What Services Have A Monopoly In Prisons

The price to call home: land-sanctioned monopolization in the prison house phone industry

Sections: ane. Introduction; ii. The Prison Telephone Market place is Cleaved; three. Exorbitant Prison house Phone Rates Result from the Monopolistic Marketplace; 4. Exorbitant Prison Phone Prices Harm Club; 5. Government Regulation in the Prison Phone Manufacture; half-dozen. Why Federal Regulation Would Ameliorate the Trouble; vii. Summary & Recommendations; Acknowledgments; Near the author; About the Prison Policy Initiative; Endnotes

A Prison Policy Initiative Report
by Drew Kukorowski
September xi, 2012

1. Introduction

Exorbitant calling rates brand the prison telephone manufacture ane of the almost lucrative businesses in the United states of america today. This manufacture is so assisting because prison phone companies have state-sanctioned monopolistic control over the land prison markets,[1] and the government agency with authority to rein in these rates across the nation has been reluctant to offer meaningful relief.

Prison telephone companies are awarded these monopolies through bidding processes in which they submit contract proposals to the state prison systems; in all just eight states, these contracts include promises to pay "commissions" — in outcome, kickbacks — to states, in either the form of a percentage of revenue, a stock-still up-front payment, or a combination of the ii.[2] Thus, state prison systems have no incentive to select the phone company that offers the everyman rates; rather, correctional departments have an incentive to reap the most profit by selecting the phone company that provides the highest commission.[three]

This market oddity — that the government entity has an incentive to select the highest bidder and that the actual consumers have no input in the bidding process — makes the prison telephone market susceptible to prices that are well-above ordinary rates for non-incarcerated persons. This fact, coupled with what economists would label as the "relative inelastic demand"[4] that incarcerated persons and their families have to speak with ane another, leads to exorbitant prices. The prison house telephone market is structured to be exploitative because it grants monopolies to producers, and because the consumers — the incarcerated persons and their families who are actually basis the bills — have no comparable culling ways of communicating.[5]

Exorbitant telephone rates are non only bad for incarcerated persons and their families, but are bad for society at big. High phone rates reduce incarcerated persons' ability to communicate with family, and family contact has been consistently shown to lower recidivism.[6] Currently, at that place is public debate nigh reducing the costs of mass incarceration past focusing on ways to lower the likelihood that incarcerated persons will re-offend after their release.[7] For example, the Republican Party Platform for 2012 endorses "the institution of family-friendly policies … [to] reduce the rate of backsliding, thus reducing the enormous fiscal and social costs of incarceration."[8] And the Autonomous Party Platform for 2012 notes that the political party "support[s]… initiatives to reduce recidivism." [9] Lowering prison house telephone rates would serve the uncontroversial goal of reducing the likelihood that incarcerated persons will commit another crime afterward their release.

Fortunately, government regulation can help achieve this goal. The Federal Communications Commission is considering a small regulation to impose price caps on long-altitude prison telephone rates. This study finds that such regulation, when considered confronting the backdrop of the corporate monopolization of the prison telephone marketplace, would both reduce the cost-gouging that incarcerated persons' families suffer and simultaneously contribute to the social adept by reducing recidivism.

2. The Prison Telephone Market is Broken

Markets for appurtenances and services work all-time when consumers have the freedom to select the best seller. In the prison phone market place, though, the consumers have no pick as to which telephone company to use. That pick is made for them by the country prison house arrangement. But state prison systems cannot be expected to abet for lower phone rates because they don't have consumer interests in mind. And prison telephone companies take little incentive to provide reasonable rates to their customers because they do not answer to those customers.

These state-sanctioned monopolies casualty upon people who are least able to select alternative methods of communication and who are least able to sustain additional expenses. Incarcerated persons take below average literacy rates that make it less practical for them to communicate in writing.[10] Information technology is difficult for families of incarcerated persons to pay for phone calls considering people in prison tend to come from depression-income households.[11] A study of recently released people from Illinois prisons found that the price of phone calls from prison was one of the two most significant barriers to family contact during incarceration.[12] Therefore, prison house phone companies not only take monopolies, but their customers have no comparable alternatives to telephone communication.

