USA: a mega-merger in the prison phone industry is in the FCC's hands

Securus has had more than its share of negative headlines. In the past few years, the company, which provides technology services to prisons and jails, has been slammed by inmates’ families who say they’re charged outrageous prices to phone loved ones. The controversy has extended into video call and email services, two other places the company has staked a claim. In October, the company was hit with a $1.7 million fine for allegedly misleading the FCC during a regulatory maneuver. By May, attention shifted to another scandal, as the company took heat for enabling warrantless cellphone tracking around the country.

It’s against that backdrop that Securus is now moving ahead with a merger that could further consolidate a market already criticized as woefully consolidated. The company, which already claims to service more than 1.2 million inmates in North America, has announced its intention to acquire ICSolutions, a smaller competitor in the industry. While exact market figures are difficult to come by, and Securus has pointed to a handful of smaller businesses that offer similar services, inmate advocates argue that the merger will allow two companies to effectively dominate the market. The only thing standing in the way is the FCC.

The merger requires approval from the agency, and the battle has been playing out in dueling regulatory filings. The Prison Policy Initiative, a nonprofit organization that has fought against onerous prison phone prices for years, has argued that scandal-plagued Securus lacks the requisite “character” requirements for approval, and should be blocked on those grounds.

Among other issues, legal director Aleks Kajstura says, the company has been accused by advocates and FCC commissioners of changing the name of a fee to skirt a ban by the agency, and by the FCC of lying to the agency itself. “I feel like that’s a pretty low bar to cross that Securus has failed at,” Kajstura says. (A Securus spokesperson said the company “does not believe it committed any wrongdoing” and entered into the FCC agreement to “expedite” the approval without admitting liability.)

The organization has said consolidation could mean more than 70 or 80 percent of calling services will be operated by two companies, Securus and GTL, the latter of which has already grown by acquiring competitors. With that much market share, they argue, the companies will be able to further tighten their hold on the industry as facilities and customers are forced to agree to whatever costs and terms the companies might demand.

Securus has strongly contested the figures, and in filings, it questioned the organizations’ methodologies, which rely on sparse publicly available records. But Securus, the Prison Policy Initiative points out, has not released its own figures. “They didn’t really put out a number of their own, which makes me think however they calculate, it’s not any better,” Kajstura says.

“Securus is continually working to provide the highest-quality services as affordably as possible, connecting individuals and keeping communities safe,” a spokesperson said in a statement. “Our industry is highly competitive, with over 40 operators vying for contracts — which has driven consumer call rates down by 37 percent over the last five years. Securus’ acquisition of another operator would not harm competition, but would instead allow us to reduce costs and pass on price reductions to consumers, while investing in public safety and security.”

Today, companies like Securus often bargain with prisons and jails for exclusive contracts, and they offer the facilities a cut of the revenue in exchange. Families, advocates say, bear the heaviest burden from those contracts, which can include price structures that benefit the facilities, as advocates say some calls can cost nearly $25 for 15 minutes. Under a new regime, the advocates argue, the companies will be able to dictate even more stringent terms that will further squeeze families of the incarcerated who already complain about the costs of keeping in touch with an incarcerated loved one. “Clearly, the market’s at the point where they’re doing pretty damn well what they please,” Kajstura says.

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