Incarcerated People's Communication Services; Implementation of the Martha Wright-Reed Act; Rates for Interstate Inmate Calling Services

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 14, 64

[WC Docket Nos. 12-375, 23-62; FCC 24-75; FR ID 237400]

Incarcerated People's Communication Services; Implementation of the Martha Wright-Reed Act; Rates for Interstate Inmate Calling Services

AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

In this document, the Federal Communications Commission (Commission) adopts rules addressing all intrastate, interstate, and international audio and video incarcerated people's communication services (IPCS), including video visitation services. The reforms include adopting permanent rate caps for audio IPCS and interim rate caps for video; prohibiting IPCS providers from making site commission payments associated with IPCS and preempting state and local laws and regulations requiring such commissions; prohibiting IPCS providers from imposing any separate ancillary service charges on IPCS consumers; strengthening the Commission's requirements for access to IPCS by incarcerated people with disabilities; permitting IPCS providers to offer optional alternate pricing plans that comply with the rate caps; strengthening existing consumer disclosure and inactive account requirements; revising the existing annual reporting and certification requirements; facilitating enforcement of the new IPCS rules; and delegating authority to the Commission's Wireline Competition Bureau (WCB), Consumer and Governmental Affairs Bureau (CGB), and Office of Economics and Analytics (OEA).

DATES:

Effective date:

This rule is effective November 19, 2024, except for amendatory instruction 7 (§§ 64.611(l)(2), (3), (5), (6)); amendatory instruction 15 (§ 64.6040(f)); amendatory instruction 17 (§ 64.6060); amendatory instruction 20 (§ 64.6090); amendatory instruction 22 (§ 64.6110); amendatory instruction 23 (§ 64.6120); amendatory instruction 25 (§ 64.6130(d) through (f), and (h) through (k)); amendatory instruction 27 (§ 64.6140(c), (d), (e)(2) through (4), (f)(2), and (f)(4)), which are delayed indefinitely. The Federal Communications Commission will publish a document in the

Federal Register

announcing the effective date of these provisions.

Delegation of authority:

The delegations of authority to WCB, CGB, and OEA are effective on November 19, 2024.

ADDRESSES:

Federal Communications Commission, 45 L Street NE, Washington, DC 20554. People with Disabilities: To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to

fcc504@fcc.gov

, or call the Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY).

FOR FURTHER INFORMATION CONTACT:

Stephen Meil, Pricing Policy Division of the Wireline Competition Bureau, at (202) 418-7233 or via email at

stephen.meil@fcc.gov,

regarding the portions of this document relating to matters other than communications services for incarcerated people with disabilities, and Michael Scott, Disability Rights Office of the Consumer and Governmental Affairs Bureau, at (202) 418-1264 or via email at

michael.scott@fcc.gov,

regarding the portions of this document relating to communications services for incarcerated people with disabilities.

SUPPLEMENTARY INFORMATION:

This is a summary of the Federal Communications Commission's (Commission's) Report and Order, document FCC 24-75, adopted on July 18, 2024 and released on July 22, 2024, in WC Docket Nos. 12-375 and 23-62. This summary is based on the public redacted version of the document, the full text of which can be obtained from the Commission's Electronic Document Management System (EDOCS) website at

www.fcc.gov/edocs

or via the Commission's Electronic Comment Filing System (ECFS) website at

www.fcc.gov/ecfs

, or is available at the following internet address:

https://docs.fcc.gov/public/attachments/FCC-24-75A1.pdf

.

Synopsis

I. Introduction

1. Today we take the most significant steps thus far to fulfill the dream of Martha Wright-Reed, who advocated tirelessly to ensure that incarcerated people would be able to communicate with family and loved ones at just and reasonable rates. While this document implements the requirements of the Martha Wright-Reed Just and Reasonable Communications Act of 2022 (Martha Wright-Reed Act or Act), this proceeding began over twenty years ago when a determined grandmother petitioned the Federal Communications Commission to take action against the egregiously high telephone rates and charges that were impeding incarcerated people's ability to stay connected with their families and friends. Martha Wright-Reed championed the idea of easing the financial burdens imposed on incarcerated people and their families simply to make a phone call. As a blind elderly woman, who could neither write letters nor travel such long distances for in-person visits, she often spent hundreds of dollars a month in long distance phone calls to stay in touch with her incarcerated grandson. In her honor, and in the face of years of litigation frustrating the Commission's reform efforts in this area, Congress passed the Martha Wright-Reed Act, significantly expanding the Commission's jurisdiction over incarcerated people's communications services (IPCS) and directing the Commission to “establish a compensation plan to . . . ensure just and reasonable charges for telephone and advanced communications services in correctional and detention facilities.”

2. In this item, we exercise the authority granted the Commission by Congress and adopt comprehensive reforms that will significantly reduce the financial burdens incarcerated people face to communicate with their loved ones. We first reduce existing rate caps for all incarcerated people's audio communication services, by implementing a methodology specifically permitted by Congress in the Act, and establish, for the first time, interim rate caps for incarcerated people's video communications services. We also materially reduce the prices consumers pay for IPCS by limiting the costs that can be recovered through IPCS rates to only costs that the Commission finds are used and useful in the provision of IPCS. We also permit states to maintain rates lower than the Commission's rate caps. We next end IPCS providers' long-standing practice of making site commission payments to carceral facilities, the costs of which were passed through to consumers via higher IPCS rates. We further strengthen the requirements for access to IPCS by incarcerated people with disabilities, and adopt stronger consumer protection rules. We also permit providers, for the first time, to offer optional alternate pricing plans, subject to conditions to protect and benefit IPCS consumers.

A. Executive Summary

3. The Report and Order implements the expanded authority granted to the Commission by the Martha Wright-Reed Act to establish a compensation plan that ensures both just and reasonable rates and charges for incarcerated

people's audio and video communications services and fair compensation for incarcerated people's communications service providers. The Report and Order fundamentally reforms the regulation of IPCS in all correctional facilities, regardless of the technology used to deliver these services, and significantly lowers the IPCS rates that incarcerated people and their loved ones will pay. These comprehensive reforms:

• Utilize the expanded authority Congress granted the Commission, in conjunction with the FCC's preexisting statutory authority, to adopt just and reasonable IPCS rates and charges for all intrastate, interstate, and international audio and video IPCS, including video visitation services;

• Lower existing per-minute rate caps for audio IPCS and establish initial interim per-minute rate caps for video IPCS, based on industry-wide cost data submitted by IPCS providers, while permitting states to maintain IPCS rates lower than the Commission's rate caps;

• Lower the overall prices consumers pay for IPCS and simplify the pricing structure by incorporating the costs of ancillary services in the rate caps and prohibiting providers from imposing any separate ancillary service charges on IPCS consumers;

• Prohibit IPCS providers from making site commission payments for IPCS and preempt state and local laws and regulations requiring such commissions;

• Limit the costs associated with safety and security measures that can be recovered in the per-minute rates to only those costs that the Commission finds are used and useful in the provision of IPCS;

• Allow, subject to conditions, IPCS providers to offer alternate pricing plans for IPCS that comply with the rate caps we establish;

• Revise and strengthen accessibility requirements for IPCS for incarcerated people with disabilities;

• Revise and strengthen existing consumer disclosure and inactive account requirements; and

• Revise the existing annual reporting and certification requirements.

4. We adopt the following rate caps:

Table One—New Rate Caps by Tier

Tier (ADP)

Audio

(permanent)

(per minute)

Current

caps

New

caps

Video

(interim)

(per minute)

Current

caps

New

caps

Prisons (any ADP)

* $0.14

$0.06

N/A

$0.16

Large Jails (1,000+)

* 0.16

0.06

N/A

0.11

Med. Jails (350 to 999)

0.21

0.07

N/A

0.12

Small Jails (100 to 349)

0.21

0.09

N/A

0.14

Very Small Jails (0 to 99)

0.21

0.12

N/A

0.25

* Current cap figures that include a $0.02 additive for facility costs, which equates to the allowance made for facility-incurred IPCS costs reflected in contractually-prescribed site commissions, the closest available comparison.

II. Background

A. The Martha Wright-Reed Just and Reasonable Communications Act of 2022

5. The Martha Wright-Reed Just and Reasonable Communications Act of 2022 (Martha Wright-Reed Act or Act), was enacted on January 5, 2023. It represents the culmination of a years-long effort to comprehensively address unreasonably high rates and charges that incarcerated people and their families pay for communications services. The Act expands and clarifies the scope of the Commission's authority over IPCS under section 276 of the Communications Act of 1934, as amended (Communications Act) by modifying section 276 to require the Commission to ensure that the rates and charges for incarcerated people's intrastate and interstate communications services be just and reasonable. It also modifies the requirement in section 276(b)(1)(A) that providers be fairly compensated by eliminating the requirement that compensation occur on a “per call” basis and for “each and every [call].” Thus, with the new amendments, section 276(b)(1)(A) directs the Commission to establish a compensation plan to “ensure that all payphone service providers are fairly compensated and all rates and charges are just and reasonable for completed intrastate and interstate communications using their payphone or other calling device.” The Act further augments the Commission's jurisdiction by modifying the Communications Act to expand the definition of payphone service in correctional institutions to encompass advanced communications services, including “any audio or video communications service used by inmates . . . regardless of technology used.”

6. The Martha Wright-Reed Act also amends section 2(b) of the Communications Act to reinforce that the Commission's jurisdiction extends to intrastate, as well as interstate and international, communications services used by incarcerated people. The Communications Act generally allocates regulatory authority over intrastate, interstate, and international communications services between the Commission and the states. It grants authority to the Commission to ensure that “[a]ll charges, practices, classifications, and regulations for and in connection with” interstate or international common carrier communications services are “just and reasonable,” and directs the Commission to “prescribe such rules and regulations as may be necessary in the public interest to carry out” this mandate.

7. Section 2(b) of the Communications Act generally preserves states' jurisdiction over “charges, classifications, practices, services, facilities, or regulations for or in connection with intrastate communication service.” The Commission is thus “generally forbidden” from regulating “intrastate communication service, which remains the province of the states.” Stated differently, section 2(b) “erects a presumption against the Commission's assertion of regulatory authority over intrastate communications.” But Congress can enact statutory provisions that overcome this presumption, including by expressly excluding provisions of the Communications Act from section 2(b). Section 276 of the Communications Act always has been

clear that the Commission has authority to establish compensation plans for “intrastate and interstate” payphone calls, and the Martha Wright-Reed Act also specifically modified section 2(b) to include section 276, as amended, in an explicit exception. This amendment makes abundantly clear that the Commission's authority under section 276 encompasses intrastate IPCS.

8. In direct response to the D.C. Circuit's decision in

GTL

v.

FCC,

the Act expressly allows the Commission to “use industry-wide average costs,” as well as the “average costs of service of a communications service provider” in setting just and reasonable rates and charges. In implementing the Act, the Commission is required to consider the “costs associated with any safety and security measures necessary to provide” telephone service and advanced communications services. Finally, the statute directs the Commission to promulgate regulations necessary to implement the statutory provisions not earlier than 18 months and not later than 24 months after its January 5, 2023 enactment date.

B. Early Reform Efforts

9. Prior to the enactment of the Martha Wright-Reed Act, the Commission had previously taken a number of steps to reform communications services for incarcerated people. In 2012, the Commission initiated its inmate calling services (ICS) rulemaking principally in response to petitions filed by Martha Wright and her fellow petitioners seeking relief from “excessive” inmate calling services rates. In the

2013 ICS Order,

the Commission found that rates for calling services for incarcerated people greatly exceeded the reasonable costs of providing those services and adopted interim interstate rate caps of $0.21 per minute for debit and prepaid calls, and $0.25 per minute for collect calls. The Commission also launched its First Mandatory Data Collection to obtain industry cost data to help develop permanent rate caps. In 2014, the Commission sought comment on establishing permanent rate caps for both interstate and intrastate calls and on reforming charges for services ancillary to the provision of inmate calling services.

10. In 2015, the Commission adopted a comprehensive regulatory framework for interstate and intrastate inmate calling services that included permanent rate caps for interstate and intrastate inmate calling services calls, and imposed limits on ancillary service charges. Specifically, the

2015 ICS Order

set tiered rate caps for interstate calls based on the type and size of correctional facilities and calculated these caps using industry-wide average costs as reported in the First Mandatory Data Collection. The Commission excluded all site commission payments from industry costs, having found such payments were not reasonably related to the provision of inmate calling services. The Commission also extended the interim interstate rate caps it had adopted in 2013 to intrastate calls, pending the effectiveness of the new rate caps, and sought comment on rate regulation of international inmate calling services calls. Finally, the

2015 ICS Order

established a Second Mandatory Data Collection to guide further reforms, and began an annual filing obligation to collect information on providers' interstate, intrastate, and international rates, as well as their ancillary service charges, among other information.

11. While an appeal of the

2015 ICS Order

was still pending, the Commission reconsidered the full exclusion of site commission payments from its permanent rate cap calculations. The Commission's

2016 ICS Reconsideration Order

increased the permanent rate caps adopted in the

2015 ICS Order

to account for claims that certain correctional facility costs reflected in site commission payments are directly and reasonably related to the provision of inmate calling services.

C. The GTL v. FCC Decision

12. The permanent rate caps adopted in the

2015 ICS Order

were vacated by the D.C. Circuit in

GTL

v.

FCC

in 2017 on three principal grounds. First, the panel majority held that the Commission lacked the statutory authority to cap intrastate calling services rates because the Commission's authority over intrastate calls under section 276 of the Communications Act did not authorize it to impose intrastate rate caps, and the Commission's authority under section 201(b) of the Communications Act did not extend to intrastate rates. Second, the D.C. Circuit concluded that the Commission had erred by categorically excluding site commissions from inmate calling services providers' costs used to set rate caps. Because some site commissions were “mandated by state statute,” while others were “required by state correctional institutions,” the court concluded that some portion of site commissions might be legitimately included in provider costs, and remanded to the Commission to determine what portion of site commissions were directly related to the provision of inmate calling services. Third, the court found that the Commission's use of a weighted average per-minute cost in setting rate caps, on the existing record as analyzed in the

2015 ICS Order,

was arbitrary and capricious, in part because this approach, as the Commission had applied it, rendered calls with above-average costs unprofitable and thus did “not fulfill the mandate of [section] 276 that `each and every' ” call be fairly compensated.

13. The D.C. Circuit also remanded the Commission's ancillary service charge caps, finding that—on the available record—the Commission “had no authority to impose ancillary fee caps with respect to intrastate calls.” Although the court found ancillary service charge caps on interstate calls “justified,” it could not “discern from the record whether ancillary fees [could] be segregated between interstate and intrastate calls,” and remanded the issue for the Commission to determine whether it could segregate ancillary service fee caps between interstate calls and intrastate calls. The court also vacated the video visitation annual reporting requirements adopted in the

2015 ICS Order

as “beyond the statutory authority of the Commission.”

