The Cost of Prison Phone Calls

Thousands of men and women each year find themselves as unwilling participants in a very unique financial market, that of the private prison service industry. We live in a hyper-connected world where with only WIFI access you can make a free phone call from Los Angeles to London using WhatsApp, as long as you have WIFI access. Yet, if you a permanent resident of the prison system then a one hour local phone call from the inside can be the same cost as a month of Internet access on the outside.

Just a warning before we get started. This article is a bit dark. It’s not the typical light-hearted comic genius that you would expect from Profit Pants. It however is a very interesting economic market, a “captive” market (pun intended), one that I felt compelled to write about. If you aren’t in the mood for anger and depression then maybe instead you can jump over and read about Spotify Artist Revenue, the 2018 FIFA World Cup or Roblox Gaming. Regular Profit Pants programming to resume for the next article …maybe.

Prison Phone Calls: The Privatisation of Prisons

Growth in the private prison industry took off in the 1980s. The War on Drugs was ramping up and incarceration rates jumped as a result. Prisons suffered from overpopulation and funding issues and suddenly the door was found to be opened for private enterprise to jump in and profit. In 1984 the Shelby County, Tennessee facility was taken over by CoreCivic, who at the time were known as the Corrections Corporation of America. This takeover marked the start of prison privatisation on a mass scale.

In 2017 it was estimated that the private prison industry had 126,000 men and women under their control, creating an estimated $5 billion industry. These are some big numbers that we are talking about. 7-9% of the United States prison population are housed in a privately owned facility.

Whether or not privatisation is the way to go for the justice system is a major ethical debate. In almost any business it is significantly more expensive to acquire a new customer than it is to retain an existing one. This is why I can find domain name deals for $0.99 a year, yet whenever I go to renew my existing domain I am paying ten times that. Translate this to the prison system and as a private operator of a prison isn’t it then in my best interests to ensure that a prisoner either is never released, or has a high chance of becoming a repeat customer? Or am I just being cynical here?

In addition to private prisons you also have many different private prison services. Private corporations are involved in the delivery to inmates of what are arguably essential services. Phone call services are the focus of this article.

Prison Phone Calls: Who Provides The Services

Private Prison Services

There are two Goliaths playing in the private prison trade. Both companies have spent time at the centre of court cases alleging mistreatment of inmates.

• CoreCivic (formerly Corrections Corporation of America): Founded in 1983 in Nashville, Tennessee.Net income in 2011 of $162.5 million on revenue of $1.73 billion. CoreCivic operate solely within the United States and operate 128 facilities, including correctional facilities, detention facilities and treatment facilities as of 2018.

• Geo Group: Founded in 1984 and headquartered in Boca Raton, Florida. Net income in 2011 of $77.5 million on revenue of $1.61 billion. The Geo Group operate facilities in the United States, Australia, South Africa and the United Kingdom. Within the United States the group operated 71 facilities as of 2018 providing 75,365 beds.

Prison Phone Services

There are a number of players offering prison phone services. Some of these include:

• CenturyLink: Founded in 1930 they have operations in 60 countries and are the third largest telecommunications company in the United States, sitting behind AT&T and Verizon. Net income in 2017 of $1.38 billion on revenue of $17.65 billion. CenturyLink’s involvement in the prison industry is just one of their many revenue streams. As of 2015 they served approximately 250,000 prisoners in 37 facilities across the United States.

• Global Tel Link: Sometimes referred to as GTL. Founded in 1980 they are the market leader for inmate phone services, controlling an estimated 50% of the market.

• Securus Technologies: Founded in 1986 and currently with an estimated 1000 employees, Securus provide services to 2,600 prisons and jails. Inmate phone services is their core business. In 2014 it was reported by The Huffington Post that Securus made $114.6 million in profit. Securus hold a market share of approximately 20%. Securus in 2014 bought JPay, a company who provide money transfer, video communication and entertainment services for over a million inmates.

Prison Phone Calls: Cost Per Call

The price that an inmate pays for a phone call varies depending on where they have been incarcerated. More precisely, it is all down to who runs the prison, the company that they have selected to administer their phone system and the contract they have agreed on regarding the contact of the phone calls.

Calls within the same state can be up to $1.50 per minute. That’s the equivalent of $90.00 an hour! It is starting to feel like these are more like hostages being taken for ransom.

The aim of Profit Pants isn’t to over-dramatise things too far though. In 2013 federal regulators began a push to lower the cost of intrastate phone calls for prisoners. In 2015 the Federal Communications Commission were successful in reducing the average rates for intrastate phone calls from $2.96 for 15 minutes down to a maximum of $1.65 for 15 minutes. Caps were also placed on interstate phone calls, seeing rates go from $3.15 for 15 minutes down to a maximum of $1.65 for 15 minutes. News of the phone pricing caps then resulted in the major players in the prison phone call industry taking the ruling to court.

The fight for rate reductions backed down significantly in early 2017, around the same time when Ajit Pai stepped in as the Chairman of the Federal Communications Commission (…yeah, Ajit Pai, the guy who doesn’t believe in net neutrality).