In addition to these structural issues with the prison telephone industry, corporate agglomeration has exacerbated the already exorbitant rates. Over the past few years, iii corporations accept emerged to dominate the market. xc% of incarcerated persons alive in states with prison phone service that is exclusively controlled past Global Tel*Link, Securus Technologies, or CenturyLink.[13] The largest of these corporations, Global Tel*Link, currently has contracts for 27 state correctional departments after its acquisition of four smaller prison phone companies betwixt 2009 and 2011.[fourteen] Global Tel*Link-controlled states contain approximately 57% of the full state population of incarcerated people in the United States.[15] Government regulation was designed to control this kind of corporate domination over a captive market.

3. Exorbitant Prison house Phone Rates Result from the Monopolistic Market

The combination of corporate consolidation in the prison telephone manufacture, state-granted monopolies, and inelastic demand for prison telephone service has led to exorbitant rates. In many states, someone behind bars must pay about $xv for a fifteen infinitesimal phone telephone call.[xvi] For families trying to stay in touch a regular basis, such prices are often arduous.

Because rates vary widely between states — even between states that use the same prison phone company — nationwide regulation is appropriate. For example, a fifteen minute long-distance phone call from Global Tel*Link costs $2.36 in Massachusetts, just that same call costs more than $17 in Georgia.[17] This large difference in rates originates in large part from the wide range — anywhere from 15% to 60% — in the size of kickbacks that prison phone companies pay to country governments.[xviii]

The telephone companies and state prison house systems use different arguments to defend the loftier rates. Prison phone companies debate that rates must be high in order to comprehend costs associated with providing secure telephone service, such every bit phone call monitoring.[19] But this statement is refuted by telephone rates charged in New York. New York police bans kickbacks and requires that "the lowest possible cost to the user shall be emphasized."[20] Currently, Global Tel*Link charges incarcerated persons and their families almost $0.05 per minute, local and long-distance, in the New York prison system. Thus, low rates in the prison phone market are entirely consequent with phone call monitoring and other security measures.

Correctional departments contend that revenue from kickbacks provides for prison house amenities that would otherwise get unfunded past country legislatures.[21] This argument fails to stand up up to scrutiny when because that the federal prison organisation charges insufficiently low rates: $0.06/infinitesimal local and $0.23/minute long-distance, and notwithstanding generates enormous acquirement. As a recent Government Accountability Office report points out, the federal prison house phone rates were sufficient to cover costs and generate $34 meg in turn a profit in 2010.[22] Thus, profits can still be generated when prices are capped at relatively depression levels. Both prison telephone companies and state prison systems would exist able to cover costs and generate revenue even with price caps.

4. Exorbitant Prison Phone Prices Harm Gild

The link between family contact during incarceration and reduced recidivism is well-documented.[23] Indeed, the federal Agency of Prisons states that "telephone privileges are a supplemental means of maintaining community and family ties that will contribute to an inmate's personal evolution."[24] Congress itself has establish, in the context of re-enacting the Second Adventure Human action of 2007, that "at that place is bear witness to suggest that inmates who are continued to their children and families are more likely to avoid negative incidents and accept reduced sentences."[25] And the American Correctional Clan, the globe's largest professional corrections association and an accreditation agency for correctional facilities, has repeatedly resolved that "audio correctional management" requires that "adult/juvenile offenders should have access to a range of reasonably priced telecommunications services" and that rates for such services should be "commensurate with those charged to the general public for like services."[26] Thus, a variety of stakeholders and policy-making bodies agree that high telephone prices are harmful, and yet high prison phone prices persist.

image of an incarcerated man at San Quentin prison crouching down in a phone booth on the phone

The telephone is one of the few ways that people in prison can remain in bear on with their children. (Photo: Lucy Nicholson/Reuters, 2012)

In addition to reducing recidivism, lower telephone prices that lead to increased contact between incarcerated people and their children increase incarcerated persons' involvement with their children after release.[27] As of 2007, 52% of people incarcerated in state prisons and 63% of people incarcerated in the federal arrangement were parents of minor children.[28] Lowering the cost of communications for these incarcerated persons and their children would better parent-child relationships by permitting more frequent communication.