14. In a related case decided later that year, the D.C. Circuit “summarily vacated” the

2016 ICS Reconsideration Order

“insofar as it purports to set rate caps on inmate calling service” because the revised rate caps in that order were “premised on the same legal framework and mathematical methodology” rejected by the court in

GTL

v.

FCC.

As a result of the D.C. Circuit's decisions in

GTL

and

Securus Techs.

v.

FCC,

the interim rate caps that the Commission adopted in 2013 ($0.21 per minute for debit/prepaid calls and $0.25 per minute for collect calls) remained in effect for interstate inmate calling services calls.

D. More Recent Reform Efforts

15. Following the D.C. Circuit's remand in

GTL

v.

FCC

, the Commission took additional actions to address unreasonable rates and charges for communications services for incarcerated people. In February 2020, the Wireline Competition Bureau (Bureau or WCB) issued a document seeking to refresh the record on issues related to ancillary service charges to respond to the D.C. Circuit's remand. The Bureau sought comment on whether ancillary service charges may be “segregated between interstate and intrastate calls and, if so, how.” It also sought comment on the definition of jurisdictionally mixed services and how the Commission should proceed if any

permitted ancillary service is deemed jurisdictionally mixed.

16. In August 2020, the Commission adopted the

2020 ICS Order on Remand

(85 FR 67450 (Oct. 23, 2020)), in which it found that ancillary service charges generally are jurisdictionally mixed and cannot be practicably segregated between the interstate and intrastate jurisdictions, except in a limited number of cases. The Commission therefore concluded that inmate calling services providers are generally prohibited from imposing ancillary service charges other than those permitted by the Commission's rules, and from imposing charges in excess of the Commission's ancillary service fee caps. In an accompanying document, the Commission proposed reform of the inmate calling services rates then within its jurisdiction based on its analysis of industry data collected in the Second Mandatory Data Collection, as well as information collected in the 2020 Annual Reports.

17. In May 2021, the Commission adopted the

2021 ICS Order,

which, among other actions, set new interim interstate rate caps for prisons and larger jails, reformed the treatment of site commissions, and capped international calling rates. The Commission first eliminated separate rate caps for all collect calls and retained the existing $0.21 per minute interstate rate cap for debit and prepaid calls for correctional facilities with average daily populations below 1,000. The Commission then lowered the interstate interim rate caps from $0.21 per minute for debit and prepaid calls to $0.12 per minute for prisons and $0.14 per minute for jails with average daily populations of 1,000 or more incarcerated people. It allowed site commission payments mandated by federal, state, or local law, to be passed through to consumers, without any markup, and capped other site commission payments that result from contractual obligations or negotiations with providers to no more than $0.02 per minute for prisons and jails with average daily populations of 1,000 or more. The Commission adopted a modified waiver process that permits providers to seek waivers of the rate and ancillary services fee caps on a facility-by-facility or contract-by-contract basis. The Commission also delegated authority to WCB and the Office of Economics and Analytics (OEA) to conduct a Third Mandatory Data Collection to collect uniform cost data to use in setting permanent rate and ancillary services fee caps that more closely reflect inmate service providers' costs of providing service.

18. In 2021, the Commission sought comment on, among other matters, the provision of communications services to incarcerated people with disabilities, and the methodology to be employed in setting permanent interstate and international rate caps. It also sought comment on general reform of the treatment of site commission payments in connection with interstate and international calls, and additional reforms to the Commission's ancillary service charges rules.

19. In September 2022, the Commission issued the

2022 ICS Order,

which adopted requirements to improve access to communications services for incarcerated people with disabilities and to reduce certain charges and curtail abusive practices related to ICS. The Commission required inmate calling services providers to provide access to substantially all relay services eligible for Telecommunications Relay Services (TRS) Fund support in any correctional facility where broadband is available and where the average daily population incarcerated in that jurisdiction (

i.e.,

in that city, county, state, or the United States) totals 50 or more persons. It also required that where inmate calling services providers are required to provide access to substantially all forms of TRS, they also must provide access to American Sign Language (ASL) direct, or point-to-point, video communication. Additionally, the Commission lowered its caps on certain provider charges and barred certain abusive practices to lessen the financial burden on incarcerated people and their loved ones when using calling services.

20. The Commission also issued 2022 seeking stakeholder input and evidence relating to additional reforms concerning incarcerated people with disabilities. It sought further comment on reforms concerning providers' rates, charges, and practices in connection with interstate and international calling services, including further refining the Commission's rules concerning the treatment of balances in inactive accounts, expanding the breadth and scope of the Commission's consumer disclosure requirements, using the Commission's data collections to establish just and reasonable permanent caps on interstate and international rates and associated ancillary service charges, and allowing providers to offer pilot programs for alternative pricing structures.

E. Implementation of Martha Wright-Reed Act

21. Following the enactment of the Martha Wright-Reed Act in January 2023, the Commission issued 2023 and

2023 IPCS Order

in March 2023 to begin the process of implementing that Act. In 2023, the Commission sought comment on how it should interpret the Martha Wright-Reed Act's provisions expanding the Commission's authority over communications services for incarcerated people, including the Act's requirement that rates and charges for incarcerated people's communications services be just and reasonable, the Act's expansion of the Commission's authority to include advanced communications services, including video services, the expansion of the Commission's jurisdiction to include intrastate communications services, and other aspects of the Act. It also sought comment on how the Martha Wright-Reed Act affects the Commission's ability to ensure that IPCS services and associated equipment are accessible to and usable by people with disabilities. Finally, 2023 incorporated unresolved issues previously raised in WC Docket No. 12-375 into the current dual-captioned proceeding.

22. In the

2023 IPCS Order,

the Commission reaffirmed its prior delegation of data collection authority to WCB and OEA, and directed them to update and restructure their most recent data collection as appropriate in light of the requirements of the new statute. In July 2023, WCB and OEA exercised this delegated authority and adopted the

2023 Mandatory Data Collection Order

(88 FR 27850, May 3, 2023) to collect information on the additional services and providers subject to the Commission's newly expanded authority and address the Act's other provisions where necessary.

III. Discussion

A. Unique Marketplace for Incarcerated People's Communications Services

23. The history of this proceeding makes crystal clear that the IPCS marketplace “is not a well functioning market with competitive forces that would drive prices towards costs.” Once a provider successfully competes for a contract to serve a facility, it has a monopoly over the provision of IPCS at that facility. Incarcerated people play no role in the process of selecting IPCS providers or the services they offer and have no choice but to pay the rates and charges imposed if they wish to call their family or other loved ones. Consumers have no means of switching to another provider and no means of redress even if the IPCS provider “raises rates, imposes additional fees, adopts unreasonable terms and conditions for use of the service, or offers inferior

service.” As a result, there are no competitive forces to constrain providers from imposing rates and charges that far exceed the costs required to provide the services. This absence of competitive alternatives to discipline IPCS rates justifies rate regulation independent of the problematic role that site commissions historically have played. We thus reject arguments that the elimination of site commission payments calls into question the need for rate regulations. In stating its preference for relying on competition and market forces to discipline prices, the Commission has acknowledged “there is little dispute that the [IPCS] market is a prime example of market failure.” This market failure persists today. Indeed, one provider aptly summarizes the IPCS market dynamics today as follows:

Fundamentally, due to the inherent structure of the [IPCS] marketplace, [IPCS] providers' rational economic incentive is to entice confinement facilities to award the provider a service contract as the facility, and confinement facilities' rational economic incentive is to award contracts to [IPCS] providers who provide the greatest payments (monetary or otherwise) to the facility. Notably absent from the foregoing calculus are the [IPCS] consumers themselves, despite the fact that they are the ones who ultimately pay for [IPCS] service.

24. Despite Commission actions over the years to constrain rates and charges in the audio IPCS marketplace, the monopolistic nature of the marketplace has not changed, and remains “characterized by increasing rates, with no competitive pressures to reduce rates.” The “unusual market dynamics” of the IPCS marketplace and the “inability of market forces to constrain IPCS rates” are also evident in a still nascent portion of the marketplace—video IPCS, making clear that “some form of regulatory constraint . . . is needed to ensure that end user rates are just and reasonable.” The bipartisan Martha Wright-Reed Act is a directive that the Commission provide such regulatory constraint on the IPCS marketplace through ensuring “just and reasonable charges for telephone and advanced communications services in correctional and detention facilities.”

25. Some commenters argue that the IPCS marketplace is competitive because contracts are awarded based on a bidding process, an argument that appears challenging to square with Congress's enactment of the Martha Wright-Reed Act. Independently, the Commission has not been persuaded by such arguments in the past, and we find no further evidence in the record that might warrant a departure from this conclusion. Instead, we continue to find that “because correctional officials typically allow only one provider to serve any given facility . . . there are no competitive constraints on a provider's rates once it has entered into a contract to serve a particular facility.” Indeed, the Commission has found that providers' cost data reflect this lack of competition in the industry. And the Commission has explained how factors such as site commissions ` “distort[ ] the [IPCS] marketplace' by creating incentives for the facilities to select providers that pay the highest site commissions, even if those providers do not offer the best service or lowest rates.” Thus, even if there is “competition” in the bidding market as some providers assert, it is not the type of competition the Commission recognizes as having an ability to “exert downward pressure on rates for consumers.”

B. Impact on Consumers and Society

26. The Commission has long recognized—and worked to combat—the negative consequences that unreasonable communications rates and charges have on incarcerated people, their families and loved ones, and society at large. The record in this proceeding provides overwhelming evidence of the substantial burden excessive communications rates have on the ability of incarcerated people to stay connected and maintain the vital, human bonds that sustain families and friends when a loved one is incarcerated. In fact, “[t]he high costs of keeping in contact drive more than 1 in 3 families, who are already financially burdened, into debt for phone calls and visits with their loved ones.” As the Prison Policy Initiative explains, “[t]he cost of everyday communication is arguably the worst price-gouging that people behind bars and their loved ones face.” Color of Change highlights these burdens through the story of Maria Marshall, who, “after spending $120 in just two weeks to maintain contact with both her teenage son and her ex-husband behind bars, was forced to make the difficult choice between the two, as she struggled to pay exorbitant phone rates and could only afford one of their accounts.” Brian Howard, a formerly incarcerated person, speaks for all too many in stating, “though we have committed a crime and became incarcerated, we incarcerate our family as well.”

27. The Commission held several public listening sessions to learn firsthand from individuals directly impacted by unreasonable IPCS rates and charges. In these sessions, witnesses testified to the high cost of communications as being the primary barrier to keeping families connected—despite the well documented benefits of “maintaining communication with loved ones during incarceration.” Universally, testimony from formerly incarcerated individuals stresses the burden that unreasonable communications rates and charges have had on their ability to communicate with their families. For example, Colette Payne, both formerly incarcerated and having an incarcerated son, relates how, because of the cost of phone calls, “I wasn't always able to speak with my own children during my incarceration.” Kim Thomas, a formerly incarcerated person, explains the anguish of mothers “who gave birth while incarcerated and did not get to see their child for 18 months, physically or in any other way.” Other formerly incarcerated people emphasize how the high cost of communications prevents mothers from regularly speaking to their children. One grandmother, whose daughter is incarcerated, details how her four young grandchildren are only able to speak to their mother every “week and a half and two weeks if that” because communications are so expensive. Jada Cochran, who gave birth in prison and whose mother raised her four young children while she was incarcerated, cried as she lamented that her mother could not afford many calls, despite the fact they were her “lifeline to my family, to my children.” Brione Smith, a teenager whose father is incarcerated, describes being devastated when she could not reach her father after her best friend and grandfather died within a few weeks of each other.

28. Participants at the Commission's listening sessions explain how the unreasonably high communications rates at times force incarcerated people and their families to choose between basic necessities, such as between food, and communications. For example, Deon Nowell reports at the Chicago listening session how some incarcerated people had to beg for food to reserve enough money to call their families. Ana Navarro describes how families must choose between communication or rent, food, or school supplies. Kim Thomas, a formerly incarcerated person, explains how incarcerated people earn “about 15 cents an hour. . . . So if you calculate that out, it's not very much money, and you choose to make a phone call or buy soap.” Incarcerated people with disabilities that impact their ability to communicate continually experience barriers to access because “prison

administrators fail to understand their communication needs.”

29. The benefits of communications between incarcerated people and their families are wide-ranging and well-documented. For decades, studies have linked regular contact with family with lowering rates of recidivism and increasing likelihood of successful reentry into society after release. During the listening sessions, the formerly incarcerated emphasized how communication with family decreases recidivism and sustains hope. Children who have regular communications with an incarcerated parent have “better relationships with that parent.” Without these connections, incarcerated people tend to lose contact with the outside world and can lose hope of reengaging with society and their loved ones. Others suggest that unlawful activities within correctional facilities would likely decrease if communications services were affordable and accessible. Rosalind Akins, whose grandson was formerly incarcerated, describes how “[p]eople become induced mentally ill because they can't communicate.” Deon Nowell explains that lower communications rates will “help [the incarcerated people] make the right decision. That's why it's called rehabilitation. Help [the incarcerated people] to make the right decision, especially when it deals with the costs of communications.”

30. The Martha Wright-Reed Act charges us with evaluating and breaking down the financial barriers to communications between incarcerated people and their families, consequently lessening the burden of having to choose between buying food and communicating with their family members, and helping facilitate a successful transition to a life outside of correctional facilities. The Act gives us the tools we need to meet these objectives. We anticipate that by lessening the financial burdens of staying connected, the reforms we adopt today will promote increased communication—allowing the preservation of essential family ties, keeping vital family connections alive by enabling incarcerated people to parent their children and connect with their spouses, and helping families stay intact.

C. Interpreting the Martha Wright-Reed Act and the Commission's Authority Thereunder

1. Purpose and Scope of the Martha Wright-Reed Act

31. In the Martha Wright-Reed Act, Congress gave the Commission a clear mandate to fix a “broken system,” one in which the rates and charges that incarcerated people pay to communicate with those they love far exceed the amounts other Americans pay. The 2023 IPCS Notice of Proposed Rulemaking (NPRM) (88 FR 20804, April 7, 2023) sought comment on the proper interpretation of the scope and purpose of the Martha Wright-Reed Act's amendments. We conclude that the Martha Wright-Reed Act, taken as whole, fundamentally validates the Commission's broad exercise of authority over IPCS. The record reflects widespread agreement that the Martha Wright-Reed Act “confers plenary authority on the Commission” to regulate a wide range of communications services, including telephone and certain advanced communications services, provided to incarcerated people regardless of the technology or device used or a communication's status as interstate or intrastate. More specifically, as certain commenters observe, the Martha Wright-Reed Act's amendments to section 276 of the Communications Act provide the Commission with authority over all IPCS rates and charges, complemented by the Commission's section 201(b) of the Communications Act authority over interstate and international IPCS. The Commission has previously interpreted “interstate,” as used in section 276 of the Communications Act, to include international calling services. Consistent with our historical understanding of our statutory authority—including in the IPCS context in the near-term lead-up to the enactment of the Martha Wright-Reed Act—we adopt that interpretation today, a step that no commenter opposes. Independently, insofar as our rules treat international IPCS calls the same as domestic IPCS calls, the record does not persuade us that it would be practicable to make the sort of real-time jurisdictional determinations that would enable our rules to distinguish international calls from domestic calls in those scenarios, in any event. Congress's directives guide our implementation of the Commission's responsibilities as described in further detail below.

