Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554

In the Matter of ) ) Rates for Interstate Inmate Calling Services ) WC Docket No. 12-375 ) ______)

REPLY COMMENTS OF GLOBAL TEL*LINK CORPORATION

Chérie R. Kiser Angela F. Collins Matthew L. Conaty* CAHILL GORDON & REINDEL LLP 1990 K Street, NW, Suite 950 Washington, DC 20006 202-862-8900 [email protected] [email protected] [email protected]

Dated: January 15, 2021 Its Attorneys

*Admitted in NY only. Reply Comments of Global Tel*Link Corporation January 15, 2021

TABLE OF CONTENTS Page

INTRODUCTION AND OVERVIEW ...... 1

REPLY COMMENTS ...... 5

I. THE COST DATA DOES NOT SUPPORT THE COMMISSION’S PROPOSED RATE CAPS AND SITE COMMISSION ALLOWANCE...... 5

II. THE RECORD DOES NOT SUPPORT THE RATE CAP AND SITE COMMISSION PROPOSALS OFFERED BY THE BRATTLE GROUP ...... 9

III. THE COMMENTS DEMONSTRATE A ONE-SIZE-FITS-ALL APPROACH IS NOT WORKABLE FOR ICS RATES ...... 12

IV. THE RECORD SHOWS INTERNATIONAL ICS RATE CAPS MUST BE HIGHER THAN INTERSTATE ICS RATE CAPS GIVEN THE COST DIFFERENTIALS FOR INTERNATIONAL CALLING...... 15

V. A 30-DAY TRANSITION PERIOD FOR ANY NEW RATE CAPS IS NOT WORKABLE ...... 16

VI. ANY NEW DISABILITY ACCESS REQUIREMENTS MUST BE IMPLEMENTED IN COORDINATION WITH CORRECTIONAL FACILITIES AND REFLECT THE COSTS OF IMPLEMENTING NEW TECHNOLOGIES ...... 17

VII. AN ADDITIONAL DATA COLLECTION IS NOT NECESSARY...... 21

VIII. INTERSTATE ICS RATE CAPS SHOULD CONTINUE TO APPLY TO INTERSTATE CALLS CLASSIFIED IN ACCORDANCE WITH INDUSTRY STANDARDS...... 22

IX. NO ADDITIONAL ACTION ON ANCILLARY SERVICE CHARGES IS WARRANTED AT THIS TIME ...... 35

CONCLUSION ...... 38

Attachment: Economists Incorporated Supplemental Report in Support of Comments of Global Tel*Link Corporation Regarding the FCC’s Report and Order on Remand and Fourth Further Notice of Proposed Rulemaking

ii Reply Comments of Global Tel*Link Corporation January 15, 2021

Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554

In the Matter of ) ) Rates for Interstate Inmate Calling Services ) WC Docket No. 12-375 ) ______)

REPLY COMMENTS OF GLOBAL TEL*LINK CORPORATION

Global Tel*Link Corporation (“GTL”),1 by its undersigned counsel, hereby submits these

Reply Comments in response to the Fourth Further Notice of Proposed Rulemaking (“2020

FNPRM”) issued by the Federal Communications Commission (“FCC” or “Commission”) in the above-referenced docket regarding the regulation of interstate inmate calling services (“ICS”).2

INTRODUCTION AND OVERVIEW

Since 2014, the Commission’s existing interstate ICS rate caps have served the

Commission’s dual goals of ensuring interstate ICS rates are just and reasonable, and consistent with the fair compensation mandates in Section 276 of the federal Communications Act of 1934,

1 These comments are filed by GTL on behalf of itself and its wholly owned subsidiaries that also provide interstate inmate calling services: DSI-ITI, Inc., Public Communications Services, Inc., Telmate, LLC, and Value- Added Communications, Inc. Attached hereto is a Supplemental Report in Support of Comments of Global Tel*Link Corporation Regarding the FCC’s Report and Order on Remand and Fourth Further Notice of Proposed Rulemaking prepared by Economists Incorporated (hereinafter “EI Supplemental Report”), which supplements the initial Report of Economists Incorporated included with GTL’s initial comments (hereinafter “EI Initial Report”). 2 Rates for Interstate Inmate Calling Services, 35 FCC Rcd 8485 (2020) (“2020 FNPRM”). The 2020 FNPRM is the latest in a series of orders issued by the Commission with respect to ICS. See Rates for Interstate Inmate Calling Services, 28 FCC Rcd 14107 (2013) (“2013 ICS Order”), pets. for stay granted in part sub nom. Securus Tech., Inc. v. FCC, No. 13-1280, Order (D.C. Cir. Jan.13, 2014), superseded as stated in Securus Tech., Inc. v. FCC, No. 13- 1280, Order (D.C. Cir. Dec. 21, 2017); Rates for Interstate Inmate Calling Services, 29 FCC Rcd 13170 (2014) (“2014 ICS FNPRM”); Rates for Interstate Inmate Calling Services, 30 FCC Rcd 12763 (2015) (“2015 ICS Order”), pets. for stay granted in part sub nom. Global Tel*Link Corporation v. FCC, No. 15-1461, Order (D.C. Cir. Mar. 7, 2016), Order (D.C. Cir. Mar. 23, 2016), vacated in part, rev’d and remanded in part by Global Tel*Link v. FCC, 866 F. 3d 397 (D.C. Cir. 2017) (“GTL”); Rates for Interstate Inmate Calling Services, 31 FCC Rcd 9300 (2016) (“2016 ICS Order on Reconsideration”), pets. for stay granted in part sub nom. Securus Tech., Inc. v. FCC, No. 16-1321, Order (D.C. Cir. Nov. 2, 2016), vacated and remanded by Securus Tech., Inc. v. FCC, No. 16-1321, Order (D.C. Cir. Dec. 21, 2017).

1 Reply Comments of Global Tel*Link Corporation January 15, 2021 as amended (the “Act”). As the record of this proceeding demonstrates, the Commission’s current regulatory regime for interstate ICS rates – market-based backstop rate caps that reflect the realities of the ICS market – have had a beneficial effect on both interstate and intrastate ICS rates, while also ensuring ICS providers can recover their costs of providing ICS including any required site commission payments.3 As the Commission has determined, its goals are best achieved through the continuation of a market-based rate regime that protects ICS consumers and provides each correctional facility the flexibility to seek the differing security and communication services that best meet their requirements.4

The rate caps and site commission allowance proposed in the 2020 FNPRM, however, appear to be blind to the complex system of federal and state regulation that underlies ICS operations. Several commenters agree that the proposed caps (including the proposed site commission allowance) do not reflect the variations in cost across the ICS industry, and are not

3 The Commission’s existing market-based approach to regulating ICS has resulted in the deployment of new and innovative services and technologies for incarcerated individuals and their friends and family. For example, in addition to traditional calling options, GTL also provides access to messaging, E-books, educational resources, skills development, entertainment options, religious services, and training to ease the transition back into society, all of which provide incarcerated individuals the ability to connect with others – with appropriate safety and security measures in place – and ultimately reduce recidivism. See, e.g., Where Are They Now: Deb Alderson in 2021, WashingtonExec (Jan. 10, 2021), https://washingtonexec.com/2021/01/where-are-they-now-deb-alderson-in- 2021/#.YAB8UNhKi71 (“Alderson Profile”). 4 As the Statement of Work in a recent California Department of Corrections and Rehabilitation (“CDCR”) Request for Proposal notes, personal electronic devices “ha[ve] been proven to increase family and community unification for incarcerated individuals” in affording “incarcerated individuals access to educational content, self-help, and cognitive behavioral therapy,” providing entertainment, and acting as a secure alternative to contraband wireless devices. See California Department of Corrections and Rehabilitation, Request for Proposal CDCR08112020 Communication and Technology Solution, Statement of Work, 9-10 (Aug. 11, 2020) (“CDCR RFP”), https://www.caleprocure.ca.gov/event/5225/0000017169. As such, an “integral part of an individual’s rehabilitation are the continued support and connections with their families, friends and communities. By providing services via tablets or devices, the Department is able to reach more offenders expeditiously and better prepare them for life outside of prison; thereby, effectively reducing their risk of recidivism.” See id. The CDCR accordingly seeks a Communications and Technology Solution “intended to improve communication with family/friends, dissemination of information, and optionally access to Third Party and CDCR application and content such as education and rehabilitative programs, health care requests, scheduling, and patient information, managing finances, Canteen orders, access to Law Library, and appeals/grievance process by taking advantage of existing technologies.” CDCR RFP at 23, 26 (detailing documents explicating inmate rights and pop-up facility announcements to be offered through tablets and kiosks).