The economical consequences of high prison house phone rates are harmful, also. The credible revenues generated past loftier prison phone rates are offset past the costs of larger prison populations caused past increased rates of re-offending. Foregoing acquirement from exorbitant phone rates at present will subtract correctional departments' costs in the future because fewer people volition notice themselves back in prison. If land governments are serious nearly lowering costs by reducing prison house populations, lowering prison phone rates provides a uncomplicated, straightforward, and evidence-based manner to achieve that goal.

High prison telephone rates also function as a regressive revenue enhancement on communities that experience higher incarceration rates.[29] This is the opposite of our by and large progressive revenue enhancement structure where taxation burdens increment every bit income rises. In this context, depression-income families pay exorbitant phone rates that fund state revenues. But taxpayers are already paying for prisons. It is unfair that taxpayers whose family members are incarcerated should be subject to an additional tax, especially one that as well enriches prison telephone corporations and makes incarcerated people more likely to return to prison.

Finally, lower prison phone rates would besides lessen the recent problem of contraband cell phones.[30] The connection betwixt high prison house phone rates and contraband cell phone spurred Congress to order a authorities study into the effect of high prison telephone rates on the demand for contraband cell phones.[31] And even Time Magazine notes that the "notoriously expensive" cost of using prison house telephones contributes to the demand for prison cell phones in prison.[32] Lowering prison house telephone rates would amend safety past providing less incentive for incarcerated people to learn contraband cell phones.

5. Regime Regulation in the Prison Telephone Industry

Currently, prison phone companies are subject to minimal governmental regulation. Pressuring state utility agencies, which regulate local and in-state long-distance phone rates, to lower prison house phone rates has been successful in a few places, simply is unlikely to succeed everywhere. The commissions that states receive from prison phone companies requite states little incentive to enact affordable rates. At the federal level, the Federal Communications Commission (FCC) currently limits its regulation of the prison phone manufacture to disclosure requirements mandating that prison phone companies inform collect call recipients of prices earlier family unit members accept calls from incarcerated persons.[33]

In 2000, a group of plaintiffs brought a form action lawsuit against the Corrections Corporation of America and several prison phone companies, alleging that the prison phone agreements betwixt the parties violated, amidst other things, federal anti-trust law. The federal district court referred the instance to the FCC, stating that the FCC was better suited to addressing the concerns raised by the lawsuit. The plaintiffs and so petitioned the FCC to enact regulations that would introduce competition to the prison phone market place in the hopes of lowering prison phone rates past breaking up the monopolistic prison phone industry. After several years of little motility from the FCC, the plaintiffs shifted their request past petitioning the FCC to impose toll caps or benchmark rates of $0.20 - $0.25 per minute for interstate long-distance rates.[34] This petition — known every bit the Wright Petition, after original plaintiff Martha Wright — is still pending before the FCC.

The rates requested by the Wright Petition would be more affordable and would still let phone companies to earn profits. Equally demonstrated past the example of the federal prison organization discussed in section three, rates every bit low as $0.06 per minute tin can still generate pregnant acquirement. Despite widespread consensus that prison phone rates should be lower, the FCC has failed to impose price caps in this market because of obstructionism past prison phone companies. Prison phone companies keep to resist a regulation that is eminently reasonable and that would allow them to make handsome profits while simultaneously reducing crime. This is corporate greed and disregard for public welfare at its worst.

six. Why Federal Regulation Would Ameliorate the Problem

The Federal Advice Commission'southward statutory purpose, stated in the law that created the commission in 1934, is to regulate telecommunications such that service is available nationwide at "reasonable charges."[35] Nether no circumstances can the current prison telephone rates be deemed reasonable.

