSC 

have raised concerns about the Joint 

Provider Reform Proposal for a unitary 

rate and urged the adoption of different 

rates for jails and prisons. For example, 

Pay Tel stated that the rate caps were 

‘‘excessively high for prisons.’’ 

64. We generally seek comment on the 

rate caps proposed by the Joint Provider 

Reform Proposal. We seek comment on 

how our data analysis described above 

reconciles with the rate caps proposed 

by the providers. As noted above, 

average debit and prepaid costs are 

lower than $0.20 per minute. Should we 

adopt the Joint Provider Reform 

Proposal’s rate caps because any 

adopted rate caps will serve as a 

backstop to ensure that rates are just and 

reasonable? Would these rates enable 

the Commission to include a per-minute 

cost recovery of $0.005 for correctional 

facilities’ cost recovery? We also seek 

comment on how ICS providers’ earlier 

data filings reconcile with the rate caps 

suggested in the Joint Provider Reform 

Proposal. 

65. Current Interim Rate Caps. Some 

parties have supported making the 

interim rate caps permanent for all 

interstate and intrastate ICS calls. 

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CenturyLink asserts that it could 

‘‘support a unified cap approximately at 

the current interstate cap levels.’’ NCIC 

asserts that collect ICS rates should be 

capped at $0.25 per minute and debit 

call rates at $0.21 per minute. We seek 

comment on these proposals in light of 

the data received in response to the 

Mandatory Data Collection. 

66. Wright Petitioners’ Proposal. The 

Wright Petitioners previously proposed 

a $0.07/minute rate cap for all interstate 

ICS. We sought comment on this 

proposal in the FNPRM, particularly as 

it related to distance insensitive rate 

proposals. ICS providers suggested that 

the rate may jeopardize ICS security. 

Other commenters suggested that the 

Commission should adopt a $0.07/

minute rate cap for all ICS and that 

current rates in states like New Mexico 

($0.043/minute) and New York ($0.048/ 

minute) support this cap. We now seek 

comment on whether we should adopt 

this proposal. If the Commission were to 

adopt this proposal, would rate caps at 

this level preclude ICS providers from 

paying site commissions and therefore 

negate the need for the Commission to 

regulate site commission payments as 

discussed above? What level of rate cap 

do commenters believe would change 

what providers are able to offer 

correctional facilities? Do the data from 

the Mandatory Data Collection support 

this rate cap? What are the 

considerations associated with such an 

approach? 

2. Tiered Rate Caps 

67. While we see certain benefits to a 

single set of rate caps such as 

administrative ease and avoidance of 

potential loopholes, some commenters 

recommend rates tied to the size or type 

of facility. In the FNPRM the 

Commission sought comment on the 

adoption of, and benefits of, tiered rates 

based on a facility’s volume of minutes, 

type (i.e., jail versus prison) or size. 

Responses centered on the distinction 

between jails and prisons, with some 

commenters advocating for different ICS 

rate tiers for jails and prisons. These 

same commenters also point out that the 

differences between jails and prisons are 

not absolute, and acknowledge that 

some prisons ‘‘are more costly to serve 

than jails and the range of costs of 

serving jails and prisons is very wide.’’ 

The record indicates that jail 

administrators support a tiered rate 

instead of a flat rate because jails may 

face different costs than prisons as a 

result of their smaller size, higher 

turnover rate, and relative inability to 

take advantage of economies of scale. 

How do the data collected and reported 

herein impact our evaluation of these 

claims? 

68. Pay Tel Proposal. In its proposal 

Pay Tel recommends separate rates for 

jails and prisons. Pay Tel proposes an 

$0.08 per minute rate for all prisons 

regardless of population. Pay Tel also 

estimated a $0.067 per minute average 

rate for the eight state prison systems 

that barred site commissions. Pay Tel 

suggests a rate of $0.26 per minute for 

jails with 1–349 average daily 

population [ADP], a $0.22 per minute 

rate for jails with 350 plus ADP, and a 

$0.08 per minute rate for all prisons 

regardless of size. We seek comment on 

these proposed rate caps. 

69. Alabama recently adopted ICS 

rates tied to facility type. For example, 

the Alabama PSC has adopted perminute rates of $0.30, decreasing to 

$0.25 over two years, for jails and $0.25, 

decreasing to $0.21 over two years, for 

prisons. We seek comment on this 

approach. 

70. Commenters suggest that rates tied 

to the type or size of facility would open 

loopholes in ICS reform and allow for 

gaming. Is this accurate? Recently, 

CenturyLink said it ‘‘does not support 

complex or tiered rate caps.’’ Other 

commenters contend that an insufficient 

record exists from which to develop rate 

tiers, and point to evidence that many 

jails house long-term inmates, which 

may indicate that costly account set-up 

fees are less of an issue than suggested. 

Do the data received in response to the 

Mandatory Data Collection assuage the 

concern regarding the sufficiency of the 

record? The data also suggest that 

certain ICS providers reported a large 

proportion of the costs of ICS as 

common costs, rather than direct or 

facility-specific costs. Does this further 

call into question the cost allocation 

methods used by providers in their data 

submissions to allocate common and 

direct costs? Or does it suggest that ICS 

providers did not use uniform standards 

to distinguish between direct and 

common costs? We seek updated 

comment on interested parties’ opinions 

on tiered rates for different types of 

facilities. Specifically, if the 

Commission adopts a market-based 

approach of addressing site commission 

payments and allowing competition to 

drive rates closer to cost, should we 

consider rate tiers, or should we instead 

adopt common rate caps for all 

correctional institutions to 

accommodate any differences between 

jails and prisons? Would the adoption of 

tiered rates help promote competition 

among ICS providers and promote the 

widespread deployment of ICS—a form 

of payphone service—consistent with 

the goals of section 276? For example, 

would a lower rate cap for ICS in prison 

facilities promote additional usage, a 

potential means of promoting 

widespread deployment of payphone 

ICS service? 

71. The Commission seeks comment 

above on prohibiting site commissions 

to address the primary cause of the ICS 

market failure. If the Commission does 

not prohibit site commissions should 

we focus more on rates tied to facility 

size or type? If the Commission were to 

set tiered rates, we seek comment on 

defining a jail facility as a correctional 

facility operated by a political 

subdivision of a state or its agent and 

defining a prison facility as a state-run 

or federally-run correctional facility. 

How would differences in tiered rate 

caps be administered? We seek 

comment on a simpler approach. Would 

a variety of rate caps cause confusion? 

We also seek comment on the 

administrability of cost on 4ICS 

providers on an approach that varies by 

size and type of facility. CenturyLink 

urges the Commission to exclude from 

ICS rate reform certain types of facilities 

that it considers high-cost, such as 

juvenile detention centers and secure 

mental health facilities. Do other 

commenters agree that these types of 

facilities are particularly high cost? If so, 

why? Are there other categories of 

facilities that the Commission should 

consider exempting because they are 

high cost? Would doing so be in keeping 

with our statutory mandate? How 

should the Commission regulate the 

provision of ICS at such facilities? 

Should it exempt such facilities from 

ICS rate reform? We seek comment on 

the appropriate definitions for juvenile 

detention facilities and secure mental 

health facilities. 

72. In the FNPRM, the Commission 

also sought comment on rate tiers based 

on facility size as measured by the 

average daily population of the facility. 

The Prison Policy Initiative suggested 

that the Commission could use the 

Census of Jail Facilities population data 

to capture facility size but could also 

use more recent data. Would following 

the Census numbers result in too few or 

too many tiers? We seek comment on 

what interested parties believe to be the 

appropriate inflection points, in terms 

of ICS providers’ scalability of costs, 

with regard to possible tiered rates. 

Some states have recently adopted ICS 

rate tiering. We seek comment on the 

jail and prison rates adopted by the 

Alabama PSC or any other states. 

3. Additional Considerations Related to 

ICS Rates 

73. Debit/Prepaid and Collect Calling. 

In the Order the Commission treated 

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debit and prepaid ICS alike and collect 

ICS separately because ‘‘[t]he record 

indicates that prepaid calling is 

generally less expensive than collect 

calling but can be about equal in rates 

to debit calling.’’ Data from the 

Mandatory Data Collection suggest a 

difference in cost between collect ICS 

calling and debit/prepaid ICS calling. 

The data also show, however, that debit 

and prepaid ICS costs are very similar. 

Commenters have recommended higher 

rates for collect calls. The Alabama PSC 

adopted different rate caps for different 

types of service from prisons. Other 

commenters have opposed 

differentiated rate caps for different 

types of ICS. We seek comment on 

retaining this distinction and adopting a 

rate cap for debit and prepaid calls and 

a rate cap for collect calls. We also seek 

comment on the appropriate 

differential, if any, between the debit/

prepaid cap and the collect cap. 

74. Per-Call or Per-Connection 

Charges. Per-call or per-connection 

charges are one-time fees often charged 

to ICS users at call initiation. We seek 

comment on banning the imposition of 

per-call or per-connection charges. In 

the Inmate Calling Report and Order 

and FNPRM the Commission noted 

several problems with per-call or perconnection charges, including the level 

of some of the charges, their effect on 

the rate for short calls, and evidence of 

premature, non-security related call 

terminations, and the assessment of 

multiple per-call charges for what was, 

in effect, a single conversation. The 

Commission, recognizing that many 

different ways to address per-call 

charges exist, did not prohibit all percall charges in the Order but sought 

comment in the FNPRM. In the FNPRM 

the Commission noted the flexibility it 

gave ICS providers to use a rate 

structure that included per call charges 

and sought further comment on the risks 

and benefits of allowing per call 

charges. Specifically, the Commission 

‘‘express[ed] serious concerns about 

such charges.’’ Some commenters 

suggested that the Commission 

eliminate per-call charges and that 

doing so would be beneficial because it 

‘‘would lead to significant reductions in 

customer complaints regarding charges 

associated with dropped calls and in the 

amount of time providers are required to 

spend analyzing and resolving such 

complaints.’’ Is there continuing 

evidence of premature, non-security 

related call terminations since the 

Commission adopted the Order? The 

per-minute rate caps proposed by Joint 

ICS Providers do not contemplate the 

continued charging of a per-call or perconnection fee. 

75. We seek comment on our legal 

authority to ban the imposition of percall or per-connection charges, for both 

interstate ICS calls and intrastate ICS 

calls. More specifically, we seek 

comment on whether such fees are part 

of the rate for ICS and therefore subject 

to the section 276 mandate to ensure fair 

compensation. Alternatively, should the 

Commission consider per-call or perconnection charges an ancillary service 

as discussed in section 276(d)? Are 

there instances in which the 

correctional facility or some other third 

party assesses a per-call or perconnection fee? If so, we seek comment 

on our authority to ban such charges. 

Would the elimination of per-call 

charges allow for just and reasonable 

interstate and intrastate ICS rates and 

fair compensation for providers? Would 

pure per-minute rate caps at an 

appropriate level or levels ensure fair 

compensation for ICS providers? 

Section 276 specifically requires us to 

‘‘establish a per call compensation 

plan.’’ We seek comment on whether 

section 276 gives the Commission the 

legal authority to ban per-call 

compensation. We seek comment on 

whether we should also rely on our 

section 201 authority to ban per-call 

charges for interstate calls. The record 

has not shown significant per-call costs 

that could not reasonably be recovered 

using per-minute charges. With one 

exception, ICS providers have 

successfully implemented the interim 

per-minute rate caps for interstate ICS 

mandated by the Order. We seek 

comment below on transitions and 

whether rate caps should be effective 90 

days after the effective date of a 

Commission order. If the Commission 

continues to allow per-call charges, 

should it nonetheless disallow an 

additional per-call charge when a call 

has been reinitiated within one or two 

minutes of having been mistakenly 

disconnected? If states have conducted 

ICS reform, we seek comment on 

whether we should review the effective 

rates for consistency with the 

Commission’s regulations based on the 

calculation of the cost of a 15-minute 

ICS call. Are there other considerations 

relating to per-call charges in the ICS 

context that the Commission should 

consider? 

76. Flat-Rate Charges. We seek 

comment on whether or not it is 

necessary to ban flat-rated charges for 

calls of a fixed duration to ensure rates 

are just and reasonable and fair. In the 

Order the Commission stated that ‘‘a 

rate will be considered consistent with 

our rate cap for a 15-minute 

conversation if it does not exceed $3.75 

for a 15-minute call using collect 

calling, or $3.15 for a 15-minute call 

using debit, prepaid, or prepaid collect 

calling.’’ Rule 64.6030 mirrors this 

language and was intended to illustrate 

that a five-minute collect call would 

equal $1.25 and a five-minute debit or 

prepaid ICS call would equal $1.05, 

while a 30-minute collect call could 

equal no more than $7.50 and a 30- 

minute debit or prepaid ICS call could 

equal no more than $6.30. In the 

FNPRM the Commission sought 

comment on whether it should adopt an 

overall rate cap based on call duration, 

how such a rate cap might ensure that 

ICS rates are just, reasonable, and fair, 

and whether a per-minute cap is still 

necessary to ensure that shorter calls are 

reasonably priced. Commenters 

expressed concern that ‘‘consumers who 

make shorter calls would necessarily be 

penalized’’ and that ‘‘there is no 

principled basis for capping the amount 

that can be charged for a call.’’ The 

Public Service Commission of the 

District of Columbia discussed the 

benefits of its $1.75 per-call cap 

regardless of call length. 