2 Reply Comments of Global Tel*Link Corporation January 15, 2021 supported by the cost data. Nor does the record support the rate cap and site commission proposal offered by the Public Interest Parties and their expert, the Brattle Group. The Brattle Group simply follows the Commission’s lead, and the same methodological infirmities and flaws impair its proposal. The proposed rate caps derived from methodologies that ignore the differences in the data and costs incurred at many facilities – whether as proposed by the Commission or by the

Brattle Group – are unreliable from an economic perspective and are legally unsound.

For these reasons, GTL supports the continued use of a reasonable backstop per-minute rate cap regime for interstate ICS. The record is clear that a one-size-fits all approach to ICS is not workable. Any ICS rate regime must take into consideration the size, location, security requirements, and types of services each correctional facility needs, as well as account for different state and local management, policy, and budgetary approaches.5 A reasonable backstop rate will continue to ensure that the interstate ICS rate caps account for all ICS provider costs at all correctional facilities based on the individualized requirements at each facility.6 In addition, international ICS rate caps should follow that market-based approach and reflect the widely divergent, higher costs of international calling. Finally, any new rate regime adopted by the

5 The rate flexibility available under the Commission’s existing rate cap regime has been a key driver of GTL’s new, permanent program that provides weekly free calls, messages, or video visits to all incarcerated individuals located in correctional facilities served by GTL. See GTL at 3. In connection with GTL’s new free calling program, and GTL’s efforts in response to the COVID-19 pandemic, GTL provided more than 50 million free calls, millions of messages, and 6 million minutes of video visitation in 2020. See Alderson Profile; see also CDCR RFP at 19 (describing Enterprise Inmate Communications Pilot Program in CDCR facilities, which affords inmates reduced-cost and free communication and application options over inmate kiosks and tablets), 27 (“The contractor shall offer limited free entertainment contents to individuals who choose not to purchase any additional contents in addition to the paid content.”). In connection with GTL’s new free calling program, and GTL’s efforts in response to the COVID-19 pandemic, GTL provided more than 50 million free calls, millions of messages, and 6 million minutes of video visitation in 2020. 6 Cf. CDCR RFP at 71 (mandating that contractor ensure “relevant and timely upgrades and adheres to the manufacturers standards and industry best practices, generally established as a two (2) to five (5) year usage cycle” and “evolve, supplement, and enhance the goods and services provided in the normal course of business and that which is in scope of the contract . . . both to keep pace with and utilize technological advancements and improvements in the method of delivering technology and communications-related services and the pricing thereof”).

3 Reply Comments of Global Tel*Link Corporation January 15, 2021

Commission must allow adequate time for implementation by ICS providers and correctional facilities.

GTL also supports the introduction of advanced assistive technologies in correctional facilities as urged by some parties. However, it would be inappropriate to extend the current rate rules for teletype (“TTY”) ICS calls placed using new assistive communication systems.

Implementation of such technologies must be done in coordination with correctional facilities, and the existing rules revised to reflect the increased costs associated with the deployment of those technologies.

The record also supports retaining the current practice of applying the interstate ICS rate caps to interstate calls that are classified in accordance with existing industry standards. The comments demonstrate the far-reaching effects of the Commission’s new “definitively identify” standard, and the current reliance (and dependence) by all telecommunications carriers on the use of NPA-NXX and other industry-standard classification practices. Consistent with the concerns of other commenters, GTL urges the Commission to reconsider its new “definitively identify” standard.

Finally, GTL submits that conducting an additional data collection or making further changes to the Commission’s ancillary service charge rules is not necessary. GTL has worked cooperatively with the Commission and other industry stakeholders on these matters, and the record does not support the need for taking either of these additional actions at this time.

4 Reply Comments of Global Tel*Link Corporation January 15, 2021

REPLY COMMENTS

I. THE COST DATA DOES NOT SUPPORT THE COMMISSION’S PROPOSED RATE CAPS AND SITE COMMISSION ALLOWANCE

The record does not support the Commission’s proposed interstate ICS rate caps and site commission allowance, and does not support modifications to the existing market-based interstate

ICS rate caps.7 Many commenters agree the cost data from the Second Mandatory Data Collection and the Commission’s resulting analysis cannot be used as the basis for adoption of the

Commission’s proposed rate regime.8 Indeed, each of the five experts submitting reports in this proceeding (including the expert supporting the Public Interest Parties) conclude the differences in the cost data collected by the Commission render it unsuitable for measuring carrier costs of providing ICS or for developing market-based ICS rate caps.9

The differences in the cost data and the Commission’s “arbitrary and unexplained methods”10 have resulted in “flawed results and conclusions” that cannot be relied upon.11 The

7 See, e.g., Qwest Corp. v. F.C.C., 258 F.3d 1191, 1198–99 (10th Cir. 2001) (explaining that an FCC decision is legally infirm if “limitations in the . . . record make it impossible to conclude the action was the product of reasoned decisionmaking”); Texas Power & Light Co. v. F.C.C., 784 F.2d 1265, 1269 (5th Cir. 1986) (“[T]he Commission must be able to explain [its] decision, as well as the methods and factors used in reaching that decision, in a coherent and intelligible fashion.”). 8 See, e.g., GTL at 20; Correct Solutions at 1; Pay Tel at 4-5; Securus at 10; see also Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 4-5 (stating the FCC’s proposed approach suffers from methodological flaws); Worth Rises at 1 (raising concerns about the FCC’s methodology for setting new interstate rate caps). Similarly, the commenters agree the Commission’s refusal to provide its workpapers and other relevant material underlying Commission staff’s manipulation of the ICS providers’ data raises serious concerns about the validity of the Commission’s analyses and processes. See, e.g., EI Initial Report § V; PayTel at n.15; Wood at 5; Securus at 15. 9 EI Initial Report ¶ 29 (finding the FCC’s analyses of costs are invalid); Wood at 6 (stating there are fundamental problems with the data collection process, the process used to compile the data, and the results of the subsequent analysis); Brattle Group at 1 (finding deficiencies in the FCC’s implementation of its rate methodology); Furchtgott-Roth at 12 (concluding the FCC’s proposed rate caps are based on economically flawed methods); FTI Consulting at 7 (stating the FCC’s methodology for calculating rate caps creates flawed results and conclusions). 10 Furchtgott-Roth at 13. For example, former Commissioner Dr. Furchtgott-Roth notes the Commission improperly excluded goodwill from its cost calculation when there is no legal or economic foundation to exclude any portion of goodwill from the calculation. See id. at 20-22. This is consistent with the finding in the EI Initial Report that the Commission improperly adjusted GTL’s reported costs. See EI Initial Report ¶ 24; see also EI Supplemental Report at n.6. 11 FTI Consulting at 1.

