Trump's FCC pick voted to let prison phone companies price-gouge families

President Donald Trump’s appointment of Ajit Pai to become America’s next telecommunications chief has set off alarms due to his opposition to net neutrality and other regulations. But consumer advocates and Silicon Valley entrepreneurs aren’t the only ones worried about the incoming Republican FCC chairman.

So, too, are the families of the 2.2 million men and women imprisoned in the U.S.

As chief of the Federal Communications Commission, Pai will oversee regulation of the prison phone business, a sprawling, $1.2 billion industry dominated by a handful of private for-profit companies, including Global Tel* Link and Securus Technologies.

Critics of the industry have long contended that the companies, which operate as monopolies within jails and prisons, price-gouge their captive customers. In some places, the FCC has noted, a one-minute phone call from jail can cost as much as $14. According to the Prison Policy Initiative, jail inmates have a median income of about $15,000 prior to their incarceration, and the impossibility of paying sky-high phone rates often results in being disconnected from family and friends.

In October 2015, under the leadership of outgoing FCC Chair Tom Wheeler, the commission voted 3-2 to implement so-called “rate caps”; Pai was one of the two FCC commissioners who voted against the measure.

“The Commission’s decision today is well-intentioned, and I commend the efforts of those working to reduce the rates for inmate calling services,” Pai wrote in his dissent. “Unfortunately, I cannot support these particular regulations because I believe that they are unlawful.”

The implemented measure was set to force companies to lower their prices. While inmate advocates rejoiced, GTL and Securus sued, convincing the D.C. Court of Appeals to halt the rate caps on in-state calls until the case could go to trial.

On Feb. 6, lawyers will present oral arguments in the case. The central question will be whether the FCC has the authority to regulate in-state rates in addition to interstate rates.

In the months leading up to the trial, companies like GTL and Securus have jacked up prices, meaning that the FCC’s attempts to regulate the rates led — directly or indirectly — to higher rates in many places. (“It’s salt in the wound,” one inmate’s mother, who lives on a $900 monthly disability check, told me last summer after she saw her rates go up in June 2016.)

Lee Petro, an attorney who has worked pro bono for the last several years on behalf of inmates and their families, submitted filings to the FCC in mid-January showing just how expensive in-state jail calls have become. In the Roscommon County Jail in Michigan, for instance, a 15-minute phone call to someone living just a few miles away costs $22.56, as charged by Securus Technologies. San Antonio, Texas-based ICSolutions charges $17.77 for a 15-minute local call from the Douglas County jail in Oregon.

“It really is nuts,” Petro said. “The only reason they would do that is to extract as much revenue as they can before the FCC or the court rules. There’s no reason why some of these large counties in Michigan should be $18 or $22 for a 15-minute phone call. The companies are doing it because they can.”

The Feb. 6 hearing puts Pai, formerly one of the FCC commissioners, in an awkward spot. He voted against the 2015 FCC regulations, meaning lawyers from his agency are headed to court to argue in favor of a policy with which he fundamentally disagrees. Peter Wagner, the executive director of the Prison Policy Initiative, says it’s unlikely that Pai will interfere with the court’s decision at this point, but it’s also unclear if he will decide to make any last-minute moves that might affect the case.

An email to Pai’s office was not returned.

“I think both the families and the companies are very anxious,” Wagner said. “The families need fairness, and the companies also need some predictability.”

The companies are not the only ones who cash in from inmates and their families. Police profit as well — prison phone companies offer sheriff’s departments around the country a cut of the phone revenue. These so-called “commissions,” which the Campaign for Prison Phone Justice has called “kickbacks” that have led to “gross profiteering,” are very lucrative for law enforcement agencies. Securus boasts in marketing materials that it has handed out $1.3 billion to sheriffs departments over the last decade.

The FCC has documented how commission payments made to correctional facilities drive up rates up for families, but when it was suggested in 2015 that the FCC might regulate their use, the National Sheriffs Association threatened to remove phones from prisons and jails altogether.

It’s unlikely that Pai will address commissions in the first few weeks of his tenure, but he is certainly widely admired among conservatives for his deregulatory stance on many issues, especially net neutrality. In general, he has pledged to roll back what he considers onerous regulations on U.S. businesses. “We need to fire up the weed-whacker and remove those rules that are holding back investment, innovation, and job creation,” Pai said in a December 2016 speech.

Inmate advocates and families now wonder whether Pai will take a “weed-whacker” to any of the regulations put forward for the inmate calling industry.

“This is a big unknown,” Wagner said. “[Pai] voted against some of the key regulations and clearly didn’t like them, but early on, he was unbelievably clear that there was a need for something to be done.”