Unfortunately the cost per call isn’t where the fees end, some providers also charge for:

• Creating an account
• Topping up an account: One example stated that Securus Technologies charged $7.95 to top up a pre-paid account. When taking over the Arizona prison contract CenturyLink agreed to drop this additional fee.
• Monthly account maintenance
• Taxes

Prison Phone Calls: Prison Profits & Ethical Dilemmas

It’s not just the phone company profiting though, the prison will in most situations also receive a share of the profits.

The argument from the prison industry is that they require this revenue stream in order to survive. But I guess that this goes back to the ethical debate again about if a prison should be taxpayer funded institution or instead viewed as a profit center.

When a prison acts in the role of a profit making money machine the decisions made can often be driven by money. And hypothetically speaking if one prison phone service were to offer a 50% profit share with the prison and another 75%, how would the decision process work in the minds of the prison administrators?

One article that I came across stated that in Arizona the CenturyLink corporation were sending 93.9% of phone call revenue back to the Arizona Department of Corrections. 93.9%. Wow. Lets assume that this figure is accurate. 93.9% isn’t even trying to hide the fact that inmate phone calls are used in the first instance as a revenue stream rather than viewed as a basic service.

The previous provider to Arizona, Securus, were kicking back 53.7%.

What weighting does a facility give to the quality and affordability of the service? When 93.9% of inmate phone fees are going straight back into the pockets of the facility what behaviours are being incentivised?

Here is a concerning passage from an article by CronkiteNewsOnline.com in relation to the Arizona bid:

“During the bidding process last year for the contract CenturyLink won, the Department of Corrections encouraged phone companies to offer the highest commission possible by assigning 1,500 of the 1,800 available evaluation points based on how high the rate was. The remaining 300 points were assigned based on how well the companies met the department’s technical requirements, how qualified each company was and the companies’ implementation plans.”

A justification provided for the scoring system bias towards pricing is that all the services were more or less the same. If we break down a theoretical $10.00 call (keep in mind that in reality an average 15-min call would be much less than $10.00, but the maths is easier on this number) then the split between the three parties in the arrangement looks a bit like this:

• Call cost to inmate: $10.00
• Revenue to CenturyLink: $0.61
• Revenue to prison: $9.39

So far in this article the prison phone service companies are the ones who have sounded evil. In this costing model example, which uses the split from the Arizona prison system agreement, there are $9.39 in fees that the prison is choosing to pass on to the inmate. This takes us back once again to the debate on how prisons should be funded.

To be fair to the prisons, under Arizona State Legislature these profits must be fed into a Special Services Fund, a fund which is used for inmate services. However, shouldn’t inmate services be something that prisons are already budgeting for when the whole goal of the prison system, in addition to keeping everyone outside of prison safe, is to rehabilitate inmates and return them to the community as productive members of society?

Prison Phone Calls: Who Is Really Paying?

Think about the demographics of the prison population. There is a strong chance that a prisoner will be able to tick one or more of the following boxes:

1. Racial minority
2. Low income
3. Broken family

To be clear, not everyone who ticks these boxes is a criminal by any means. These are two characteristics that can lead to an individual facing more challenges in life. Now think about how an inmate’s income source is effected when they go to prison. They are unlikely to have passive high-yielding investments that will be topping up their coffers during their prison stay. There is a real chance that they are going to be near broke.

Prisoners are in prison for a reason. I get that. Prisoners should be punished for the crimes that they commit. I get that too. Many would say that prisoners should be responsible for paying their own way in prison. I can even understand where that argument is coming from to a certain extent.

But phone calls aren’t only for the benefit of the prisoner. When someone goes to prison the family and friends of the inmate are also being denied access to that person. Phone calls are one way that an an inmate can have a positive influence on those on the outside. Remove, or at the very least restrict, that ability to communicate and family networks break down even further. Broken family networks result in greater chances for an inmate to return to prison and at the same time the risk is increased for those family members and friends on the outside.

In an effort to keep these family networks together many decide to take up the option of making phone calls. These phone calls are likely being paid for by those on the outside. Those on the outside in many cases have lost a breadwinner and therefore may already be struggling financially. The inflated cost of phone calls is punishing the families and friends of those who are incarcerated. And with more financial stress comes the greater possibility of these people on the outside, those who are funding the prison stay, staying in the low income brackets. They are kept in the at-risk category.

Future customers.

Prison Phone Calls: What Are The Goals Of A Prison?

One key goal of any prison in the justice system, as we have mentioned earlier, should be to rehabilitate prisoners before releasing them as productive members of society. When determining any revenue stream it is critical to keep the goal of the business in mind.

Is restricting inmates access to support networks acting towards, or against, achieving this key goal?

Another key goal of the justice system should be to prevent people heading to prison in the first place. Does it make sense to introduce a revenue model that increases financial stress for inmates families and friends on the outside who have not committed any crime?

Introducing money to any debate makes for tough decisions. We aren’t in a perfect world where we can throw unlimited funds at prison services.

Do we point the finger at the private phone service companies for trying to make a profit? Or maybe the greater question is whether or not a federal justice system should even allow an opportunity for these companies to prey on the families and friends of inmates to begin with.

Protect and serve.

It sure is a unique financial market!

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