77. Subsequent to the FNPRM 

comment deadline, Securus sought 

additional guidance on whether the 

Order allows providers to use a flatrated charge based on the interim rate 

caps for a 15-minute call regardless of 

call duration. We seek comment on this 

practice. Should we allow ICS providers 

to charge fixed call duration pricing for 

all interstate ICS usage regardless of call 

duration? Is this an appropriate 

interpretation and application of rule 

64.6030 and the relevant discussion in 

the Order? We also seek comment on 

how we should address the use of flatrate charges for ICS going forward and 

our legal authority to act on such 

charges. We seek comment on whether 

we should revise the existing rules to 

prohibit flat-rate charges or develop new 

rules prohibiting flat-rated charges. If 

not, how much flexibility should the 

Commission allow if flat-rate charges 

are permitted? How can we ensure that 

flat-rate charges allow for just and 

reasonable ICS rates to end users as well 

as fair compensation to ICS providers? 

78. One commenter asserts that 

correctional facilities seek such flatrated charges. Is this the case and, if so, 

why? What impact would allowing this 

level of flexibility have on the effective 

per-minute rates end users pay? If the 

Commission adopted a lesser degree of 

flexibility, how would it work? Should 

such a flat rate be used only for calls 15 

minutes in length? Will flat-rated 

charges, at the rate caps discussed 

above, for a 15-minute call duration 

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allow for just and reasonable ICS rates 

and fair compensation? In the Order, the 

Commission found that the record 

supported 15-minute average call 

duration. Data from the Mandatory Data 

Collection show that the average call 

length reported by respondents was 

below 13 minutes in 2013. Is 15 minutes 

still a useful average call duration for 

purposes of discussing flat-rate charges? 

If not, what would be an appropriate 

average call duration? 

79. Waivers. The Order made clear 

that the Commission’s standard waiver 

process applies to ICS, specifically, that 

ICS providers seeking a waiver of the 

interim rules must demonstrate good 

cause. The Commission delegated to the 

Bureau the authority to seek additional 

information necessary for evaluating 

waivers. Since release of the Order, the 

Bureau has processed three waiver 

requests. CenturyLink suggests that the 

Commission ‘‘invite waivers where new 

rules conflict with state statutes, or 

where they would force ICS providers to 

offer service at a loss.’’ The ICS 

providers that submitted the Joint 

Provider Reform Proposal suggest that 

the Commission ‘‘permit an ICS 

provider to seek a waiver of the rate cap 

for a particular correctional facility if 

the ICS provider can demonstrate that 

the proposed rate cap does not allow the 

ICS provider to economically serve the 

correctional facility. However, such 

waivers should be permissible only on 

a facility-by-facility basis.’’ We seek 

comment on these suggestions. 

Specifically, is such action necessary if 

the Commission preempts inconsistent 

state regulations pursuant to section 

276(c) of the Act? We seek comment on 

how the Commission would determine 

that rates are below-cost in a waiver 

proceeding and how any adopted 

regulations should address this issue. 

We further seek comment on what 

information would be important for 

providers to demonstrate when seeking 

a waiver in the ICS context. We also 

seek comment on whether exempting a 

provider’s highest-cost facilities from 

the final, adopted regulations would be 

a suitable remedy to a waiver request. 

Conversely, would such an exemption 

encourage ICS providers to focus on 

particular facilities so as to arbitrage our 

rules? 

C. Reforms to Ancillary Charges 

1. Background 

80. In addition to unreasonable rates, 

ICS providers typically assess a wide 

range of separate charges for services 

ancillary to the provision of ICS. These 

charges impose significant additional 

burdens on consumers and considerably 

inflate the effective price they pay for 

ICS. The record indicates that ancillary 

charges represent a significant 

proportion of the total expense of ICS to 

consumers. The Prison Policy Initiative 

estimated that ancillary charges 

represent 38 percent of all consumer 

payments for ICS. Others have suggested 

that this estimate may be low. Fees to 

open, fund, maintain, close, and refund 

an ICS account represent just a few of 

a variety of ancillary charges assessed 

by ICS providers. The sheer number of 

ancillary charges, their varying 

nomenclature, and the variability of the 

amounts charged cause considerable 

customer confusion, let alone 

consternation. 

81. In the Order, the Commission 

‘‘question[ed] whether such charges are 

reasonable in and of themselves’’ and 

noted that ‘‘the levels of such charges do 

not appear to be cost-based.’’ The 

Commission required that all interstate 

ancillary service charges be cost-based 

and reasonably and directly related to 

provision of ICS. The Commission 

concluded that it had the jurisdiction 

and authority to regulate ancillary 

service charges. The Commission also 

required ICS providers to file cost data 

about ancillary services as part of the 

Mandatory Data Collection, and in the 

FNPRM sought comment on additional 

steps the Commission could take to 

address ancillary service charges and 

ensure that they are cost-based. We now 

seek further comment on issues related 

to ICS ancillary charges. 

82. Since the release of the Order, 

evidence indicates that ancillary charges 

have increased, suggesting that any 

reforms limited to ICS rates could be 

circumvented through increased and 

new ancillary charges. As the 

Commission stated in the Order, ICS 

reform and ensuring just and reasonable 

rates to end users ‘‘could not be 

achieved if ancillary charges were not 

also controlled.’’ Given that ancillary 

charges are typically shielded from site 

commission assessments in correctional 

institutions’ contracts with providers, 

ICS providers appear to have an 

incentive to assess additional ancillary 

charges as an alternative source of 

revenue to compensate for lowered ICS 

rates or for increasingly high site 

commission payments. We seek 

comment on the extent to which the 

proliferation of ancillary charges may be 

a result of the market distorting effects 

of site commissions. 

83. There is broad consensus in the 

record on the need for the Commission 

to reform ancillary charges. The Wright 

Petitioners and prisoner advocacy 

groups have recommended the 

regulation or elimination of ancillary 

charges. A number of ICS providers 

have made similar recommendations. 

For example, CenturyLink stated that 

‘‘the Commission should prohibit all or 

all but a very narrow class of ancillary 

fees. Ancillary fees are the chief source 

of consumer abuse and allow 

circumvention of rate caps.’’ NCIC 

stated ‘‘[a]lthough telecom companies 

don’t normally welcome a regulation, 

we see the need for the FCC and state 

regulators to set a standard rate and fee 

structure.’’ Pay Tel stated ‘‘you ought to 

get rid of all of them except the fees 

where the consumer makes a choice.’’ 

And Securus stated that it ‘‘offered, 

however, to cease passing through 

several types of fees and to cap its fees 

for optional, convenient payment 

methods for a period of five years.’’ 

84. Mandatory Data Collection. ICS 

providers submitted a significant 

amount of ancillary service cost and 

usage data in response to the Mandatory 

Data Collection. The ancillary services 

data provide some useful insight into 

the costs of ancillary services. For 

example, the data show that 

approximately 82 percent of total 

ancillary costs incurred by ICS 

providers pertain to the provision of bill 

processing services, particularly for the 

processing of credit and debit card 

transactions. Conversely, only about 10 

percent of providers’ ancillary costs 

pertain to ancillary services that are 

typically treated as normal utility 

overhead. Even so, the data have some 

limitations given providers’ inconsistent 

approaches in assessing and labeling 

such fees, different allocation 

methodologies, and different ways of 

reporting those costs. The data, while 

mixed, also show that the per 

transaction cost of processing financial 

transactions point to the reasonable 

nature of the $3.00 caps for financial 

transaction processing fees set by the 

Alabama PSC. We seek comment on 

these general observations and on the 

ancillary charge data generally. 

2. Legal Authority for Ancillary Charge 

Reform 

85. In the Order, the Commission 

asserted jurisdiction over interstate ICS 

ancillary charges, citing as sources of 

authority sections 201(b) and 276 of the 

Act. Given section 276’s mandate of fair 

compensation ‘‘for each and every 

completed intrastate and interstate 

call,’’ and its inclusion of ‘‘inmate 

telephone service’’ and ‘‘any ancillary 

services’’ in the definition of ‘‘payphone 

service,’’ we seek comment on whether 

section 276 gives the Commission 

authority to regulate both interstate and 

intrastate charges for ICS ancillary 

services. While the Commission has 

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previously adopted a definition of 

ancillary charges, we have not adopted 

a definition for ‘‘ancillary services’’ and 

therefore seek comment on such a 

definition. Additionally, given the 

absence of any qualifying statutory 

language to the contrary, we seek 

comment on whether section 276 gives 

the Commission jurisdiction over 

charges that are ancillary to ICS to the 

extent such services are considered IPenabled services. Further, in the Order 

the Commission asserted in regard to 

ICS generally that ‘‘[o]ur exercise of 

authority under sections 201 and 276 is 

further informed by the principles of 

Title I of the Act.’’ 

86. We seek comment on whether this 

assertion also encompasses the 

Commission’s regulation of services 

ancillary to the provision of ICS to the 

extent that ICS may be considered an IPenabled service. Additionally, to the 

extent that ancillary charges are 

assessed in connection with ICS 

provided through wireless phones, we 

seek comment on whether sections 276 

and 332(c) confer jurisdiction on the 

Commission to reform such fees. We 

also seek comment on assertions that 

charges for ancillary services are 

primarily related to billing and 

collection and therefore may not be 

considered to be communications 

services subject to Commission 

regulation. Finally, we seek comment on 

whether regulation by the Commission 

of ICS ancillary services should be 

treated as a default federal framework, 

with states encouraged to adopt 

additional reforms to the extent they are 

consistent with the Commission’s 

regulations. Regarding the jurisdictional 

nature of ancillary charges, the Alabama 

PSC stated that ‘‘any schedule of 

ancillary fees applies to both the 

interstate and intrastate jurisdictions.’’ 

Are ancillary charges inherently dual 

jurisdictional in nature? We seek 

comment on this assertion and its 

impact on our legal authority to regulate 

such charges. 

3. Discussion 

a. Prohibition of Certain Ancillary 

Charges 

87. The FNPRM sought comment on 

whether certain ancillary charges 

constituted unjust and unreasonable 

practices under section 201(b), or 

practices that would result in providers 

being unfairly compensated under 

section 276. We now seek comment on 

prohibiting separate charges for certain 

ancillary services that are basic 

requirements for consumers to gain 

access to ICS, and that are typically 

recovered through rates as part of 

normal utility overhead costs. We also 

seek comment on capping charges for 

certain other ancillary services such as 

payment processing for credit and debit 

card payments that enhance 

convenience for ICS consumers. We 

seek comment on whether this approach 

will promote the Commission’s mandate 

of ensuring just and reasonable ICS rates 

and fair compensation for ICS providers, 

as well as promote competition and 

deployment in the ICS market. 

88. The record, including the 

discussion at the Commission’s 2014 

ICS Workshop, supports the notion that 

the Commission should prohibit 

separate ancillary charges for services 

that represent normal utility overhead 

but allow other charges for services that 

represent an additional option or 

convenience for consumers. For 

example, the Alabama PSC workshop 

participant stated that its approach ‘‘is 

first, establish a basic level of ICS 

service and what is included in that 

basic service at no additional charge to 

the customer. . . . Beyond that basic 

level, the Commission will consider 

fees.’’ The Alabama PSC participant 

described its goal to be to ‘‘[m]ake the 

rates a true reflection of cost for 

providing the service.’’ Other 

commenters support making a similar 

distinction. For example, Pay Tel’s 

President stated at the 2014 ICS 

Workshop ‘‘what I characterize as 

ancillary fees are all these extra things 

that really should be incorporated into 

the cost of the call. . . . [T]he fees that 

should be separated are the ones that are 

driven by consumer choice.’’ Securus 

similarly proposed ‘‘not to have any 

mandatory fees and to have only fees for 

optional, convenience-related payment 

methods.’’ The Minnesota Department 

of Commerce stated that if an ancillary 

charge applies ‘‘to all ICS end-users at 

a facility, or cannot be avoided by a 

purchaser of ICS (e.g., in a situation in 

which a no-cost alternative is not 

offered), the ancillary charge or lineitem fee should be incorporated in the 

per-minute rate, and should be subject 

to the per-minute rate cap.’’ 

89. We seek comment on prohibiting 

separate ancillary charges for functions 

that are typically a part of normal utility 

overhead and should be included in the 

rate for any basic ICS offering. These 

functions should include account 

establishment by check or bank account 

debit; account maintenance; payment by 

cash, check or money order; monthly 

electronic account statements; account 

closure; and refund of remaining 

balances. Separate charges for such 

ancillary services can often represent 

unreasonable practices and result in 

unfair compensation. For example, the 

record indicates that GTL currently 

requires a minimum deposit of $25 to 

create a prepaid collect account for an 

inmate’s family member. If the customer 

does not spend the $25 in the account, 

GTL charges a $5 refund charge that is 

only triggered once the customer asks 

for a refund. If the account remains 

inactive for 180 days, the remaining 

funds become the property of GTL. We 

seek comment on prohibiting separate 

charges for these functions and on 

whether separate charges for other 

services should also be prohibited. 

Would such prohibitions help ensure 

just and reasonable ICS rates and fair, 

not excessive, ICS compensation? 