The FCC is ideally situated to regulate this cleaved market place. The FCC already has consumer protection capabilities such that it can field consumer complaints and resolve disputes with phone companies without the time and costs associated with litigation.

Federal regulation of interstate long-altitude prison phone rates would bring much-needed relief to incarcerated persons and their families, and it would increase public safety by reducing backsliding through increased family communications. While such regulation would non necessarily touch on prison phone long-altitude rates within a unmarried state,[36] the highest prison phone rates currently use to interstate phone calls.[37] Setting cost caps for interstate prison long-altitude rates would bring rates more than in line with rates in the not-prison market while still enabling prison telephone companies to earn profits.[38] In sum, federal regulation of this marketplace is imperative.

7. Summary & Recommendations

State-sanctioned monopolies for prison house phone companies encourage exorbitant phone rates for incarcerated persons and their families. Loftier prison phone rates — effectively regressive taxes — reduce communication betwixt incarcerated persons and their families. Criminological research undeniably demonstrates that increased advice with family during incarceration reduces the risk that incarcerated persons volition re-offend afterward their release. But neither prison house phone corporations nor country prison systems have a strong incentive to lower rates. As a consequence, incarcerated persons, their families, and the public at big suffer while a few select corporations reap the profits.

Government regulation of this predatory industry is the best solution. The Federal Communications Commission should set cost caps on prison house phone rates past approving the Wright Petition. State governments should decline to engage in the collusive and pernicious practice of accepting kickbacks from prison house phone revenue. And the public should practise its political power to ensure that justice is brought to the prison phone industry by participating in the relentless advocacy campaigns for this upshot, such as those organized by Citizens United for the Rehabilitation of Errants (CURE), Prison Legal News, the Center for Media Justice, Thou Kites, and the Campaign for Prison Phone Justice.

Acknowledgements

I thank Barbara Off-white, Alex Friedmann, Stephen Healy, Kelsey Kauffman, Taren Stinebrickner-Kauffman, Nick Szuberla, and Paul Wright for sharing their expertise on fighting the monopolistic prison house telephone industry with me, and I thank Leah Sakala and Peter Wagner for their assistance developing and distributing this report.

About the author

Drew Kukorowski has an M.A. in Philosophy from Tufts University and a J.D. degree from the University of North Carolina School of Law. He is currently a research associate at the Prison Policy Initiative.

About the Prison Policy Initiative

The non-profit, non-partisan Prison Policy Initiative was founded in 2001 to demonstrate how the American system of incarceration negatively impacts anybody, not just the incarcerated. The Easthampton, Massachusetts based organisation is virtually famous for its work documenting how mass incarceration skews our democracy. Other projects have included a groundbreaking report about sentencing enhancement zones, and online resources giving activists, journalists and policymakers the tools they need to participate in setting constructive criminal justice policy.

Endnotes

[ane] Paul R. Zimmerman & Susan M.Five. Flaherty, Location Monopolies and Prison Phone Rates, 47 QUARTERLY REVIEW OF ECONOMICS AND FINANCE 261, 262 (2007). Specifically, Zimmerman & Flaherty identify prison phone companies as having 'location monopolies,' i.e., the phone service provider is the sectional provider for all of the prisons in a country.

[ii] Run across John E. Dannenberg, Nationwide PLN Survey Examines Prison Phone Contracts, Kickbacks, 22 PRISON LEGAL NEWS 1, four-five (2011); see likewise Steven J. Jackson, Ex-Advice: Competition and Collusion in the U.S. Prison Phone Industry, 22 Disquisitional STUDIES IN MEDIA Communication 263, 269 (2005). Dannenberg's article is a tour de strength that is required reading for this issue.

[iii] See Jackson, supra note ii, at 269.

[4] Roughly, demand for a specific production is inelastic when changes in the product's price do not take a corresponding effect on the demand for that good.

[5] Run across Zimmerman & Flaherty, supra notation ane, at 262 (arguing that mail and email are not close substitutes of telephone communication because of the high charge per unit of illiteracy among incarcerated persons).