5 Reply Comments of Global Tel*Link Corporation January 15, 2021

Commission cannot simply “average away” these differences in the data to reach the

Commission’s desired result.12 The Commission admits that each ICS provider used different methods to report its costs and each provider applied its own accounting practices to report those costs.13 ICS providers are not subject to Part 32 accounting rules or a uniform system of accounts, and as such, each ICS provider keeps their books and records in a different way and tracks their costs (if tracked at all) in various ways.14 It is no surprise there are differences in the data among

ICS providers given the different reporting methodology because no uniform accounting is required or necessary.15 The differences in the data leave the Commission’s resulting conclusions untenable and unusable for purposes of reasoned ratemaking.16

The Commission’s improper focus on creating a “regulated cost-based rate”17 for ICS also undermines its results and conclusions, and is contrary to the Commission’s stated purpose for this proceeding – creation of market-based interstate ICS rate caps.18 Both the Commission and the

12 Wood at 6, 20-21. 13 See, e.g., 2020 FNPRM ¶ 79 (“The collected data are subject to certain limitations based on differences in recordkeeping practices among the respondent providers.”); 2020 FNPRM at Appendix E, ¶ 2 (“While providers generally reported at least some inmate calling services costs at the level of the contract, and more rarely at the level of the facility, each did this differently.”); 2020 FNPRM at Appendix E, ¶ 7 (“Each filer applied its own accounting practices in reporting overheads.”); 2020 FNPRM at Appendix E, ¶ 18 (“The reporting of costs for shared contracts varies by provider.”); see also EI Supplemental Report ¶ 6; EI Initial Report ¶ 26. 14 Wood at 6. 15 EI Initial Report ¶ 29. 16 Pay Tel at 8; FTI Consulting at 1. 17 2020 FNPRM ¶ 92; 2020 FNPRM Appendix G, ¶ 4; see also 2020 FNPRM ¶ 97; Request for Information and Documents Regarding Global Tel*Link Corporation’s Inmate Calling Services Costs, 35 FCC Rcd 7028 (2020) (“GTL Additional Data Requests”). 18 In an effort to cure its legally-flawed cost-based approach to regulation of ICS, the FCC asked the D.C. Circuit to hold review of the 2013 ICS Order in abeyance based on the FCC’s 2014 ICS FNPRM, which proposed to adopt a comprehensive, market-based approach to regulating ICS. See Case No. 13-1280, Securus Technologies, Inc. v. FCC, Uncontested Motion of the Federal Communications Commission to Hold Case in Abeyance (D.C. Cir. filed Dec. 10, 2014); see also 2014 ICS FNPRM ¶¶ 6, 48 (stating the FCC intended to adopt a “market-based approach” for ICS rates, not the “cost-based approach” previously adopted in the 2013 ICS Order). The Commission reiterated that commitment in the 2020 FNPRM when it stated it was proposing a permanent rate cap for “all calls that a provider identifies as interstate.” See 2020 FNPRM ¶ 70.

6 Reply Comments of Global Tel*Link Corporation January 15, 2021

Public Interest Parties appear to be under the mistaken impression that the analysis should take into account the costs of each individual ICS provider using the framework applied to dominant carriers subject to rate-of-return ratemaking and historical accounting recordkeeping requirements.19 ICS providers, however, are non-dominant telecommunications carriers, and are not subject to cost-based, rate-of-return obligations.20 Rather, ICS providers are competitive carriers subject to state-mandated competitive bidding requirements and parameters established by their customers, i.e., the law enforcement entities who have a responsibility to protect the internal and external communities for which they are responsible.21 The Commission cannot ignore the realities of the ICS market and the fact that public safety comes first in delivering any type of service related to the housing of incarcerated individuals.22

19 See, e.g., 2020 FNPRM ¶ 92 (looking at certain data “as a basis for a regulated cost-based rate”); 2020 FNPRM Appendix G, ¶ 4 (manipulating data “for the purpose of developing a regulated, cost-based rate for inmate calling services”); Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 13 (discussing the steps the FCC “often takes when it moves toward establishing cost-based rates on a ‘glide path’”); Brattle Group at 12 (focusing on and removing the costs of certain ICS providers from the analysis as so-called “outliers”). The FCC’s previous attempt to impose cost-based rates on ICS providers was met with a stay by the D.C. Circuit. See Securus Tech., Inc. v. FCC, No. 13-1280, Order (D.C. Cir. Jan. 13, 2014) (staying implementation of the 2013 ICS Order’s requirement for cost-based ICS rates). 20 GTL at 22-24; see also Furchtgott-Roth at 16-17 (discussing how application of the FCC’s data adjustment methodology to a single company leads to a form of company-specific regulation). 21 Instead of focusing on each individual provider’s costs (one of the hallmarks of rate-of-return regulation), the more important consideration is the rates being charged to end users (the cornerstone of market-based rate cap regulation). See GTL at 24; EI Initial Report ¶¶ 34-35. 22 California State Sheriff’s Association at 1; National Sheriffs’ Association at 5; see also GTL at 5 (stating interstate ICS rates must continue to reflect the realities of the ICS market, which include the competitive bidding process, the special public safety and security needs required by correctional facilities, and the payment of site commissions); cf. CDCR RFP at 10 (soliciting a communications system that “will enhance individual’s communication user experience, provide new services and increase access to existing services through advancements in technology,” which “increases rehabilitative opportunities and associated investigative, live monitoring and management control systems”), 13 (describing “security standards and . . . special computer-based security features intended to protect the public” incumbent upon the provision of Inmate/Ward Telephone Service within CDCR facilities). The CDCR RFP is just one example; most of the correctional facility industry has evolved to require such services and products.

7 Reply Comments of Global Tel*Link Corporation January 15, 2021

Nor should the Commission choose an allocation methodology only because it will yield a desired outcome when there are other more reasonable methods available.23 For example, as Don

Wood explains, it appears the Commission chose to allocate costs by minute-of-use to achieve the lowest standard deviation in the results for both jails and prisons.24 The objective, however, should not be to choose an allocation method that generates the most homogenous results (or to generate results that minimize the variation in calculated costs across locations or contracts).25 The

Commission offers no reasoned explanation as to why it chose this allocation method.26

Finally, the Commission’s proposed rate caps and site commission allowance are not supportable under the law. The commenters agree the proposed rate caps (including the site commission allowance) will not allow ICS providers to recover their costs as required by law.27

Rate caps that fail to adequately reflect demonstrated cost differences are inconsistent with the requirement of Section 276 that ICS providers are to be “fairly compensated for each and every completed” call.28 The National Sheriffs’ Association notes per-minute costs associated with the provision of ICS far exceed the Commission’s proposed site commission allowance.29 Other commenters agree, stating site commission costs likely are substantially higher than presented by

23 Wood at 6, 20-21; see also Furchtgott-Roth at 16 (stating it appears the FCC had a prior notion of “reasonable” interstate rate caps and the FCC adjusted the data in order to meet the FCC’s sense of reasonability in ICS rates). 24 Wood at 20-21. 25 Wood at 20-21. 26 Wood at 21; see also Securus at 40-41 (noting the Commission’s justification for allocating indirect costs based on minutes-of-use is circular). 27 See, e.g., Correct Solutions at 2; Pay Tel at 7, 18-19; Wood at 3-4; Securus at 42; Furchtgott-Roth at 15. 28 Wood at 5; see also 47 U.S.C. § 276(b)(1)(A); GTL, 866 F.3d at 414 (finding ICS rates must “fulfill the mandate of § 276 that ‘each and every’ inter- and intrastate call be fairly compensated”). 29 National Sheriffs’ Association at 7; see also NCIC at 4-5 (noting a strict cap on site commissions may impair the ability of state and local governments to recover the costs associated with the provision of ICS).

