FAIRBANKS -- In the jailhouse phone business, the usual practice in the United States has been for the company that provides telephones behind bars to pay a "commission" to the government agency that allows it to serve a captive customer base.
In Alaska and 41 other states, the Prison Policy Initiative says, the system has allowed what it calls "kickbacks," with phone companies charging excessive rates to prisoners' families and quietly paying some of the proceeds back to the entities that own the jails. This makes the governments partners in preserving phone monopolies, the group charged.
Securus, the Texas-based contractor that provides prison phones in Alaska, has long had a contract to pay commissions to the state but in February the Federal Communications Commission agreed with critics and banned the practice nationwide on interstate calls.
Now the company says if it is going to keep operating in Alaska, it will have to replace the lost revenue by charging prisoners for local phone calls.
'Exorbitant' phone charges criticized
A 2011 survey by Prison Legal News found that Securus charged $6.45 for a collect interstate call in Texas, $7.50 in Maryland and $17.30 in Alaska.
"Such disparities further demonstrate the arbitrary nature of prison phone rates among the states, even when provided by the same company," Prison Legal News said.
In its ruling in February, the FCC denounced what it called "exorbitant rates," such as those charged in Alaska. Testimony submitted to the agency quoted a 2007 request for proposals from Alaska that said the company that offered the highest commission payments to the state would get the most points in scoring the contract.
Next, the FCC is expected to eliminate or reduce commissions on intrastate calls, according to Securus, which provides phone services to institutions housing 1 million prisoners in the U.S. and Canada.
In Alaska, under a 2008 sliding scale contract that has been extended, the commission for the Alaska jail system could have been as high as 32 percent but only upon phone revenues of more than $6.4 million.
The Alaska Department of Corrections said that after the FCC reduced rates on interstate calls, revenues to its phone contractor dropped below the $1 million threshold at which a 7 percent commission had been paid back to Alaska.
Securus said it has paid $1.3 billion in commissions over the past decade to local and state governments across the country. It defends the practice and says the funds help pay the operating costs of prisons and jails. Opponents say the fees are far higher than market rates and that the system penalizes the families of prisoners and enriches the phone companies.
As to the future finances of prison phones in Alaska, a lot will depend on the Regulatory Commission of Alaska.
Securus wants to start charging $1 per call for local phone calls, which are now free. The reduction of more than 70 percent in the cost of interstate calls has eliminated funds that Securus said it used to subsidize local calls.
"The drastic reduction in interstate rates has resulted in a very large decrease in Securus's revenue making it impossible for Securus to support its Alaska intrastate operation with interstate revenue," the company said.
Alaska state regulations say "a private pay telephone service provider may not charge more than 25 cents for each local call," but Securus said without a change it won't be feasible to continue jail phone service after the state contract expires in 2015.
The Alaska chapter of the American Civil Liberties Union has challenged the Securus attempt to institute a $1 flat fee, saying it should be more in line with the FCC guidelines of 7 cents a minute. It said that indigent prisoners should be allowed 20 free phone calls a week.
The ACLU also said that Securus did not note in its RCA application that its reduction in revenue came about because of the FCC crackdown on excessive charges.
Connecting with inmates
Inmates at 14 sites in Alaska connect on about 3.8 million calls a year, though 10 million more calls are attempted and fail because no one answers. Of the successful calls, only 222,000 are billable long distance calls, Securus said.
Alaska is the only one of 46 states in which it operates where local calls are free from jail. The contractor first proposed charges for local calls in 2008 but the attempt to institute a $2 fee prompted backlash and it was withdrawn.
In other states, the charge for local calls ranges from 50 cents to $3.55, Securus said in its November filing with the RCA.
It said that if it is allowed to charge for local calls, it will spend $250,000 to upgrade its equipment, which is similar to statements it made in 2008 when it sought the $2 fee.
The company also seeks waiver of a state regulation that allows users of pay phones to call 911 free, because people in jail do not need 911 service.
The firm submitted a cost study with its application but asked that it remain secret because "the inmate telephone business is highly competitive," Securus said.
The company says the cost study "more than adequately" justifies the company request to charge $1 per call.