[6] Run across Nancy Thousand. La Vigne, Rebecca L. Naser, Lisa E. Brooks, & Jennifer Fifty. Castro, Examining the Effect of Incarceration and In-Prison Family Contact on Prisoners' Family unit Relationships, 21 Journal OF Gimmicky CRIMINAL JUSTICE 314, 316 (2005).

[vii] There is too significant action by states to consider new ways to reduce backsliding. See CHRISTIAN HENRICHSON & RUTH DELANEY, VERA Plant OF JUSTICE, THE Toll OF PRISONS: WHAT INCARCERATION COSTS TAXPAYERS 12 (2012) (noting that several states take increased efforts to reduce backsliding through improved reentry programs), available at http://www.vera.org/download?file=3542/Cost%2520of%2520Prisons_updated%2520version_072512.pdf (last visited Sept. 5, 2012).

[viii] REPUBLICAN PARTY PLATFORM 38 (2012), bachelor at http://www.gop.com/wp-content/uploads/2012/08/2012GOPPlatform.pdf (terminal visited Sept. 4, 2012).

[9] DEMOCRATIC NATIONAL PLATFORM (2012), available at http://assets.dstatic.org/dnc-platform/2012-National-Platform.pdf (last visited Sept. seven, 2012).

[10] See ELIZABETH GREENBERG, ERIC DUNLEAVY, Marker KUTNER, & SHEIDA WHITE, U.S. DEPT. OF EDUCATION, NATIONAL CENTER FOR EDUCATION STATISTICS, LITERACY Behind BARS: RESULTS FROM THE 2003 NATIONAL ASSESSMENT OF Adult LITERACY PRISON SURVEY 29 (2007), available at http://nces.ed.gov/pubs2007/2007473.pdf (last visited Sept. five, 2012).

[xi] See generally BRUCE WESTERN, PUNISHMENT AND INEQUALITY IN AMERICA 85-107 (2006) (Ch.4).

[12] See La Vigne et al., supra notation half dozen, at 323 (2005).

[13] Note that this data only reflects state prison house contracts, not local jail contracts or contracts with private prisons. Thus, it is likely that these companies command phone service for even more incarcerated persons. Percentage was calculated past consulting Dannenberg (2011) and U.South. DEPT. OF JUSTICE, BUREAU OF JUSTICE STATISTICS, PRISONERS IN 2010 14 (2012), available at http://bjs.ojp.usdoj.gov/index.cfm?ty=pbdetail&iid=2230 (last visited Sept. 5, 2012).

[14] See Dannenberg, supra note 2, at 16, and Global Tel*Link website, available at http://www.gtl.cyberspace/ (noting that Global Tel*Link owns the contracts for Conversant Technologies, Value-Added Communications, Public Communications Services, and Inmate Phone Inc.) (final visited Sept. ten, 2012).

[15] Come across note xiii, supra.

[16] In Mississippi, for example, someone behind bars in the land Department of Corrections pays $fourteen.55 for a fifteen-minute call. See U.Southward. GOVERNMENT ACCOUNTABILITY OFFICE, IMPROVED EVALUATIONS AND INCREASED COORDINATION COULD IMPROVE Jail cell PHONE DETECTION fourteen (2011), available at http://world wide web.gao.gov/assets/330/322805.pdf (terminal visited Sept. 5, 2012). In Georgia, that price rises to more than $17. See GEORGIA Section OF CORRECTIONS, INMATE TELEPHONE SYSTEM: GLOBAL TEL LINK Client USER GUIDE 4, available at http://world wide web.dcor.state.ga.us/pdf/GDC_GTL_user_manual.pdf (last visited on Sept. 3, 2012).

[17] See Dannenberg, supra note ii, at 16.

[18] See id. at 2.

[19] See Zimmerman & Flaherty, supra annotation 1, at 263.

[20] N.Y. CORR. LAW S 623.