8 Reply Comments of Global Tel*Link Corporation January 15, 2021 the Commission, which creates a significant issue under Section 276.30 The Commission’s proposed site commission allowance and proposed rate caps fail to reflect the variations in correctional facility costs and thus are legally unsustainable under Section 276.31

II. THE RECORD DOES NOT SUPPORT THE RATE CAP AND SITE COMMISSION PROPOSALS OFFERED BY THE BRATTLE GROUP

The Brattle Group acknowledges the flaws in the Commission’s data analyses,32 but nonetheless relies on the Commission’s analyses in support of further reduced rate caps and the site commission allowance.33 Brattle arrives at its rate cap proposal by deleting some “outliers” with costs on the high end of the distribution of reported costs, which Brattle argues will address some of the flaws in the FCC’s process for arriving at its proposed rate caps.34 Brattle (and the

Commission) ignore the simple fact that the distribution it is examining is not valid in the requisite statistical sense; it is not the distribution of consistently-reported costs across the various providers and facilities.35 The invalidities in the Commission’s empirical analyses flow through to the

Brattle analysis; Brattle simply follows the Commission’s lead in analyzing the distribution of a value that is not being measured consistently.36 As previously explained in the EI Initial Report, it is not valid to treat all of the data as being consistently reported when clearly that is not the case

(nor should it have been expected).37

30 Pay Tel at 7-8; Furchtgott-Roth at 15. 31 Pay Tel at 7-8. 32 Brattle Group at 5 (“The costs, and their components, were not collected in a standardized format with common definitions of what constituted direct, indirect and overhead costs.”) 33 Brattle Group at 11-12 (“The FCC’s implementation of its rate methodology has two inconsistencies that result in inflated rates that we identify and correct in this section.”). 34 EI Supplemental Report ¶ 17. 35 EI Supplemental Report ¶ 18. 36 EI Supplemental Report ¶ 18. 37 EI Initial Report at 29; see also EI Supplemental Report ¶ 18; Wood at 6; FTI Consulting at 7. ICS providers are non-dominant, competitive carriers that are not subject a uniform system of accounting, and thus have no obligation 9 Reply Comments of Global Tel*Link Corporation January 15, 2021

Brattle further manipulates the Commission’s data to reach a lower site commission allowance.38 The Brattle analysis, however, suffers from the same infirmities as the Commission’s site commission analysis, which are detailed in the EI Initial Report.39 Brattle implicitly accepts the Commission’s unsupported approach for arriving at an “acceptable” level for the site commission allowance.40 After setting up its strawman position, Brattle adjusts the Commission’s site commission methodology by rounding down (instead of up as the Commission did), asserting

“usual rounding convention.”41 These methodological infirmities undermine any reliance on the

Brattle site commission proposal.42

Brattle further concludes “it may be reasonable to fully exclude an adjustment for site commissions based on ‘the speculative nature of these unobserved costs.’”43 Brattle’s conclusion directly conflicts with Section 276, which requires ICS providers to be “fairly compensated for each and every completed” call,44 and the D.C. Circuit’s holding that the “exclusion of site

to track their costs in a certain format, or even track them at all. See Wood at 6 (“while the Commission regulates the rates for ICS based on section 276 of the Act, ICS providers are (with a few exceptions) not regulated telecommunications carriers. There are no Part 32 accounting rules and no Uniform System of Accounts that apply to how their books and records are kept or how categories of cost are reported.”); see also 47 CFR § 32.11 (setting forth the Uniform System of Accounts (“USOA”) that applies to incumbent local exchange carriers); US Sprint Communications Company Limited Partnership, 4 FCC Rcd 6279 (1989) (declining to require Sprint to provide certain cost information because, as a non-dominant carrier, Sprint was not subject to the Uniform System of Accounting (USOA), or the cost allocation rules developed by the Commission). 38 Brattle Group at 14. 39 EI Initial Report at Section VII; see also GTL at 26-27. 40 EI Supplemental Report ¶ 19. Brattle conducts no analysis of how site commissions are determined or the functions they serve, and ignores the fact that site commissions are determined by the correctional facilities or by state law/regulation. See EI Initial Report ¶ 41; see also GTL, 866 F.3d at 413 (“it does not matter that the states may use commissions for purposes unrelated to the activities of correctional facilities. The ICS providers who are required to pay the site commissions as a condition of doing business have no control over the funds once they are paid.”). 41 Brattle at 14. 42 EI Supplemental Report ¶¶ 19-20. 43 Wright Petitioners, Public Policy Initiative, and Public Knowledge at 7 (citing Brattle Report at 14) (emphasis in original). 44 47 U.S.C. § 276(b)(1)(A); see also GTL, 866 F.3d at 414 (finding the mandate of Section 276 is not fulfilled when calls with above-average costs are unprofitable).

10 Reply Comments of Global Tel*Link Corporation January 15, 2021 commissions from the calculus used to set ICS rate caps defies reasoned decision-making because site commissions obviously are costs of doing business incurred by ICS providers.”45 Brattle is wrong - site commissions are not “unobserved costs.”46 The law recognizes site commissions are direct costs that ICS providers are required to pay as a condition of doing business and must be able to recover as a cost of doing business.47

Brattle’s claims of “market power” in the ICS market also are unsupported.48 In stark contrast to Brattle, nearly every other expert participating in this stage of the proceeding disavows the notion that ICS providers wield market power.49 As former Commissioner Dr. Furchtgott-

Roth explains, the Commission “has not asked, much less received a record to demonstrate, that bidding processes that result in higher ICS rates are the result of market power or anticompetitive conduct by bidders.”50 Don Wood – who has been offering expert testimony in FCC ICS proceedings since at least 2008 – describes the market to provide ICS at a given correctional facility location as “highly competitive.”51 These experts echo the EI Initial Report, which found there is no basis in the record for an assumption of market power related to the provision of ICS.52

Further, the existence of low ICS rates in some portions of the market cannot be used to support Brattle’s rate proposal.53 As Securus notes, the fact that some jails and prisons have rates

45 GTL, 866 F.3d at 413. 46 See, e.g., Brattle at 3, 14, 19. 47 GTL, 866 F.3d at 413; 47 U.S.C. § 276(b)(1)(A); U.S. Const. amend. V (“[P]rivate property [shall not] be taken for public use, without just compensation.”); see also GTL at 30-32 (discussing how forcing providers to provide services below cost violates the Takings Clause of the Constitution and Section 276). 48 Brattle at 8; see also EI Supplemental Report § IV. 49 See, e.g., EI Initial Report ¶ 23; Furchtgott-Roth at Section C; Wood at 6. 50 Furchtgott-Roth at 12. 51 Wood at 6. 52 EI Initial Report ¶ 23; see also EI Supplemental Report ¶ 16. 53 Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 5-6 (discussing marketplace data as support for rate proposal); see also Worth Rises at 4 (discussing existing bidding and contract trends in support of 11 Reply Comments of Global Tel*Link Corporation January 15, 2021 below the proposed rate caps is evidence that competitive bidding by ICS providers has driven down prices.54 The presence of current rates below the Commission’s proposed interstate rate caps cannot be used as “evidence” that the proposed caps will allow for cost recovery for services to all correctional facilities.55 As explained in more detail below, those lower rates simply reflect the positive effects of the market-based approach used to establish the existing interstate rate cap regime for a market that has widely disparate customers, with varied needs, and is required to employ competitive bidding to select their service providers.56

III. THE COMMENTS DEMONSTRATE A ONE-SIZE-FITS-ALL APPROACH IS NOT WORKABLE FOR ICS RATES

The comments demonstrate the Commission cannot implement a one-size-fits-all rate regime for interstate ICS services.57 It is unworkable to implement a rate structure applicable to all correctional facilities that ignores the different size, location, security requirements, and types of services each facility needs, and fails to account for different state and local management, policy, and budgetary decisions. Interstate ICS rates must continue to reflect the realities of the

ICS market, which include the competitive bidding process, the special public safety and security needs required by correctional facilities, and the payment of site commissions when required.

For this reason, GTL supports adoption of a reasonable backstop per-minute rate cap regime for interstate ICS, which has been demonstrated to protect consumers of interstate ICS and provide the ICS market the flexibility to respond to the differing security and communication

lower rate caps); Prisoners’ Legal Services at 2 (discussing Securus’ recent rate reductions in Massachusetts in support of lower rate caps). 54 Securus at 42. 55 GTL at 5, 9-10; see also 2020 FNPRM ¶ 89. 56 The Commission should reject the below-cost rate proposals offered by MediaJustice and Worth Rises (MediaJustice at 2; Worth Rises at 4), which are offered without evidentiary support and would violate Section 276 mandates and the D.C. Circuit’s remand. See 47 U.S.C. § 276(b)(1)(A); GTL, 866 F.3d at 414. 57 See, e.g., California State Sheriff’s Association at 2; Securus at 33; Pay Tel at 18.