90. The Alabama PSC implemented 

such an approach to the regulation of 

ancillary charges in its Further Order. It 

defined basic utility overhead services 

as including account set-up, account 

maintenance, account funding, payment 

by check or money order, monthly 

electronic billing statements, and 

refunds, declining to authorize separate 

fees for these services. The Alabama 

PSC took other steps to address fees and 

practices, including barring payment 

limits for certain forms of customer 

payments, barring wireless 

administration fees for linking wireless 

numbers to an account, and requiring 

providers to include up to five preapproved numbers on the call list for 

prepaid ICS at no charge. In contrast, it 

authorized, but capped, separate 

ancillary charges for other services, 

including debit/credit card payment, 

payment via live agent, bill processing 

for collect calls billed by a call 

recipient’s local telecommunications 

service provider, third party payment 

services, inmate canteen/trust fund 

transfers, and paper billing statements. 

We seek comment on whether the 

Alabama PSC’s approach to prohibiting 

certain fees and capping others is 

reasonable and would lead to just and 

reasonable rates and fair ICS 

compensation. We also seek comment 

on the approach taken by the New 

Mexico Public Regulation Commission, 

which adopted a similar but more 

proscriptive approach, barring all fees 

except payment processing fees for 

credit card or check by phone payments 

and a refund fee. 

91. We seek comment on other 

proposals in the record to reform ICS 

ancillary charges. The Wright 

Petitioners recommend prohibiting all 

ancillary charges but, if the Commission 

were to permit ancillary fees, it suggests 

adopting an approach similar to 

Alabama’s and New Mexico’s. The 

Prison Policy Initiative recommends 

‘‘ban[ning] all illegitimate fees.’’ Several 

ICS providers also recommend 

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reforming ancillary charges. Pay Tel 

recommends that ancillary charges be 

‘‘generally prohibited, subject to a 

narrow list of clearly-defined 

exemptions,’’ particularly ‘‘fees 

associated with the processing of 

payments.’’ CenturyLink suggests 

similar treatment. Securus proposes 

eliminating all mandatory fees, bill 

statement fees, federal regulatory 

recovery fees and state cost recovery 

fees, and capping all convenience fees, 

including transaction funding fees, for 

five years. 

92. We also seek comment on the 

Joint Provider Reform Proposal, which 

includes a proposal ‘‘that ancillary fees 

are limited to a specified list of 

permissible fees,’’ proposing to 

eliminate a number of types of fees, 

including per call fees, account set-up 

fees, billing statement fees, account 

close-out and refund fees, wireless 

administration fees, voice biometrics 

and other technology fees, and 

regulatory assessment fees and the 

capping of rates for remaining fees. The 

Proposal also requires providers to offer 

free payment processing options such as 

payment by check or money order when 

offering single call payment options. 

The Alabama PSC raised concerns with 

the Joint Proposal, including its 

treatment of site commissions, proposed 

rate caps that purportedly 

overcompensate providers serving 

prisons, and proposed ancillary fees that 

it asserted would result in substantial 

net revenue increases for providers. Pay 

Tel also identified concerns with the 

Proposal, stating that it ‘‘lacked 

legitimacy from a number of 

perspectives’’ and ‘‘would allow the 

Proposers . . . to continue to burden 

inmates and their friends and family 

with excessive fees and practices that 

significantly and unjustifiably increase 

the cost of ICS.’’ The Alabama PSC’s 

and Pay Tel’s concerns are addressed at 

greater length below. Will the 

suggestions in the Joint Provider Reform 

Proposal result in just and reasonable 

rates for consumers and fair, not 

excessive, compensation? If the use of 

ancillary charges was driven by pressure 

from increasingly high site commissions 

and the Commission were to prohibit 

site commissions, is there continued 

justification for allowing providers to 

assess ancillary fees generally? 

93. If the Commission were to 

prohibit some ancillary charges, should 

ICS providers be required to seek prior 

Commission approval before assessing a 

new ancillary charge? If so, what should 

such an approval process involve and 

what information should providers file? 

Certain states already require prior 

approval of new ancillary charges. 

Should states continue to play such a 

role even if the Commission regulates 

ICS ancillary charges? In lieu of seeking 

approval, should ICS providers file a 

notice about a change such as 60 days 

before? If we take this approach, should 

the new fee be allowed to go into effect 

absent Commission or a state action? We 

seek comment on these approaches, 

including the administrability and 

relative burden associated with each 

approach. 

b. Rate Caps for Ancillary Charges 

94. We seek further comment on 

whether the Commission should set rate 

caps for ancillary charges that it finds 

permissible to ensure those charges are 

just and reasonable and ensure fair 

compensation. Commenters, including 

some ICS providers, support the use of 

rate caps. Some commenters note with 

approval the Alabama PSC’s Further 

Order that capped rates for ancillary 

charges it allows. For example, the 

Wright Petitioners support the use of 

rate caps for ancillary charges if the 

Commission decides to authorize them, 

and cites with approval the two states 

that already proposed taking such a 

step. Would either the Alabama PSC’s or 

the New Mexico PRC’s approaches to 

capping ancillary charges be appropriate 

models for the Commission to consider? 

If the Commission were to establish rate 

caps for ancillary charges it did not 

prohibit, what would be appropriate 

levels for such rate caps? We seek 

comment specifically on the Alabama 

PSC’s rate caps for debit and credit card 

payment fees via the web, an IVR, or a 

kiosk ($3.00 maximum) and for live 

operator assisted payments ($5.95 

maximum). NCIC and Pay Tel expressly 

support ancillary charge rate caps at 

these levels, as other ICS providers 

reportedly have. How do these rate caps 

compare to providers’ costs? 

95. In the alternative, we seek 

comment on whether we should 

prohibit separate ancillary fees and 

instead permit the recovery of such 

costs using a per minute rate cap. The 

data submitted by ICS providers on the 

cost of processing financial transactions 

yields a wide range of per-minute costs. 

We seek comment on establishing a perminute ancillary charge rate cap or safe 

harbors. If so, how should these charges 

be set and what level is appropriate? If 

so, what would permanent rate caps 

inclusive of such charges be? 

96. We also seek comment on the 

Joint Provider Reform Proposal which 

proposes to (1) cap deposit fees to fund 

prepaid and debit ICS accounts at $7.95 

for three years, (2) allow providers to 

charge a $2.50 administrative fee to 

process payments made through third 

party payment processing companies 

such as Western Union and MoneyGram 

in addition to the fees they charge, (3) 

allow providers to charge a per call 

validation fee of eight percent to 

compensate providers for call-specific 

security functions, and (4) cap fees for 

‘‘convenience or premium payment 

options’’ for single call services at 

current rates for three years. The 

Alabama PSC generally opposes these 

fee proposals. AmTel agrees and asserts 

that the ‘‘Proposal is very misleading 

and will not lower prices to inmate 

families.’’ Pay Tel comments that the 

consumer benefits of the proposed 

ancillary fees’ ‘reduction’ are illusory. 

For example, Pay Tel suggested that 

‘‘[v]alidation is a legitimate expense, but 

one that is included in Pay Tel’s normal 

cost of providing service. In no event 

does this expense rise to the level of 8% 

of gross call revenue.’’ We seek 

comment on whether these proposals 

would ensure reasonable rates and fair 

compensation. How do these proposed 

caps compare with providers’ costs? 

How do they compare with previous 

proposals made by ICS providers? 

97. The following table is provided as 

a means of facilitating comparison of 

several of the ancillary charge reform 

proposals referenced herein. The fees 

included in this table represent a nonexhaustive list of fees addressed in the 

various proposals. 

TABLE TWO

Ancillary charge proposals 

Alabama PSC further order ICS provider reform proposal Pay Tel proposal 

Check/money order payment ........ No charge ..................................... No charge ..................................... No charge. 

Debit/credit card payment or deposit fees.$3.00 cap (web/IVR) .....................

$5.95 cap (live operator) ..............

$7.95 cap for 3 years ................... $3.00 cap (web/IVR). 

$5.95 cap (live operator). 

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TABLE TWO—Continued 

Ancillary charge proposals 

Alabama PSC further order ICS provider reform proposal Pay Tel proposal 

Single call/single payment services Sum of $3.00 cap on bill processing fee plus capped per 

minute charge for a 12 minute 

call.

Cap at existing fees (as high as 

$14.99 billed to card, $9.99 

billed to cell phone) for 3 years.

Jails (ADP 1–349): $6.12. 

Jails (ADP 350+): $5.64. 

Prisons: Prohibit service. 

Account set-up, maintenance, closure, and refund fees.Prohibited ...................................... Prohibited ...................................... Not addressed. 

Bill processing fee for collect calls 

(by call recipient’s carrier).

$3.00 cap ...................................... Not addressed .............................. Not addressed. 

Bill statement fee ........................... No charge for electronic bill. $2.00 

cap for paper bill.

Not addressed .............................. No charge for electronic bill. $2.00 

cap for paper bill. 

Money transfer fees ....................... Fees above $5.95 require affidavit 

and are subject to investigation.

Existing fees (as high as $11.95) 

plus an additional administrative 

fee capped at $2.50.

$5.95 cap (Western Union). 

$5.65 cap (MoneyGram). 

No additional fee. 

Regulatory cost recovery fees ....... State regulatory cost recovery 

fees prohibited.

Various regulatory cost recovery 

fees prohibited (but ‘‘federal 

and state regulatory fees’’ allowed).

Not addressed (but pass through 

government mandated taxes 

and fees). 

Security fees .................................. Allow separate security biometrics 

fee.

Validation fee of up to 8% per 

call. Prohibited fees include 

VINE, location validation fees, 

voice biometrics fees, and technology fees.

$0.02 per minute voice biometric 

fee (only where deployed; lower 

in prisons). 

Vendors may apply for new technology fees. 

c. Charges for Other Services 

98. Single Call Services. ICS providers 

also make available so-called single 

payment or single call services. These 

services enable the billing of ICS collect 

calls through third party billing entities 

on a call-by-call basis to parties whose 

carriers refuse to bill collect calls. The 

Alabama PSC addressed single call 

services in its Further Order, asserting 

jurisdiction over intrastate single call 

services and capping the rates ICS 

providers may charge for them. By some 

accounts, the use of single call services 

has increased dramatically, particularly 

since the adoption of the Inmate Calling 

Report and Order and FNPRM. One 

commenter stated that such services 

have recently been estimated to account 

for as much as 40 percent of provider 

revenues. We seek further comment on 

the prevalence of the use of single call 

services in the ICS industry. Have such 

services become more prevalent in the 

market since the Commission’s Order? If 

so, why? Are such services effectively 

an end run around the Commission’s 

rate caps or are customers fully apprised 

of the higher costs and select such 

services for convenience or value? We 

also seek comment on how significant a 

role such services play in the ICS 

market today and what usage trends for 

such services are likely to be. 

99. While ICS providers appear to 

offer single call services under a variety 

of names, they appear to be generally 

two types. The first involves a one-time 

credit or debit card payment to enable 

the completion of a single collect call to 

a wireline phone. Examples of this type 

of single call service include Securus’ 

‘‘Pay Now’’ and GTL’s ‘‘Collect2Card’’ 

services, both of which are priced at a 

flat rate of $14.99 per call, substantially 

higher than the Alabama PSC’s 

proposed interim intrastate rate caps. A 

second type of single call service 

involves a similar payment arrangement 

for the completion of a single collect 

call to a wireless phone, the charge for 

which is confirmed by a text message to 

the called party’s wireless phone. 

Examples of this type of single call 

service include Securus’ ‘‘Text2Collect’’ 

and GTL’s ‘‘collect2phone’’ services, 

both of which are priced at a flat rate of 

$9.99 per call, also well above the 

Alabama PSC’s intrastate rate caps, as 

well as the Commission’s interstate rate 

caps. Do charges for such services 

circumvent or violate either set of rate 

caps or are such services sufficiently 

distinct from collect ICS to warrant 

separate pricing? Both types of single 

call services are charged on a flat rate 

basis, regardless of call duration, further 

distorting the effective per-minute 

charge consumers pay and raising 

concerns about multiple charges in the 

case of inadvertent call disconnection. 

Consumers using these services may be 

unaware that they could dramatically 

reduce the charges for ICS simply by 

establishing an account with an ICS 

provider. Some ICS providers have been 

successful in educating consumers on 

lower cost options. We seek comment 

on whether these rates are just and 

reasonable and whether they ensure fair 

and not excessive compensation for 

providers. We also seek comment on 

whether ICS providers incur additional 

costs in providing single call services, 

and if so, what they are. 

100. Providers have challenged the 

Alabama PSC’s jurisdiction over both 

types of single call services. In the case 

of single call services to wireline 

phones, ICS providers disputed the 

Alabama PSC’s authority to regulate 

such services, citing interference with 

their contractual relationships with 

third party billing and payment 

processing entities which typically 

contract with ICS providers to provide 

the service. The Alabama PSC 

characterized these entities as ‘‘third 

party billing aggregators’’ which 

performed the ‘‘the billing and delivery 

functions for ICS calls.’’ We seek 

comment on the nature of these services 

and the types of functions such entities 

provide. For example, do these third 

parties perform functions analogous to 

those performed by third party billing 

entities used by local exchange carriers? 