32. IPCS providers, state and local officials, and public interest advocates broadly agree that this expanded authority over communications services provided to incarcerated people includes not just audio services, but also certain advanced communications services that were previously outside the Commission's ratemaking authority. No commenter challenges this overall interpretation of the purpose and scope of the Martha Wright-Reed Act or suggests a more limited view of the Commission's authority. We find no basis for disagreeing with this consensus view, and thus, we exercise the full degree of our authority in this regard to adopt a compensation plan ensuring just and reasonable rates and charges, as well as fair compensation for providers of incarcerated people's audio and video communications services. We analyze below the specific amendments to section 276 of the Communications Act included in the Martha Wright-Reed Act that collectively expand our jurisdiction over IPCS and interpret each amendment, consistent with the overarching goal of the Act—just and reasonable rates for IPCS consumers and fair compensation for IPCS providers.

2. Addition of “Other Calling Device[s]”

33. At the outset of our analysis, we address the fact that the Martha Wright-Reed Act extends the Commission's authority over IPCS to include not just communications using traditional payphones, but also communications using “other calling device[s].” As amended, section 276(b)(1)(A) of the Communications Act directs the Commission to establish a compensation plan so all payphone service providers are fairly compensated for communications “using their payphone or other calling device.” Based on the record and consistent with the Commission's proposal in 2023, we interpret the term “other calling device[s]” in the Martha Wright-Reed Act broadly to encompass all devices that incarcerated people either use presently or may use in the future to engage in covered communications with individuals not confined within their correctional institutions. Our interpretation is further confirmed by Congress's expansion of our authority over advanced communications services in section 3(1)(E) of the Communications Act, to include “any audio or video communications service used by inmates . . .

regardless of technology used.

”

34. There is support in the record for this expansive interpretation. As the Public Interest Parties explain, “Congress chose to use expansive language covering `any technology used' to grant the Commission authority as broadly as possible, intending to cover any and all technologies that an incarcerated person may use to communicate [by audio or video] today or in the future.” The breadth of Congress's language and the “absence of additional qualifying language” limiting the scope of the term “other calling

device[s]” persuades us that a broad reading of this term is intended. Under this reading, the Commission's authority extends to “all types of calling devices” that incarcerated people may now or in the future use to communicate by audio or video with those not confined in the incarcerated person's correctional institution. Furthermore, the Commission has long understood section 276(b)(1)(A) of the Communications Act to set requirements governing TRS communications using TRS devices in correctional facilities. Given that backdrop, coupled with the fact that TRS is designed to ensure service functionally equivalent to telephone service, we conclude that “payphone[s]” and “other calling devices” under section 276(b)(1)(A) include devices that people with disabilities use for purposes of “communications” regardless of whether the devices convey those communications using audio and/or video, or also (or instead) text, braille, or another communications medium.

35. To be clear, as proposed in 2023, the interpretation of “other calling device[s]” we adopt today encompasses all wireline and wireless phones, computers, tablets, and other communications equipment capable of sending or receiving audio or video communications described in section 276(d) of the Communications Act, regardless of transmission format. And, “[c]onsistent with the Commission's mandate to provide Telecommunications Relay Service (`TRS') for incarcerated people with disabilities,” this statutory phrase also includes all wireline and wireless equipment, whether audio, video, text, other communications medium, or some combination thereof that incarcerated people with disabilities presently use to communicate, through any payphone service, with the non-incarcerated, including but not limited to videophones, captioned telephones, and peripheral devices for accessibility, such as braille display readers, screen readers, and TTYs.

36. Finally, as proposed in 2023, our interpretation of “other calling device[s]” includes other potential devices, not yet in use, to the extent incarcerated people, including those with disabilities, use them for covered communications in the future. Such a future-oriented interpretation is necessary to ensure that IPCS rates and charges remain just and reasonable, and that providers continue to be fairly compensated, as IPCS technology evolves. It also will, to the extent possible, keep IPCS providers from shifting “exploitative practices to spaces left unregulated” by our actions today.

3. The Requirement To Establish a Compensation Plan

37. The Martha Wright-Reed Act preserved the requirement in section 276(b) of the Communications Act that the Commission “establish a compensation plan” as a principal means of achieving the statutory goals with regard to IPCS. As amended, section 276(b)(1)(A) requires that this compensation plan ensure that “all payphone service providers are fairly compensated” for completed communications and that “all rates and charges [for those communications] are just and reasonable.” The statute further requires the Commission to implement this statutory directive by rule. We now turn to the legal framework envisioned by the statute for establishing a compensation plan that will realize these statutory goals.

a. Addition of the “Just and Reasonable” Requirement to Section 276(b)(1)(A)

38. We adopt the Commission's proposal that the term “just and reasonable,” added to section 276(b)(1)(A) of the Communications Act by the Martha Wright-Reed Act, be interpreted as having the same meaning as the term “just and reasonable” in section 201(b) of the Communications Act. Prior to the Martha Wright-Reed Act, section 276(b)(1)(A) contained no “just and reasonable” requirement. Instead, that section required the Commission to evaluate payphone rates on a per-call basis and to ensure that providers were fairly compensated for each and every completed call. Congress, however, modified this approach in the Act by removing the “per call” and “each and every” completed call language from section 276(b)(1)(A), which instead now requires that all payphone service providers be fairly compensated, and that all rates and charges imposed by those providers be “just and reasonable.” Not only is there strong support in the record for the conclusion that “just and reasonable” for the purposes of revised section 276(b)(1)(A) has the same meaning as “just and reasonable” in section 201(b), but the rules of statutory construction and judicial precedent buttress this finding.

39. By way of example, the Public Interest Parties explain, and we agree, that “[t]racking the Section 201(b) meaning is the most sound reading of the statute and of congressional intent,” consistent with the understanding “that Congress was aware of the Section 201(b) standard—and the Commission's decades of relevant precedent interpreting it—when it chose to add the identical term to Section 276.” The Supreme Court likewise explained in

FCC

v.

AT&T

that “identical words and phrases within the same statute should normally be given the same meaning.” Both of these tenets have particular force here. The identical terms “just and reasonable” appear in section 201(b) and have now been added to section 276(b)(1)(A), both sections of Title II of the Communications Act, to describe the required end result of our ratemaking. The Martha Wright-Reed Act also was enacted against the regulatory backdrop of—and in response to—the

GTL

v.

FCC

decision, where the D.C. Circuit found that the Commission unreasonably relied on the “just and reasonable” standard of section 201(b) when implementing the differently-worded language of section 276. Further, in the wake of

GTL

v.

FCC,

the Commission continued to regulate rates and practices for interstate and international IPCS services under its section 201(b) “just and reasonable” authority, informed by the obligation to ensure “fair” compensation under section 276(b)(1)(B).

40. Nothing in the text of the Martha Wright-Reed Act leads us to believe that Congress intended to alter that general regulatory approach in our implementation of section 276(b)(1)(A) in the case of services we previously have regulated under section 201(b). Instead, that regulatory backdrop reinforces our conclusion that “just and reasonable” is best interpreted in a manner that harmonizes the application of that standard in sections 201(b) and 276(b)(1)(A). The record also provides no reason to interpret “just and reasonable” differently in the two sections of the Communications Act. We thus find that “just and reasonable” has the same meaning in both statutory provisions and regardless of the services to which the phrase is applied.

41.

The Used and Useful Framework.

As Congress has imported section 201(b)'s “just and reasonable” standard into section 276(b)(1)(A), we next find that the standard the Commission has used to determine just and reasonable rates under 201(b) should also apply to our ratemaking under section 276(b)(1)(A). Historically, the “used and useful” framework has “both informed the Commission's regulatory cost accounting and ratemaking rules and operated to protect the interests of ratepayers and carriers.” The record supports our conclusion that this framework provides the most appropriate mechanism for ensuring just and reasonable rates and charges for

IPCS, and therefore applies to all IPCS over which we now have authority.

42. Accordingly, we rely on “the `used and useful' doctrine and its associated prudent expenditure standard” to assess the costs that should either be included or excluded from our rate cap calculations to ensure just and reasonable rates and charges for IPCS. Under this framework, the determination of just and reasonable rates focuses on affording regulated entities an opportunity to recover their “prudently incurred investments and expenses that are `used and useful' in the provision of the regulated service for which rates are being set.” The used and useful framework permits regulated entities to earn a reasonable return on their resources dedicated to public use but it does not allow them to include a markup for profit beyond that. This “used and useful” framework, which “is rooted in American legal theory and particularly in the constitutional limitations on the taking of private property for public use,” balances the “equitable principle that public utilities must be compensated for the use of their property in providing service to the public” with the “[e]qually central . . . equitable principle that the ratepayers may not fairly be forced to pay a return except on investment which can be shown directly to benefit them.” In this Order, we use the term “used and useful framework” to refer collectively to the “used and useful” standard and the “prudent expenditure” standard. In applying these principles, “the Commission considers whether the investment or expense `promotes customer benefits, or is primarily for the benefit of the carrier.' ” There are several elements of the Commission's used and useful analysis. First, the Commission considers the need to compensate providers “for the use of their property and expenses incurred in providing the regulated service.” Second, the Commission looks to the “equitable principle that ratepayers should not be forced to pay a return except on investments that can be shown to benefit them.” In this regard, the Commission considers “whether the expense was necessary to the provision of” the services subject to the “just and reasonable”. And third, the Commission considers “whether a carrier's investments and expenses were prudent (rather than excessive).” As the Commission has explained, “[t]he used and useful and prudent investment standards allow into the rate base portions of plant that directly benefit the ratepayer, and exclude any imprudent, fraudulent, or extravagant outlays.”

43. As one commenter suggests, the used and useful framework allows us to recognize all IPCS costs that benefit IPCS users, including any such costs incurred by correctional facilities, as costs that should be recovered though IPCS rates and charges. Conversely, that framework allows us to exclude from that recovery any costs that do not benefit IPCS users, either because they were imprudent or because they were for non-IPCS products or services, regardless of whether the provider or the facility incurred them. In short, the used and useful framework functions as an “equitable principle” that prevents ratepayers from having to pay for costs that are “primarily for the benefit of the carrier,” while allowing regulated entities to be compensated for providing service.

44. Some commenters express concerns over our reliance on the used and useful framework in the IPCS context, describing the framework as being “a vestige of rate-of-return regulation.” To the contrary, we find that the framework remains the most practical and effective method for determining the costs providers and facilities reasonably incur in providing IPCS. As historically applied by the Commission, the used and useful framework limits the costs recoverable through regulated rates and charges to “prudently incurred investments and expenses that are `used and useful' in the provision of the regulated service.” Contrary to Pay Tel's and Securus's representations, our application of the used and useful standard is not “novel” or otherwise inappropriate as applied in the Report and Order. The used and useful standard is “a standard regulatory agencies have been using for decades” to “determine whether a regulated company's expenses are justified. Nothing about the Commission's approach here is novel. Instead, it reflects the familiar ratemaking exercise the Commission routinely undertakes to determine those capital costs and expenses that may be recovered through regulated rates. To the extent Pay Tel's argument is premised on the notion that the used and useful standard “is nowhere specified in the Martha Wright-Reed Act or in Section 276,” we explain above that as Congress has imported section 201(b)'s “just and reasonable” standard into section 276(b)(1)(A), the used and useful framework that the Commission's has used to determine just and reasonable rates under section 201(b) provides the most appropriate mechanism for determining just and reasonable rates under section 276(b)(1)(A). And, in any event, section 201(b) is similarly silent on the applicability of the used and useful standard. Further, we do not, as Pay Tel suggests, rely on the used and useful framework “to the exclusion of `fair compensation.' ” As we explain below, the text of section 276(b)(1)(A), as amended by the Martha Wright-Reed Act, requires the Commission to implement both provisions in tandem, which we do in setting rate caps using a zone of reasonableness approach. We disagree with those commenters who argue that competition in the IPCS market makes application of the used and useful standard unnecessary. That argument conflates the bidding market (

i.e.,

the market in which IPCS providers compete against each other to win contracts with correctional facilities) with the retail market (

i.e.,

the market in which IPCS consumers pay rates and charges for the communications services that we must ensure are just and reasonable). Indeed, the Commission has previously determined that “even if there is competition in the bidding market . . . it is not the type of competition the Commission recognizes as having an ability to exert downward pressure on rates for consumers.” Pay Tel and ViaPath contend that “IPCS providers [should be] free to best determine how to manage their investments and expenses.” Allowing providers such complete flexibility would run contrary to the plain text in the Martha Wright-Reed Act and congressional directive to the Commission. Moreover, this type of behavior has thus far resulted in unreasonable IPCS rates and charges for consumers, underscoring the need for us to apply the used and useful (or a similar) framework to prevent the inclusion of imprudent and non-IPCS costs in IPCS rates and charges.

45. We also find unpersuasive arguments that we should allow all prudently incurred “operating expenses” to be recovered through IPCS rates and charges even if those expenses are not used and useful in the provision of IPCS and related ancillary services. The National Sheriffs' Association, in particular, expresses concern that the costs of some expenditures that correctional officials find prudent, including expenditures for certain safety and security measures, will be excluded from our ratemaking calculus. It claims that relying on the used and useful standard is inconsistent with section 4 of Martha Wright-Reed Act, which specifies that “[n]othing in the Act shall be construed to . . . prohibit the

implementation of any safety and security measures” related to IPCS “at a State or local prison, jail, or detention facility.”

46. The National Sheriffs' Association's reasoning, however, does not fully comport with the language of the Martha Wright-Reed Act addressing safety and security measures. Section 3(b)(2) of that Act requires that we “consider costs associated with any safety and security measures necessary to provide” IPCS in promulgating implementing rules and in “determining just and reasonable rates” for IPCS. But neither section 3(b)(2) nor any other provision of the Martha Wright-Reed Act concludes or requires that

every

safety and security measure that a correctional institution chooses to implement in connection with IPCS is “necessary to provide” IPCS, or mandate that we require consumers to pay for

all

those measures through IPCS rates.

47. Rather, when read in conjunction with section 3(b)(2) and the other provisions of the Martha Wright-Reed Act, section 4 simply makes clear that, in directing the Commission to develop a compensation plan to ensure just and reasonable IPCS rates and charges, Congress did not intend to intrude on the ability of correctional institutions to “adopt policies that, in their judgment, are needed to preserve safety and security.” Our actions in this Order make no such intrusion. We do not prohibit any correctional institution from implementing any safety and security measure that it deems appropriate or desirable. We do, however, ensure that IPCS consumers do not bear the costs of those safety and security measures that are not necessary to provide IPCS regardless of how desirable these measures may be to correctional institutions. Section 4 does not preclude such an outcome.