12 Reply Comments of Global Tel*Link Corporation January 15, 2021 service needs of each correctional facility.58 A reasonable backstop rate ensures the interstate ICS rate caps account for all ICS provider costs at all correctional facilities based on the individualized requirements at each facility as expressed in Requests for Proposals (“RFP”) and developed through the competitive bidding process. Indeed, although some commenters bemoan ICS as an example of market failure, the San Francisco Financial Justice Project demonstrates otherwise, and shows the positive effect the Commission’s existing backstop rate cap regime has had on ICS rates.59

It is essential that the Commission not lose sight of the impact of a one-size-fits-all regime on the ICS market. The existing interstate backstop rate cap approach provides the ICS market with the rate flexibility necessary to respond to market conditions, protects end users, and ensures adequate security measures for correctional facilities will remain in place.60 As the comments of the National Sheriffs’ Association and California State Sheriff’s Association explain, ICS rates must recompense all types of correctional facilities for the considerable security and administrative costs they incur in providing ICS.61 And those who assert that the costs of security should not be

58 GTL at 5. GTL is not opposed to the tiered rate approach proposed by Pay Tel and Securus (Pay Tel at 18- 19; Securus at 40) or to the Commission’s proposal to adopt different rates for prisons and jails (2020 FNPRM ¶ 74), but adoption of a reasonable backstop rate cap that takes into account all possible variances in ICS rates would be more efficient for ICS providers, correctional facilities, and end users. 59 San Francisco Financial Justice Project at 2 (citing first-in-the-nation negotiations between the San Francisco Sheriff’s Office and GTL for a per-device rate contract); see also GTL at 5 (discussing the effect of the Commission’s current backstop rate regime on interstate and ICS rates). 60 2014 ICS FNPRM ¶ 19. Brattle incorrectly notes the current rate caps of $0.21/$0.25 per minute were “interim safe harbors” adopted by the FCC in 2013. See Brattle at 4. The “safe harbor” rates adopted by the FCC in 2013 were $0.12/$0.14 per minute, and never took effect because they were stayed by the D.C. Circuit. See Securus Tech., Inc. v. FCC, No. 13-1280, Order (D.C. Cir. Jan.13, 2014). The interim rate caps of $0.21/$0.25 per minute were never challenged and have never been vacated. Since their implementation in 2014, the interim rate caps have served their purpose as a backstop rate cap, and many rates in the market are set well below those caps, as several commenters note. See, e.g., GTL at 9-10; Securus at 42; Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 5-6 (discussing marketplace data); Worth Rises at 4 (discussing existing bidding and contract trends); Prisoners’ Legal Services at 2 (discussing Securus’ recent rate reductions in Massachusetts). Thus, it appears the FCC is trying to fix a problem that it has failed to demonstrate is broken. 61 National Sheriffs’ Association at 2-3; California State Sheriff’s Association at 2.

13 Reply Comments of Global Tel*Link Corporation January 15, 2021 factored into ICS rates62 are wrong.

As the Commission has recognized, correctional facilities and ICS providers must “balance the laudable goal of making calling services available to inmates at reasonable rates . . . with necessary security measures and costs related to those measures.”63 The “concerns and requirements” of correctional authorities have not diminished in the years since the Commission first recognized the “special” nature of ICS;64 if anything, those concerns and requirements have increased in recent years. More and more correctional facilities are demanding unique and increasingly sophisticated security elements, which require ICS providers to deploy complex and costly technological features,65 including: special automated voice-processing systems for call screening, advanced blocking mechanisms, real-time recording systems that must store terabytes of data for easy retrieval, monitoring to evade restrictions on call-forwarding or three-way calling, voice overlays identifying calls and disclosing that calls are recorded, detailed reporting systems, biometric caller verification, fraud control features, and more.66 A reasonable backstop rate regime

62 See, e.g., MediaJustice at 2; Worth Rises at 8-9; 63 Implementation of the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996, 17 FCC Rcd 3248, ¶ 72 (2002) (“2002 Order). 64 Petition for Declaratory Ruling by the Inmate Calling Services Providers Task Force, 11 FCC Rcd 7362, ¶ 25 (1996) (“1996 Declaratory Ruling”); see also 2002 Order ¶ 9; Billed Party Preference for InterLATA 0+ Calls, 16 FCC Rcd 22314, ¶ 15, n.46 (2001). 65 Neither the law nor the record of this proceeding supports Worth Rises’ contention that communications services in prisons and jails are not meaningfully different from communications services in any other marketplace. See Worth Rises at 2. As the National Sheriffs’ Association explained, the provision of ICS presents a substantial security risk to the public and to correctional officers, and security measures must be taken to deter illegal and harmful activities. See National Sheriffs’ Association at 2-3. Further, the Commission has recognized since at least 1996 “the unique nature of the service offered and the requirements of corrections authorities to carefully control the conditions under which the service is offered.” See 1996 Declaratory Ruling ¶ 23. As a result, the Commission determined “the concerns and requirements of corrections authorities are different and often in conflict with those associated with the provision of basic public payphone service” and those “facts distinguish inmates from the ‘general public.’” See id. ¶ 25; cf. CDCR RFP at 27-29 (detailing monitoring, tracking, and recording features and investigative tools and support that form integral component of solicitation). The CDCR RFP is just one example; nearly every RFP issued today includes requirements for these types of technical and monitoring capabilities. 66 Such security measures are necessary given the ability of incarcerated individuals to use telephones to, for example, request drugs, weapons, or other forms of contraband from parties outside of the correctional facility; engage in witness intimidation or order violent reprisals; or plan escape attempts. Courts have afforded prisons substantial 14 Reply Comments of Global Tel*Link Corporation January 15, 2021 ensures correctional facilities can obtain the services they require for public safety while achieving the Commission’s dual goals of just and reasonable rates and fair compensation for ICS providers.

IV. THE RECORD SHOWS INTERNATIONAL ICS RATE CAPS MUST BE HIGHER THAN INTERSTATE ICS RATE CAPS GIVEN THE COST DIFFERENTIALS FOR INTERNATIONAL CALLING

There is wide support for the Commission’s proposal to cap international ICS rates based on the per-minute interstate rate cap plus the amount the provider must pay its underlying international service provider without mark-up.67 There is no question that international calling is more costly than interstate calling given international settlement and/or foreign termination rates,68 and the Commission’s proposal reflects those well-established differences.69 As such, the

Commission should reject the Public Interest Parties’ unsupported suggestion that international rates be capped at interstate levels, and that ICS providers be required to “submit copies of actual

