Washington, D.C., July 20, 2024, Bloomberg
The Federal Communications Commission (FCC) has significantly reduced the cost of phone calls for inmates in U.S. prisons and jails, impacting approximately 2 million incarcerated individuals and their families.
Under the new regulations, the cost of a 15-minute phone call will drop from as high as $11.35 to 90 cents in large jails, and from $12.10 to $1.35 in smaller facilities. This substantial reduction aims to alleviate the financial burden on inmates and their families, making communication more affordable.
Key Changes and Impact
Video Calls and Fees: In addition to phone call reductions, the FCC has introduced caps on video call costs, including visitation calls, for the first time. The new rates will be between 11 and 25 cents per minute, significantly lower than current prices. Furthermore, all additional fees associated with these services will be eliminated. The FCC also plans to examine video call quality issues to ensure a satisfactory user experience.
Legislative Background: This move follows the passage of legislation in 2023 that granted the FCC extensive authority to regulate and reduce the costs of inmate communication services. This legislation was necessary after previous caps set by the FCC were overturned by the U.S. Appeals Court for the District of Columbia in 2017.
Economic and Social Benefits: FCC Chair Jessica Rosenworcel highlighted the social and economic benefits of the new rates, stating that the change addresses “the unconscionable rates families of the incarcerated pay for communications.” The FCC estimates that the new rate caps will save prisoners, their friends, and families about $386 million annually.
Regular contact with family members has been shown to reduce the likelihood of inmates reoffending after their release. Senator Tammy Duckworth, a key proponent of the legislation, emphasized that the new rates will end the “unjust and unreasonable” costs previously borne by families, enabling more frequent and meaningful communication.
Economic Analysis
This regulatory change represents a significant financial shift for the telecommunications providers servicing the prison system. With the substantial reduction in rates, providers will need to adjust their business models to maintain profitability. However, the broader economic benefit lies in the potential reduction of recidivism rates, which can lead to substantial savings for the criminal justice system in the long run.
For investors, companies that can adapt to these regulatory changes and innovate in the inmate communication market may find new growth opportunities. The focus on quality improvements in video calls also presents a potential area for technological advancements and investments.