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Major Prison Telecom Merger Canceled; Victory for Campaign for Prison Phone Justice!
The prison phone industry, which provides telecom services for prisons, jails and other detention facilities, has a long and sordid history of exploiting prisoners and their families by charging exorbitant phone rates and fees. [See: PLN, Dec. 2013, p.1; April 2011, p.1]. Over the past decade the industry has steadily consolidated, with two companies supplying the majority of prison phone services: Securus Technologies and Global Tel*Link (GTL).
On April 2, 2019, the Federal Communications Commission (FCC) announced that a proposed merger between Securus and the nation’s fourth-largest prison telecom, Inmate Calling Solutions, LLC (also known as ICSolutions or ICS), which would have resulted in further consolidation and thus even less competition, had been withdrawn by the firms.
FCC staff had recommended to the agency’s chairman, Ajit Pai, that the merger be denied. Pai wrote in a terse statement that the FCC’s staff “concluded that this deal poses significant competitive concerns and would not be in the public interest.”
The parent organization of Prison Legal News, the Human Rights Defense Center (HRDC), which co-founded the Campaign for Prison Phone Justice in 2011 to advocate for reforms in the prison telecom industry – including lower phone rates, the elimination of ancillary fees and an end to “commission” kickback-based contracts with corrections agencies – had previously filed a comment with the FCC opposing the Securus merger.
In its July 13, 2018 comment, HRDC noted the proposed merger “would further increase the duopoly nature of the [inmate calling services] industry and thus result in even less competition within that market.” [See: PLN, July 2018, p.20]. HRDC also called on Chairman Pai to recuse himself from all decisions involving both Securus and the prison telecom industry, in part because prior to his appointment to the FCC he had represented Securus when he worked for the law firm of Jenner & Block. He also had dissented on all votes taken by the FCC during the Obama administration with respect to reforms and rate caps involving prison phone services.
“It is excellent news that Securus has withdrawn its bid to merge with ICS and prevent further consolidation of the prison telecom industry, but more needs to be done when just two companies, Securus and Global Tel*Link, control around 80% of the detention facility telephone lines,” said HRDC executive director Paul Wright. “The total absence of a competitive market where the consumers who pay the bills have a voice and are heard is also not addressed by this.”
“Securus and ICS have a history of competing aggressively to win state and local contracts by offering better financial terms, lower calling rates, and more innovative technology and services. This merger would have eliminated that competition, plain and simple,” stated Assistant Attorney General Makan Delrahim with the U.S. Department of Justice’s Antitrust Division. “The companies’ decision to abandon this deal is the right outcome – correctional facilities, inmates and their friends and families will continue to benefit from the robust competition between these firms.”
In July 2018, a coalition of organizations, including HRDC, had asked the FCC to deny the Securus merger in a petition filed by pro bono attorneys Davina Sashkin and Cheng-yi Liu with the Arlington, Virginia law firm of Fletcher, Heald & Hildreth, PLC.
According to Reuters news service, after the merger cancellation was announced, FCC Commissioner Jessica Rosenworcel stated, “now that two of the largest prison payphone companies have called off their merger, it is time for the FCC to once and for all fix the sky-high rates inmates and their families pay for phone calls.”
Securus is owned by Platinum Equity, a private equity firm founded by Tom Gores, who also owns the Detroit Pistons. [See: PLN, April 2018, p.54; Oct. 2017, p.48]. ICSolutions is owned by another private equity firm, H.I.G. Capital.
Prison and jail phone services comprise an estimated $1.2 billion industry nationwide.
Sources: HRDC press release (April 3, 2019); justice.gov