48. The Commission has relied on the used and useful framework to ensure just and reasonable rates for decades. Our decision to apply that framework in determining which costs should be recoverable from consumers through IPCS rates and charges is fully consistent with the Communications Act, as amended by the Martha Wright-Reed Act, as well as with Commission precedent, including Commission regulation of IPCS rates that formed the regulatory backdrop to the enactment of the Martha Wright-Reed Act. The used and useful framework, including its prudent expenditure component, embodies core ratemaking principles that the Commission has long used to separate the costs that captive ratepayers should pay for regulated services from those that are either properly attributable to other products or services or excessive. In applying that framework, along with the “necessary” standard that section 3(b)(2) of the Martha Wright-Reed Act specifies for the costs of safety and security measures and the other standards set forth in that Act, we discharge our statutory duties, consistent with record support, without intruding into matters outside our authority.

b. Effect on Other Laws

49. Section 4 of the Martha Wright-Reed Act provides additional direction regarding the effect of the Act on existing laws. Section 4 consists of two clauses that are meant to guide the interpretation of the remainder of the Act. The first clause of section 4 of the Act specifies that “[n]othing in this Act shall be construed to modify or affect any Federal, State or local law to require telephone service or advanced communications services at a State or local prison, jail, or detention facility.” We interpret “this Act,” as used in section 4 of the Martha Wright-Reed Act, as referring the Martha Wright-Reed Act, rather than the Communications Act. All parties commenting on the meaning of section 4 accept this interpretation. In 2023, the Commission sought comment on the meaning of this statutory language. The Commission asked whether “the language of this clause simply mean[s] that the Martha Wright-Reed Act does not create any new obligation for state or local facilities to provide any form of incarcerated people's calling services.” The National Sheriffs' Association supports this interpretation, adding that the language of the Martha Wright-Reed Act would not support “any new requirement to make IPCS available.” The United Church of Christ and Public Knowledge likewise agree that “this provision demonstrates that the Act does not affirmatively require any additional service offerings” at correctional institutions. No commenter disputes this interpretation of the first clause of section 4. We conclude that this clause means that the Martha Wright-Reed Act neither expressly nor by implication modifies any federal, state or local law in a manner that would require the provision of any new or additional incarcerated people's communications services at any state or local correctional institution.

50. The second clause of section 4 specifies that nothing in the Martha Wright-Reed Act “shall be construed to . . . prohibit the implementation of any safety and security measures related to” telephone service or advanced communications services at a State or local prison, jail, or detention facility. In 2023, the Commission sought comment on how to interpret this clause and asked, in particular, whether the clause means that the Martha Wright-Reed Act, with its focus on “just and reasonable ratemaking” was “not intended to interfere with any correctional official's decision on whether to implement any type of safety or security measure that the official desires in conjunction with audio or video communications services.” Two commenters support this interpretation of the second clause of section 4. In contrast, the United Church of Christ and Public Knowledge contend more narrowly that “this provision demonstrates that the Act does not . . . prohibit safety and security measures.”

51. While the Commission's initial request for comment seems to suggest the more expansive reading of the second clause of section 4 that the National Sheriffs' Association supports, we now conclude that a narrower reading of that clause will more closely reflect the limited scope of the statutory language. We find that the National Sheriffs' Association's interpretation is overbroad and would expand the reach of the second clause beyond its intended scope. When read in conjunction with the other provisions of the Martha Wright-Reed Act, the second clause of section 4 of that Act simply makes clear that, in directing the Commission to develop a compensation plan to ensure just and reasonable IPCS rates and charges, Congress did not intend to prohibit correctional institutions from implementing policies that, in their judgment, are needed to preserve safety and security. Consistent with that interpretation and the specific language of section 4, we interpret the second clause of section 4 as precluding us from construing any provision of that Act as making such a prohibition regarding the implementation of any safety and security measures at any federal, state, or local correctional institution.

51. The National Sheriffs' Association expresses concern that the costs of some expenditures for certain safety and security measures will be excluded from our ratemaking calculus. The National Sheriffs' Association relies on its broader interpretation of section 4 to assert that the Commission must not “interfere with the operation of jails by eliminating their ability to recover [safety and security] costs” through IPCS rates. Although the National Sheriffs' Association admits that excluding certain safety and security costs from IPCS rates “is not a prohibition per se,” it claims that, in

practice, disallowing any costs associated with safety and security measures that law enforcement officials have approved effectively prohibits the measures from being implemented.

53. The National Sheriffs' Association's reasoning, however, does not comport with the broader statutory context of the Martha Wright-Reed Act addressing safety and security measures. In particular, section 3(b)(2) of that Act requires that we “consider costs associated with any safety and security measures necessary to provide” IPCS in promulgating implementing rules and in “determining just and reasonable rates” for IPCS. The best interpretation of the Martha Wright-Reed Act will ensure a meaningful role for both section 3(b)(2) and section 4.

54. If section 3(b)(2), of its own force, required the Commission to allow recovery of all costs identified by providers or correctional facilities as safety and security costs in regulated rates, as some commenters suggest, then there would seem to be little to no possible risk that such safety and security measures could be “prohibited” because they would, instead, be affirmatively funded by IPCS ratepayers. That would leave section 4 with little or no risk to address in that regard, and thus the relevant language of section 4 would be of substantially diminished significance. We reject Securus' suggestion that failure to find all safety and security measures “necessary” and recoverable would violate the Administrative Procedure Act (APA). As revealed by our consideration of the relevant issues and the record before us on safety and security issues below, we fully ensure that we have “acted within a zone of reasonableness and, in particular, ha[ve] reasonably considered the relevant issues and reasonably explained the decision.” We recognize that section 3(b)(2) is focused on “costs associated with any safety and security measures

necessary

to provide” IPCS, Martha Wright-Reed Act § 3(b)(2) (emphasis added), while section 4 is focused on “safety and security measures

related to”

IPCS. Martha Wright-Reed Act § 4 (emphasis added). Despite the potential that “necessary” in section 3(b)(2) is a narrower standard than “related to” in section 4, it is not clear how much practical significance that would have if, as some commenters contend, the Commission is required to simply defer to providers' and/or correctional facilities' on what safety and security costs must be recoverable in IPCS rates. But even under a stricter standard, we are persuaded that mandatory recovery through IPCS rates of all “costs associated with any safety and security measures necessary to provide” IPCS would leave the relevant proviso of section 4 of substantially diminished significance.

55. Conversely, if section 4 were read to require recovery of the full array of safety and security costs—deferring to the correctional facilities' decision to approve the use of particular measures when doing so—there would seem to be little meaningful left for the Commission to “consider” in that regard under section 3(b)(2). Matters such as identifying the magnitude of such costs and how they should be allocated already would be necessitated by the “just and reasonable” requirement in section 276(b)(1)(A) of the Communications Act, as amended by the Martha Wright-Reed Act, if section 4 were interpreted to require such recovery. That, in turn, would leave section 3(b)(2) of substantially diminished significance.

56. Our interpretation of those provisions, by contrast, preserves a meaningful role for each, particularly when understood in light of the relevant regulatory backdrop. In the years leading up to the enactment of the Martha Wright-Reed Act, one of the most-debated issues was the recovery through IPCS rates of payments providers made to correctional facilities, ostensibly—at least in some instances—associated with safety and security measures. Some parties argued for a categorical prohibition on any such recovery, while other parties advocated for full recovery through IPCS rates of virtually any such asserted costs or payments. For its part, the Commission sought to navigate these competing claims by seeking to use the best available evidence to assess whether there were costs—such as safety and security costs—with a sufficient nexus to IPCS to potentially warrant recovery of those costs in IPCS rates; using the best available data to seek to quantify those costs; and continuing to evaluate additional tools it might use to address the continued concerns about such cost recovery, including possible preemption. Our reading of section 3(b)(2) reflects an approach to safety and security costs analogous to the middle path the Commission historically has sought to take. By requiring that such costs be “considered”—but

only

that they be “considered”—the Martha Wright-Reed Act makes clear that it is not putting a thumb on the scale of either extreme position by categorically precluding or categorically allowing recovery of claimed safety and security costs through regulated IPCS rates. At the same time, section 4 of the Martha Wright-Reed Act makes clear that the Commission cannot use that Act as a basis to go so far as outright “prohibit[ing] the implementation of any safety and security measures related to” IPCS—such as by preempting even the implementation of such measures—while not foreclosing the possibility that correctional facilities ultimately must look elsewhere besides IPCS provider payments passed through in IPCS rates to fund some (or many) of those measures.

57. Our actions in this Order do not prohibit any correctional institution from implementing any safety and security measure that it deems appropriate or desirable. We do, however, ensure that IPCS consumers do not bear the costs of those safety and security measures that are not used and useful or necessary to provide IPCS regardless of how desirable these measures may be to correctional institutions. Section 4 does not preclude such an outcome.

58. In addition, without conceding the factual merits of the National Sheriffs' Association's claim regarding our ability to exclude costs of safety and security measures that are neither used and useful nor necessary from our ratemaking analysis, as a statutory matter we observe that in other contexts where Congress wanted to prevent not only the prohibition of certain conduct, but even things that effectively prohibit such conduct, it has done so explicitly. Particularly because our interpretation best reconciles sections 3(b)(2) and 4 of the Martha Wright-Reed Act, we are not persuaded to infer a

de facto

prohibition—a prohibition in fact—from the language of section 4 as the National Sheriffs' Association suggests. With respect to the factual merits of the National Sheriffs' Association claims, we have provided for the recovery generally of used and useful costs, including costs for necessary safety and security measures, through the rate caps we adopt today. We find our actions adequately address concerns about a

de facto

prohibition of safety and security measures in this context.

c. Implementation of the “Fairly Compensated” Standard in Section 276(b)(1)(A)

59. We now turn to the requirement that we establish a compensation plan to ensure IPCS providers are fairly compensated. We conclude that, in addition to ensuring “just and reasonable” rates and charges, our compensation plan for IPCS must accord meaning to the “fairly compensated” clause in section 276(b)(1)(A) and its relationship to the

“just and reasonable” rates and charges mandate.

60.

Meaning of the Fair Compensation Standard.

We conclude that our compensation plan for IPCS must give full effect to both the “just and reasonable” and the “fairly compensated” clauses in section 276(b)(1)(A). In 2023, the Commission sought comment on how it should balance the interests of both consumers and industry in giving effect to both clauses. As proposed in 2023, we determine that giving effect to both standards requires a balanced approach that “emphas[izes] consumers' (particularly incarcerated people's) and providers' right to just and reasonable rates and charges for each audio and video communications service now encompassed within the statutory definition of `payphone service,' ” as well as ensuring that such rates ensure that “all payphone providers are fairly compensated.” We thus reject Securus's claim that the Order “simply collapses the fair compensation standard into the just and reasonable standard.” As we explain, our rate-making methodology and statutory interpretation of the Martha Wright-Reed Act ensure that both standards are given full effect.

61. We view these clauses as imposing two interdependent statutory mandates, each of which we must seek to fully implement. As discussed below, as a general matter a range of possible outcomes potentially can be found “just and reasonable” and a range of possible outcomes potentially can be found to “fairly compensate” IPCS providers. Because of that, we anticipate being able to find areas of overlap in those two ranges that will satisfy both statutory mandates. We find this expectation particularly reasonable given that the “just and reasonable” precedent under section 201(b)—which we carry into our application of section 276(b)(1)(A)—already involves a balancing that accounts for the service provider's interests.

62. With respect to the “just and reasonable” mandate, as discussed above, that directive leads us to balance the “equitable principle that public utilities must be compensated for the use of their property in providing service to the public” with the “[e]qually central . . . equitable principle that the ratepayers may not fairly be forced to pay a return except on investment which can be shown directly to benefit them,” drawing on Commission precedent under section 201(b). In determining rates that are “just and reasonable” we look to whether costs to be recovered were prudently incurred and used and useful in the provision of the services at issue. That framework does not inevitably lead to a single “just and reasonable” rate, however, but allows for a range of rates with the agency potentially able to find any rate with that zone to be “just and reasonable.”

63. There also is a body of precedent regarding the interpretation of the “fairly compensated” mandate historically present in section 276(b)(1)(A)—but our approach here must account for certain ways in which the Martha Wright-Reed Act altered the operative statutory approach, necessitating related departures from that historical precedent. Under that precedent, regulated rate levels historically were viewed as in accordance with the “fairly compensated” standard if they “allow providers to generate sufficient revenue from each interstate and international call—including any ancillary service fees attributable to that call—(1) to recover the direct costs of that call; and (2) to make a reasonable contribution to the provider's indirect costs related to inmate calling services.” As the Commission recognized in the

2002 Pay Telephone Order

—and recognized again in the

2021 ICS Order

—the “lion's share of payphone costs are those that are `shared' or `common' to all services,” and there are “no logical or economic rules that assign these common costs to `each and every call.' ” As a result, “a wide range of compensation amounts may be considered `fair.' ” Securus argues that we have departed from the

2002 Pay Telephone Order's

fair compensation determination based on overall profitability to determine fair compensation evaluating “profitability on a call-by-call basis.” We disagree. Further, Securus has not explained the difference between these two views of profitability, and has not articulated why a provider would not be profitable overall if it were profitable on a call-by-call basis.

64.

The Continued Role of the Fair Compensation Standard.

Prior to the enactment of the Martha Wright-Reed Act, section 276(b)(1)(A) of the Communications Act required that the Commission “establish a per call compensation plan” ensuring that service providers be “fairly compensated for each and every completed” call. The Martha Wright-Reed Act eliminated the “per call” and “each and every” call requirements and added a new dimension to section 276 by requiring that our compensation plan for IPCS “ensure that . . . all rates and charges” for incarcerated people's communications services “are just and reasonable.” We disagree with UCC's argument that it would be “arbitrary and capricious” to require fair compensation for providers. This is contrary to the explicit statutory text of section 276(b)(1)(A) that requires fair compensation. In 2023, the Commission sought comment on how the Martha Wright-Reed Act's amendments to section 276(b)(1)(A) affect the “fairly compensated” requirement in that section. In particular, the Commission sought comment on Congress's intent in striking the “per call” and “each and every [call]” language from section 276(b)(1)(A) and the effect of its removal on the “fairly compensated” requirement, particularly in light of the Martha Wright-Reed Act's new requirement that all IPCS rates and charges be just and reasonable.

65. The record persuades us that in striking the “per call” and “each and every [call]” language, Congress modified but did not eliminate the requirement that providers be fairly compensated for completed intrastate and interstate communications. Instead, as Pay Tel explains, the fair compensation requirement “was left as an independent requirement by the Martha Wright-Reed Act, reflecting a purposeful decision by Congress to retain the requirement as an essential component of [IPCS] reform.” We agree that we should not “effectively read the requirement out of the statute or diminish its importance.” Instead, we address the fair compensation and just and reasonable standards as interdependent standards as we implement the requirements of section 276(b)(1)(A).

