making plans to fight an FCC vote last month that will slash
long-distance rates for inmates.
After a decade of delay, the FCC voted 2-1 in August to set maximum
rates for collect and prison debit card calls. The new maximum rate
for a collect call will be 25 cents a minute — still far above the
average for a traditional landline, but a serious reduction.
In an interview with The Huffington Post, the CEO of the
second-largest company in the $1.2 billion a year industry said he
will go to court to stop the still-unreleased rules if they are issued
as described in an FCC press release. He also lashed out at the
“What we’ve built for the corrections industry is very secure and it
helps solve tens of thousands of crimes a year, and it helps save
thousands of lives a year,” claimed Richard Smith of Securus
Technologies, pointing to technology his company uses to detect
prisoners ordering hits over the phone. “All of that good work gets
undone when you paint us as bad guys who are making lots and lots of
money, and we’re just raping the friends and families of inmates.”
“It’s almost like throwing firemen and policemen under the bus; it
just isn’t fair,” Smith added.
The value of Securus debt dropped about two percent in the weeks after
the FCC’s decision, suggesting the market foresees a modest but
noticeable impact on the company’s bottom line. The FCC’s ruling will
not impact local calls, which make up the bulk of the market.
After a decade-long period of consolidation and mergers in the
industry, Securus and another company, Global-Tel-Link, control 80
percent of the prison phone call market. Their success has rewarded
private equity firms handsomely, including Veritas Capital and an
investment arm of Goldman Sachs, which jointly saw a reported
three-year, 325 percent gain when they sold Global-Tel-Link in 2011.
Securus itself was recently sold to private equity firm Abry Partners
in a reported $640 million deal. Neither Abry nor Global-Tel-Link’s
owner, American Securities, responded to requests for comment.
The industry’s profits have been made, critics charge, on the backs of
poor, mostly black and Latino inmates. Prison reform advocates have
quoted rates as high as $17 for a single 15-minute phone call.
“It’s been times when she did have to choose over paying for her
medication to talk to me, that really does happen,” Ulandis Forte, a
man convicted of murder whose grandmother was the lead plaintiff in a
lawsuit over the sky-high phone fees, said earlier this year. “I don’t
blame anybody for putting me in the position I was in, wholeheartedly
I accept my responsibility, but in doing so it was so unjust at the
pain my grandmother had to go through.”
Studies have found a link between prisoners’ contact with families
back home and lower recidivism rates.
The FCC said prison phone companies’ rates were “exorbitant,” an
assertion supported by an analysis conducted for reform advocates. The
rates are kept high by commissions — critics charge they are
essentially kickbacks — that the phone service providers pay to
prisons as part of their contracts. Prisons then use those commissions
to avoid asking their states for more tax revenues.
But Smith claimed that prison advocates and Democrats at the FCC were
“embellish(ing)” the profitability of his business, and dismissed
personal stories like Forte’s. He also suggested prisoners’ families
should easily be able to pay what he charges, which according to his
company’s calculations averages out to $34 per inmate per month.
“We see lots and lots of people (visiting) jail who have one cellular,
two cellulars, drive very nice cars,” Smith said. “I’ve been in the
booking areas, I’ve seen lots and lots of visitors in the waiting
areas, and every single person has at least one cellular.”
In the wake of the FCC’s decision, Securus raised the fee it charges
families to deposit money onto prisoners’ phone debit cards over the
phone from $7.95 to $9.95, according to the Prison Policy Initiative,
which pushed for the FCC rule change.
“I can’t think of a business that I use regularly that charges me a
fee to take my money,” wrote Peter Wagner, the executive director of
the non-profit group. “Generally, companies absorb those costs because
they want my business. Because this industry has its customers locked
in (pun intended), they don’t have to worry as much about
Smith said that the costly commissions keeping prison phone call
prices high are already written into his contracts with prisons,
meaning the FCC’s caps will cut into the revenues he expected to earn.
A FCC spokesman said the commission still has yet to publish the new
regulations in the Federal Register. Once they are published, the
rules will kick in after 90 days.
“Clearly we will file a lawsuit,” if the new top rates don’t take into
account commissions, Smith said. If the new rates remain, he predicted
higher local call fees and lower commissions for prisons.
“It isn’t an altruistic business. It’s a business for profit, and
commission is, for the last 20 years it’s been the vehicle that
prisons and jails have asked for so we can pay them part of revenue
for every call back to them,” Smith said. “That’s just the business