Do the third parties actually contribute 

any facilities or services used to provide 

these services? The Alabama PSC also 

noted that ICS providers advertise and 

provide these services in their own 

name and bills refer consumers to an 

ICS provider Web site. The Alabama 

PSC determined that it had ‘‘jurisdiction 

over the charges for collect calls 

originating from Alabama confinement 

facilities regardless of any 

intermediaries the ICS provider chooses 

to include prior to call termination.’’ We 

seek comment on whether Commission 

regulation of single call services would 

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not impermissibly infringe on such 

contractual relationships. 

101. In the case of single call services 

to wireless phones, ICS providers have 

asserted that such services are not 

subject to state commissions’ authority 

since they entail the use of a text 

message to confirm the source and 

charges for the call and involve calls to 

wireless phones, the rates for which are 

not subject to state jurisdiction. We seek 

comment on the concept that neither the 

fact that such calls are preceded by a 

text message nor the fact that the called 

party uses a wireless phone alters the 

nature of the ICS provided. If, however, 

the Commission were to determine that 

either of these factors is relevant to 

determining the nature of the ICS, we 

seek comment on whether the 

Commission’s section 276 jurisdiction 

over all forms of ICS give it authority to 

regulate such services. 

102. The Alabama PSC set a rate cap 

for single call services at a flat rate 

amount that included a billing or 

payment charge capped at $3.00 per call 

and a usage charge derived from its perminute rate caps. We seek comment on 

this approach. Should the Commission 

adopt a rate cap for single call services? 

Should ICS providers be required to 

charge a per-minute rate on the basis of 

actual call duration? Should the rates 

for such calls reflect the per-minute 

charge for collect calls along with an 

appropriate bill or payment processing 

fee? Should there be a transition period 

to allow providers to adapt their single 

call service offerings? Are ICS providers 

required to publish on their Web sites 

their charges for single call services and 

notify consumers of the option of 

establishing an account to obtain a more 

reasonable rate? Alternatively, should 

these services be considered ancillary 

services? 

103. Money Transfer Services. The 

FNPRM sought comment on fees 

assessed by third parties such as 

Western Union and MoneyGram to 

process debit and prepaid account 

payments for ICS. The Prison Policy 

Initiative previously noted that third 

party payment processing fees for the 

provision of ICS are typically higher 

than such fees in other industries and 

suggested that ICS providers were 

receiving compensation from such third 

party service providers. We seek 

comment, data and other evidence on 

how prevalent the use of third party 

money transfer services is and what 

percent of account funding is 

accomplished through such services. 

We also seek comment on the Alabama 

PSC Proposed Order which 

acknowledges that money transfer ‘‘fees 

are set by these financial services but 

[the PSC] is also aware that agents 

hosting such services are paid a portion 

of the fee.’’ The Alabama PSC Proposed 

Order states that ‘‘ICS providers are 

prohibited from receiving any portion of 

fees paid by their customers to thirdparty financial services.’’ It also 

proposed a rate cap of $5.95 per 

transaction, above which providers 

would face an investigation of their 

rates and potential refund liability. 

Similarly, CenturyLink suggests that 

‘‘[c]ertain consumer-optional third party 

fees such as Western Union charges 

should be allowed, but without markups, revenue sharing arrangements or 

volume rebates.’’ In contrast, the Joint 

Provider Reform Proposal suggested 

adding an additional administrative fee 

of a maximum of $2.50 per transaction 

on top of existing money transfer fees. 

We seek further comment on these 

proposals and on whether ICS 

providers’ receipt of payments from 

payment processing companies in 

connection with their provision of ICS 

represents an unreasonable practice 

under section 201(b) or results in unfair 

compensation under section 276. 

104. We seek comment on how the 

Commission should ensure that money 

transfer service fees paid by ICS 

consumers are just and reasonable and 

represent fair compensation. Are money 

transfer services ancillary services 

under section 276(d)? Are they a 

practice that causes unjust rates or 

unfair compensation? Are such charges 

encompassed by the definition of 

‘‘ancillary charges’’ in the Commission’s 

rules? To the extent they involve 

charges placed by a third party on a call 

recipients’ phone bill, are they 

analogous to third party fees that are the 

subject of our ‘‘cramming’’ rules? To 

ensure just and reasonable rates and fair 

compensation, should the Commission 

prohibit ICS providers from entering 

into revenue sharing arrangements with 

money transfer services, receiving 

payments from such services, or 

including the costs of such services in 

their rates? To enforce a similar 

prohibition, the Alabama PSC proposes 

to require ICS providers operating in the 

state to report the payment transfer fees 

third parties charge their customers. It 

also proposes to require providers to 

justify fees over $5.95, and subject such 

fees to investigation and potential 

refund liability. Should the Commission 

adopt a similar enforcement 

mechanism? Should it allow states to 

enforce such a mechanism? What 

impact would any such requirements 

have on contracts between ICS 

providers and third party money 

transfer services? The Alabama PSC 

notes that, according to its research, 

contracts between ICS providers and 

Western Union may be cancelled on 30 

days’ notice. It also notes that Western 

Union contracts with providers include 

a provision requiring vendor 

compliance with all regulatory 

requirements and laws. Do commenters’ 

experiences confirm the Alabama PSC’s 

observations? Are there other 

approaches to enforcement that the 

Commission should consider? 

105. Regulatory Recovery Fees. 

Commenters have previously 

highlighted ICS providers’ use of fees to 

recover the cost of regulatory 

compliance. The amount of such fees 

industry-wide can be quite substantial. 

The Alabama PSC noted that ‘‘[s]everal 

ICS providers presently absorb 

regulatory costs electing not to charge 

consumers a separate recovery fee’’ and 

barred separate intrastate regulatory 

fees, stating that their rate caps were 

‘‘sufficient to recover reasonable 

regulatory costs incurred by the 

provider.’’ 

106. A number of ICS providers have 

also opposed the use of regulatory 

recovery fees. The Joint Provider Reform 

Proposal recommends eliminating 

various types of regulatory recovery fees 

and does not include such a fee among 

the fees it proposes to retain. Pay Tel, 

in its advocacy before the Alabama PSC, 

stated ‘‘these expenses are a cost of 

doing business reflected in the overall 

average cost per minute. Pay Tel 

supports the prohibition of such fees.’’ 

Securus proposes to eliminate its 

Federal and State regulatory recovery 

fees. We seek comment on whether the 

cost of regulatory compliance should be 

considered a normal cost of doing 

business and as such should be 

recovered through basic ICS rates, not 

additional ancillary fees. In the 

alternative, if the Commission permits 

the separate recovery of regulatory fees, 

should it require that they be broken out 

as a line item on an ICS end users’ 

billing statement? 

107. Security Fees. Some ICS 

providers suggest that the Commission 

allow fees to recover new security 

technology expenses for correctional 

institutions. The Joint Provider Reform 

Proposal proposed the elimination of 

three or four types of fees likely related 

to security and the retention of a single 

technology-related fee. However, as part 

of its comprehensive proposal, Securus 

suggests that providers be allowed to 

charge ‘‘incremental product pricing 

above rate caps if necessary’’ for ‘‘safety 

and security features’’ and proposes 

such charges ‘‘be filed with [the] FCC 

for approval.’’ 

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108. We seek comment on whether 

security costs represent a core function 

in the provision of ICS, the costs of 

which should be included in rates and 

not as ancillary fees. The Commission’s 

interim interstate rate caps were based 

on ICS providers’ cost data that 

included the costs incurred in 

developing, deploying and provisioning 

security features. The Order also 

expressly accounted for the cost of 

continuous voice biometrics in its debit 

and prepaid rate cap it adopted. Pay 

Tel’s Proposal suggests that a voice 

biometric fee of $0.02 per minute be 

applied to its proposed rates. If the 

Commission were to allow providers to 

assess customers separate ancillary 

charges for such services, how would it 

evaluate providers’ claims regarding the 

need for such functions or their cost? 

How would it ensure that ICS providers 

were not recovering the cost of security 

features twice—once through their rates 

and again through an ancillary charge— 

short of a full analysis of the provider’s 

costs? If the Commission were to allow 

separate fees to recover security costs, 

should it require prior approval or 60 

days’ notice for such charges? 

d. Consumer Disclosures 

109. We also seek comment on how 

to ensure that rates and fees are more 

transparent to consumers. We therefore 

seek comment on the requirement that 

ICS providers notify their customers 

regarding the ICS options available to 

them and the cost of those options. One 

ICS provider underscores the 

importance of ‘‘educating the consumer, 

giving them the choice, what’s the most 

economical way if they want to get 

money on an account and do it 

quickly.’’ The same provider states that 

when it advertises on its Web site the 

most economical way to fund ICS calls, 

a substantial percent of its customer 

base uses that method, reducing 

consumer expense significantly. ICS 

providers that offer interstate toll 

service are already required to post their 

rates on their Web sites and, to the 

extent they offer inmate operator 

services, their live agents are already 

required to make certain notifications to 

customers. Should providers’ Web sites, 

automated IVRs, and live agents be 

required to offer in a more prominent 

fashion no-cost or lower-cost options 

available to consumers before offering 

other, higher-priced optional services? 

To what extent would any such 

regulation implicate the First 

Amendment? Should the Commission 

take other steps to ensure consumers are 

aware of lower-priced service options? 

110. The Joint Provider Reform 

Proposal acknowledged existing 

requirements to publish ancillary fee 

rates on providers’ Web sites and 

offered a detailed proposal regarding 

notification requirements for financial 

transactions, including: 

• The ICS provider shall fully inform 

customers of all payment methods 

available (including the no-charge 

option), the payment processing charges 

associated with each payment method, 

and the estimated time required to 

establish service applicable to each 

payment option. 

• The ICS provider shall clearly and 

conspicuously identify the required 

information. The information should be 

presented clearly and prominently so 

that it is actually noticed and 

understood by the customer. 

Æ The ICS provider shall provide a 

brief, clear, non-misleading, plain 

language description of the required 

information. The description must be 

sufficiently clear in presentation and 

specific enough in content so that the 

customer can accurately assess each of 

the available payment methods. 

Æ An ICS provider shall clearly and 

conspicuously disclose any information 

the customer may need to make 

inquiries about the available payment 

methods, such as a toll-free number, 

email address, or Web site address by 

which customers may inquire or dispute 

any charges. An ICS provider shall 

include any restrictions or limitation 

applicable to each payment method 

available. 

In its proposal Pay Tel suggests that: 

• Vendors must post facility-specific 

rates and fees for all services, to be 

visible to inmates on-site and to 

consumers on the Vendor Web site prior 

to setting up an account. 

• Vendor Web sites must provide a 

link to the FCC Enforcement Bureau 

Web site and the applicable State 

Regulatory Agency Web site. 

• Posting/Notice Must Include: 

Æ Call rates and transaction fees (at 

time of call, printed material available at 

facility, Automated IVR, Live Agent & 

Web site). 

Æ Refund instructions (Web site). 

Æ Terms and conditions for service 

(Web site). 

Æ Cost information for calls, email 

and messaging services, video visitation 

and any other communication services 

offered (Web site). 

We seek comment on these proposals as 

they relate to ICS financial transactions 

and more generally to ICS practices in 

general. We also seek comment on 

alternative proposals to make rates and 

fees more transparent to inmates, their 

families, friends and other users of 

inmate calling services. 

e. Other Issues 

111. Some ICS providers impose 

additional policies beyond their 

assessment of ancillary fees that further 

restrict consumers’ access to ICS. In 

regard to such policies, CenturyLink 

expresses the concern that ‘‘policies 

such as funding minimums and 

maximums, prepaid account refund 

requirements, and account expiration 

policies must be tightly controlled to 

avoid gaming.’’ We seek comment on 

whether we should prohibit ICS 

providers from these and similar 

practices that effectively limit end users’ 

ability to access and use ICS. What other 

types of limiting practices should we 

prohibit or restrict to preclude such 

gaming? 

112. GTL asserts that the 

Commission’s Truth-in-Billing rules 

give providers flexibility to recover their 

costs either through rates or other line 

item charges. The Minnesota 

Department of Commerce asserts that 

ancillary charges that exceed a 

provider’s costs are inherently deceptive 

and violate the Commission’s Truth-inBilling rules. We seek comment on 

whether it would be necessary to 

harmonize Commission regulation of 

ICS ancillary charges with its Truth-inBilling rules. To the extent that such 

fees are not commensurate with 

providers’ costs, does existing precedent 

support the view that those fees violate 

the Truth-in-Billing rules, or should we 

clarify that the fees are considered 

misleading and a violation of the 

Commission’s Truth-in-Billing rules, 

unreasonable under section 201(b) or 

unfairly compensatory under section 

276? Should the Commission clarify 

that pursuant to section 276, Truth-inBilling rules apply to all ICS providers, 

including any that may claim they 

provide VoIP services? 

D. Additional Ways To Promote 

Competition 

113. Over the last 30 years, real 

competition, as opposed to rate 

regulation, has been the preferred 

method to advance consumer 

protection, lower rates, increase feature 

and functionality of equipment and 

services, reduce the government 

involvement and costs, and improve the 

overall consumer experience. To date, 

however, correctional facilities 

generally have not permitted 

competition for consumers within the 

ICS market. 