66. At the same time, we reject suggestions that the “just and reasonable” mandate could be treated as subsidiary to the “fairly compensated” mandate. We therefore reject any argument that IPCS rates or ancillary services charges “must be

higher

than they otherwise would be under a `just and reasonable' ” analysis in order “to achieve `fairness.' ” The text of section 276(b)(1)(A) as amended by the Martha Wright-Reed Act requires the Commission to implement both provisions in tandem. And because the two mandates potentially can be satisfied through a range of outcomes, the record here does not persuade us that we will be forced into a situation where one mandate must yield for the other mandate to be met.

67.

Interpreting the Fair Compensation Standard in Light of the Martha Wright-Reed Act.

While we conclude that our compensation plan for IPCS must accord meaning to the “fairly compensated” clause in section 276(b)(1)(A), we also conclude that the

Martha Wright-Reed Act alters our interpretation and application of that clause in certain key ways. For one, deletion of the “per call” and “each and every [call]” language from section 276(b)(1)(A) fundamentally changes the requirements of that clause. Consistent with the Commission's preliminary interpretation in 2023, we find that these statutory amendments signal “Congress's intent to restrict the application of the `fairly compensated' requirement with respect to [IPCS] by no longer requiring the Commission to ensure that its compensation plan allows for `fair' compensation for `each and every' completed call.” Thus, while we must ensure that providers receive fair compensation for completed intrastate and interstate communications, we are not obliged to establish a per-call based compensation plan, as section 276(b)(1)(A) previously required.

68. The Martha Wright-Reed Act also affects how we implement section 276(b)(1)(A)'s directive that our compensation plan for IPCS “ensure that all payphone service providers are fairly compensated” for completed communications, consistent with the Act's amendments to section 276(b)(1)(A). Section 3(b)(1) of the Martha Wright-Reed Act grants us explicit authority to use “industry-wide average costs.” Use of industry-wide average costs, of necessity, evaluates provider compensation on a more aggregated—rather than provider-by-provider—basis. Section 3(b)(1) expressly permits the use of such data in “determining just and reasonable rates” as one permissible example, alongside more general authority to use industry-wide average costs “[i]n implementing this Act and the amendments made by this Act,” and “promulgating regulations under” the Martha Wright-Reed Act's amendments to the Communications Act. Nothing in the Martha Wright-Reed Act compels the Commission to use “the average costs of service of a communications service provider” in determining just and reasonable rates. Martha Wright-Reed Act § 3(b)(1). We thus reject Securus's argument that the Commission somehow “ignored” the possibility of using such costs in setting its rate caps. Based on that language we interpret Congress as authorizing us to rely on industry-wide average costs in implementing the “fairly compensated” mandate—and its interplay with the “just and reasonable” mandate—as amended and codified in section 276(b)(1)(A) by the Martha Wright-Reed Act. We consequently interpret Congress' permission to use industry-wide average costs to mean that rate caps based on costs evaluated on an aggregated basis generally will satisfy the requirement that all payphone service providers be fairly compensated. The record supports this interpretation. Consistent with the Martha Wright-Reed Act, and its amendments to section 276(b)(1)(A), we therefore adopt rate caps based on industry-wide average cost data submitted by IPCS providers in response to the Commission's 2023 Mandatory Data Collection, as described below.

69. We also observe that these provisions of the Martha Wright-Reed Act respond directly to the D.C. Circuit's holding in

GTL

v.

FCC

that setting rate caps based on industry-wide average costs was “patently unreasonable” because “calls with above-average costs” would not be fairly compensated on a per call basis. The elimination by Congress of the “per call” and “each and every [call]” language from section 276(b)(1)(A) leads to the interpretation that compensation need not be evaluated on a per-call basis. In addition, our reading of section 3(b)(1) of the Martha Wright-Reed Act persuades us that fair compensation need not be evaluated on a provider-by-provider basis—still subject, of course, to Constitutional limits on rate regulation as applied to individual providers.

70. At the same time, the flexibility in evaluating costs described in section 3(b)(1) of the Martha Wright-Reed Act is tempered by certain requirements to consider particular costs or cost characteristics under section 3(b)(2) of that Act. Section 3(b)(2) provides that the Commission “shall consider costs associated with any safety and security measures necessary to provide a service.” Under that provision, the Commission also must consider cost differences associated with “small, medium, or large facilities or other characteristics.” Consistent with that provision, we therefore also evaluate such costs considerations in the rate caps we adopt, as described below.

71. Consistent with the Commission's analysis in the

2021 ICS Order,

we find that a provider will be fairly compensated within the meaning of section 276(b)(1)(A), as amended by the Martha Wright-Reed Act, if the rates and charges we find just and reasonable afford it an opportunity to be fairly compensated at the level of the contract, regardless of the contributions that any particular communication or service makes toward the provider's shared and common costs, ensuring efficient providers have an opportunity to obtain fair compensation when bidding on contracts. We decline to set rate caps that ensure cost recovery for providers with unusually high costs because to let unusual cases determine rates generally would result in unjust and unreasonable rates. Instead, if such providers exist, they can seek a waiver. In that

Order,

the Commission found that compensation could be fair, when measured on a per-call basis, even if “each and every completed call” did not “make the same contribution to a provider's indirect costs” (

i.e.,

costs shared among, or common to, groups of calls) and even if the provider did not “recover the total `cost' it claims in connection with each and every separate inmate calling services call.” Instead, the Commission recognized that “the lion's share” of inmate calling services costs were shared or common costs and that there were a range of economically sound methods of assigning these costs to individual calls. Under this approach, a provider will be fairly compensated if the rates and fees it is permitted to charge will afford it an opportunity to recover industry-average costs associated with prudent investments used and useful in providing IPCS and associated ancillary services at the facilities the provider serves.

d. Rates and Charges

72. We interpret the statutory language “rates and charges” to encompass the amounts imposed on consumers by IPCS providers as the Commission proposed in 2023. Section 276(b)(1)(A), as amended by the Act, requires that “all rates and charges” imposed by providers for the eligible communications are just and reasonable. The

2023 IPCS NPRM

proposed to interpret “rates” to include “the amounts paid by consumers of incarcerated people's communications services for calls or other audio or video communications covered by the statute or [the Commission's] rules.” And 2023 proposed to interpret “charges” to include “all other amounts assessed on consumers of incarcerated people's communications services” including “ancillary service charges, authorized fees, mandatory taxes and fees, and any other charges a provider may seek to impose on consumers.” The record supports these interpretations. We are persuaded that the statutory language “rates and charges” encompasses the amounts imposed on IPCS consumers, as we proposed in 2023, whether “rates” and “charges” are interpreted individually or if “rates and charges” is understood as an all-encompassing category.

73. The regulation of “rates and charges” lies at the core of the Martha Wright-Reed Act, and the amendments to section 276. Prior to the enactment of the Martha Wright-Reed Act, the Commission's rules commonly used the term “rates” when referring to the amounts consumers paid for inmate calling services calls, while at other times referring to such amounts as “charges.” The Commission's rules also at times use the term “rates” in connection with ancillary service charges. Nonetheless, on balance we conclude that under our rules in place at the time of the enactment of the Martha Wright-Reed Act, the term “rates” should be understood as referring to the amounts paid by consumers of incarcerated people's communications services for calls, supporting our adoption of the interpretation of that term proposed in 2023. Our interpretation also comports with the broad ordinary meaning of the term “rate.”

74. We also conclude that “charge[s]” properly are interpreted as including ancillary services charges, mandatory taxes, mandatory fees, and authorized fees. The Commission's rules at the time of the Martha Wright-Reed Act's enactment defined “Ancillary Service Charge” as “any charge Consumers may be assessed for, or in connection with, the interstate or international use of Inmate Calling Services that are not included in the per-minute charges assessed for such individual calls.” Although the ancillary service charges that were permitted to be assessed under the Commission's rules were limited to five discrete categories, Congress notably did not use the term “ancillary service charges” in the Martha Wright-Reed Act, instead using the more generic term “charges.” Consequently, we do not find it appropriate to focus narrowly on the scope of ancillary service charges specifically permitted to be assessed under the Commission's rules. Rather, consistent with Congress's use of the broader term “charges,” we look to the distinction drawn between per-minute rates and any other “charge[s] Consumers may be assessed for, or in connection with, the interstate or international use of Inmate Calling Services.” That encompasses not only ancillary service charges permitted under the Commission's rules, but the other amounts identified in 2023 such as mandatory taxes, mandatory fees, and authorized fees. This interpretation likewise comports with the broad ordinary meaning of the term “charge.”

75. As an alternative basis for our decision, we conclude that “rates and charges” can be interpreted collectively as reflecting a “belt and suspenders” approach to the Commission's regulatory authority under section 276(b)(1)(A) that encompasses the full array of amounts assessed on IPCS customers discussed above. The statutory context and regulatory history are consistent with that understanding. For example, leading up to the enactment of the Martha Wright-Reed Act, the Commission relied on authority under section 201(b)—which refers to “charges” but includes no express reference to “rates”—to adopt rules governing “rates and charges” for IPCS. Treating “rates and charges” as a doublet that emphasizes that meaning of these overlapping terms also harmonizes section 3(b) of the Martha Wright-Reed Act—which addresses the Commission's consideration of certain cost information when, among other things, “determining just and reasonable

rates

”—with the fact that the Act amended section 276(b)(1)(A) to include a mandate that the Commission ensure that “

rates and charges

are just and reasonable” for IPCS. This understanding of “rates and charges” also is understandable given the Commission's own sometimes inconsistent usage of “rates” and “charges” in its IPCS rules in effect at the time of enactment of the Martha Wright-Reed Act. Given that statutory context and regulatory history, “rates and charges” need not necessarily be understood as embodying two distinct concepts, but rather as ensuring that Congress collectively encompassed the full range of amounts assessed on IPCS customers over which it wanted the Commission to have authority. Further, this interpretation of “rates and charges” reflects the substantial overlap in the ordinary meaning of those terms.

76. Notably, section 276(b)(1)(A) also specifies that “

all

rates and charges” be just and reasonable. By specifying that “all,” as opposed to some smaller subset of “rates and charges,” are to be just and reasonable, Congress obviously intended to grant us broad regulatory oversight of “rates and charges.” We find that the requirement that “all” rates and charges be just and reasonable applies both to the rates providers impose and the rates consumers ultimately pay. Thus, the totality of the rates and charges a provider assesses on or collects from consumers must be just and reasonable. We find support for this in the record and judicial precedent.

77. Thus, we disagree with ViaPath that we should interpret “rates and charges” as excluding mandatory taxes, mandatory fees, and authorized fees. ViaPath contends that our “current IPCS rules acknowledge” that “authorized fees and mandatory taxes and fees are separate and apart from ancillary service charges.” As we explain above, the Martha Wright-Reed Act uses a broader term than “ancillary service charges,” and we conclude it best effectuates Congress' choice for our interpretation to sweep more broadly than the specific categories of ancillary service charges permitted under our existing rules. Nor are we persuaded by ViaPath's efforts to rely on rules and precedent from the operator services context. We find the statutory and regulatory considerations that we have described here to be much more pertinent to understanding Congress's actions against that precise legal backdrop than precedent and rules cited by ViaPath that were adopted in a context that we find at most tangentially related to our regulation of IPCS as relevant here.

78. To exclude any tax or fee that a provider might impose on IPCS consumers from the term “all rates and charges” would risk opening the door to assessments that could undercut the requirement of section 26(b)(1)(A) that amounts IPCS providers impose—and that IPCS customers pay—be just and reasonable. Indeed, the Commission recognized as much in the

2015 ICS Order

(80 FR 79135, December 18, 2015) when it repeatedly referred to mandatory taxes, mandatory fees, and authorized fees as charges and banned all inmate calling services “fees or charges beyond mandatory taxes and fees, and authorized fees that the carrier has the discretion to pass through to consumers without any mark up.” The Commission concluded that this ban would help ensure just and reasonable rates for inmate calling services. The record at that time demonstrated that providers had been marking up taxes and regulatory fees before passing them on to consumers and that those inflated fees had contributed to unreasonable inmate calling services rates and charges. Given the history of inflated ICS charges, there can be no assurance of a just and reasonable end result for IPCS if the definition of rates and charges were limited in the manner ViaPath proposes, which would allow providers to impose additional charges on consumers or to mark up their authorized fees, mandatory taxes, or mandatory fees before recovering them from consumers. Indeed, a recent class action lawsuit alleges that an IPCS provider charges consumers inflated fees under the guise of taxes. The rules we adopt today do not alter the circumstances in which providers may pass authorized fees, mandatory taxes,

and mandatory fees through to consumers. We therefore conclude that the statute requires us to consider the totality of the rates and charges a provider assesses or collects from consumers to ensure that all IPCS rates and charges are just and reasonable.

e. Authority To Regulate IPCS Providers' Practices

79. In 2023, the Commission sought comment on whether section 276(b)(1)(A)'s mandate that we “establish a compensation plan to ensure that . . . all rates and charges” for incarcerated people's communications services be “just and reasonable” extends to ensuring that the providers' practices, classifications, and regulations for or in connection with those services are just and reasonable. The Commission also asked for comment on the extent of its section 276(b)(1)(A) authority, if any, to address providers' practices, classifications, and regulations, as well as any limitations on that authority. Based on the record, we conclude that the Martha Wright-Reed Act provides us with limited authority to regulate IPCS providers' practices, classifications, and regulations (collectively, “practices”) as a necessary part of our obligation to establish a compensation plan to ensure fair IPCS compensation to providers and just and reasonable rates and charges for IPCS consumers and providers under section 276(b)(1)(A). In addition, section 201(b)'s grant of authority over practices for or in connection with interstate and international common carrier incarcerated people's communications services enables us to act in certain circumstances, as well. We address these two sources of authority below.

80.

Section 276(b)(1)(A) Compensation Plan Requirement.

We conclude that the section 276 requirement that the Commission “establish a compensation plan” to achieve the goals of fair compensation for providers and just and reasonable rates and charges for consumers and providers, requires more of the Commission than the simple act of setting rates and charges. When implementing section 276(b)(1)(A) historically, the Commission has not limited itself just to the regulation of rate levels when seeking to effectuate the “fairly compensated” requirement that preceded the Martha Wright-Reed Act. By adding the “just and reasonable” mandate, while leaving the directive to establish a “compensation plan” unaltered, we understand Congress to intend that the Commission undertake an integrated set of actions designed to work in concert to achieve the statute's central goals of fair compensation and just and reasonable rates and charges.

