Prison Phone Services

Telephone communications are vital for people in prison, crucial to their survival and well-being inside prison, and to maintaining family and community connections that will help them adjust when released. Studies have shown that family contact reduces the rate at which people commit new crimes and return to prison. Exorbitant phone rates prevent people from connecting with their families, and undermine imprisoned parents’ relationships with their children.

The main companies involved in this sector are:
CoreCivic, Inc., of Nashville, TN (NYSE: CXW)
CenturyLink Public Communication, Inc., of Monroe, LA (NYSE: CTL)
Global Tel*Link Corporation, of Mobile, AL (Private)
Securus Technologies, Inc., of Dallas, TX (Private)
ICSolutions Advanced Technology, Keefe Group inc., of San Antonio, TX (Private)  
Telmate LLC., of Ontario, OR (Private)
Pay-Tel Communications Inc., of Greensboro, NC (Private)
NCIC Inmate Phone Services, of Longview, TX (Private)

Companies providing prison telephone service enjoy a state-sponsored monopoly, since prisoners can’t choose which phone service they want to use. Once a contract is awarded, the cost of phone calls is set by the telephone companies, without any competition. In all but eight states, contracts include “commissions” paid to jails and prisons – direct payments to the contracting agencies, added on top of the price of the phone call and paid by the prisoners.

The Campaign for Prison Phone Justice and the Human Rights Defense Center estimates that these commissions average 48% and can be as high as 96% of the cost of a prisoner’s phone call. These payments grossly inflate the cost of calls. According to the Federal Communications Commission (FCC), $460 million in commissions was paid to jails and prisons in 2013 -- money paid by prisoners and their families. Prison phone contracts also include money for staff monitoring and recording of prisoners’ phone calls. Missouri, for example, requires its phone service provider to cover the cost of 21 staff positions for this purpose. Contracts are awarded based on which company provides the biggest commission to the state Department of Corrections, not the lowest price per call for the prisoners.

As a result, prisoners pay the highest phone rates in the nation, though charges vary widely between state contracts. In 2012, a fifteen minute long-distance phone call from Global Tel*Link cost $2.36 in Massachusetts, but that same call cost more than $17 in Georgia, where Global Tel*Link paid a higher commission per call.

In 2000, a group of plaintiffs representing prisoners and their families brought a class action lawsuit against CoreCivic, Inc., Evercom Inc., MCI-Worldcom, Pioneer Telephone Corporation, AT&T, and Global Telecommunications Link, Inc. The suit charged that prison phone agreements violated federal anti-trust law. The district court referred the case to the Federal Communications Commission (FCC). An FCC mediation process was not successful, and in 2003 a petition for rulemaking was filed seeking the restructuring of long distance prisoner calling services to introduce competition.

In March of 2007, an alternative petition was filed requesting that the FCC established caps on all interstate calling rates. A national Campaign for Prison Phone Justice was formed with over 55 supporting organizations and thousands of individual members. Tens of thousands of prisoners and their families submitted comments and signed petitions to support reducing phone rates.

The FCC voted in August 2013 to cap the cost of interstate (long distance) prison and jail phone calls at $.25/minute for collect calls and $.21/minute for debit and prepaid calls. The FCC also prohibited the cost of commissions from being passed on to consumers. However, that order, which went into effect on February 11, 2014, did not extend to in-state or local calls – which comprise an estimated 85% of calls from prisons and jails. The order also required that rates be cost-based, meaning that the costs of commissions cannot be recovered through interstate phone rates. Global Tel*Link, TelMate and Securus have filed legal challenges to the FCC’s order, which are currently pending.

In October of 2015, the FCC passed new rules regarding the cost of in-state calls, which they said can run as high as $14 a minute. The FCC's decision eliminates or limits fees commonly tacked on by providers. It also caps the maximum cost of a 15-minute in-state or local call at $1.65 and lowers the per-minute rate. The new rules affect inmates in federal and state prisons, including immigrant detention centers. They also apply to local jails, though rates are higher in smaller facilities.

Inside the prison phone service industry, five corporations have emerged to dominate the market. Global Tel*Link (GTL), the largest, has contracts for 31 state correctional departments, serving approximately 2400 jails and prisons, including the federal Bureau of Prisons. The other four are Securus Technologies, Telmate, ICSolutions, and CenturyLink. Together with GTL, these companies provide phone services for 49 of the 50 state’s Departments of Correction. A number of other companies, such as Pay-Tel, NCIC, Legacy, and EagleTel provide phone services primarily to jails.

The largest prison phone service provider, Global Tel*Link, was purchased by American Securities, LLC in October 2011, for about $1 billion. American Securities is a private equity firm that owns 18 other companies. GTL operates several subsidiary phone service companies: Value Added Communications, Public Communications Services, Conversant Technologies, 3V Technologies, and DSI-ITI.

Securus Technologies was formed in a merger of T-Netix and Evercom Systems in 2004. It was acquired in 2011 for $440-450 million by Castle Harlan, Inc., a private equity firm based in New York. In 2013, Securus was bought by another big investment company, Abry Partners, which paid a reported $640 million for the company. Securus currently provides services to about one million incarcerated people, in more than 2,600 private, local, county and state correctional facilities in the United States and Canada. Securus made $114.6 million in profit on $404.6 million in revenue in 2014. In July of 2015, Securus acquired competitor JPay, described as “the market leading technology company that introduced electronic payments, email and a host of entertainment and educational related apps to the corrections space, and currently operates in over 33 state prison systems.” JPay aims to be the “Apple of the U.S. Prison System,” offering an array of digital services to inmates, including video visitation, money transfers, and multimedia tablets that inmates can use to listen to music or read books.  The company also offers a telecommunications system that allows inmates to send and receive emails (including “videograms”) from their tablets or from kiosks within corrections facilities.

CenturyLink is the only publicly-traded major prison phone company in this sector. It provides prison phone services to a number of jails and 5 state prison systems through CenturyLink Correctional Markets and conducts business through its wholly-owned subsidiary Embarq Payphone Services, Inc.

ICSolutions was acquired in January 2011 by Centric Group, as an affiliate of the Keefe Group. Keefe Group provides prison commissary services, video visitation, and other services to prisons and jails.

 

Among the companies listed here, we recommend these 1 for divestment.