III. Costs Associated with Prison Telephone Systems

A. Prison Telephone Technology

States and telecommunications companies justify their rates based on the high costs of technology associated with the “extra security measures phone companies must provide.”45  However, prison telephone systems and the related security measures have become less costly than-and are not considerably different from-other telephone technologies widely used by the general public.46  A comparison of rates offered by different prison systems demonstrates that kickbacks, as opposed to the technological costs associated with the telephone systems themselves, are responsible for exorbitant long-distance rates.  For instance, all federal prisons,47 and some state prisons,48 offer “debit calling options as an alternative to more expensive collect calls.”49

“Until 1984, the fledgling inmate telephone market remained the exclusive purview of AT&T, and rates for operator-assisted collect calling-the only form of service available to inmates-kept pace with those for similar services.”50  It was only after the 1984 break-up of AT&T and the subsequent opening of the market to other providers that companies started putting together service packages specifically designed for prisons.51  MCI and Sprint were on the forefront of this industry, but newcomers like Pay-Tel were able to get a foothold by advertising services that would “best take advantage of pending regulatory changes to enhance revenues and increase our clients' commissions.”52

Initially, the “special security requirements applicable to inmate calls”53 generally involved live operators listening in on telephone conversations.54  Today, technological advances allow prison phone systems to automatically monitor and record all calls without operator assistance; authorities are also able to later analyze conversations using a computer interface.55  In addition, these technologies prevent prisoners from calling phone numbers that have not been pre-approved, thus minimizing opportunities for criminal activity.56  

Recently, technological advances have decreased the costs associated with providing such security systems.  Currently, “[t]he technology and degree of human supervision . . . does not seem appreciably different from the technology that makes caller I.D. feasible, or the technology that makes it possible to block 900-numbers from residential phones.”57  

In today's digital age, computer software and hardware have become more advanced and less expensive with each passing year.58  For instance, many corporations, especially those in service-oriented industries, routinely make digital records of all customer service telephone calls.59  In fact, there is an entire industry, Customer Relation Management (CRM), that delivers services technologically similar to that of a modern prison phone system.60  Such technology appears to be capable of providing all the functions of a prison telephone system at a minimal cost.61  

B. Commissions Drive the Prices More Than Operation Costs

Despite these technological advances,62 prison phone rates have remained high, even increasing in some instances.63  MCI stated that their high rates are based on “the added expense of providing telephone service to prisons,”64 but the evidence belies such an assertion.65  

Large commissions paid back to state governments often contribute to high phone rates.66  For instance, the Federal Bureau of Prisons, which does not accept a commission from phone providers, provides direct-dial, out-of-state debit calls at $0.17 per minute.67  Similarly, the Nebraska Department of Corrections, which also does not accept commissions, provides out-of-state debit calling at $0.16 per minute.68  By contrast, the contract that MCI has with Arkansas prisons sets the interstate long distance rate at $0.89 per minute in addition to a $3.95 connection fee.69  Interestingly, MCI offers the same service to Missouri prisons for only $0.45 per minute, plus a $2.45 surcharge.70  The reason for the disparities is clear:  Missouri's Department of Corrections stopped accepting commissions on prison telephone charges in 1999.71