114. As an alternative to the ideas 

explored in this item to reduce inmate 

calling rates, we continue to explore 

whether the advent of competition 

within the inmate facilities may provide 

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a different course of action. The 2013 

Inmate Calling Report and Order and 

FNPRM sought comment on how to 

promote competition within the 

correctional facilities, but the 

Commission received insufficient 

information in response to the questions 

posed, so we seek to provide more 

targeted questions in order to solicit 

further responses. Accordingly, we seek 

further comment on ways to remove 

barriers to entry and promote 

competition in the ICS market. Aspects 

of the current ICS market appear to 

contribute to the market failure. One is 

the practice of site commission 

payments, and we seek comment above 

on whether, and under what authority, 

the Commission should restrict such 

payments. Another is the fact that 

correctional facilities award ICS 

providers exclusive contracts and 

therefore do not permit competition 

within the facilities. The Commission 

previously sought comment on the 

impact of exclusive contracts and 

whether they should be prohibited. 

While some commenters opposed the 

idea due to security and cost concerns, 

another commenter suggested that the 

Commission revisit whether those 

concerns continue to justify exclusive 

contracts in light of technological 

advances. We seek additional comment 

on these views. Moreover, some 

commenters have questioned whether 

facilities incur any additional costs for 

the provision of ICS and we seek 

comment above on quantifying these 

costs. If facilities do not incur costs 

when there is one provider, what 

additional costs are incurred by 

introducing multiple providers? We ask 

commenters to specify and quantify any 

additional costs. 

115. We also seek comment on 

whether there are other barriers and, if 

so, what steps we should take to address 

them and under what authority. For 

example, are there ways to allow greater 

competition within ICS without banning 

exclusive contracts? Are providers 

willing to compete on price, quality of 

voice and/or video service, service 

disruption and outage rates, and other 

factors that would be applicable with 

multiple providers? Would multiple 

providers be willing to serve an inmate 

facility if there is already an established 

provider? What impact could new 

technologies have on competition 

within inmate facilities? 

E. Harmonization of State Regulations 

Under Section 276(c) 

116. In this section, we seek comment 

on how state reform of ICS may be 

harmonized with any federal framework 

we may adopt and on the continuing 

roles states should play in advancing 

ICS reform. In the FNPRM, the 

Commission ‘‘tentatively conclude[d]’’ 

that section 276 ‘‘affords the 

Commission broad discretion to . . . 

preempt inconsistent state 

requirements.’’ In response, some 

commenters opposed state preemption, 

while others supported it as crucial to 

the Commission’s reform efforts. While 

we seek comment on whether it is 

necessary to have a comprehensive 

framework for interstate and intrastate 

ICS, we nonetheless seek comment on 

how consistent state regulation of ICS 

could be harmonized with our 

framework. For example, should we 

establish guidelines regarding what a 

state would have to do on ICS reform to 

not be preempted? What would those 

guidelines include? Should we include 

reform of site commission payments, 

rate caps, actions addressing state 

prisons, as well as county or city jails? 

117. We recognize the substantial ICS 

reform already accomplished in a 

handful of states such as Alabama, New 

Jersey, New York, and New Mexico. 

Such states have provided important 

leadership in the effort to reform ICS. In 

the FNPRM, the Commission 

commended such states and 

‘‘encourage[d] more states to eliminate 

site commissions, adopt rate caps, 

disallow or reduce per-call charges, or 

take other steps to reform ICS rates.’’ In 

her opening remarks at the 2014 ICS 

Workshop, Commissioner Clyburn 

urged states to ‘‘follow the FCC’s lead, 

grab the baton, and enact their own 

reforms.’’ Some states have taken steps 

to advance ICS reform since the release 

of the Order. New Jersey, for example, 

has set lower rates for ICS. Alabama has 

recently proposed comprehensive 

regulation of intrastate ICS. However, 

the vast majority of states have not taken 

up our repeated calls for ICS reform. In 

addition, states have inconsistently 

addressed site commission payments. 

For example, while the Order noted 

seven states that had eliminated site 

commissions for intrastate ICS, by 

implication the vast majority have not. 

We again encourage states to act on ICS 

in their jurisdictions and note that state 

action that is consistent with the 

regulations that the Commission 

ultimately adopts would not be subject 

to preemption. We also recognize, 

however, that most states either cannot 

or will not act and the Commission 

must adopt a nationwide framework to 

apply in these states to ensure that ICS 

rates are just, reasonable and fair. 

118. We seek more focused comment 

on section 276(c), which states in 

reference to payphone regulation that 

‘‘[t]o the extent that any State 

requirements are inconsistent with the 

Commission’s regulations, the 

Commission’s regulations on such 

matters shall preempt such State 

requirements.’’ We believe that the 

Commission has broad discretion to find 

that a particular state requirement, or 

category of state requirements, is either 

consistent or inconsistent with 

Commission ICS regulations under 

section 276(c). We also seek comment 

on the whether preemption is selfeffectuating under section 276(c) and 

will occur automatically as a 

consequence of the inconsistency. 

119. If preemption is not selfeffectuating, and there is no 

Commission decision defining the scope 

of any inconsistency between federal 

and state requirements, how would 

states and other parties know that a 

particular state requirement had been 

preempted because it was inconsistent 

under section 276(c)? In the absence of 

a prior Commission decision, should 

any disputes regarding the 

inconsistency of a state requirement be 

resolved by the Commission on a caseby-case basis: e.g., through declaratory 

ruling or the section 208 complaint 

process? Are certain types of state 

requirements inherently ‘‘inconsistent’’? 

Other preemption provisions in Title II 

of the Act require the Commission to 

make certain decisions before a state 

law can be preempted, whereas section 

276(c) does not directly address the 

issue. 

120. Exemptions to Preemption. To 

encourage states to reform ICS, the 

FNPRM also sought comment on 

possible exemptions to preemption, 

asking whether ‘‘the Commission 

[should] only take action to reform 

intrastate ICS rates in states that have 

not reformed rates to levels that are at 

or below our interim safe harbor.’’ We 

expand on this concept here. What 

specific types of state actions to reform 

ICS should the Commission interpret as 

consistent with its regulations? Should, 

for example, the Commission list 

scenarios in which state regulations 

would be presumed to be consistent 

with the federal framework, such as 

when states address site commissions 

and reform ancillary charges? If so, what 

should the Commission consider 

‘‘reform’’ or ‘‘partial reform’’ in this 

context? For example, we note that the 

Alabama PSC proposes capping 

ancillary fees but maintaining site 

commission payments. If the state 

regulates ICS rates in a manner that is 

consistent with Commission 

regulations, but regulates ancillary 

services in a manner inconsistent with 

Commission regulations, would all state 

regulations be viewed as preempted, or 

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would just the regulation of ancillary 

services be treated as preempted? To the 

extent the question would depend on 

how the Commission crafts its 

regulations, should the Commission 

design them in a way that makes 

inconsistency regarding one dimension 

severable from consistency regarding 

other dimensions? If so, how? 

121. One FNPRM commenter suggests 

a ‘‘cooperative federalism’’ approach 

that would allow ‘‘states to regulate 

intrastate rates provided that the 

regulatory framework complies with the 

core principles contained in the Order.’’ 

We seek further comment on this and 

other approaches to harmonizing federal 

and state ICS reform. Some states have 

adopted laws that effectively require 

intrastate ICS rates to be provided at 

below-cost rates, with the difference 

presumably to be recouped by charging 

interstate rates that are set significantly 

above costs. Would any such state laws 

that require below-cost intrastate ICS 

rates be consistent with a Commission 

cap on intrastate ICS rates, even if the 

state rate was more ‘‘aggressive’’ than 

the Commission cap? For example, if 

the Commission adopts a per-minute 

cap on ICS rates, should states be free 

to regulate the level of per-call and perminute charges for intrastate ICS so long 

as the resulting charge for a call of a 

particular duration is within the 

Commission’s cap? Should states have 

other flexibility as it relates to site 

commission payments, ICS rates, 

charges for ancillary services, or other 

ICS regulation? If so, how can the 

Commission craft its regulations so that 

such state ICS reforms are interpreted as 

being consistent with its regulations? 

Should the Commission be concerned 

that some state reform actions could 

undercut the market-based approach 

that we seek comment on herein? How 

would the Commission then balance the 

benefits of encouraging state reform 

efforts with the need to ensure just and 

reasonable rates and fair compensation 

for ICS, as required by sections 201 and 

276 of the Act? 

122. If the Commission’s final ICS 

rules are silent on certain issues (for 

example, arguendo, quality of service 

regulation), we seek comment on how 

the Commission should interpret state 

rules. Does the Commission have broad 

authority to enforce section 276(c) on a 

case-by-case basis even in situations 

where it has not previously adopted an 

applicable rule or provided relevant 

guidance? If a state commission has an 

active ICS proceeding, is it consistent 

with section 276(c) to permit the state 

commission a reasonable period of time 

to complete its proceeding prior to a 

Commission determination of whether 

such state reform is consistent with 

Commission reform? What might 

constitute such a reasonable period of 

time? 

F. Existing Contracts 

123. Background. The Wright 

Petitioners previously discussed the 

possibility of a one-year fresh look 

period, essentially a one-year period 

during which existing ICS contracts may 

be revised regardless of terms within the 

contracts that may prohibit such action. 

The Commission sought comment on 

this proposal in the 2012 ICS NPRM. 

124. In the Order, the Commission did 

not directly override existing contracts 

between correctional facilities and ICS 

providers. Rather, the Commission 

noted that if ‘‘any particular agreement 

needs to be revisited or amended . . . 

such result would only occur because 

agreements cannot supersede the 

Commission’s authority to ensure that 

the rates paid by individuals who are 

not parties to those agreements are fair, 

just, and reasonable.’’ The Commission 

acknowledged that ‘‘[t]o the extent that 

the contracts contain ‘change of law’ 

provisions, those may well be triggered 

by the Commission’s action today.’’ 

125. Discussion. We seek comment on 

the implementation of the requirements 

adopted in the Order and their impact, 

if any, on ICS contracts. The record 

indicates that the interim rates were 

implemented with little to no contract 

renegotiation. The record also indicates 

that several ICS providers have 

unilaterally made decisions about site 

commission payments without initiating 

contract renegotiations or cancellations. 

Is this accurate? We seek comment on 

any challenges associated with these 

practices. To the extent that commenters 

suggest alternatives to the regulatory 

approaches discussed above that could 

modify or otherwise affect existing 

agreements, we seek comment on the 

Commission’s authority to take such 

action, why it should exercise such 

authority, and how any modification or 

other effect on existing agreements 

should be implemented. 

126. We seek comment on a transition 

period for comprehensive ICS reform. 

Given the transition that we seek 

comment on herein, we seek comment 

on whether we should retain the 

approach in the Order and allow for 

change-of-law provisions to govern 

changes or whether we should take an 

alternative approach with respect to 

existing contracts. Should we allow for 

a ‘‘fresh look’’ to enable providers to 

renegotiate contracts or do most 

contracts include change-in-law 

provisions so a fresh look is not 

warranted? If the Commission adopts a 

transition period for existing ICS 

contracts, should it stagger the 

transition period as previously 

suggested by Telmate? Specifically, 

Telmate suggests that ‘‘[s]taggering the 

fresh look window among the many 

thousands of ICS contracts nationwide 

. . . [is] the only practical way to 

harmonize the existence of long-term 

contracts and the unreasonable burden 

on smaller ICS providers in competing 

for correctional facility business at 

thousands of locations at the same time 

nationwide.’’ If so, should the 

Commission stagger any transition 

period based on contract expiration 

dates or some other metric? 

127. Alternatively, we seek comment 

on whether we should abrogate ICS 

contracts or modify particular terms of 

such contracts. Will abrogation of 

contracts that are focused on site 

commission payments better enable the 

market-based approach described herein 

to be implemented? In the Order the 

Commission concluded that it has the 

authority to abrogate or modify 

contracts. We seek comment on our 

legal authority to do so. In the 

alternative, should the Commission 

grandfather existing ICS contracts for 

some period of time and then allow 

them to expire? Given that ICS contracts 

are often multiple years in duration, is 

it consistent with the statute’s 

requirement that ICS rates be just, 

reasonable and fair if we allow such 

rates to continue for an extended period 

of time? Are there ways the Commission 

could mitigate the possible 

disadvantages of a grandfathering 

approach? We seek comment on these 

issues, including our legal authority for 

each approach. 

G. Transition Periods 

128. In the Order, the Commission 

delayed the effective date of the new 

rules until 90 days following 

publication in the Federal Register to 

give parties ‘‘time to renegotiate 

contracts or take other appropriate 

steps.’’ The FNPRM sought further 

comment on ‘‘how the Commission 

should proceed in establishing ICS rates 

for interstate and intrastate ICS.’’ 

Comments were mixed. Several 

commenters requested that, if the 

Commission takes further steps toward 

ICS reform, it implement a transition 

period ‘‘that is sufficiently long to 

enable correctional facilities to revise 

budgets and find replacement sources of 

funding.’’ Conversely, one commenter 

opined that rate changes pursuant to the 

interim Order may have been 

accomplished through a simple 

notification letter from ICS providers to 

correctional facilities. 

