Inmate Calling Services Cost Model: A Model Carrier Approach to Estimating the Communications Services Cost for the US Incarcerated Population

For decades, the FCC has been trying to regulate prison phone rates and although it has had some success in lowering rates, they are still significantly higher than those paid by the general US population. Currently, the regulated maximum rates for voice calls is $0.12 – $0.14 per minute. Given the FCC’s new authority to set Incarcerated People’s Communication Service (IPCS) rates granted by the recent passage of the Martha Wright-Reed Just and Reasonable Communications Act of 2022, the Commission now has an opportunity to take a fresh approach to regulating IPCS rates, including regulating video communication rates. This paper develops an illustrative cost model based on characteristics such as average daily population, type of facility, and services provided, and uses industry average costs for the non-IPCS telecommunications sector to calibrate the model. We discuss five cost modules – telecommunications costs, facility costs, security costs, overhead costs, and margin – and calculate total expected costs per minute of service. These cost modules will be based on modeling best practices and, where appropriate, the use of broader telecommunication industry comparables. The proposed model offers an analysis of what costs should be considered reasonable as a basis for setting rates in order to provide adequate communication services to incarcerated individuals.