81. Long prior to the enactment of the Martha Wright-Reed Act, the Commission implemented section 276(b)(1)(A)'s mandate to establish a compensation plan to ensure payphone providers are fairly compensated by addressing the practical details associated with charging for, and receiving payment for, payphone services. In its implementation of section 276(b)(1)(A) over time, the Commission adopted various requirements in particular payphone contexts apart from simply rate setting. Such requirements have included, among other things: (1) requiring the transmission of information to enable tracking of calls from payphones; (2) allocating responsibility for paying compensation for payphone calls; and (3) defining the permissible arrangements between payphone providers and the carriers paying them compensation for payphone calls. A unifying premise of these requirements is that their inclusion in a compensation plan enabled the Commission to advance the fair compensation mandate in section 276(b)(1)(A).

82. In light of the Martha Wright-Reed Act's addition of the “just and reasonable” mandate in section 276(b)(1)(A), we find that the statute's direction to establish a compensation plan likewise necessarily carries with it the authority to prescribe regulations to govern providers' practices to the extent that those practices implicate the Commission's ability to ensure that rates and charges are just and reasonable. In this way, the “compensation plan” requirement—which the Martha Wright-Reed Act left unaltered—gives the Commission authority in the case of the “just and reasonable” mandate that is comparable to what it historically has possessed when crafting compensation plans to account for the “fairly compensated” mandate. As the Public Interest Parties indicate, the responsibility to establish a comprehensive plan ensuring just and reasonable rates and charges “necessarily encompasses a corresponding responsibility to ensure that IPCS providers do not evade [the Commission's rate and fee] caps through their other practices, classifications, and regulations.” Given the mandate of the Martha Wright-Reed Act and its revisions to section 276(b)(1)(A), we find that the Commission's authority over rates and charges necessarily extends to practices that affect our ability to ensure that rates and charges are just and reasonable, as well as that providers are fairly compensated.

83. If section 276(b)(1)(A) instead were read only to allow us to regulate IPCS rate levels, providers' practices could thwart Congress' direction to ensure just and reasonable rates and charges for consumers and fair compensation for IPCS providers. The risk that providers' practices could subvert the goals of the statute is not speculative. For example, in light of evidence that inmate calling services providers were “engaging in unjust and unreasonable practices and imposing unfair rates by instituting minimum or maximum amounts that may be deposited for prepaid calling accounts,” the Commission prohibited providers from instituting prepaid account minimums and required that any provider that limits deposits set the maximum purchase amount at no less than $50 per transaction. Securus asks that we “set minimum funding amounts to allow [IPCS providers] to better manage costs. We decline on the record before us to adopt its proposal, but will continue to monitor its concerns. And, more recently, the Commission concluded that all funds deposited into a debit-calling or prepaid calling account and not spent on products or services are generally the property of the account holder and that any action inconsistent with this finding is an unjust and unreasonable practice. The Commission also has found affirmative requirements, such as consumer disclosure rules, necessary to ensure that rates and charges as implemented are just and reasonable as applied to consumers. In sum, we find that section 276, as amended by the Martha Wright-Reed Act, gives us authority over providers' practices to the extent they may affect the Commission's ability to ensure just and reasonable IPCS rates and charges and fair compensation for all incarcerated people's communications services. Those services include the full range of services now subject to Commission authority as a result of the Martha Wright-Reed Act, including intrastate IPCS and the advanced communications services now included in the statutory definition of “payphone service.”

84. We agree with commenters insofar as they note that Congress did not incorporate the entirety of the section 201(b) legal framework to ensure just and reasonable practices, classification, and regulations into section 276(b)(1)(A). At the same time, we reject claims that we lack any authority at all over IPCS provider practices under section 276(b)(1)(A). In particular, we reject arguments that our interpretation

fails to properly credit Congress' decision to use different language in section 201(b) and section 276(b)(1)(A). To the contrary, we honor Congress's choice because we do not interpret our section 276(b)(1)(A) authority over IPCS practices to be as extensive as the Commission's authority over common carrier practices under section 201(b). At the same time, we also must honor Congress's choice to leave intact the requirement that the Commission “establish a compensation plan” in the regulation mandated by section 276(b)(1)(A). As indicated by our analysis above, the compensation plan provision goes beyond the establishment of individual rates and necessarily entails a harmonized set of requirements that act as a coordinated whole to achieve the new statutory mandate of just and reasonable rates and charges.

85.

Section 201(b) Authority Over Interstate and International Practices.

Apart from the statutory directives in section 276 taken as a whole that support our finding of jurisdiction over certain IPCS practices to the extent they bear on just and reasonable rates and charges, we conclude that section 201(b) provides an independent statutory basis for regulating providers' practices with regard to IPCS. This authority explicitly extends to IPCS-related practices for or in connection to the interstate and international telecommunications services that are within our section 201(b) authority, as well as to practices for or in connection with other IPCS services within our section 276 authority to the extent those practices cannot practicably be separated from practices applicable to services within our section 201(b) authority.

86. Section 201(b) grants the Commission jurisdiction over “practices, classifications, and regulations” of carriers “for or in connection with” interstate and international communications services, including those services used to provide IPCS. That authority has been interpreted by the Commission to extend “to the intrastate portion of jurisdictionally mixed services `where it is impossible or impractical to separate the service's intrastate from interstate components' and state regulation of the intrastate component would interfere with valid federal rules applicable to the interstate component.” In 2023, the Commission sought comment on whether it could use this “impossibility exception” to regulate practices for or in connection with incarcerated people's intrastate communications services and to audio and video services that were unregulated prior to the enactment of the Martha Wright-Reed Act. The record is mixed on this issue.

87. The Commission has previously applied section 201(b) and the impossibility exception to regulate providers' practices that affect both interstate and intrastate inmate calling services. In the

2020 ICS Remand Order,

the Commission relied on section 201(b) in adopting rules applicable to both interstate and intrastate ancillary service charges, finding that “ancillary service charges generally cannot be practically segregated between the interstate and intrastate jurisdiction except in the limited number of cases where, at the time a charge is imposed and the consumer accepts the charge, the call to which the service is ancillary is a clearly intrastate-only call.” In the

2022 ICS Order,

the Commission exercised its 201(b) authority to prohibit provider seizure of outstanding balances in inactive accounts that could be used to pay for interstate, intrastate, and nonregulated services, and to set limitations on ancillary service fees in order to curtail the incentives for providers to engage in revenue-sharing schemes that drive up prices charged to inmate calling services consumers.

88. Consistent with this precedent, we conclude that our section 201(b) authority over providers' practices extends to the full range of “payphone service[s],” as defined in section 276(d), to the extent the practices for or in connection with the payphone services outside of our separate section 201(b) authority cannot practicably be separated from the practices for or in connection with the payphone services within that authority. Consistent with the Commission's finding in the

2020 ICS Remand Order,

we find that this inseverability generally extends to providers' rate and ancillary services charge practices in connection with interstate and intrastate IPCS to the extent that IPCS-related practices cannot practicably be separated into interstate, intrastate or non-section 201(b) regulated services components.

4. Amendment to Section 2(b) of the Communications Act

89. In the next step of our analysis, we address the Martha Wright-Reed Act's confirmation of our jurisdiction to regulate the rates of all forms of intrastate IPCS to ensure they are not unreasonably high. Section 276(b)(1)(A) always has been clear that the Commission has authority to establish compensation plans for “intrastate and interstate” payphone calls, and as explained above, the Martha Wright-Reed Act amended that provision to clearly establish the Commission's authority to ensure just and reasonable rates for both intrastate and interstate communications, as newly encompassed by section 276(d). Above and beyond that, the Martha Wright-Reed Act added section 276 to the express exceptions to the general preservation of state authority in section 2(b) of the Act. Consistent with the Commission's proposal in 2023, we conclude that the collective effect of the amendments to section 276 as to intrastate communications, when coupled with the Martha Wright-Reed Act's amendment to section 2(b) of the Communications Act, is to remove any doubt that our authority over IPCS includes both interstate and intrastate jurisdiction.

5. Inclusion of Advanced Communications Services Within the Definition of Payphone Service

90. In 2023, the Commission recognized that the Martha Wright-Reed Act had expanded its section 276 authority over “payphone service” in correctional institutions to include “advanced communications services,” as defined in sections 3(1)(A), 3(1)(B), 3(1)(D), and new (3)(1)(E) of the Communications Act. The Commission asked how this expansion of statutory authority applies to each type of enumerated advanced communications service for incarcerated people. We conclude that the Martha Wright-Reed Act not only retains the Commission's preexisting authority over audio communications in the carceral setting, but extends that authority to include four categories of advanced communications services—“interconnected VoIP service,” “non-interconnected VoIP service,” “interoperable video conferencing service,” and “any audio or video communications service used by inmates for the purpose of communicating with individuals outside the correctional institution where the inmate is held, regardless of technology used”—within the definition of “payphone service. We also conclude, as proposed in 2023, that the language in the new statute confers on the Commission broad jurisdiction to develop a compensation plan for the categories of audio and video communications included in the definition of “payphone service” in order to ensure that IPCS providers are fairly compensated and all IPCS rates and charges are just and reasonable. We likewise find that the expansion of the types of services and devices over which we have authority correspondingly includes entities that may not have previously been subject to

our rules and that now fall under our regulatory oversight. Below, we discuss, in turn, the four types of advanced communications services now included in the definition of “payphone service.”

a. Interconnected and Non-Interconnected VoIP Services (47 U.S.C. 153(1)(A) to (B))

91. The Martha Wright-Reed Act expressly confirms the Commission's authority over interconnected and non-interconnected VoIP services, adding interconnected and non-interconnected VoIP services, as referenced in sections 3(1)(A) and 3(1)(B) of the Communications Act, to section 276(d)'s definition of “payphone service.” Based on universal support in the record, we find that this authority includes audio services using interconnected or non-interconnected VoIP, and extends to each entity that provides IPCS via interconnected or non-interconnected VoIP, including entities that provide those services via non-traditional equipment such as tablets or kiosks. As the Commission has observed, “[s]ection 276 makes no mention of the technology used to provide payphone service. . . . Thus, the use of VoIP or any other technology for any or all of an ICS provider's service does not affect our authority under section 276.” Our authority over inmate calling services is therefore unaffected by the application of VoIP technology; rather, the expansion of our inmate calling services authority to include VoIP technology reflects the Commission's long-held understanding of inmate calling services as inherently technology neutral. If a particular service meets the relevant definition in the Commission's rules, it is a form of inmate calling services and subject to the Commission's inmate calling services rules. To the extent an entity provides any of these services in “correctional institutions,” it will be subject to the rules we adopt in the Report and Order.

b. Interoperable Video Conferencing Service (47 U.S.C. 153(1)(D))

92. The Martha Wright-Reed Act extends our section 276 authority to “interoperable video conferencing service” by adding a reference to sub-paragraph 3(1)(D) of the Communications Act to the definition of “payphone service” in section 276(d). The Communications Act defines “interoperable video conferencing service” as “a service that provides real-time video communications, including audio, to enable users to share information of the user's choosing.” This definition encompasses video conferencing applications commonly in use outside the incarceration context, including applications that rely on transmission over the internet; and the rules we adopt in the Report and Order extend to such applications and similar applications should they be used in the incarceration context.

93. One commenter suggests that “[i]n the absence of a Commission adopted definition of `interoperable,' it is difficult to identify which video services made available to incarcerated persons qualify for potential rate regulation.” That argument is outdated. In the

Access to Video Conferencing Order,

the Commission revisited its previous views regarding the interpretation of the statutory term “interoperable video conferencing service” and concluded that there was “no persuasive reason to modify or limit the scope of the statutory definition of this term.” There, the Commission explained that the statutory definition of “interoperable video conferencing service” encompasses a variety of video communication services that are commonly used today, or that may be used in the future, to enable two or more users to share information with one another. In 2011, the Commission interpreted a qualifying phrase in the definition—“to enable users to share information of the user's choosing”—to mean that services “provid[ing] real-time video communications, including audio,

between two or more users

” would be included, “even if they can also be used for video broadcasting purposes (

only from one user

).” It rejected arguments that the term “interoperable” had meaning independent of the statutory definition or in some way limited the scope of the statutory definition of the service. It concluded that the term interoperable “may simply reflect the fact that any video service satisfying [the statutory] definition . . . necessarily involves some level of interoperability among the particular devices and software employed by users of that service.” We find arguments to the contrary to have been fully addressed by the Commission's actions in the

Access to Video Conferencing

proceeding.

94. As the Commission has explained, the definition of interoperable video conferencing services does not reflect an intention to exclude any service based on whether it is used primarily for point-to-point or multi-point conversations, or based on the type of device used to access the service. Likewise, the definition does not depend on the options offered to users for connecting to a video conference (

e.g.,

through a dial-up telephone connection or by broadband, through a downloadable app or a web browser), what operating systems or browsers users' devices may employ, whether the service works with more than one operating system, or whether the service may be classified as offered to the public or to a private group of users (such as a telehealth platform). The Commission concluded that the important characteristic is that two or more people can use the service to share information with one another in real-time, via video.

95. Our section 276 authority over interoperable video conferencing services in the IPCS context therefore includes all options offered to users for connecting to a video conference, regardless of what operating systems or browsers their devices may use, whether the service works with more than one operating system, or whether the service may be classified as offered to the public or to a private group of users. Where two or more people can use a video conferencing service to share information with one another in real-time, that service is subject to our section 276 authority in the incarceration context. This authority also extends to educational, vocational, or other video programming in which incarcerated people participate in real-time in the incarceration context. To be clear, entertainment and other forms of content that are not real-time communications services are not included in our authority over interoperable video conferencing. They may, however, be subject to our authority under section 3(1)(E), which is not limited to real-time communications services.

96. We disagree that this interpretation somehow constitutes an assertion of authority over internet content. Notwithstanding certain parties' comments suggesting otherwise, we have not proposed to regulate internet content, nor do we do so in the Report and Order. The rules we adopt today are content-neutral, and our authority over interoperable video conferencing services, like our authority over traditional payphone services, is independent of the information communicated though those services. Neither the Communications Act nor the Martha Wright-Reed Act includes any language limiting the content or information that may be offered through interoperable video conferencing, and we do not impose any such limitations in our rules.

97.

Interoperable Video Conferencing Service for People with Disabilities.