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129. Discussion. The ICS providers 

that submitted the Joint Provider Reform 

Proposal suggest that ‘‘[t]he new rate 

caps should become effective 90 days 

after adoption, along with any site 

commission reductions and ancillary fee 

changes outlined below.’’ The providers 

that submitted the Proposal assert that 

‘‘[t]his period for implementation 

should ensure ICS providers and 

correctional facilities have adequate 

time to implement the new rate caps 

and any corresponding reductions in 

site commissions, including any 

contract amendments or adjustments 

that may be necessary.’’ Pay Tel suggests 

a 90-day, after final order publication 

transition period for transaction fees, 

third party money transfer service fees, 

and ancillary fees and an 18-month 

transition period for jail and prison rate 

caps. Commenters advocating for a 

transition to the new rate caps should 

identify the appropriate transition and 

the justification for doing so. 

130. We seek comment on whether 90 

days after the effective date of the order 

is the appropriate transition to comply 

with all new requirements, including 

any rate caps, elimination of per-call 

charges, and ancillary fee changes for 

existing contracts. We also seek 

comment on whether any new ICS 

contracts entered into after adoption of 

an ICS reform order must comply with 

the terms of the order immediately after 

the effective date of the order. 

131. In addition, we seek comment on 

a two-year transition period or at least 

one state or state subdivision budget 

cycle to transition away from site 

commission payments to allow facilities 

and states time to adjust. If we adopt a 

cost recovery amount for facilities, how 

should the transition be implemented in 

a manner that does not delay 

comprehensive reform? How would the 

transition work if the Commission gave 

a 90-day transition for rates to be at or 

below the cap, while allowing two years 

for site commissions to be eliminated? 

Would a period of two years allow 

sufficient time for correctional facilities 

to prepare for forthcoming ICS reform 

and its effect on their budgets? Or 

should we consider a longer transition 

such as a three year transition? Should 

the transition be shorter to minimize the 

potential for abuse? If so, should the 

transition be one year, the same as the 

90-day transition to rate caps, or 

something else? The record suggests that 

site commission payments make up less 

than five-tenths of a percent of facilities’ 

operating budgets. Securus suggests that 

site commissions should be completely 

eliminated by January 1, 2016 and rate 

reform should also be accomplished by 

that date. We seek comment on these 

proposals. 

132. If the Commission adopts a twoyear transition to the elimination of site 

commission payments, how should the 

payments be reduced? Should they be 

reduced in equal increments over two 

years, or should we align the reductions 

to state or state subdivision budget 

cycles? How have other states that 

reduced or eliminated site commissions 

implemented this change? Did they 

adopt a transition plan or implement the 

change immediately? We seek comment 

on whether any new contracts that 

include any potential cost recovery 

payments to facilities and a ban on site 

commissions that are entered into after 

the adoption of the final order be 

required to comply with the order. 

Should there be exceptions to a 

transition period based on whether 

interstate or intrastate rates are already 

below the prescribed rate level? 

H. Accessible Inmate Calling Services 

133. Our goal with ICS reform is to 

ensure that ICS is accessible to all 

inmates and their families at just and 

reasonable rates that represent fair 

compensation to ICS providers. Below, 

we seek focused comment on several 

disability access issues raised in the 

Inmate Calling Report and Order and 

FNPRM that merit further inquiry. 

134. Background. In the Order, the 

Commission highlighted the 

telecommunications challenges faced by 

inmates who are deaf and hard of 

hearing, as well as by inmates 

communicating with family members or 

friends who are deaf and hard of 

hearing, such as extremely high rates for 

calls placed via the 

Telecommunications Relay Service 

(TRS). In the Order, the Commission 

‘‘clarif[ied] that ICS providers may not 

levy or collect an additional charge for 

any form of’’ telecommunications relay 

services (TRS) call because ‘‘such 

charges would be inconsistent with 

section 225 of the Act.’’ However, the 

record indicates continuing problems, 

such as, for example, ‘‘nearly half of 

deaf inmates surveyed did not have 

access to TTY at their facilities.’’ 

135. In the FNPRM, the Commission 

sought comment on a number of 

questions to ensure that ICS is 

accessible. The Commission also 

tentatively concluded that inmate 

calling service rates per-minute for TTY 

calls should be set at 25 percent of the 

safe harbor rate for inmate calls, and 

sought comment on this proposal. The 

Commission sought comment on how 

ICS providers should recover the costs 

of providing such discounted TTY calls, 

and on the possibility of allowing ICS 

providers to recover the cost of a TTY 

call from the Telecommunications Relay 

Service Fund. In the Joint Provider 

Reform Proposal, the providers ‘‘commit 

to continue to comply with their 

existing obligations’’ under applicable 

laws, and ‘‘also will work closely with 

correction facilities ‘to ensure that deaf 

and hard of hearing inmates are afforded 

access to telecommunications that is 

equivalent to the access available to 

hearing inmates.’ ’’ Pay Tel’s Proposal 

states that ‘‘ICS Vendors will work with 

confinement facilities where requested 

to enable video relay services,’’ 

‘‘[c]omply with all existing obligations 

and laws regarding service people with 

disabilities,’’ and ‘‘[r]equire that deaf 

and hard of hearing inmates will have 

full access to TDD/TTY services at no 

additional charge.’’ We seek comment 

on these proposals. 

136. Discussion. In the Order, the 

Commission noted commenters’ general 

agreement with the Commission’s 

statement in the 2012 ICS NPRM that 

TTY-to-voice calls take at least three to 

four times longer than voice-to-voice 

conversations to deliver the same 

conversational content, not including 

the time it takes to connect to the 

operator. In the FNPRM, the 

Commission tentatively concluded that 

ICS per-minute rates for TTY calls 

should be set at 25 percent of the 

interim safe harbor rate for standard ICS 

calls, and sought comment on this 

proposal. CenturyLink asserts that ‘‘a 

discounted rate of 25% of the interstate 

safe harbor rate for TTY calls . . . is far 

too low. In CenturyLink’s experience, 

TTY calls can take up to two times as 

long as regular calls, not the three or 

four times suggested by some 

commenters.’’ HEARD, however, asserts 

that the proposed discounted rate is 

insufficient, as it ‘‘does not account for 

varying literacy rates of deaf prisoners 

many of whom use sign language as 

their primary or only method of 

communication.’’ HEARD urges a 

greater discount, based on the assertion 

that ‘‘prison TTY telephone calls are 

typically at least six to eight times 

longer than a hearing phone call.’’ We 

seek specific comment on the actual 

relative length of TTY-to-TTY and TTYto-voice calls as compared to voice-tovoice calls. Given the wide range of 

assertions in the record, we request that 

comments be backed by data on the 

actual lengths of TTY-to-TTY, TTY-tovoice, and voice-to-voice conversations. 

Commenters should describe the 

methodology they used to collect the 

information with specificity. 

137. The Commission has observed 

that, in implementing section 276 of the 

Act, section 276(b)(1)(A) exempts TRS 

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calls from the per-call compensation 

requirement, and it requires payphone 

service providers to provide free access 

to connect to TRS. However, if the 

outgoing portion of a TRS call is a long 

distance call, a caller is required to pay 

for that portion. Is it the case that no ICS 

provider charges inmates for voice-toTTY or TTY-to-voice calls because the 

‘‘interexchange company holding the 

[state] TRS contract carries the call to 

the called party?’’ If so, should final 

reduced ICS per-minute rates for TTY 

calls be applicable only to TTY-to-TTY 

calls, as those calls are indistinguishable 

from standard voice calls because the 

inmate is dialing the called party 

directly, using the called party’s 

terminating phone number, and thus the 

call data looks identical to the call data 

from a typical voice call? 

138. With respect to TTY-to-voice and 

voice-to-TTY calls, we seek comment on 

AT&T’s request for clarification that the 

‘‘manner in which it handles operatorassisted collect calls from inmates via 

TRS’’ is ‘‘subject to the rate 

requirements set out in the order in WC 

Docket No. 12–375.’’ AT&T describes 

the issue as follows: 

Pursuant to contract with state authorities, 

AT&T provides TRS service in eight states 

plus the District of Columbia. Often times, 

but not always, the TRS Communications 

Assistant (CA) can see that the call has 

originated from a detention facility. For 

security, operator services practices limit 

inmate calling to collect calls. Upon 

receiving the call, the inmate can direct the 

CA to forward the call to any interexchange 

carrier on the carrier of choice list. The CA 

in the states where AT&T provides the 

service is an AT&T employee. If the inmate 

selects AT&T as the IXC for the call, the CA 

then functions as the operator service 

provider and the called party will be charged 

at the tariffed rate for the call, which is 

higher than the rate cap for a collect call 

specified in the ICS order. AT&T 

interexchange collect calling toll services are 

not limited to inmates only; anyone making 

the same type of TRS collect call will be 

treated and charged in the same manner. 

139. Section 64.6000 of our rules 

defines ICS as ‘‘the offering of interstate 

calling capabilities from an Inmate 

Telephone;’’ and Inmate Telephone as 

‘‘a telephone instrument or other device 

capable of initiating telephone calls set 

aside by authorities of a correctional 

institution for use by Inmates.’’ We seek 

comment on whether AT&T and other 

entities that provide TRS are providing 

ICS for TRS calls placed by inmates. Is 

it relevant that ‘‘TRS [communications] 

assistants may place only [operator 

assisted] collect calls on behalf of 

inmates using TRS?’’ Would it be 

relevant if inmates are not charged for 

calling TRS, but only for the long 

distance component of a TRS call? 

140. We seek further comment as to 

whether the rates and charges levied for 

operator-assisted collect calls from 

inmates via TRS are subject to the rate 

requirements set out in the Order. Does 

the fact that an inmate ‘‘can direct the 

CA to forward the call to any 

interexchange carrier on the carrier of 

choice list’’ indicate that the 

interexchange portion of the call is no 

longer ICS, and therefore not subject to 

our rate requirements? 

141. TTYs are only one form of 

accessible equipment, and TTY relay is 

only one form of TRS, and commenters 

to the FNPRM, as well as some 2014 ICS 

Workshop participants, decry 

correctional facilities’ continued 

reliance on TTY equipment, as well as 

their failure to make newer equipment 

technology such as videophones for 

Video Relay Service (VRS) and point-topoint video communications, devices 

for Internet Protocol Relay Service (IP 

Relay) and Internet Protocol Captioned 

Telephone Services (IP CTS), available 

to inmates. We seek comment on the 

availability of these technologies as well 

as any other advanced technologies that 

meet persons with disabilities 

communication needs in correctional 

facilities. Should all correctional 

facilities be required to install a certain 

type or types of equipment for inmates 

with disabilities, such as videophone 

equipment, IP CTS devices or other 

assistive technologies? Should they do 

so upon the request of an inmate with 

a disability? We seek comment on our 

authority to regulate correctional 

facilities in this manner. If correctional 

facilities are required to provide such 

equipment, how should the facilities 

recover the costs of purchasing and 

installing the necessary equipment, and 

how should ICS providers recover the 

costs of the calls? In the alternative, are 

ICS providers responsible for providing 

any communications equipment needed 

to meet the communications demands of 

all inmates regardless of ability? How 

would such a requirement fit into the 

Commission’s section 225 authority? Do 

ICS providers meet criteria as a common 

carrier for offering telecommunications 

relay service eligible for cost recovery 

from the TRS Fund? Why or why not? 

And, if not, is there a justification for 

different treatment in this industry? 

Will ICS providers or facilities incur 

costs to install equipment for use by any 

inmate with a disability? What is the 

impact of such approaches on ICS 

providers? Should providers be able to 

recover any additional costs if they are 

unable to do so through the TRS Fund? 

142. The Commission has imposed 

differing registration requirements for 

users of the various types of TRS. We 

seek comment on how the 

Commission’s evolving relay service 

registration requirements can be met in 

an institutional setting where more than 

one user will be utilizing equipment. 

We also seek comment about security 

issues related to IP telephone 

technologies, such as VRS, IP-captioned 

telephone service, and IP Relay. Do 

these types of advanced technologies 

pose a security risk in a correctional 

setting? If so, what is the nature of such 

risk? Is the risk greater or lesser than 

that associated with traditional 

telecommunications and interconnected 

VoIP services utilized by ICS providers? 

143. What are just, reasonable and fair 

per-minute rates for end users and ICS 

providers for forms of TRS other than 

traditional TTY TRS that will allow 

service to be accessible to all inmates 

regardless of ability? HRDC suggests 

that, consistent with section 225 of the 

Act, the rates for accessible 

communications technology from 

correctional facilities should be no more 

than calls made from traditional 

telephones. Would it be appropriate to 

discount the per-minute rate for ICS 

calls made using other accessible 

equipment or other forms of TRS, such 

as Speech to Speech relay services or 

Captioned Telephone Service, as 

previously proposed for TTY calls? 

Would different rate setting 

methodologies be appropriate given the 

differing nature of TTY and other forms 

of TRS? 

144. TRS Reporting Requirements. In 

the FNPRM the Commission asked 

whether ICS providers should be 

required to submit TRS usage data and 

report on user complaints. Commenter 

HEARD asserts that ‘‘nearly half of deaf 

inmates surveyed did not have access to 

TTY at their facilities’’ and suggests that 

correctional facilities begin to track and 

report to the Commission the number of 

relay calls being made. We seek further 

comment on this proposal. Should ICS 

providers be required to report to the 

Commission the number of disabilityrelated calls they provide, the number of 

problems they experience with such 

calls, or related complaints they 

receive? Or should any such data 

collection be more narrowly tailored as 

suggested by the Federal Bureau of 

Prisons? Should such data be part of the 

periodic review we seek comment on 

below? 

