CenturyLink calls prison phone rate cap proposed by Pay Tel, Alabama PSC "grossly unrealistic"

CenturyLink (NYSE: CTL) said that the proposed framework for inmate calling service (ICS) reform from a Pay Tel Communications consultant and the Alabama Public Service Commission is not feasible.

Written by Don Wood, an economic consultant for Pay Tel Communications and Darrell Baker of the Alabama Public Service Commission, the proposal included recommendations for specific ICS rate caps and ancillary fee restrictions and noted the need for transition time.

CenturyLink wrote in an FCC regulatory filing that while their proposal raises legitimate concerns about ancillary fees and the need for transition--two issues the telco agrees with--the proposal's "suggested caps for prisons are grossly unrealistic."

The telco added, "The Wood Proposal's $.08 per minute rate cap for prisons and the $.02 per minute facility cost recovery for prisons are unrealistic and not based on the record," CenturyLink wrote in its FCC filing. "Leaving aside the very real limits of the FCC's authority, these rate caps would not allow ICS providers or correctional institutions to recover their costs of making ICS available at the great majority of prisons nationwide."

CenturyLink added that the proposal "would ultimately jeopardize ready access to calling services in many prison facilities."

The telco pointed out that Pay Tel based the 8 cents per minute prison rate cap proposal on what it says is a "selective reading" of the Securus Siwek cost study completed well before the release of the FCC's Second Further Notice of Proposed Rulemaking and a sample of the rates charged at eight of the state's prisons served by Securus and Global Tel*Link (GTL) that had eliminated site commissions.

One of the problems CenturyLink has with the Siwek study is that it included a small sample of prisons and did not look at all of the costs of providing ICS in prisons, including capital to install equipment and the cost of debt.

CenturyLink suggested that the commission "should set rate ICS rate caps with sufficient headroom to allow for a reasonable site commission.

"Correctional facilities incur a wide range of legitimate cost to make ICS available, and they should be given the flexibility to determine what commission or administrative fee structure, if any, makes sense given their unique requirements," wrote CenturyLink. "Rate caps with headroom for a reasonable site commission will give correctional facilities the flexibility they need, while ensuring that inmates have ready access to ICS and that their families receive reasonable rates."

Prison calling rates have been coming to a head once again in Alabama following the state PSC's ruling and the new rate changes went into effect on July 1, 2015. These rate changes apply to all ICS providers in the state except to fellow prison calling provider GTL and another competitor who were granted stays pending the outcome of lawsuits that challenge the validity of the PSC's ruling.

The FCC has been taking more of an active role in prison calling reform over the past two years. In September 2013, the FCC worked to reduce voice call rates for prison inmates via a declaratory ruling made by the regulator's Wireline Competition Bureau that prevents inmate calling service providers from blocking lower-cost call routing services.

For more:
- see this FCC filing (.pdf)

Related articles:
GTL unveils new inmate calling rates, fees in Alabama
FCC ruling sets pace for low-cost inmate call routing rates
FCC approves order to reduce prisoners' long-distance calling rates
Curbing prison payphone costs: FCC's Clyburn sounds off on new petition

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