[21] See Zimmerman & Flaherty, supra note 1 , at 263; see as well Justin Carver, An Efficiency Analysis of Contracts for the Provision of Phone Services to Prisons, 54 FED. COMM. Fifty.J. 391, 400 (2002).

[22] See U.S. GAO, supra annotation sixteen, at 15.

[23] See La Vigne et al., supra note 6, at 316; see besides Rebecca L. Naser & Christy A. Visher, Family Members' Experiences with Incarceration and Reentry, 7 WESTERN CRIMINOLOGY REVIEW 20, 21 (2006) (noting that "a remarkably consistent association has been found between family contact during incarceration and lower recidivism rates").

[24] 28 C.F.R. S 540.100(a).

[25] 42 U.Due south.C. S 17501(b)(half dozen).

[26] AMERICAN CORRECTIONAL ASSOCIATION, PUBLIC CORRECTIONAL POLICIES, PUBLIC CORRECTIONAL POLICY ON Developed/JUVENILE OFFENDER ACCESS TO TELEPHONES 2001-1 (amended 2011), available at https://www.aca.org/government/policyresolution/PDFs/Public_Correctional_Policies.pdf (concluding visited Sept. eight, 2012). This Policy Statement was unanimously adopted in 2001, and was amended and endorsed in 2006 and 2011.

[27] See La Vigne et al., supra note 6, at 328.

[28] LAUREN E. GLAZE & LAURA One thousand. MARUSCHAK, Agency OF JUSTICE STATISTICS, PARENTS IN Prison AND THEIR Small-scale CHILDREN 1 (2008; revised 2010), bachelor at http://bjs.ojp.usdoj.gov/index.cfm?ty=pbdetail&iid=823 (last visited Sept. six, 2012).

[29] Run into Carver, supra notation 21, at 400 (2002).

[30] Meet, e.1000., TODD Due west. Shush & STEPHEN South. OWEN, FBI Police ENFORCEMENT Bulletin, CELL PHONES Every bit Prison CONTRABAND (2010), bachelor at http://www.fbi.gov/stats-services/publications/constabulary-enforcement-message/july-2010/prison cell-phones-as-prison-contraband (concluding visited Sept. 6, 2012). This FBI bulletin also acknowledges that part of correctional administrators' objection to cell phones lies in the fact that cell phone use reduces revenue from prison-approved phones. Meet also DAVID R. SHAW, CALIFORNIA Office OF THE INSPECTOR GENERAL, SPECIAL REPORT: INMATE CELL PHONE Utilise ENDANGERS PRISON SECURITY AND PUBLIC Condom 6 (2009) (noting that a correctional officeholder in the California prison system earned $150,000 in a unmarried twelvemonth smuggling prison cell phones).

[31] Cell Phone Contraband Act of 2010, Pub. Fifty. No. 111-225, 124 Stat. 2387 (2010).

[32] Tom McNichol, TIME MAGAZINE, Prison Jail cell Phone Use a Growing Problem, bachelor at http://www.time.com/time/nation/article/0,8599,1900859,00.html (May 26, 2009) (last visited Sept. 3, 2012).

[33] 47 C.F.R. S 64.710.

[34] Federal Communications Committee, Implementation of Pay Telephone Reclassification and Compensation Provisions of Telecommunications Act of 1996. Petitioners' Alternative Rulemaking Proposal, CC Docket No. 96-128 (Feb. 28, 2007). Given that this asking was submitted in 2007, and the low long-distance rates that prevail today, the requested rates would already seem besides high.

[35] 47 U.S.C. S 151.

[36] FCC jurisdiction only extends to interstate telecommunications.

[37] See Dannenberg, supra note 2, at sixteen.

[38] See Zimmerman & Flaherty, supra note one, at 277.

[39] David Carey, THE Bargain PIPELINE, American Securities Buys Global Tel*Link from Veritas, (Oct. 31, 2011), http://www.thedeal.com/content/private-equity/american-securities-buys-global-tellink-from-veritas.php (final visited Sept. x, 2012); American Securities, http://www.american-securities.com (concluding visited Sept. 5, 2012).