Under section 716 of the Communications Act, as amended by the Twenty-First Century

Communications and Video Accessibility Act of 2010 (CVAA), interoperable video conferencing service and equipment used for interoperable video conferencing service must be accessible to and usable by people with disabilities, unless those requirements are not achievable. Consistent with the Commission's analysis in the

Access to Video Conferencing Order,

we find no persuasive reason to modify or limit the scope of these accessibility requirements as they apply in the IPCS context. Instead, we conclude that the accessibility requirements in section 716 of the Communications Act and part 14 of our rules apply, without limitation, to all interoperable video conferencing services provided in correctional institutions and to all equipment that people with disabilities use to access those services. As explained in more detail below, in the

2011 ACS Order

the Commission assumed that the word “interoperable” needed to be defined independently of the term “interoperable video conferencing service.” In the

Access to Video Conferencing Order,

the Commission revisited this issue and rejected arguments that the term “interoperable” had meaning independent of the statutory definition or in some way limited the scope of the statutory definition of the service. The Commission explained that the statutory definition of “interoperable video conferencing service” encompasses a variety of video communication services that are commonly used today, or that may be used in the future, to enable two or more users to share information with one another.

c. Any Audio or Video Communications Service (47 U.S.C. 153(1)(E))

98. The Martha Wright-Reed Act added new subsection (E) to section 3(1) of the Communications Act to expand the definition of “advanced communications services” to include “any audio or video communications service used by inmates for the purpose of communicating with individuals outside the correctional institution where the inmate is held, regardless of technology used.” It also included these same services in the definition of payphone service in section 276(d), expanding the scope of the Commission's authority over incarcerated people's communications services. As proposed in 2023, we interpret the phrase “any audio or video communications service” in subsection 3(1)(E) as encompassing every method that incarcerated people may presently, or in the future, use to communicate, by wire or radio, by voice, sign language,” or other audio or video media, without qualification. The record strongly supports this interpretation. In doing so, we fulfill Congress's intent that a broad range of communications services and technologies be available to incarcerated persons and their loved ones at just and reasonable rates. Congress included all aspects of the section 3(1) definition of advanced communications services in the section 276(d) definition of payphone services with the exception of electronic messaging services defined in section 3(1)(C). Certain commenters address the exclusion of electronic messaging services from the Commission's regulatory jurisdiction in the record, particularly to the extent audio or video communications may be sent via electronic messaging service. On the limited record before us, we decline at this time to determine what is or is not an electronic messaging service for purposes of excluding such services from the scope of the Act's implementation mandate. While we decline to make a determination, we reiterate that under section 716 of the Communications Act, electronic messaging service is required to be accessible to and usable by people with disabilities, including those in carceral facilities. Separately, some commenters argue that the Commission should assert authority over voicemail. Other commenters argue that the Commission may not regulate voicemail because the Commission treats voicemail as an information service. The record in this regard is underdeveloped. Thus, at this time, we decline to address the Commission's regulatory jurisdiction over voicemail in the IPCS context.

99. Our interpretation encompasses technology used by people with disabilities. We find that, consistent with our mandate to provide TRS to incarcerated persons with disabilities, “any audio or video communications services,” as used in section 3(1)(E) includes all services currently provided in correctional institutions that an incarcerated person who is deaf, hard of hearing, deafblind, or has speech or other disabilities may use to communicate with individuals outside the correctional institution where the incarcerated person is held, and incorporates all future services and technologies that will assist incarcerated people with disabilities to communicate with the non-incarcerated—or incarcerated people to communicate with non-incarcerated people with disabilities—so long as it involves audio or video communications services.

100. We interpret “audio or video communications services” to encompass not only services that are audio and/or video at both ends of the communication, but also services that are audio and/or video at only one end of the communication or otherwise involve audio and/or video for only a segment or portion of the communication. The focus of section 3(1)(E) is not on whether a particular party to a communication is communicating in audio and/or video form, but rather on whether the

service

is an “audio or video communications service.” So long as the communications service involves audio and/or video in at least some respect, we conclude the “audio or video communications service” criterion is satisfied. The breadth of this interpretation, which may be of particular relevance where communications involving people with disabilities are concerned, is further supported by the fact that Congress chose to include that service within the category of “advanced communications services” that are subject to various disability access requirements, along with the recognition in section 276(b)(1)(A) that the communications services covered by that provision would include TRS.

101. Unlike some other services included within the section 3(1) definition of advanced communications services, the services included in section 3(1)(E) are not expressly restricted to real-time or near real-time communications services. We interpret Congress' omission of such limiting language for the comprehensive set of IPCS services covered by section 3(1)(E) as bringing non-real-time communications services generally within the ambit of our IPCS jurisdiction, to the extent an incarcerated person may use them to communicate with the non-incarcerated.

102. While Congress included no limitations to the range of audio and video communications services encompassed in section 3(1)(E), it addressed the parties involved by limiting the definition to audio or video services used for communications between two classes of users,

i.e.,

“inmates” and “individuals outside the correctional institution where the inmate is held.” While there is no dispute in the record regarding the meaning of the statute's reference to inmates, parties do dispute the meaning of the latter phrase.

103. Consistent with one of the alternatives raised in the Commission's discussion in 2023, we interpret the phrase “individuals outside the correctional institution where the inmate is held” to mean, not the precise physical location of the individual with whom the incarcerated person is

communicating, but instead the status of that individual as someone who is “neither confined in nor employed by the institution, even if [they are] temporarily located on the premises of the institution for purposes of communicating with incarcerated individuals through some form of audio or video communications service.” The record supports this interpretation. As the Public Interest Parties recognize, “although the term `outside the correctional institution' can mean `not physically within the structure,' it can equally mean `not held within the institution.' ” The relevant statutory language appears very similar to part of the Commission's longstanding definition of “inmate calling service,” which likewise refers to “individuals outside the Correctional Facility where the Inmate is being held.” Although the Commission did not definitively interpret the meaning of the “outside” language in its IPCS rules prior to the enactment of the Martha Wright-Reed Act, in the inmate calling context it regularly used the term “outside” of a correctional facility when referring to the status—rather than the physical location—of the party with whom the inmate was communicating. We recognize that the FCC Form established for purposes of a proposed collection of data on video visitation services described “Off-Site Video Visitation” as “a call that allows an Inmate to communicate via video with another party (or parties) located outside the Facility where the Inmate is being detained.” That limited example does not overcome our understanding of the broader usage of “outside” in Commission decisions in this context, particularly where it referred to communications to another party “located” outside the relevant correctional facility—a qualifier signaling physical location that is not present in either the Commission's definition of ICS or the text of section 3(1)(E) of the Communications Act. Because our interpretation is both consistent with the ordinary meaning of “outside” and accords with the trend we discern in the regulatory backdrop relevant here, we find that the best reading of “outside the correctional institution” in section 3(1)(E) refers to a party's status rather than its physical location. Consistent with the arguments of a number of commenters, we thus conclude that communications with “individuals outside the correctional institution where the inmate is held” is best understood to mean communications with individuals who are neither incarcerated in, nor employed by, the incarcerated person's correctional institution,

i.e.,

“outside” of the institution's framework, regardless of the physical location where they can use the communication service. By the same token, our analysis leads us to reject claims that we must interpret “outside the correctional institution” to refer to the physical location of the party with whom the inmate is communicating. These commenters do not persuade us that anything in the statutory text itself counsels against our interpretation, and insofar as they otherwise have a narrow view of congressional intent underlying the language it adopted, we are not persuaded by that either, as discussed more below.

104. Our interpretation also is supported by our view of congressional intent and associated policy considerations. We agree with Worth Rises that “[t]here is no evidence that Congress intended for a miniscule regulatory cut-out that leaves IPCS ratepayers unprotected from rate regulation when they are physically located within a building that is property of the correctional authority. Whether the outside called party is on their mobile phone in the lobby of a correctional facility or sitting at a video kiosk booth in the on-site video calling room, they should be protected by the Commission's ratemaking authority.” This reinforces our conclusion that the best reading of the statutory language is that it refers to the non-incarcerated status of the individual with whom the incarcerated person is communicating, rather than the physical location of individuals with whom an inmate can communicate using a given service.

105. The ordinary tools of statutory interpretation strongly support the view that the qualifier, “individuals outside the correctional institution where the inmate is held,” in section 3(1)(E) should be limited to services that only meet the definition of advanced communications services under that specific provision. Section 3(1) consistently has been understood as a disjunctive list of services such that meeting any one of those categories is sufficient to render a service an advanced communications service. While several commenters agree with this interpretation, one commenter contends that “the limiting phrase of new subsection 3(1)(E)” applies to all of the services included in section 3(1) “in the context of IPCS.” While the scope of section 3(1)(E) outside of the phrase in question is sufficiently expansive to encompass virtually all communications services, the National Sheriffs' Association points to nothing in the Martha Wright-Reed Act or the amended text of section 3(1) that would suggest that Congress intended to override the preexisting operative structure of that provision or subsume the definitions of interconnected VoIP service, non-interconnected VoIP service, and interoperable video conferencing service within section 3(1)(E). Indeed, if the relevant qualifier in section 3(1)(E) either were interpreted to apply to sections 3(1)(A), (B), and (D) or if section 3(1)(E) were read as subsuming sections 3(1)(A), (B), and (D), it is not clear what remaining practical significances sections 3(1)(A), (B), and (D) would have given the existence of section 3(1)(E). Under ordinary canons of statutory interpretation, such an outcome cuts against that reading. Had Congress intended the “outside the correctional institution” language in section 3(1)(E) to apply to other advanced communications services, it could have included that language in section 3(1) as a whole, appended it to other subsections of section 3(1) as it deemed appropriate, or incorporated that language into section 276(d). It did none of these things.

106. Nor can the National Sheriffs' Association's interpretation be reconciled with the broader statutory context. The definition of “advanced communications service” in section 3(1) does not owe its existence solely to IPCS regulation under section 276 of the Communications Act. Indeed, section 3(1) includes “electronic messaging service,” 47 U.S.C. 153(1)(C), which was not included as a specified category of service covered by amended section 276(d) of the Communications Act. Rather, a range of statutory provisions rely on that definition. Interpreting section 3(1) to mean that each of the individual audio and video services listed in sections 3(1)(A), (B), and (D) are subject to the limitation in (E) would result in a substantial narrowing of preexisting statutory requirements dealing with matters such as disability access.

107. Likewise, the National Sheriffs' Association's interpretation cannot readily be squared with section 276(d) as amended by the Martha Wright-Reed Act. In pertinent part, that provision as originally enacted defined “payphone service” subject to Commission authority under section 276 as encompassing “the provision of inmate telephone service in correctional institutions.” When Congress amended that definition in the Martha Wright-Reed Act to include certain advanced communications services, it made those services subject to the “in correctional institutions” limitation, as well. Yet if

the relevant terms in section 3(1) all already were subject to the limitation in 3(1)(E), it is not clear how much work would be left for the section 276(d) qualifier “in correctional institutions” to perform. At a minimum, Congress's deliberate choice to subject the advanced communications services covered by section 276(d) to the “in correctional institutions” qualifier provides good reason to pause before inferring arguably similar limitations in section 3(1) in a manner that appears contrary to that statutory text.

108. Consequently, we adopt the proposal in 2023 that the language requiring that communications involve “individuals outside the correctional institution where the inmate is held” applies only with regard to subparagraph 3(1)(E). We therefore agree with other commenters that the phrase “outside the correctional institution where the inmate is held” does not apply outside the context of section 3(1)(E).

6. Onsite Video Visitation

109. In 2023, the Commission sought comment on whether its expanded authority over IPCS extends to onsite video visitation services. The widespread use of onsite video visitation is a relatively recent phenomenon, initially driven by significant health risks posed by the COVID-19 pandemic. During the pandemic, “nearly every jail and prison” shifted from in-person visitation to onsite video services to prevent exposure to and the spread of coronavirus. In many instances, correctional institutions continue to restrict onsite visits to video communications in lieu of in-person visits.

110. Consistent with the description in 2023, we define onsite video visitation services as services that enable video communications between a person incarcerated in a correctional institution and a non-incarcerated person visiting that institution. We find that our authority over incarcerated peoples' advanced communications services extends to onsite video visitation on two independent grounds: (a) onsite video visitation's status as an “interoperable video conferencing service” within the meaning of section 3(1)(D); and (b) its status as an “audio or video communications service used by inmates for the purpose of communicating with individuals outside the correctional institution where the inmate is held, regardless of technology used” within the meaning of section 3(1)(E).

111.

Onsite Video Visitation as an Interoperable Video Conferencing Service under Section § 3(1)(D).

We conclude that onsite video visitation includes each of the elements of the definition of interoperable video conferencing service in section 3(27) of the Communications Act and that it is therefore a “payphone service” within the meaning of section 276(d) when provided in correctional institutions. Section 3(27) defines “interoperable video conferencing service” as “a service that provides real-time video communications, including audio, to enable users to share information of the user's choosing.” Onsite video visitation meets those criteria: it is a real-time service that involves video communications, including audio, and that enables the incarcerated and the non-incarcerated to share information of their choosing. Notwithstanding the National Sheriffs' Association's advocacy to the contrary, we find above that the limitation to “individuals outside the correctional institution” included in section 3(1)(E) is specific to the grant of authority in that section and is not generally applicable to section 3(1) as a whole. Thus, to the extent it were relevant in a given scenario, we observe that the definition of interoperable video conferencing service does not include any limitation or requirement that the communications be with individuals outside the correctional institution. Instead, we find the statute best interpreted to mean that any interoperable video conferencing service, a service that includes onsite video visitation, is a payphone service, and therefore subject to our authority under section 276(b)(1)(A), to the extent it is provided in correctional institutions. Onsite video visitation uses the same or functionally similar technology and equipment as is used generally for video IPCS.

112. We also find that Congress intended our authority under section 276 to extend to the full range of interoperable video conferencing services, including onsite video visitation services, given the inclusion of section 3(1)(D) in section 276(d). By this inclusion, Congress eliminated doubt that video visitation was subject to the Commission's authority in response to the D.C. Circuit's

GTL

v.

FCC

decision casting doubt on whether video visitation reporting requirements were within the Commission's authority. As amended by the Martha Wright-Reed Act, the definition of “payphone service” in section 276(d) of the Communications Act now includes all interoperable video conferencing services, without qualification, to the extent they are provided in correctional institutions. Given this statutory language, we conclude that our authority under section 276(b)(1)(A) extends to all onsite video visitation services.

113. Our conclusion does not change regardless of whether onsite video visitation is offered free of charge. Though one commenter argues that we should limit our oversight because “the industry has no history of charging for such services, we find that because such services meet the definition of “payphone service” in section 276(d), they fall within the Commission's jurisdiction. We affirm that onsite video visitation services are interoperable video conferencing services, and as such, are subject to our section 276 jurisdiction and the rules we adopt herein.

114.

Onsite Video Visitation as a Video Communications Service under Section 3(1)(E).

In 2023, the Commission sought comment on whether onsite video visitation services constitute “video communications service[s]” within the meaning of section 3(1)(E). As an initial matter, we find that, based on the record in response to 2023, onsite video visitation is a video communications service under section 3(1)(E), giving us an alternative basis for exercising section 276 authority over those services independent of section 3(1)(D). We are persuaded by commenters' explanations that “[o]n-site video visitation service used by an incarcerated person for the purpose of communicating with those neither confined nor employed by the correctional facility fits plainly within the statutory language in section 3(1)(E), as the service is used by incarcerated persons to communicate with . . . persons not held within the institution.”

