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The High Cost of Calling the Imprisoned

Heather Kofalt at home in Franklin, Pa. Phone calls with her husband, Anthony, who is in a prison just a few hours' drive away, cost $12.95 for 15 minutes.Credit...Stephanie Strasburg for The New York Times

Since the police in Pennsylvania arrested Anthony Kofalt last March for walking out of a Walmart with 21 boxes of Crest Whitestrips he had not paid for, his wife, Heather, has spent $3,000 — about $60 a week — on phone calls to the prisons and jails where he has been held.

The cost of a 15-minute call is $12.95 to the prison where Mr. Kofalt is now incarcerated, a few hours’ drive from his wife’s home in Franklin, Pa. The cost for a similar non-prison call within Pennsylvania would be about 60 cents.

And every time Ms. Kofalt deposits $25 into the prison phone account, the private company that runs the system applies a service charge of $6.95.“I don’t drive,” said Ms. Kofalt, 39, who works as a home health care aide and lives with her 19-year-old son, his girlfriend and their two children. “This is all we have. The people in jail did wrong, but the only people being punished are the families.”

Until the 1990s, inmates could place and receive calls to lawyers and family members at rates similar to those outside prison walls. But the prison phone system is now a $1.2 billion-a-year industry dominated by a few private companies that manage phones in prisons and jails in all 50 states, setting rates and fees far in excess of those established by regular commercial providers. The business is so considerable — some 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.

Now, after years of complaints from prison-rights groups and families of the incarcerated, the Federal Communications Commission is investigating the financial intricacies of the industry, which has been largely unregulated.

At the core of the inquiry are the hundreds of millions of dollars in concession fees, known as commissions, paid by the 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, and the leading companies say they need to charge at least 20 cents per minute, compared with typical commercial rates of about 4 cents a minute.

In 2013, a total of $460 million in concession fees was paid to jails and prisons, and to state, county and local governments, according to the F.C.C. The fees are legal, and they cover a range of expenses within prisons as well as outside.

The agency is expected to rule this year on whether to ban the concession fees and limit the costs of prison phone calls.

An analysis released in 2013 by the F.C.C. said the fees “have caused inmates and their friends and families to subsidize everything from inmate welfare to salaries and benefits, states’ general revenue funds and personnel training.”

It added, “The companies compete not based on price or service quality, but on the size of the commission.”

The possibility of eliminating the fees has met fierce opposition from prisons and jails, sheriff’s departments and local officials. Some law enforcement groups have said changes could stoke inmate violence against prison guards because there might be less money for security.

“I don’t know any sheriff who’s making a profit,” said Jonathan Thompson, executive director of the National Sheriffs’ Association, a group that supports the concession fees. “What they are trying to do is to provide a service for their inmates while protecting their communities.”

But in providing that service, the companies are generating a lot of money.

Global Tel-Link Corp. and Securus Technologies, the dominant players in the industry, have each changed hands twice among private equity firms since 2009. Global Tel-Link, which controls 50 percent of the market for correctional institutions, was sold for $1 billion in 2011 to American Securities, a New York-based firm. Securus, which has about 20 percent of the market, was most recently sold in 2013 to ABRY Partners, based in Boston, for $640 million.

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Mr. Kofalt was arrested last March for shoplifting. Since then, his wife has spent $3,000 on phone calls to the prisons and jails where he has been held.Credit...Heather Kofalt

Global Tel-Link recently announced that it reached a record high 215 million prison calls totaling three billion minutes in 2014. Securus said that on Christmas Day it completed the most calls in its history.

“They are profiting off of people in vulnerable situations,” said Kasie Campbell, who said she lives paycheck to paycheck and spends $150 a month on phone calls to her husband, Allen, in a Texas prison for robbery. “The cost determines when I can talk to my husband and when my son can read a book to him. It’s detrimental to rehabilitation.”

Ms. Campbell, 33, said Securus’s fees for its prison phone service included a charge of $2.49 for processing her bill and $5 if she wants to pay it over the phone.

Securus, according to company documents, imposes dozens of fees for calls and basic services, including establishing, maintaining and closing an account.

The fees make up an estimated 40 percent of the average prison phone bill, according to the Prison Policy Initiative, a nonprofit organization.

In its first foray into regulating the industry, the F.C.C in February 2014 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 prison and jail calls.

Global Tel-Link and Securus say any rate cap below about 20 cents a minute would cut too deeply into their operating margins, preventing them from adequately providing monitoring of calls for security.

But prisoner advocates say a cap of about 7 cents a minute would allow phone companies to make a profit while providing inmates more opportunities to speak to their families.

Richard A. Smith, Securus’s chief executive, said in a letter to regulators that his company had paid $1.3 billion in concession fees to prisons and local governments over the past decade. He did not return calls and emails seeking comment.

”We believe that the intention of the commission to allow correctional facilities to recover the costs of hosting inmate calling while seeking to address pricing issues in the market is a step in the right direction for all parties involved,” Kirk Vespestad, a Global Tel-Link spokesman, said in a statement.

The significance of the fees paid to win a contract was illustrated recently in a solicitation by the Arizona Department of Corrections for a new five-year phone contract. The department’s bidding system awarded 1,250 points to the company that proposed paying the highest concession fee. All other factors, including technical requirements, were worth only a combined 300 points.

Joymara Coleman, a 25-year-old California college student, met her father for the first time last summer at the Louisiana penitentiary where he is serving a life sentence for murder. She said the cost of phone calls meant that she had talked to him only twice since her visit.

Adding to her financial and psychological strain, she said, are two brothers also serving time in prison.

“I’m the first in my family to go to college,” Ms. Coleman said. “I don’t have the money. I’m just trying to keep the family together.”

A version of this article appears in print on  , Section A, Page 12 of the New York edition with the headline: The High Cost of Calling the Imprisoned. Order Reprints | Today’s Paper | Subscribe

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