Until the 1990s, inmates could call lawyers and family members at rates similar to those outside prison walls. The prison phone system is now a $1.2 billion-a-year industry dominated by a few companies that manage phones in prisons and jails in all 50 states, setting rates and fees far in excess of those charged by regular commercial providers, the New York Times reports. The business is so considerable — 500 million prison and jail phone calls totaling more than six billion minutes in 2014 — that it has caught the eye of private equity firms. After years of complaints from prison-rights groups and inmate families, the Federal Communications Commission is investigating the financial intricacies of the largely unregulated industry.
The inquiry involves hundreds of millions of dollars in concession fees, known as commissions, paid by phone companies to state and local prison systems in exchange for exclusive contracts. The fees help drive phone charges as high as $1.22 per minute. Leading companies say they need to charge at least 20 cents per minute, compared with commercial rates of about 4 cents a minute. The FCC is expected to rule this year on whether to ban the concession fees and limit the costs of prison phone calls. Last year, the FCC capped the cost of interstate calls to and from prisons at 25 cents. Phone companies responded by increasing fees on calls made to and from prisons in the same state, which account for about 90 percent of calls.