115. Nor do we find any “reasonable justification to interpret the Act to allow the Commission to regulate [remote video services] but [not onsite video services].” We are not persuaded by suggestions that Congress intended to include a limitation based on the physical location of the non-incarcerated person involved in the communication such that we have no authority over onsite video visitation under section 3(1)(E). As discussed above, the language of the statute is best read as focused on the status of the individuals involved in an audio or video communication—not on the physical location of the called party at the time of the communication. Indeed, even assuming

arguendo

that the qualifier in section 3(1)(E) were interpreted to apply to the physical

location rather than status of the individuals with whom an inmate is communicating, the relevant statutory question would be where the

service

can be used, and not where a given

communication

occurs. If an audio or video communications service can be used by inmates for the purpose of communicating with individuals outside the correctional institution where the inmate is held, the details associated with a given individual communication using that service would be irrelevant.

116. Policy considerations likewise support our interpretation. We find it compelling that “[b]oth remote and on-premises video calls are typically operated by the same IPCS providers, involve the same technological systems, and have the same functions and equipment for the incarcerated user, regardless of the location of the person with whom they are communicating.” While some providers offer such service for free today, it does not follow that consumers never would or could need the protection of the “just and reasonable” standard provided by the Martha Wright-Reed Act for these video communications. Absent Commission oversight of onsite video visitation, both facilities and IPCS providers could, for example, have “a perverse incentive . . . to reduce the availability of other forms of IPCS as well as in-person visitation.” We are persuaded that, because these services share providers, equipment, and other technology systems, the only difference between onsite and remote video communications is the location of the non-incarcerated party with whom the incarcerated individual is communicating. We therefore agree that “[t]here is no reasonable justification to interpret the Act to allow the Commission to regulate one but not the other.”

D. Rate Caps

117. After carefully considering our expanded statutory authority, the data received in response to the 2023 Mandatory Data Collection, and the record developed from the 2023 and the precursor requests for comment, we take a series of actions to establish just and reasonable rates for IPCS while also ensuring fair compensation for providers. Specifically, we adopt the Commission's proposals to set separate rate caps for audio IPCS and video IPCS, and to treat interstate and intrastate communications uniformly, as supported by both the record and provider responses to the 2023 Mandatory Data Collection. We also revise our rate cap tiers, and adopt separate per-minute rate caps within each of those tiers for audio IPCS and video IPCS. Collectively, these steps will achieve the dual directives of the statute to ensure just and reasonable rates for consumers and providers and fair compensation for providers.

118. These actions reflect our application of the “used and useful” framework in evaluating the costs of providing IPCS, consistent with the Commission's proposal in 2023. Under this framework, the determination of just and reasonable rates focuses on affording regulated entities an opportunity to recover their “prudently incurred investments and expenses that are `used and useful' in the provision” of the regulated service. In applying this framework, we use provider-submitted data and other information from the record to estimate the costs incurred in providing IPCS, including any safety and security measures used and useful in the provision of these services. Our rate cap calculations incorporate the costs providers reported as their costs of providing ancillary services, consistent with our decision to eliminate separate charges for ancillary services. Finally, our rate caps reflect our best estimate of the costs incurred in implementing the TRS reforms adopted in the

2022 ICS Order

and our best estimate of the costs facilities incur in the provision of IPCS.

119. Accordingly, we adopt the following permanent rate caps for audio IPCS, and interim rate caps for video IPCS:

• For all prisons, $0.06 per minute for audio communications, and $0.16 per minute for video communications;

• For jails with an average daily population (ADP) greater than or equal to 1,000 incarcerated people, $0.06 per minute for audio communications and $0.11 per minute for video communications;

• For jails with an ADP between and including 350 and 999 incarcerated people, $0.07 per minute for audio communications and $0.12 per minute for video communications; and

• For jails with an ADP between and including 100 and 349 incarcerated people, $0.09 per minute for audio communications and $0.14 per minute for video communications.

• For jails with an ADP with 99 or fewer incarcerated people, $0.12 per minute for audio communications and $0.25 per minute for video communications.

We establish these rate caps using a zone of reasonableness approach. This approach allows us to respond to the limitations of the cost-of-service data before us in a manner that appropriately balances fair compensation for IPCS providers with just and reasonable rates and charges for consumers and providers. Through this approach, we afford providers an opportunity to recover the used and useful costs incurred to provide IPCS and also keep IPCS rates affordable for incarcerated people and their loved ones.

1. Rate Cap Structure

120.

Adopting Rate Caps as the Regulatory Mechanism.

We conclude that rate caps are the appropriate mechanism for ensuring that all rates for IPCS are just and reasonable. Consistent with the Commission's prior ratemaking with regard to inmate calling services, we find that rate caps provide the best overall rate structure for IPCS because of the flexibility that rate caps afford providers while still ensuring that the incarcerated individual and their loved ones are protected from unreasonably high rates and charges. We also find that rate caps are preferable to prescriptive rate setting for IPCS because a rate cap approach does not preclude or prevent providers and parties representing facilities from negotiating and entering into agreements to provide IPCS at lower or no cost to incarcerated people and their friends and family, as is shown in the record. The record strongly supports the use of rate caps rather than prescriptive rate setting. Rate caps also allow providers to be responsive to the differing needs of each facility, and “protect ratepayers as a group from high prices and provide carriers with an incentive to increase productivity.” As the IPCS industry continues to develop and offer advanced communications services including video communications, we find that flexibility in pricing and in service offerings will be important to ensure that providers and incarcerated people and their friends, families, and loved ones benefit from the rate caps we adopt today.

121.

Separate Rate Caps for Audio IPCS and Video IPCS.

With the Martha Wright-Reed Act's expansion of the Commission's authority to regulate advanced communications services, and in keeping with the Commission's obligation to ensure just and reasonable rates, we adopt separate rate caps for audio IPCS and video IPCS. In adopting these rate caps, we do not intend any modification of the requirements of § 64.6040(d) of our rules, which addresses TRS and certain related services (TTY-to-TTY communications and point-to-point video communication in American Sign Language). For IP CTS, CTS, and point-to-point video communication in ASL, an IPCS provider may assess charges

that do not exceed its charges for an equivalent voice telephone call. Thus, charges for these services will be effectively capped at the applicable rate cap for audio communications. For TTY-to-TTY communication, an IPCS provider may assess a charge that does not exceed 25 percent of the applicable per-minute rate for a voice call. Thus, such charges are effectively capped at 25 percent of the applicable per-minute rate for a voice call. We find the record, including the 2023 Mandatory Data Collection data, overwhelmingly support this approach. Record comments support separate rate caps because of the materially different cost structures of offering audio and video IPCS, and we agree. The data show that video communications typically require more expensive equipment, and even when comparing audio and video communications made using the same equipment, the data suggest that video communications are more expensive to provide. This difference in costs justifies the need to adopt separate rate caps for these services to satisfy our obligations for both providers and consumers of IPCS. Accordingly, we separately analyze audio and video IPCS costs and develop separate rate caps at each tier for both services.

122. As proposed in 2021 and 2023, we adopt permanent rate caps for audio IPCS. The Commission has previously been constrained to adopt only interim rates for these services given persistent limitations of the industry data available to it. We now find that the audio cost data received in response to our most recent data collection provide a sufficient basis for setting permanent audio IPCS rate caps.

123. By contrast, video IPCS involves relatively new services in an emerging market for the correctional industry, and one which the Commission has not previously had the authority to regulate. The reported costs show a marked differential between audio and video costs per minute, which may be attributable, in part, to the respective difference in maturity of the two types of service offerings. As a result of the relative nascency of the video IPCS market generally, the wide variations among facilities in the per-minute costs of providing IPCS, and the likely need to revise any video rate caps in the future to account for growth and evolution of the video IPCS marketplace, we find that the reported costs and demand for video IPCS are best suited for interim rate caps. We find that the video data present similarities to the data that the Commission reviewed in 2021, when the Commission was faced with data that it determined was unreliable, resulting in the adoption of interim rate caps. NCIC argues that the Commission should “delay the adoption of interim rates until it receives comprehensive data from all video visitation providers, and deliver immediate relief by simply prohibiting flat-rate billing, which is currently being offered at up to $12.99 per session”). While we recognize that the video marketplace is in its nascent stages, we find that the available data sufficiently support the interim rate caps we adopt today. In addition, as we note below, interim rate caps for video are necessary to curb abuses identified in the record concerning other existing rate structures in the video market.

124.

Per-Minute Rate Caps for Audio IPCS and Video IPCS.

We adopt the Commission's proposal to set rate caps for audio and video IPCS on a per-minute basis as the foundation of our efforts to ensure just and reasonable IPCS rates and charges. The record provides no basis to abandon the long-standing per-minute rate caps for audio IPCS, and we find no reason to deviate from this approach. The Commission has historically set per-minute rate caps for audio IPCS. This decision is further supported by our adoption today of rules to permit alternate pricing plans subject to specified conditions. Similarly, given the per-minute rate structure we adopt for audio calls, we find that taking a consistent approach for video communications would offer several benefits for IPCS consumers. First, per-minute rates are simple to understand and reflect the actual duration of the call or communication. As a matter of policy, the Commission has stated that transparency regarding the charges for IPCS “is critical because it ensures that incarcerated persons and their families understand the prices they are, or will be, charged for the services they use, enabling them to make informed decisions when purchasing those services.” We find that consistent use of per-minute rates for audio and video IPCS will result in an easier to understand and more transparent regulatory framework. We therefore reject proposals to use other rate metrics, such as per-session charges, in the rate caps that serve as the foundation for ensuring just and reasonable IPCS rates. Per-minute rates also provide greater transparency and offer greater familiarity and flexibility for both industry and consumers.

125. Establishing interim per-minute rate caps for video IPCS is also responsive to concerns voiced in the record about the need to curb abusive practices associated with other existing rate structures for video IPCS. At the same time, however, our new rules permitting providers to deploy alternate pricing plans for both audio and video IPCS, subject to certain conditions, including, in particular, compliance with the overall rate caps adopted here, will permit providers to experiment with optional rate structures that may be beneficial and desirable for IPCS consumers. Taken together, we find these actions satisfy two goals: our default per-minute rates will ensure just and reasonable rates for IPCS consumers and providers and fair compensation for providers; and our optional alternate pricing plan rules will provide some measure of flexibility for the industry, allowing providers and customers to voluntarily opt-in to other pricing arrangements that may be mutually beneficial. The Commission has previously found that when providers used flat-rate charges for audio calls, if the duration of the audio call was less than the maximum time allowable, “the price for that call is disproportionately high.” Receiving no record evidence to the contrary, we find that a similar result is likely in the case of per-call or per-session charges for video IPCS.

126. We decline to adopt a model carrier approach to establish the rates for either audio or video IPCS. As proposed in the record, a model carrier approach would set rates by reference to general telecommunications industry-average costs for non-IPCS calls, including a predetermined return, “and then potentially adjust for costs that may be particular to the provision of service in incarceration facilities.” Although the Commission has employed a similar approach in other circumstances, we find that our tiered approach based on the currently available IPCS-provider data provides a more accurate estimate of just and reasonable IPCS rates and will better reflect the size variance and the economies of scale in the IPCS market rather than relying on a uniform general telecommunications industry rate setting approach. We find further that the marketplace is still adapting to the requirements of IPCS video communications, which counsels in favor of allowing more time before adopting a model carrier approach. Because we do not base our analysis on the model carrier approach, we find it unnecessary to address arguments concerning the Commission's authority in this respect. At the same time, a model carrier based approach is useful for comparative analysis, and as explained further in a technical appendix, can be used to confirm our

understanding of certain aspects of providers' cost data.

127.

Adopting Rate Caps Derived from Industry Average Costs.

As permitted by the Martha Wright-Reed Act, we use industry average costs reported by IPCS providers at the company-wide and facility levels in response to the 2023 Mandatory Data Collection as the basis for developing the IPCS rate caps we adopt today. In 2021, the Commission sought comment on whether to “calculate industry-wide mean contract costs per paid minute of use,” or to “analyze costs at the facility level.” We resolve this question by confirming that we analyze costs at the facility level, in the interest of evaluating providers' costs as accurately as possible, consistent with the facility-level cost data staff sought and obtained through the 2023 Mandatory Data Collection. The Commission previously used industry average costs to set inmate calling services rate caps, but the D.C. Circuit rejected that approach as not providing fair compensation for providers on a “per call” basis for “each and every call,” as was then required by the language of section 276(b)(1)(a) of the Communications Act. The Martha Wright-Reed Act removed the “each and every call” language from section 276(b)(1)(a) and authorized the Commission to use “industry-wide average costs” in determining just and reasonable rates. We can only conclude, and commenters concur, that the Act thereby removed the limitations set forth in the D.C. Circuit's decision. We also believe that using industry average costs to set rates will best ensure rates that are just and reasonable for consumers and providers and provide fair compensation for providers.

128. We further find that the Act's elimination of the requirement that “each and every” completed communication be fairly compensated means that we are no longer required to establish a per-call based compensation plan. Commenters agree. Rate caps based on costs evaluated on an aggregated basis generally will satisfy the requirement that all payphone service providers be fairly compensated. Based on our interpretation of the Act in light of the D.C. Circuit's holding in

GTL

v.

FCC,

as well as the Act's explicit terms, we further find that setting the upper and lower bounds of our zone of reasonableness based on industry-wide average costs at each tier of facilities—without the need to consider one standard deviation or any other measure of deviance from the average—will satisfy this requirement. We find that Congress's express permission to use industry average costs in setting rate caps encompasses the specific approach to using industry average costs that the Commission adopted in the

2015 ICS Order:

setting rate caps at the level of the weighted average of providers' reported costs at each tier. The regulatory history—particularly our understanding of the ways that the Martha Wright-Reed Act sought to respond to the D.C. Circuit's decision in

GTL,

including with specific respect to the use of industry average costs—reinforces the reasonableness of our interpretation.

a. Rate Caps Based on Total Costs

129. Consistent with the changes to our authority, we adopt the proposal to set rate caps that incorporate total IPCS costs by including

all

relevant costs incurred in the provision of IPCS in our calculations of average provider costs. In implementing that approach, we depart from the Commission's previous approach to allowing and capping separate charges for certain ancillary services and instead include the costs related to the provision of those ancillary services in our IPCS rate caps. We also depart from the Commission's use of separate rate additives for facility-incurred costs in the

2021 ICS Order,

in favor of including those costs, to the extent recoverable, in our per-minute rate caps. This will substantially simplify our cap structure. Pay Tel proposes that we account for facility costs “through an explicit additive to IPCS rate caps,” as this will “incentivize facilities to compare service-based, competitive market factors when awarding contracts.” We find that the approach we adopt here will obtain a fundamentally similar result. After analyzing providers' cost data, we find that the data for calendar year 2022 collected in response to the 2023 Mandatory Data Collection, together with other record evidence, provide a sufficient and reasoned basis on which to take these steps in establishing our rate caps. One commenter notes that w

This text is long and has been trimmed here. Open the source document for the complete record.