latitude to engage in call monitoring and recording, holding that institutional security outweighs any alleged expectation of privacy an incarcerated individual may possess. See, e.g., United States v. Amen, 831 F.2d 373, 379– 80 (2d Cir. 1987) (“As the Supreme Court construes the Fourth Amendment, prison inmates have no reasonable expectation of privacy. In the prison context the reasonableness of a search is directly related to legitimate concerns for institutional security. If security concerns can justify strip and body-cavity searches, and wholly random cell searches, then surely it is reasonable to monitor prisoners' telephone conversations, particularly where they are told that the conversations are being monitored.”) (internal citations omitted); United States v. Clark, 651 F. Supp. 76, 81 (M.D. Pa. 1986) (“In Hudson v. Palmer, 468 U.S. 517, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984), the Court held that a prisoner has no legitimate expectation of privacy in his prison cell which warrants Fourth Amendment protection from unreasonable searches and seizures. . . . While the holding in Hudson may be limited to a prisoner's expectation of privacy in his cell, the reasoning in Hudson can be applied to this case. The recognition by the court of a reasonable expectation of privacy in telephone conversations placed from penitentiary telephones would frustrate the objectives of the Bureau of Prisons . . . It is clear in those regulations that it is the aim of the Bureau of Prisons to enhance the security of federal prisons through monitoring and recording of telephone conversations. The fact that the inmates are made aware of this policy through the signs posted by the telephones is even more reason not to find a legitimate expectation of privacy.”) (subsequent history omitted). 67 2020 FNPRM ¶ 124; see also Verizon at 2; MediaJustice, et al. at 2; Prisoners’ Legal Services at 6-7. 68 See, e.g., Federal Communications Commission, International Bureau, Trends in the International Telecommunications Industry (Sept. 2005); see also 2020 FNPRM ¶ 125. 69 The Commission questions the $8.58 rate listed in GTL’s April 1, 2020 Annual Reporting Form for the CCA- Cimarron Correctional facility in Oklahoma. See 2020 FNPRM at nn.305-06. On December 23, 2020, GTL supplemented its Annual Reporting Form filed April 1, 2020 to provide additional international ICS rate information by country and by correctional facility for calendar year 2019. As shown in that supplement, the $8.58 rate applies to calls destined for Somalia, not all international calls originating from the CCA-Cimarron Correctional facility.

15 Reply Comments of Global Tel*Link Corporation January 15, 2021 third-party charges” if the interstate rate cap does not cover the cost of international ICS calling.70

The record evidence demonstrates there are differences between interstate and international calling based on “international settlement rates and foreign termination rates [that] make the costs to transport and terminate international calls higher than those of domestic calls.”71 International ICS rate caps must reflect the cost differential between interstate and international calling, which are based on the charges imposed on the ICS provider by the underlying international service provider.72

V. A 30-DAY TRANSITION PERIOD FOR ANY NEW RATE CAPS IS NOT WORKABLE

The Commission should adopt a staggered implementation process for any new interstate and international ICS rate caps adopted in this proceeding.73 Correctional facilities have indicated that even the 90-day implementation period proposed in the 2020 FNPRM likely is insufficient.74

GTL proposes that any new rate caps take effect for prisons 90 days after Federal Register publication and for jails six (6) months after Federal Register publication similar to the transition periods adopted by the Commission in the 2015 ICS Order and 2016 ICS Reconsideration Order.75

70 Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 10. Further, the burdens imposed by a requirement that ICS providers file with the FCC copies of their third-party charges for each international destination and each underlying service provider overwhelmingly outweighs any purpose or anticipated benefit of such a requirement. See Radio-Television News Directors Assn’n v. FCC, 184 F.3d 872, 887 (D.C. Cir. 1999) (stating “the court must weigh the rules’ benefits against their burdens”). 71 2020 FNPRM ¶¶ 125-26 (noting the record contains a wealth of information regarding international ICS rates and associated international calling costs). 72 Securus at 45-46. Given the often-changing international landscape, GTL agrees with Securus that it may be more efficient to set the international ICS rate cap based on the interstate rate cap, plus the average amount paid by the ICS provider to underlying carriers to terminate international calls to the same destination over the preceding calendar quarter rather than on a call-by-call basis. See id. at 47. 73 GTL at 12. 74 California State Sheriff’s Association at 2. 75 GTL at 13.

16 Reply Comments of Global Tel*Link Corporation January 15, 2021

The 30-day transition period suggested by some commenters is not feasible.76 As GTL and others have explained, a “significant implementation period” is required to renegotiate the thousands of existing ICS contracts to reflect any new rate regime adopted by the Commission.77

The suggestion that ICS providers have had “ample time” to prepare for rate changes ignores the realities of a contract-based business and the sheer number of contracts to be renegotiated.

Contrary to the suggestion of some parties, ICS providers cannot unilaterally implement contract changes.78 In addition, while the Commission’s estimate of approximately 25 hours of work per contract to implement the changes is unrealistically low,79 that estimate itself undermines adoption of a 30-day transition period. Accordingly, the Commission should adopt a transition period that ensures both ICS providers and correctional facilities have ample time to fully implement any new rate caps adopted by the Commission.

VI. ANY NEW DISABILITY ACCESS REQUIREMENTS MUST BE IMPLEMENTED IN COORDINATION WITH CORRECTIONAL FACILITIES AND REFLECT THE COSTS OF IMPLEMENTING NEW TECHNOLOGIES

The record in this matter reflects a strong desire that the Commission facilitate the introduction of advanced assistive technologies in correctional facilities. Aside from parties such as the Accessibility Coalition – which emphasizes “the backdrop of the fading of teletypewriter

(TTY) communications . . . from obsolescence and ineffectiveness to literal non-functionality”80

76 See, e.g., Free Press at 6; Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 17-18. 77 Securus at 38; see also GTL at 12-13. 78 See, e.g., Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 18. 79 2020 FNPRM ¶ 119; see also GTL at 33-34 (discussing how the Commission’s estimate of the hours needed to implement a new rate regime is unrealistically low given the number of contracts to be renegotiated and the implementation of the new rates in billing systems, interactive voice response systems, websites, web-posted documents, customer service materials, and other publications). 80 Accessibility Coalition at 2; see also MediaJustice at 2 (“The Commission must act on its obligations under the Americans with Disabilities Act to provide functionally equivalent communications access for incarcerated people by requiring access to modern relay services and equipment, including VRS and videophones.”); Sorenson 17 Reply Comments of Global Tel*Link Corporation January 15, 2021

– dozens of individual commenters have urged the Commission to redress the communicative difficulties of deaf and disabled incarcerated individuals and the children of deaf adults. One individual, for example, links a “lack of contact” from outmoded assistive communications systems “to mental anguish and a detachment from essential support systems that would help the formerly incarcerated from reoffending.”81 Another characterizes TTY services as outdated, functionally limited, and unusable by non-English speakers.82

GTL stands in support of these initiatives,83 but urges the Commission to take a fulsome approach in determining how best to effectuate them. Although Telecommunications Relay

Services (“TRS”) have evolved in form and functionality over time,84 their implementation is largely constrained to TTY systems pursuant to regulations that date back nearly three decades.85

Consequently, the technological advantages and limitations, relative utility to both calling and called parties, and costs with respect to TTY deployment and maintenance are well understood.

Deploying their successors – which constitute an evolution of, rather than simple substitution for, existing accessibility communications systems – in the unique environment of the corrections industry, warrants a comprehensive prospective inquiry into these factors.

Communications and CaptionCall at 2 (noting that “TTY has been largely supplanted by better forms of TRS that are easier to use and are much more functionally equivalent to hearing use of a telephone”). 81 Kaley Klecka (Nov. 17, 2020). 82 Kathryn Hartfield (Nov. 16, 2020). 83 Cf. CDCR RFP at 24 (communication business objectives include provision of “communication services to hearing and visually impaired individuals in compliance with ADA, FCC, and California PSC”), 25 (“As part of the essential communications, Video Relay Service/American Sign Language-Video Calling Services (VRS/ASL-VCS) will be provided to accommodate hearing impaired individuals in compliance with ADA, FCC, and California PSC regulations and guideline at designated institutions.”), 33 (“ADA compliance shall be applied to all of the CTS system and shall meet all ADA requirements as they pertain to the End Users. Focus shall be to specifically comply with the ADA to ensure that the structural and programmatic access of this technology is designed and demonstrated as meeting those accessibility requirements. . . . The solution must provide VRS and American Sign Language-Video Calling Service (ASL-VCS) calls at no cost to the State, incarcerated individual, and called party.”). 84 2020 FNPRM ¶ 136, n.321. 85 Cf. Telecommunications Services for Individuals with Hearings and Speech Disabilities and the Americans with Disabilities Act of 1990, 6 FCC Rcd 4657 (1991).

