A Prison Phone Giant’s Ploy to Further Exploit Inmates

Securus Technologies’s attempt to merge with a competitor would let a company known for price-gouging inmates become larger and even more powerful.

When Lawrence Bartley was incarcerated, phone calls back home came at a shocking sticker price. Over the course of his 27-year sentence, his wife would sometimes pay as much as $400 a month to speak with him.

The market for prison phone services is captive in both an economic and literal sense—inmates who want to stay in touch with the outside world are forced to use whatever phone service provider their prison has a contract with. So, these companies can get away with charging inmates and their families—who are disproportionately low-income—as much as $14 per minute.

That rate may soon increase if the FCC allows Securus Technologies, one of the largest companies in the industry, to buy a smaller competitor. If the merger is approved, Securus and another corporation, GTL, will control around 80 percent of the market, according to calculations by the Prison Policy Initiative. In that event, Securus—which has a reputation for price-gouging inmates—would become larger and even more powerful.

The exorbitant rates paid by Bartley and others are partially explained by the whacked-out incentives built into the market. Inmates, or more often their families, are the ones who pay for the calls, but statewide prison systems choose the provider and negotiate the rates. Prisons and jails have an incentive to keep rates high because the companies give them kickbacks. “Securus might say ‘if you give us the contract, we will give you 80 percent back on the phone call,’” said Aleks Kajstura, the Prison Policy Initiative’s legal director.

If the FCC allows the merger to proceed, prisons and jails will have essentially just two options for phone service providers. For prisons and jails that do want to lower costs for families—and there are some, like New York City, which just passed legislation to make all inmate calls free—the near-duopoly would make it more difficult to negotiate contracts with reasonable rates.

It’s not just the cost-per-minute of phone calls that families like Bartley’s have to worry about—Securus and its competitors often charge steep fees every step along the way, from setting up accounts to depositing money. One such example is the “stamps” that Securus requires inmates to buy in order to send emails. “They actually charge for [email] stamps based on how many characters you send, as if the thing weighed more,” said Bianca Tylek of the Corrections Accountability Project. Tacking on fees is one way for the phone service companies to recoup some of the revenue they lose from giving a large cut of the money they earn on phone calls back to the prison.

Expensive phone calls for inmates can have ripple effects. Since in-person visits are onerous—most inmates are housed more than 100 miles away from their families—phone calls are an important way for incarcerated people to maintain their relationships. A 2014 study of 225 incarcerated women found that those who spoke on the phone with their family were far less likely to be back in prison five years after their release.

Prison advocacy groups are eagerly awaiting the FCC’s decision about the merger, but there’s good reason to believe that the agency will let the industry become even more consolidated. That’s because Ajit Pai, Trump’s pick to head the FCC, has gone easy on Securus and other inmate phone service companies. A week after Pai assumed his position as chairman in May 2017, he reversed a decision from 2015 that capped inmate calls at 11 cents per minute and barred companies from charging most add-on fees. Mignon Clyburn, an FCC commissioner at the time, called that decision “the greatest form of regulatory injustice I have seen in my 18 years as a regulator in the communications space.” And to make matters worse, before joining the FCC, Pai represented Securus as a partner at the law firm Jenner & Block. He has repeatedly refused calls to recuse himself from matters involving his old client.

Securus seems poised to become even more powerful—despite the fact that it has a history of flouting FCC regulations. Last year, the FCC slapped Securus with a $1.7 million fine for misleading the agency. And the company has also landed in hot water for providing corrections officers with access to location data for almost every cell phone in the United States. Cracking down on this type of behavior will only become harder if the merger is approved and the company grows in size.

Securus’s habit of gobbling up its competitors means the company can profit off of inmates long after they finish their sentence and are no longer shelling out money for phone calls. Bartley has to pay a monthly fee to the state of New York as part of his parole, and for every payment he makes, a processing company named JPay charges him an additional fee of $1.99. Guess who owns JPay? Securus.

Support the Washington Monthly and get a FREE subscription

Grace Gedye

Grace Gedye is an editor at the Washington Monthly.