At its upcoming meeting on May 20th, the FCC is prepared to issue a Third Report and Order (Order) in Docket 20-375 in which it will take several key steps to reform inmate calling services (ICS).  The Order results from last year’s Notice of Proposed Rulemaking (Notice) in this proceeding.

The Commission is reforming inmate calling services now to enable inmates to better communicate with their families during the pandemic especially because they have historically faced egregiously high charges as a captive audience in a monopoly environment.

Unlike virtually everyone else in the United States, incarcerated people have no choice in their telephone service provider.  Instead, their only option typically is to use a service provider chosen by the correctional facility, and once chosen, that service provider typically operates on a monopoly basis.  Egregiously high rates and charges and associated unreasonable practices for the most basic and essential communications capability—telephone service—impedes incarcerated peoples’ ability to stay connected with family and loved ones, clergy, and counsel, and financially burdens incarcerated people and their loved ones.  Never have such connections been as vital as they are now, as many correctional facilities have eliminated in-person visitation in response to the COVID-19 pandemic (Draft Order, at para. 1).

The Commission’s reforms will include:

Lowering the interstate interim rate caps of $0.21 per minute for debit and prepaid calls from prisons and jails with 1,000 or more incarcerated people to new lower interim caps of $0.12 per minute for prisons and $0.14 per minute for larger jails.  

The $0.21 rate cap for jails with fewer than 1,000 inmates remains in place, because of the higher costs carriers face in serving inmates in smaller jails.  

These are interim caps.  The Commission has concurrently issued a Fifth Further Notice of Proposed Rulemaking in which it seeks industry comment to establish permanent interstate and international rate caps along with ensuring communications services to incarcerated individuals with disabilities and permanently reforming the treatment of site commission payments (see below).  

Intrastate prison calling rates are not affected by this Order.

Tentatively reforming the current treatment of site commission payments to permit recovery only of the portions of such payments related specifically to calling services and requiring them to be separately listed on bills.  According to the FCC, site commission payments are payments made by calling services providers to correctional facilities and broadly encompass any form of monetary payment, in-kind payment requirement, gift, exchange of services or goods, fee, technology allowance, product or the like. They can be expressed in a variety of ways, including as per-call or per-minute charges, a percentage of revenue, or a flat fee.  They can be mandated by state statute or required by state correctional institutions as a condition of doing business with inmate calling services providers.

Where site commission payments are mandated by federal, state, or local law, providers may pass these payments through to consumers without any markup, as an additional component of the new interim interstate per-minute rate caps.  

Where site commission payments result from contractual obligations or negotiations with providers, providers may recover from consumers no more than the $0.02 per minute for prisons and $0.02 per minute for larger jails, as proposed in the 2020 ICS Notice.

Therefore, consistent with the proposal in the 2020 ICS Notice last year, the maximum total interstate rate caps are $0.14 per minute for prisons and $0.16 per minute for jails with 1,000 or more incarcerated people.

Eliminating the current interim interstate collect calling rate cap of $0.25 per minute resulting in a single uniform interim interstate maximum rate cap of $0.21 per minute for all calls for all facilities, consistent with the proposal in the 2020 ICS Notice.

Capping, for the first time, international calling rates at the applicable total interstate rate cap, plus the amount paid by the calling services provider to its underlying wholesale carriers for completing international calls, consistent with the 2020 ICS Notice.

Reforming the ancillary service third-party transaction fee caps for (1) calls that are billed on a single per-call basis, and (2) charges for transferring or processing third-party financial transactions, as proposed in the 2020 ICS Notice.  The Commission defined single-call services as “billing arrangements whereby an Inmate's collect calls are billed through a third party on a per-call basis, where the called party does not have an account with the Provider of Inmate Calling Services or does not want to establish an account.”

Adopting a new mandatory data collection to obtain more uniform cost data based on consistent prescribed allocation methodologies to determine reasonable permanent cost-based rate caps for facilities of all sizes, as suggested in the 2020 ICS Notice.  The data collection will be handled by the Wireline Competition Bureau and the Office of Budget Management. There will be a Public Notice to make carriers aware of when they must provide data.

Reaffirming providers’ obligations regarding functionally equivalent access for incarcerated people with disabilities, consistent with the 2020 ICS Notice and federal law.

Concurrent with the release of this Order, the Commission will release an Order on Reconsideration, reaffirming its finding in 2020 that the jurisdictional nature of an inmate’s telephone call for purposes of charging the appropriate inter or intrastate rate depends on the physical location of the originating and terminating endpoints of the call.

The Order is expected to take effect 90 days after publication in the Federal Register.