The Federal Communications Commission is moving to end price-gouging by private companies that provide telephone service in correctional facilities across the country, handing a rare victory to people who have been advocating for “prison phone justice” since the early 2000s.

But that won’t stop states like Hawaii from profiting from the calls its inmates make.

When new FCC regulations kick in next year, the costs of prison phone calls in many states are expected to be slashed by more than half, allowing inmates and their families to stay in touch without going broke.

“For far too long, prison phone companies have enjoyed monopolies that allowed them to charge outrageous fees … with virtually no regulation. Those days are finally coming to an end,” Paul Wright, executive director of the Human Rights Defense Center, said in October.

“We should look at ways to lower rates for the inmates and their families. It appears the state is taking advantage of a one-of-a-kind customer base.” — State Sen. Will Espero

But the FCC action doesn’t stop the “site commissions,” which phone companies pay to the operators of correctional facilities in exchange for exclusive contracts.

The FCC found that those payments were a “significant driver of increases to rates charged to inmates,” because the contracts are typically awarded to phone companies that promise the highest commission payment, with little regard for the corresponding rate increase.

Still, the FCC stopped short of banning the payments, saying only that it “strongly encourages parties to move away from site commissions.”

In Hawaii, the state’s prison phone system is run by Hawaiian Telcom, which turns over about 15 percent of its revenues from inmate calls to the Hawaii Department of Public Safety.

During a five-year period starting in February 2010, Hawaiian Telcom made commission payments of nearly $500,000 to the Department of Public Safety, according to records obtained by Civil Beat through a public records request.

Hawaiian Telcom officials say the arrangement hasn’t artificially inflated rates for inmates: The company offers them the same rates and fee structure that it does to any collect-call customers.

WCC Windward Correctional/Prison during tour. 17 dec 2015. photograph Cory Lum/Civil Beat

A telephone at the Women’s Community Correctional Center in Kailua.

Cory Lum/Civil Beat

But critics say the state should be negotiating for special rates for inmates, given that they are a significant customer base for Hawaiian Telcom — and they have no other legal way of conversing by phone with the outside world.

“I don’t see why the Department of Public Safety can’t just call up Hawaiian Telcom and say, ‘Hey, we’re a big customer. Could you stop sending us those 15 percent commission payments and lower the rates by 15 percent?'” said Peter Wagner, executive director of the Prison Policy Initiative, a Massachusetts nonprofit organization. “That’s something that should be very easy.”

Nolan Espinda, the director of public safety, says the commission payments fund the Hawaii Statewide Automated Victim Information and Notification system, which allows victims and others to be notified confidentially when the custody and parole status of offenders changes.

“We are solidly behind the concept of supporting SAVIN under the current arrangement,” Espinda said.

Still, Espinda said his department “will look further into the possibilities associated with renegotiating a mutually beneficial arrangement to the users and victims alike.”

Significant Price Cuts Are Coming

Inmates in Hawaii’s prisons and jails have two ways to make calls: collect or prepaid.

For in-state calls, the same rates apply to either method: Local calls can be made at a $1.95 flat rate, while calls to neighbor islands start at $1.45, with each minute adding another 9 cents to 14 cents.

For out-of-state calls, the per-minute rates differ slightly for collect and prepaid calls: 24 cents and 20 cents, respectively.

In five years, more than 1.6 million calls were made by inmates, resulting in gross revenue of more than $3.3 million for Hawaiian Telcom.

Hawaiian Telcom charges an additional fee of $7.95 to $9.75 every time inmates reload their payment account — though they can avoid the fee by paying by wire transfer, check or money order.

In five years, more than 1.6 million calls were made by inmates, resulting in gross revenue of more than $3.3 million for Hawaiian Telcom, the records show.

That means inmates and their families paid an average of $2.04 for each call, before any fee was applied.

Correction: An earlier version of this story indicated that in five years more than 135,000 calls were made by inmates, at an average cost per call (with fees included) of $24.44.

But the FCC’s new regulations will significantly cut the cost. The maximum rate of local and long-distance calls from prison will be capped at 11 cents a minute, meaning that a 15-minute call will cost no more than $1.65. In jails, the rate will range from 14 cents to 22 cents a minute, depending on the number of people in the facility.

The FCC also voted to dial back the reloading fees, capping them at $5.95.

In Hawaii, the cost of a 15-minute call, which can now be as much as $13.35, including the fees, will be reduced by up to 43 percent.

Lobbying For The Status Quo

The FCC’s new regulations faced stiff opposition from the three dominant companies in the prison phone business — Global Tel*Link, Securus Technologies and Telmate.

Before the FCC’s vote, the companies offered a nine-page alternative proposal spelling out what they thought fair regulations should look like.

The proposal offered moderate rate reductions — to 24 cents a minute for collect calls and 20 cents for debit and prepaid calls — while encouraging the FCC to eliminate the commissions paid to states.

The National Sheriffs’ Association said if the commissions were eliminated, some jails would have to stop offering phone service.

The companies argued that steep rate cuts would “have a devastating effect” on their operations “unless the existing site commission system is addressed” by the FCC.

Wagner sees an irony. “Big companies have been talking from both sides of their mouth on this. They have used the promise of high commissions to distinguish themselves to get contracts, but they now want the federal government to protect them from the facilities that demand the commissions.”

More than 250 sheriffs across the country petitioned the FCC to preserve the commissions, arguing that the money is needed to offset the cost of providing the phone services and other amenities.

The National Sheriffs’ Association even said that, if the commissions were eliminated, some jails would have to stop offering phone service — which the association said is “discretionary” — to inmates.

In the end, the FCC voted not to wade into the commission issue, except to discourage them.

The American Jail Association was delighted. In an “alert” sent out to its 4,000 members, the association said the FCC had made a “180 degree reversal” from its original stance on the commissions.

“We believe the FCC now better understands the need for facilities to recoup some costs,” it wrote.

Issue Headed To Hawaii Legislature

At least 10 states already have eliminated the payments.

In New York, the Department of Corrections and Community Supervision collected a 57.5 percent commission on each inmate call — a windfall of about $20 million a year — until it banned the practice in 2007.

The resulting price reduction led to a decrease in illicit cellphone use. In 2012, the department confiscated fewer than 100 cellphones — a far cry from more than 10,000 seizures that typically occur in a similar-sized correctional system.

In Hawaii, state Sen. Will Espero, vice chair of the Senate Public Safety Committee, is looking into sponsoring legislation to ban the payments.

“Keeping inmates connected to people on the outside is part of a recidivism strategy.” — Kat Brady, Community Alliance on Prisons

“My feeling is should we be profiting from inmates who need or want to communicate with their loved ones?” Espero said. “We should look at ways to lower rates for the inmates and their families. It appears the state is taking advantage of a one-of-a-kind customer base.”

Hawaiian Telcom says it remains open to a discussion about amending its contract with the state.

“If approached by (the Department of Public Safety), Hawaiian Telcom will be available for negotiations within the State of Hawaii procurement guidelines,” spokeswoman Ann Nishida Fry said.

Kat Brady, coordinator of the Community Alliance on Prisons, a nonprofit pushing for criminal justice reform in Hawaii, says she supports such a move. The lower rates, she says, will encourage communication between inmates and their families, one of the keys to reducing recidivism.

“Keeping inmates connected to people on the outside is part of a recidivism strategy. We don’t want people to go back to prison, so it’s important that they maintain those outside connections,” Brady said.

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