I. Advanced Inmate Communications 

Services 

145. We seek comment on newer 

technologies and services available for 

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inmate communications. We believe 

that our core goals for inmates and their 

families remain the same regardless of 

the technologies used—ensure 

competition and continued widespread 

deployment of ICS and the societal 

benefits that they bring. We expect that 

new technologies available in 

correctional settings—like new 

technologies available to consumers in 

the general public—should offer 

improvements and innovations that 

benefit users and thus serve our goals 

for ICS reform. In this section we seek 

comment on these newer technologies, 

on whether there are any pertinent 

differences that justify any differences 

in rules, and on the legal considerations 

that may need to be addressed. 

146. Background. In the FNPRM, the 

Commission sought comment on ‘‘the 

impact of technological advancements 

on the ICS industry.’’ The Commission 

also invited comment on the 

Commission’s legal authority to regulate 

the rates for services provided over 

newer technologies. In response, Pay 

Tel states that ‘‘[t]here is no question 

that new technologies will continue to 

emerge that will affect and improve 

provision and quality of, and security 

related to, ICS.’’ The Prison Policy 

Initiative suggests that there are benefits 

to advanced technologies in correctional 

settings such as video visitation systems 

(VVS), but cautions that there is ‘‘clear 

evidence that the video communications 

market is currently driven by the same 

perverse incentives that caused market 

failure in the correctional telephone 

industry.’’ 

147. At the Commission’s 2014 ICS 

Workshop, MeshIP discussed its ‘‘secure 

prison cell phone solution that gives 

detainees highly customized cell phones 

with all the security and control features 

of prison payphones.’’ JLG Technologies 

described for the audience voice 

biometrics technology, the second 

generation of voice biometrics, known 

as continuous voice identification, and 

next generation voice biometrics 

technology currently under 

development. GTL believes the biggest 

technological trends in inmate 

communications will be access to wallmounted, multiservice kiosks, which 

offer more frequent and better contacts 

with the inmates’ families and friends 

and then a shift to hand-held devices. 

148. Discussion. We seek a greater 

factual understanding of the availability 

of these and other services. What kinds 

of services are available? Are they 

available commonly in most facilities, 

or only in certain ones? What is the 

demand for these services and what 

rates and fees are charged? What 

additional functionalities do they offer? 

Do they provide any greater benefits to 

inmates, their families, or others, than 

traditional services? What are ICS 

providers’ rates for other services such 

as email, voicemail or text messaging? 

The record indicates that some ICS 

providers offer tablet computers and 

kiosks that allow inmates to access 

games, music, educational tools, law 

library tools and commissary ordering. 

What is the compensation mechanism 

for access to these offerings? 

149. Are there additional costs to ICS 

providers in developing, provisioning, 

or offering these services? Participants 

at the 2014 ICS Workshop suggest that 

there are ‘‘huge challenges in 

anticipating and funding costs 

associated with developing, 

implementing, and maintaining these 

new systems and services.’’ GTL noted 

that ICS providers bear the costs of the 

‘‘development for the kiosk, to put that 

device on the wall . . . to provide the 

additional bandwidth, to develop and 

do the software development research 

for the applications that go in that 

device, for the additional maintenance 

and support to support the device once 

it’s on the wall.’’ We seek comment on 

the costs of these services in general. We 

also seek comment on the rates and fees 

charged for their use. 

150. We seek comment on whether 

there is a similar market failure for 

service provided by new technology as 

described above for existing ICS. For 

instance, in response to evidence of 

unreasonable rates, the Alabama PSC 

capped VVS rates at $0.50 per minute 

and VVS recorded message download at 

‘‘$1.00 for the first minute and $0.50 for 

each additional recorded minute.’’ Do 

commenters consider these just and 

reasonable rates and fair compensation 

for VVS? We seek comment on Pay Tel’s 

proposal that the Commission establish 

a discrete mechanism by which 

providers may seek approval for a 

separate ancillary charge related to some 

type of advanced technology. How 

would such a charge function in the 

context of the proposed reform of 

ancillary charges discussed above? 

Securus also suggests that the 

Commission allow for ‘‘incremental 

product pricing above rate caps if 

necessary’’ for ‘‘[p]roduct [e]xceptions.’’ 

Is such a separate mechanism 

necessary? If so, how do proponents of 

such a mechanism suggest that it 

function? Will advanced ICS 

technologies continue to be developed 

and deployed without a separate and 

discrete recovery mechanism? Finally, if 

the Commission were to adopt 

regulations for advanced technologies 

like video visitation and video calling, 

what is the best way to harmonize our 

approach with that of the states? 

151. In the Order, the Commission 

found that the application of section 276 

is not restricted to any one form of 

communications technology and made 

clear that reforms apply to ICS 

regardless of technology used to 

provision the service, such as IP-based 

and TDM-based provisioning. Some ICS 

providers are developing wireless 

options. We therefore seek comment on 

whether ICS provisioned through 

wireless technology will also be subject 

to any final reforms adopted by the 

Commission under section 276. We also 

seek comment on whether advanced 

services like video visitation service and 

video calling services constitute 

‘‘inmate telephone service’’ within the 

meaning of the term in section 276. 

Given the technologically neutral nature 

of section 276 and the fact that video 

calling shares many of the attributes of 

traditional ICS, including the fact that it 

is a pay per use service involving real 

time, two-way voice communications, 

are these services ‘‘inmate telephone 

service’’? Does the Commission’s 

recognition of video relay service as a 

reimbursable relay service under section 

225 of the Act (defining the video 

service as ‘‘functionally equivalent’’ to 

traditional TRS) provide analogous 

support for including video calling as an 

inmate telephone service? To the extent 

any communications services available 

to inmates fall outside the statutory 

definition of ‘‘inmate telephone 

service,’’ what other sources of authority 

provide the Commission with the ability 

to ensure that rates are just and 

reasonable? Could such services be 

regulated pursuant to sections 201 and 

202 to ensure the rates, charges, and 

practices associated with those services 

are just, reasonable, and not 

unreasonably discriminatory? Could 

regulation of these services be 

supported through the use of the 

Commission’s ancillary authority? For 

example, the record shows that some 

correctional institutions have 

eliminated all in-person visitation and 

replaced it with video visitation. What 

if providers were to eliminate all 

payphone calling in favor of video 

calling and charged rates for those 

services far in excess of the 

Commission’s rate caps? Would such a 

shift effectively void the section 276 

requirement of fair compensation and 

preclude the Commission from 

discharging its statutory mandate? 

J. Periodic Review 

152. We seek comment on whether a 

periodic review of how the reforms we 

seek comment on above are impacting 

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ICS rates, demand, ancillary charges and 

site commission levels is essential to 

ensure that our adopted reforms are 

creating and maintaining the proper 

incentives to drive end user rates to 

competitive levels. We seek comment 

on the benefits of establishing a periodic 

review process. 

153. In the Order the Commission 

adopted an Annual Reporting and 

Certification Requirement that included 

the submission of interstate and 

intrastate ICS rate and demand data as 

well as the average duration of calls. In 

the FNPRM the Commission sought 

further comment on adjusting ICS rates 

over time. In response, the Wright 

Petitioners suggested that the 

Commission ‘‘adopt rules to review the 

interim rates no later than 180 days after 

the ICS providers have submitted their 

second round of data collected under 

Section 64.6060 of the Commission’s 

rules.’’ 

154. The ICS providers that signed on 

to the Joint Provider Reform Proposal 

suggest that ‘‘ICS providers should be 

required to provide certain information 

to the Commission annually for three (3) 

years to ensure the caps on per-minute 

rates and any admin-support payments 

adopted are implemented as required.’’ 

Specifically, they suggest that ‘‘[s]uch 

information should include a list of the 

ICS provider’s current interstate and 

intrastate per-minute ICS rates, the ICS 

provider’s current fee amounts, the 

locations where the ICS provider makes 

admin-support payments, and the 

amount of those admin-support 

payments.’’ We seek comment on this 

portion of the Proposal. In addition to 

the information suggested by the ICS 

providers, we suggest that providers 

also be required to file demand and call 

duration data. Finally, we seek 

comment on whether any information 

gathered for an annual review must be 

certified as accurate by an officer of the 

reporting company. 

K. Enforcement 

155. In the Order, the Commission 

described its standard enforcement 

authority as it relates to ICS. The 

Commission also made clear, and we 

remind interested parties, that the 

Commission’s general section 208 

complaint procedures apply. 

156. The Commission also made clear 

that penalties or failure to comply with 

the Commission’s rules may result in 

monetary forfeitures of up to ‘‘$160,000 

for each violation or each day of a 

continuing violation, up to a maximum 

of $1,575,000 per continuing violation.’’ 

We seek comment on how to interpret 

‘‘violation’’ for use in the ICS context in 

light of the reforms discussed herein. 

For example, would each non-compliant 

ICS rate charged by a provider be a 

single violation? Would the continued 

payment of site commissions to a 

correctional facility constitute a single 

violation? Would the imposition of one 

ancillary charge over any cap or caps 

ultimately adopted by the Commission 

to one consumer constitute a single 

violation? 

157. Securus has urged the 

Commission to require that the CEO, 

CFO, and General Counsel of each ICS 

provider all certify to the companies’ 

compliance with the Commission’s ICS 

rules and regulations. In the Order, the 

Commission also adopted an Annual 

Reporting and Certification Requirement 

that required ‘‘an officer or director of 

each ICS provider annually to certify the 

accuracy of the data and information in 

the certification, and the provider’s 

compliance with all portions of this 

Order.’’ We note that this rule was 

stayed by the D.C. Circuit so we have 

not evaluated the effectiveness or 

impact of such a certification. Should 

the Commission adopt such a 

requirement? How does such a 

certification requirement function with 

the proposed periodic review 

requirement we seek comment on 

above? 

158. We seek comment on whether 

states should continue to exercise 

enforcement functions with respect to 

any state requirements that are 

consistent with the Commission’s 

regulations. We seek comment on 

whether states should continue to 

exercise their enforcement functions 

with respect to any final rules that the 

Commission may adopt as part of 

comprehensive ICS reform. Should the 

Commission expressly allow states to 

exercise such enforcement authority, 

e.g., to be carried out through their 

complaint resolution process, or some 

other role in the oversight process of 

state commissions? If the Commission 

did so, what if any oversight role should 

the Commission adopt with respect to 

state proceedings involving the 

enforcement of Commission rules? 

Would our authority to provide for such 

a state role apply regardless of whether 

certain state laws have been found to be 

inconsistent with any ICS rules 

governing intrastate ICS? 

L. Cost/Benefit Analysis of Proposals 

159. Acknowledging the potential 

difficulty of quantifying costs and 

benefits, we seek to determine whether 

each of the proposals above will provide 

public benefits that outweigh their 

costs. We also seek to maximize the net 

benefits to the public from any 

proposals we adopt. For example, 

commenters have argued that inmate 

recidivism decreases with regular family 

contact. This not only benefits the 

public broadly by reducing crimes, 

lessening the need for additional 

correctional facilities and cutting overall 

costs to society, but also likely has a 

positive effect on the welfare of inmates’ 

children. On the other hand, 

commenters have argued that 

eliminating site commissions would 

directly affect jail revenues and lead to 

a reduction in recreational and 

rehabilitation services provided to 

inmates by facilities. Such a reduction 

could produce its own wave of negative 

aftereffects that offset some of the 

purported benefits. Accordingly, we 

seek specific comment on the costs and 

benefits of the proposals above and any 

additional proposals received in 

response to this Second Further Notice. 

We also seek any information or 

analysis that would help us to quantify 

these costs or benefits. 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. 

Additionally, we ask that parties 

consider whether the above proposals 

have multiplier effects beyond their 

immediate impact that could affect their 

interest or, more broadly, the public 

interest. 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 recognize that the 

costs and benefits may vary based on 

such factors as the correctional facility 

served and the ICS provider. We request 

that parties file specific analyses and 

facts to support any claims of significant 

costs or benefits associated with the 

proposals herein. 

IV. Procedural Matters 

A. Filing Instructions 

160. Pursuant to sections 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 Second FNPRM 

must be filed in WC Docket No. 12–375. 

• Electronic Filers: Comments may be 

filed electronically using the Internet by 

accessing the ECFS: http://fjallfoss.fcc.

gov/ecfs2/. 

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• 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 messengerdelivered 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 fcc504@fcc.gov or call 

the Consumer & Governmental Affairs 

Bureau at 202–418–0530 (voice), 202– 

418–0432 (tty). 

B. Ex Parte Requirements 

161. This proceeding shall be treated 

as a ‘‘permit-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. Memoranda must contain 

a summary of the substance of the ex 

parte presentation and not merely a list 

of the subjects discussed. More than a 

one or two sentence description of the 

views arguments presented is generally 

required. If the oral 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 rule 

1.1206(b). In proceedings governed by 

rule 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. Paperwork Reduction Act Analysis 

162. This document does not contain 

proposed information collection(s) 

subject to the Paperwork Reduction Act 

of 1995 (PRA), Public Law 104–13. In 

addition, therefore, it does not contain 

any new or modified 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). 

