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Prisoners as Captive Customers

Who knew they could be profit centers. Thanks to action emanating from the white House of Horrors or, as it was formerly more simply known, the White House, there’s good news for phone companies and private prisons.  This week the phone companies.

October 22, 2015, was the date on which the Federal Communications Commission (FCC), proved itself to be the prisoners’ friend. It announced that it was taking a big step to reduce what it called “excessive rates and egregious fees” of up to $14 a minute that were being charged by phone companies providing phone service to inmates in state and federal prisons. In announcing the change, the commission observed that “high inmate call rates have made [phone] contact unaffordable for many families, who often live in poverty.” As Tom Wheeler, the chairman of the FCC, said in a statement accompanying the rule revision,

“[F]ew issues have a more direct and meaningful impact on the lives of millions of Americans than inmate calling reform.  With today’s action we will provide material relief to nearly two million families with loved ones behind bars. . . . Inmate calling reform is not only the right thing to do, it is also good policy.  . . .By adopting tiered rate caps that apply to all interstate and intrastate Integrated Communication Services (ICS) calls, and limiting and capping runaway ancillary service charges, this item addresses unaffordable ICS rates . . . . Today’s actions . . . address a prime example of a market failure.  Where, as here, market forces have not been able to discipline costs to consumers, we must shoulder the responsibility of promoting communications services that do not leave the most vulnerable of our population behind.”

(Whether inmates qualify as “the most vulnerable of our population” others can decide.)  As a result of the FCC’s action, the price for prison calls went down to as low as $.11 a minute.

Phone companies providing prison service were, of course, upset with the ruling since prisoners were, at up to $14 a minute for in state calls, a profit center that the companies hated to lose.  Depriving phone companies of the opportunity to charge exorbitant rates to prisoners was just as bad as if some court had suddenly decided to shorten all the prisoners’ sentences, thus depriving phone companies of their highly desirable prison customers.  Not wanting to sit quietly by as this important source of revenue was taken from them, the companies filed suit in the D.C. Court of Appeals claiming that the FCC lacked the authority to put caps on what they were charging the inmates, and, even if it had the authority, it had abused its authority by setting caps that were too low.  (An intriguing argument in favor of higher rates, was put forth by Mithun Mansinghani, a deputy solicitor general from Oklahoma who got involved in the suit on behalf of Oklahoma.    His argument suggests he must have been one of the top students in his law school class.   He said phone companies should be able to charge higher rates than those that had been set by the FCC, because of the risk they assumed by furnishing phones to prisons.  The prisoners might, he suggested, use the phone to further criminal activity, and should that happen, the phone company might incur liability. The creativity of his theory cannot be overstated.  The possibility that any time a phone is used in furtherance of any criminal activity, whether a ransom demand, or a plan to rob a bank, the bad results flowing from the phone call may be charged to the phone company, is an intriguing one for lawyers and presents the creative lawyer with a whole new arena in which to conduct litigation

In 2017,  a funny thing happened on the way to the phone booth.  Republicans became a majority in, among other places, the FCC.  The Democrats, the authors of the cap when in the majority in the FCC, had left the FCC, and Republicans were then in the majority.  Among their early activities was to roll back the rules that capped the cost of prison phone calls.  The attorneys who had been representing the FCC in upholding the FCC’s 2015 actions, notified the court that they would no longer defend the lower rates that had been set by the democratic majority in 2015.  Since the Court had already set the matter for argument, and declined to postpone the argument, it is not clear as of this writing, where the case is headed.  Where phone rates for prisoners are headed is clear-they are going back up.  The offspring of the white House of Horrors know how to make prisons profit centers.  Phones are one.  Prisons another.  Prisons, however, are a matter for another day.

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