18 Reply Comments of Global Tel*Link Corporation January 15, 2021

To this end, it is important to assess the increased costs associated with deployment of next-generation assistive technologies. As a rule, new or emerging technologies with fewer producers and higher manufacturing costs are more expensive than well-established technologies, according to the principles of price competition and economies of scale.86 This is particularly true in the ICS context, where “off-the-shelf” communications solutions must be rendered functionally resilient, secure, and interoperable with existing prison communication systems,87 which are themselves often of proprietary construction. Other costs may also accrue with respect to training and maintenance, as correctional officers and support staff accustomed to the intricacies and operation of a 30 year-old TTY system confront an entirely new form of communication.

Accordingly, current rules concerning the rates for TTY calls cannot simply be extended to calls placed over new assistive communication systems. The Act exempts TRS calls from the fair compensation per-call methodology applicable to ICS providers,88 a provision the Commission has interpreted as prohibiting “ICS providers from assessing charges for ICS calls between a TTY device and a traditional telephone.”89 With respect to TTY-to-TTY calls, ICS providers may charge rates of “no more than 25 percent of the rates the providers charge for traditional inmate calling services.”90 It is incumbent upon the Commission to revisit these five year-old

86 Cf. Joel D. Goldhar and Mariann Jelinek, Plan for Economies of Scope, Harvard Business Review (Nov. 1983), https://hbr.org/1983/11/plan-for-economies-of-scope. 87 As a 2017 article in Correctional News explained, introducing residential Video Relay Service in a correctional facility environment without a managed-access front-end system invited “the potential for unrestricted illegal activity,” such as “gang coordination, taunting of witnesses, delivering contraband to inmates, planning escapes and arranging other serious crimes. . . . Additionally, without a front-end system in place for prison and jail VRS calls, inmates using residential VRS are able to easily make prison-to-prison calls without the knowledge of the prison administration.” Jack McWilson, “How to Meet the Communications Needs of Deaf Inmates,” Correctional News (Dec. 1, 2017), http://correctionalnews.com/2017/12/01/how-to-meet-the-communication-needs-of-deaf-inmates/. 88 47 U.S.C. § 276(b)(1)(A). 89 2015 ICS Order ¶ 236. When “assessed a per-call or per-minute charge by another carrier or service provider to complete a call made through a TRS center,” an ICS provider is permitted to pass it through to the end user with no markup. Id. at n.842. 90 2015 ICS Order ¶¶ 237-38.

19 Reply Comments of Global Tel*Link Corporation January 15, 2021 pronouncements on TTY with respect to advanced assistive technologies to ensure that ICS providers and, by extension, their correctional facility customers are afforded fair compensation for the costs of deploying and maintaining such technologies.91 Under the Act and the

Commission’s rules, the Commission has the latitude to establish rate parity with calling rates for functionally equivalent voice communications services.92 It is, in any case, unreasonable and economically unjustifiable to compel a wholesale replacement of TTY systems while asserting that ICS providers are, directly or indirectly, prohibited from assessing charges for use of their replacements.93

As the Disabilities Program Manager for the Federal Bureau of Prisons points out, there are “significant concerns” in a move away from TTY technology.94 Implementation of next- generation assistive technologies must be driven by the correctional facilities themselves. As GTL has explained,95 correctional facilities throughout the country struggle to balance the laudable deployment of advanced communications technologies with unique limitations and considerations, such as facility population size, site geography, and institutional security concerns; governing body policies and budgets; and the ability to forge partnerships with providers technically capable and capitalized to install and sustain complex communications services. In providing for the transition to advanced assistive devices, and the economic and temporal requirements necessary to effectuate it, the Commission must bear in mind these factors, particularly as to small jails and confinement

91 2013 ICS Order ¶¶ 144-47. 92 47 U.S.C. § 225(b)(1)(D); 47 CFR § 64.604(c)(4). 93 Cf. Accessibility Coalition at 16-18. 94 FBOP Disabilities Program Manager at 1. 95 See, e.g., WC Docket No. 12-375, Reply Comments of Global Tel*Link Corporation (Apr. 22, 2013) (describing challenges incumbent upon ICS providers in supplying more than traditional voice services to correctional facility customers).

20 Reply Comments of Global Tel*Link Corporation January 15, 2021 facilities. A commitment to ensuring the widespread availability of such devices through existing market-based mechanisms (such as the RFP process), and subject to institutional security and correctional management policies, will yield far more efficacious results than an inflexible and universal fiat.96

VII. AN ADDITIONAL DATA COLLECTION IS NOT NECESSARY

Conducting an additional data collection will not resolve the differences in the cost data and the infirmities in the Commission’s resulting analyses as some commenters suggest.97 There is no reason to believe – and the commenters provide none – that ICS providers will report their costs any differently than they did previously. As Pay Tel’s expert points out, ICS providers are not subject to Part 32 accounting rules or a uniform system of accounts.98 As such, each ICS provider keeps their books and records in a different way and tracks their costs (if tracked at all) in various ways,99 which the Commission itself has recognized.100 Given that data reporting varies substantially among providers, future data collections are likely to produce the same results.101

Further, there are less burdensome ways for the Commission to monitor the ICS market.

The Commission already receives annual data from ICS providers on their operations, including

96 This can be witnessed in the rapid adoption and deployment of contraband interdiction systems, where a commitment to ensuring correctional facility site integrity and a concomitant light regulatory touch has resulted in the rapid and widespread adoption of such devices. See generally GN Docket No. 13-111, Promoting Technological Solutions to Combat Contraband Wireless Device Use in Correctional Facilities. 97 See, e.g., Free Press at 6-8; MediaJustice at 2; Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 3. 98 Wood at 6. 99 Wood at 6. 100 See, e.g., 2020 FNPRM ¶ 79 (“The collected data are subject to certain limitations based on differences in recordkeeping practices among the respondent providers.”); 2020 FNPRM at Appendix E, ¶ 2 (“While providers generally reported at least some inmate calling services costs at the level of the contract, and more rarely at the level of the facility, each did this differently.”); 2020 FNPRM at Appendix E, ¶ 7 (“Each filer applied its own accounting practices in reporting overheads.”); 2020 FNPRM at Appendix E, ¶ 18 (“The reporting of costs for shared contracts varies by provider.”); see also EI Initial Report ¶ 26. 101 FTI Consulting at 7-12.

21 Reply Comments of Global Tel*Link Corporation January 15, 2021 their current rates, ancillary service charges, and site commission payments.102 The Annual

Reports of ICS providers are a better measure of ICS rates in the marketplace and whether the

Commission’s market-based interstate ICS rate caps need adjusting. As GTL previously explained, the Commission can utilize the data it currently receives to ensure ICS providers’ interstate and international ICS rates and ancillary service charges are just and reasonable without imposing a significant and unnecessary additional reporting burden on ICS providers.103

VIII. INTERSTATE ICS RATE CAPS SHOULD CONTINUE TO APPLY TO INTERSTATE CALLS CLASSIFIED IN ACCORDANCE WITH INDUSTRY STANDARDS

As discussed in GTL’s Comments and Petition for Reconsideration, the 2020 FNPRM’s proposal to apply the Commission’s interstate rate caps “to all calls that a provider identifies as interstate and to calls that the provider cannot definitively identify as intrastate”104 would artificially deplete intrastate revenues, and is so unworkable that it would render an order adopting that proposal vulnerable to legal challenge. Numerous commenters echoed GTL’s concerns that forcing providers to abandon their decades-long reliance on “the area code or NXX prefix of the telephone number” as a means for determining how the Commission will regulate a call would slash intrastate revenues. For example, the California State Sheriffs’ Association requested

“additional review of the language that would treat calls that cannot be identified as intrastate calls as interstate calls,” given the “significant impacts on revenue collection as well as implications for

102 47 CFR § 64.6060. 103 GTL at 36; see also Updating Part 1 Competitive Bidding Rules, 30 FCC Rcd 7493, ¶ 150 (2015) (rejecting a proposal after determining “that any potential benefit that might be gained from adopting such a requirement would be outweighed by the harms it would cause” because it would “impose unnecessary administrative and operational burdens with no demonstrated benefit”); Standardized and Enhanced Disclosure Requirements for Television Broadcast Licensee Public Interest Obligations, 27 FCC Rcd 4535, ¶ 19 (2012) (declining to adopt “certain proposals in the FNPRM at this time, to further ensure that the costs of compliance with the new posting procedures are outweighed by the benefits of online disclosure”). 104 2020 FNPRM ¶¶ 53, 70.