D. Initial Regulatory Flexibility Analysis 

163. As required by the Regulatory 

Flexibility Act of 1980 (RFA), the 

Commission has prepared an Initial 

Regulatory Flexibility Analysis (IRFA) 

for this Second Further Notice, of the 

possible significant economic impact on 

small entities of the policies and rules 

addressed in this document. The IRFA 

is set forth as the Appendix. Written 

public comments are requested on this 

IRFA. Comments must be identified as 

responses to the IRFA and must be filed 

on or before the dates on the first page 

of this Second Further Notice. The 

Commission’s Consumer and 

Governmental Affairs Bureau, Reference 

Information Center, will send a copy of 

this Second Further Notice, including 

the IRFA, to the Chief Counsel for 

Advocacy of the Small Business 

Administration (SBA). 

V. Ordering Clauses 

164. Accordingly, it is ordered that, 

pursuant to sections 1, 2, 4(i)–(j), 201(b), 

276, and 332 of the Communications 

Act of 1934, as amended, 47 U.S.C. 151, 

152, 154(i)–(j), 201(b), 276, and 332, this 

Second Further Notice of Proposed 

Rulemaking is adopted. 

165. It is further ordered, that the 

Commission’s Consumer and 

Governmental Affairs Bureau, Reference 

Information Center, shall send a copy of 

this Second Further Notice of Proposed 

Rulemaking, including the Initial 

Regulatory Flexibility Analysis, to the 

Chief Counsel for Advocacy of the Small 

Business Administration. 

166. It is further ordered, that 

pursuant to sections 1.4(b)(1) and 

1.103(a) of the Commission’s rules, 47 

CFR 1.4(b)(1) and 1.103(a), that this 

Second Further Notice of Proposed 

Rulemaking shall be effective 30 days 

after publication of a summary thereof 

in the Federal Register. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

Appendix 

Initial Regulatory Flexibility Analysis 

1. As required by the Regulatory Flexibility 

Act of 1980, as amended (RFA) the Federal 

Communications Commission (Commission) 

has prepared this Initial Regulatory 

Flexibility Analysis (IRFA) of the possible 

significant economic impact on a substantial 

number of small entities by the policies and 

rules proposed in this Second Further Notice 

of Proposed Rulemaking (Second Further 

Notice). Written 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 Second 

Further Notice. The Commission will send a 

copy of the Second Further Notice, including 

this IRFA, to the Chief Counsel for Advocacy 

of the Small Business Administration (SBA). 

In addition, the Second Further Notice and 

IRFA (or summaries thereof) will be 

published in the Federal Register. 

A. Need for, and Objectives of, the Notice 

2. In today’s Second Further Notice the 

Commission seeks comment on additional 

measures it could take to ensure that 

interstate and intrastate inmate calling 

service (ICS) are provided consistent with the 

statute and public interest and the 

Commission’s authority to implement these 

measures. The Commission believes that 

additional action on ICS will help maintain 

familial contacts stressed by confinement and 

will better serve inmates with special needs 

while still ensuring the critical security 

needs of correctional facilities of various 

sizes. Specifically, the Second Further Notice 

seeks comment on: 

• Limiting site commission payments; 

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• Final interstate and intrastate ICS rate 

cap reform; 

• Limiting ancillary charges; 

• Harmonizing inconsistent state 

regulations pursuant to Section 276(c) of the 

Communications Act of 1934, as amended; 

• Treatment of existing ICS contracts; 

• Appropriate transition period; 

• Accessible inmate calling services; 

• Advanced inmate communications 

services; 

• Periodic review of the industry; 

• Enforcement; and 

• Cost/Benefit analysis of proposals. 

B. Legal Basis 

3. The legal basis for any action that may 

be taken pursuant to the Second Further 

Notice is contained in sections 1, 2, 4(i)–(j), 

201(b) and 276 of the Communications Act 

of 1934, as amended, 47 U.S.C. 151, 152, 

154(i)–(j), 201(b) and 276. 

C. Description and Estimate of the Number 

of Small Entities to Which the Proposed 

Rules Will Apply 

4. The RFA directs agencies to provide a 

description of, and where feasible, an 

estimate of the number of small entities that 

may be affected by the proposed rules, if 

adopted. The RFA generally defines the term 

‘‘small entity’’ as having the same meaning 

as the terms ‘‘small business,’’ ‘‘small 

organization,’’ and ‘‘small governmental 

jurisdiction.’’ In addition, the term ‘‘small 

business’’ has the same meaning as the term 

‘‘small-business concern’’ under the Small 

Business Act. A ‘‘small-business concern’’ is 

one which: (1) Is independently owned and 

operated; (2) is not dominant in its field of 

operation; and (3) satisfies any additional 

criteria established by the SBA. 

5. Small Businesses. Nationwide, there are 

a total of approximately 28.2 million small 

businesses, according to the SBA. 

6. Wired Telecommunications Carriers. 

The SBA has developed a small business size 

standard for Wired Telecommunications 

Carriers, which consists of all such 

companies having 1,500 or fewer employees. 

According to Census Bureau data for 2007, 

there were 3,188 firms in this category, total, 

that operated for the entire year. Of this total, 

3,144 firms had employment of 999 or fewer 

employees, and 44 firms had employment of 

1,000 employees or more. Thus, under this 

size standard, the majority of firms can be 

considered small. 

7. Local Exchange Carriers (LECs). Neither 

the Commission nor the SBA has developed 

a size standard for small businesses 

specifically applicable to local exchange 

services. The closest applicable size standard 

under SBA rules is for Wired 

Telecommunications Carriers. Under that 

size standard, such a business is small if it 

has 1,500 or fewer employees. According to 

Commission data, 1,307 carriers reported that 

they were incumbent local exchange service 

providers. Of these 1,307 carriers, an 

estimated 1,006 have 1,500 or fewer 

employees and 301 have more than 1,500 

employees. Consequently, the Commission 

estimates that most providers of local 

exchange service are small entities that may 

be affected by our action. 

8. Incumbent Local Exchange Carriers 

(incumbent LECs). Neither the Commission 

nor the SBA has developed a size standard 

for small businesses specifically applicable to 

incumbent local exchange services. The 

closest applicable size standard under SBA 

rules is for Wired Telecommunications 

Carriers. Under that size standard, such a 

business is small if it has 1,500 or fewer 

employees. According to Commission data, 

1,307 carriers reported that they were 

incumbent local exchange service providers. 

Of these 1,307 carriers, an estimated 1,006 

have 1,500 or fewer employees and 301 have 

more than 1,500 employees. Consequently, 

the Commission estimates that most 

providers of incumbent local exchange 

service are small businesses that may be 

affected by our action. 

9. We have included small incumbent 

LECs in this present RFA analysis. As noted 

above, a ‘‘small business’’ under the RFA is 

one that, inter alia, meets the pertinent small 

business size standard (e.g., a telephone 

communications business having 1,500 or 

fewer employees), and ‘‘is not dominant in 

its field’’ of operation. The SBA’s Office of 

Advocacy contends that, for RFA purposes, 

small incumbent LECs are not dominant in 

their field of operation because any such 

dominance is not ‘‘national’’ in scope. We 

have therefore included small incumbent 

LECs in this RFA analysis, although we 

emphasize that this RFA action has no effect 

on Commission analyses and determinations 

in other, non-RFA contexts. 

10. Competitive Local Exchange Carriers 

(competitive LECs), Competitive Access 

Providers (CAPs), Shared-Tenant Service 

Providers, and Other Local Service Providers. 

Neither the Commission nor the SBA has 

developed a small business size standard 

specifically for these service providers. The 

appropriate size standard under SBA rules is 

for the category Wired Telecommunications 

Carriers. Under that size standard, such a 

business is small if it has 1,500 or fewer 

employees. According to Commission data, 

1,442 carriers reported that they were 

engaged in the provision of either 

competitive local exchange services or 

competitive access provider services. Of 

these 1,442 carriers, an estimated 1,256 have 

1,500 or fewer employees and 186 have more 

than 1,500 employees. In addition, 17 

carriers have reported that they are SharedTenant Service Providers, and all 17 are 

estimated to have 1,500 or fewer employees. 

In addition, 72 carriers have reported that 

they are Other Local Service Providers. Of 

the 72, 70 have 1,500 or fewer employees and 

two have more than 1,500 employees. 

Consequently, the Commission estimates that 

most providers of competitive local exchange 

service, competitive access providers, 

Shared-Tenant Service Providers, and Other 

Local Service Providers are small entities that 

may be affected by our action. 

11. Interexchange Carriers (IXCs). Neither 

the Commission nor the SBA has developed 

a size standard for small businesses 

specifically applicable to interexchange 

services. The closest applicable size standard 

under SBA rules is for Wired 

Telecommunications Carriers. Under that 

size standard, such a business is small if it 

has 1,500 or fewer employees. According to 

Commission data, 359 companies reported 

that their primary telecommunications 

service activity was the provision of 

interexchange services. Of these 359 

companies, an estimated 317 have 1,500 or 

fewer employees and 42 have more than 

1,500 employees. Consequently, the 

Commission estimates that the majority of 

interexchange service providers are small 

entities that may be affected by our action. 

12. Local Resellers. The SBA has 

developed a small business size standard for 

the category of Telecommunications 

Resellers. Under that size standard, such a 

business is small if it has 1,500 or fewer 

employees. According to Commission data, 

213 carriers have reported that they are 

engaged in the provision of local resale 

services. Of these, an estimated 211 have 

1,500 or fewer employees and two have more 

than 1,500 employees. Consequently, the 

Commission estimates that the majority of 

local resellers are small entities that may be 

affected by our action. 

13. Toll Resellers. The SBA has developed 

a small business size standard for the 

category of Telecommunications Resellers. 

Under that size standard, such a business is 

small if it has 1,500 or fewer employees. 

According to Commission data, 881 carriers 

have reported that they are engaged in the 

provision of toll resale services. Of these, an 

estimated 857 have 1,500 or fewer employees 

and 24 have more than 1,500 employees. 

Consequently, the Commission estimates that 

the majority of toll resellers are small entities 

that may be affected by our action. 

14. Other Toll Carriers. Neither the 

Commission nor the SBA has developed a 

size standard for small businesses 

specifically applicable to Other Toll Carriers. 

This category includes toll carriers that do 

not fall within the categories of 

interexchange carriers, operator service 

providers, prepaid calling card providers, 

satellite service carriers, or toll resellers. The 

closest applicable size standard under SBA 

rules is for Wired Telecommunications 

Carriers. Under that size standard, such a 

business is small if it has 1,500 or fewer 

employees. According to Commission data, 

284 companies reported that their primary 

telecommunications service activity was the 

provision of other toll carriage. Of these, an 

estimated 279 have 1,500 or fewer employees 

and five have more than 1,500 employees. 

Consequently, the Commission estimates that 

most Other Toll Carriers are small entities 

that may be affected by our action. 

15. Payphone Service Providers (PSPs). 

Neither the Commission nor the SBA has 

developed a small business size standard 

specifically for payphone services providers. 

The appropriate size standard under SBA 

rules is for the category Wired 

Telecommunications Carriers. Under that 

size standard, such a business is small if it 

has 1,500 or fewer employees. According to 

Commission data, 535 carriers have reported 

that they are engaged in the provision of 

payphone services. Of these, an estimated 

531 have 1,500 or fewer employees and four 

have more than 1,500 employees. 

Consequently, the Commission estimates that 

the majority of payphone service providers 

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69708 Federal Register / Vol. 79, No. 225 / Friday, November 21, 2014 / Proposed Rules 

are small entities that may be affected by our 

action. 

D. Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements for Small Entities 

16. In this Second Further Notice, the 

Commission seeks public comment on 

options to reform the inmate calling service 

market. Possible new rules could affect all 

ICS providers, including small entities. In 

proposing these reforms, the Commission 

seeks comment on various options discussed 

and additional options for reforming the ICS 

market. 

E. Steps Taken To Minimize the Significant 

Economic Impact on Small Entities, and 

Significant Alternatives Considered 

17. The RFA requires an agency to describe 

any significant, specifically small business, 

alternatives that it has considered in reaching 

its proposed approach, which may include 

the following four alternatives (among 

others): ‘‘(1) the establishment of differing 

compliance or reporting requirements or 

timetables that take into account the 

resources available to small entities; (2) the 

clarification, consolidation, or simplification 

of compliance and reporting requirements 

under the rules for such small entities; (3) the 

use of performance rather than design 

standards; and (4) an exemption from 

coverage of the rule, or any part thereof, for 

such small entities.’’ 

18. The Second Further Notice seeks 

comment from all interested parties. The 

Commission is aware that some of the 

proposals under consideration may impact 

small entities. Small entities are encouraged 

to bring to the Commission’s attention any 

specific concerns they may have with the 

proposals outlined in the Second Further 

Notice. 

19. The Commission expects to consider 

the economic impact on small entities, as 

identified in comments filed in response to 

the Second Further Notice, in reaching its 

final conclusions and taking action in this 

proceeding. Specifically, the Commission 

will conduct a cost/benefit analysis as part of 

this Second Further Notice and consider the 

public benefits of any such requirements it 

might adopt, to ensure that they outweigh 

their impacts on small businesses. 

F. Federal Rules That May Duplicate, 

Overlap, or Conflict With the Proposed Rules 

20. None. 

[FR Doc. 2014–26922 Filed 11–20–14; 8:45 am] 

BILLING CODE 6712–01–P 

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