United States Court of Appeals Stays Decision on Lower Intrastate Incarcerated Individual Calling Rates – Existing Rates Remain in Effect

Federal Communications Commission (FCC) Plan to Set Rates Below Carriers’ Cost Is Halted – Rule of Law Prevails. Prisons and Jails Benefit and Retain Commissions But Class Action Lawsuits Continue

DALLAS, TX March 9, 2016/PRNewswire/ — Securus Technologies, a leading provider of civil and criminal justice technology solutions for public safety, investigation, corrections and monitoring, announced its support for the court’s decision to grant a stay on the pending FCC Intrastate Rate Order. As a result of the Intrastate Rate Order [WC Docket No. 12-375; FCC 13-113] that was approved in a 3-2 vote by the FCC on October 22, 2015, the FCC was set to impose rate caps and eliminate and reduce fees charged to consumers of Incarcerated Individual telephone service. “While the intent of the FCC order was admirable, the federal government ignored the data on record and failed to compromise on key issues,” said Richard A. (“Rick”) Smith, CEO of Securus Technologies. The Order imposed a ceiling on calling rates to $0.136 per minute (on average) for Securus Agencies. This was well below the submitted Cost Study of $0.178 per minute (on average). In addition, the Order eliminates per-call surcharges, including eliminating and dramatically reducing many account-based fees. “The FCC disregarded our Cost Study and set rates below our cost of providing that service including the commissions that we pay to facilities, and that just won’t work,” said Smith. “In addition, in setting the rate caps, the FCC made no distinction in the levels of service or technology provided for that rate. That creates a negative incentive to provide good, but sometimes more costly service because of increased security features – which is wrong on many levels.” Smith said. “The FCC order made the US Court of Appeals decision very easy – the FCC set rates below costs and they deliberately disregarded our largest cost of service component and that is the commissions that we pay contractually to our prison and jail customers,” said Smith. “The FCC has continually challenged commission payments – and we rigorously defended them as a legitimate cost of service. They wanted to pit us against our facility customers and were unsuccessful – the Court granted the Stay on rates, but allowed some fees to be eliminated or reduced. That is still a problem for us and it is the subject of a formal appeal to the US Court of Appeals.” A bullet point summary of the Stay by the US Court of Appeals is included below:

1. Intrastate rate caps are stayed;
2. A “loss” for the FCC as this was the main issue in their Order;
3. A win for facilities as intrastate commissions are retained;
4. Interstate rate caps are retained without commissions (business as usual);
5. Single call services (Text to Connect and Pay Now) are retained;
6. Funding fees and ancillary charges are not stayed, and lower fees go into effect in March and June of 2016;
7. Implementation dates of March 17^th for prisons and June 20^th for jails remain;
8. Mandatory fees are allowed;
9. Commissioner Ajit Pai (R) issued a release with these comments:
   • No surprise that Court stayed the FCC decision;
   • FCC should have learned its lesson;
   • Regulations were fatally flawed;
   • FCC ridiculed rule of law in favor of political expedience;
   • FCC was untethered to the rule of law;
10. US Court of Appeals signaled by granting the Stay that they believe rates were a problem, i.e., FCC likely set those rates below costs submitted by the carriers INCLUDING commissions;

“It is clear that commissions that we pay to our facilities are a target of the FCC, class action attorneys, and Incarcerated Individual advocacy groups. We have defended the commissions that we pay for the last fifteen (15) years before the FCC and other groups – but those payments are under attack and all of the parties involved will have to determine what appropriate levels are going to be in the future. Mandatory fees that the states, counties, and local governmental agencies approve, may be part of that solution,” said Smith.