22 Reply Comments of Global Tel*Link Corporation January 15, 2021 tax and fee collection and distribution.”105 Securus summarized the “substantive, meaningful impact to provider costs and agency receipts” and the consequences to state and local correctional facility budgets and tax revenues.106

Securus’ conclusion that “the practical effect of the Commission’s proposal . . . would be that Securus would be required to apply the FCC interstate rate caps to all domestic calls” is most concerning.107 As the D.C. Circuit has explained, “the only limit that the Supreme Court has recognized on a state’s authority over intrastate telephone service occurs when the state’s exercise of that authority negates the exercise by the FCC of its own lawful authority over interstate communication,” such that “the FCC may not use its preemptive powers in a manner that would negate the lawful exercise of state authority over intrastate service.”108 Yet that is precisely what the 2020 FNPRM contemplates, relying on a vague and unworkable pronouncement to circumvent the well-established and narrowly tailored preemption process and effectively impose federal regulatory goals on matters within state jurisdiction.109

105 California State Sheriffs’ Association at 2. For example, if more ICS calls are deemed interstate under the Commission’s new standard, California universal service programs will see a decrease in revenue, and the FCC’s programs will see an increase in revenue. Indeed, the amount of revenues reported to the federal universal service fund will increase significantly given the current contribution factor for the first quarter of 2021 is 31.8%. See https://www.usac.org/service-providers/making-payments/contribution-factors/ (increasing from 27.1% in the fourth quarter of 2020). 106 Securus at 38-39. 107 Securus at 38 (emphasis in original). GTL itself hands off inmate-initiated calls to unaffiliated third-party telecommunications service providers for call routing and utilizes unaffiliated third-party classification data to rate and bill ICS calls. See GTL at 15, n.56. Such reliance on third parties does not, however, detract from the widespread confusion and uncertainty amongst ICS providers as how to interpret the Commission’s proposal. 108 National Association of Regulatory Utility Commissioners v. FCC, 880 F.2d 422, 429 (D.C. Cir. 1989) (emphasis in original). 109 Cf. People of State of California v. FCC, 905 F.2d 1217, 1243 (9th Cir. 1990) (“The impossibility exception, however, is a limited one. The FCC may not justify a preemption order merely by showing that some of the preempted state regulation would, if not preempted, frustrate FCC regulatory goals. Rather, the FCC bears the burden of justifying its entire preemption order by demonstrating that the order is narrowly tailored to preempt only such state regulations as would negate valid FCC regulatory goals.”).

23 Reply Comments of Global Tel*Link Corporation January 15, 2021

But it is not merely in its effect that the “definitively establish” or “definitively define” pronouncement is unworkable – its construction and application also renders it untenable, and thus vulnerable to legal challenge. As currently drafted, this pronouncement lacks a cognizable standard by which ICS providers may comply with it. As the D.C. Circuit has explained,

“regulations must be sufficiently specific to give regulated parties adequate notice of the conduct they require or prohibit” from the perspective of “a reasonably prudent person, familiar with the conditions the regulations are meant to address and the objectives the regulations are meant to achieve.”110 In this case, the Commission has failed to provide any definition of the term

“definitively identify” or metric by which an ICS provider may determine that it has been satisfied with particular types of calls. Is the assurance of an ICS provider’s third-party telecommunications service provider sufficient to label a call as “definitively intrastate?” Can some type or quantity of geographic identifying information fulfill this test? The Commission fails to raise these issues, much less answer them, leaving ICS providers like Securus to voice concerns that all calls should be treated as interstate – a reductive approach that contravenes decades of industry practice with respect to the application of divergent interstate and intrastate regulations and creates substantial downstream harms. Because it specifies no definitive standard of conduct,111 the Commission’s enactment is “impermissibly vague in all of its applications,” rendering it facially void.112

Moreover, in the context of the configuration of the nation’s telecommunications system, the Commission’s exclusion of NPA-NXX data raises the question of whether ICS providers are capable of determining the physical location of every single recipient of telephone calls that

110 Freeman United Coal Mining Co. v. Federal Mine Safety and Health Review Commission, 108 F.3d 358, 362 (D.C. Cir. 1997). 111 Cf. United States v. Bronstein, 849 F.3d 1101, 1107 (D.C. Cir. 2017) (quoting Coates v. Cincinnati, 402 U.S. 611, 614 (1971)). 112 Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 495 n.7 (1982).

24 Reply Comments of Global Tel*Link Corporation January 15, 2021 originate in correctional facilities. As the D.C. Circuit has noted, “[i]mpossible requirements imposed by an agency are perforce unreasonable.”113 For more than thirty-five years, NPA-NXX data, as maintained by a solitary administrator in unitary databases, has been the foundation of the routing and rating mechanisms that undergird the integrated public switched telephone network

(“PSTN”). There is no technical basis by which ICS providers can isolate themselves from this unitary whole.114

A close look at the historical evolution of the PSTN and the routing and rating databases underlying it demonstrate this point. In 1984, the Modified Final Judgment (“MFJ”) between

AT&T and the United States Department of Justice resulted in the creation of seven Regional Bell

Operator Companies (“RBOCs”): Ameritech, BellSouth, Bell Atlantic, NYNEX, Pacific Telesis,

Southwestern Bell Corporation, and US West.115 To ensure a single point of contact for national security purposes116 and provide the RBOCs with technical and nontechnical support heretofore received from the AT&T General Departments, Bell Laboratories, and Western Electric, a Central

Staff Organization (“CSO”) was created on behalf of all seven RBOCs.117 As originally conceived, the CSO was to engage in network planning, systems engineering, applied engineering,

113 Alliance for Cannabis Therapeutics v. DEA, 930 F.2d 936, 940 (D.C. Cir. 1991). 114 Cf. China Mobile International (USA) Inc., 34 FCC Rcd 3361 (2019) (“China Mobile”) (predicating denial of section 214 authorization on, inter alia, least cost routing arrangements across an integrated telecommunications network that renders communications traffic susceptible to foreign interception, oversight, and interference). 115 United States v. Western Electric Co., No. 82-0192, 1982 WL 1882 (D.D.C. Aug. 24, 1982); see also Daniel F. Cuff, “Sorting Out the Confusion After AT&T’s Breakup,” The New York Times (Nov. 18, 1984). Because AT&T owned only a minority interest in the Southern New England Telephone Company and Cincinnati Bell, these entities were permitted to operate independently of the MFJ. See Peggy McCarthy, “Phone Company Finds New Markets Are Not Easy,” The New York Times (Jan. 1, 1984). 116 Geoffrey M. Peters, Is the Third Time the Charm? A Comparison of the Government's Major Antitrust Settlements with AT&T This Century, 15 Seton Hall L. Rev. 252, 271, n.113 (1985) (summarizing repeated arguments against the breakup of AT&T by the United States Department of Defense on the grounds that a single contact point for the country's telephone network” was needed “in order to serve the nation's security needs in times of emergency”). 117 United States v. Western Electric Co., 569 F. Supp. 1057, 1114 (D.D.C. 1983) (“Western Electric”), aff'd sub nom. California v. United States, 464 U.S. 1013 (1983), and aff'd sub nom. New York State Department of Public Service v. United States, 464 U.S. 1013 (1983).

25 Reply Comments of Global Tel*Link Corporation January 15, 2021 applied research (including switching and signaling functions for exchange access purposes), and information systems support for these entities, as well as a variety of non-technical functions like legal services and marketing.118

The CSO, subsequently renamed Bell Communications Research, Inc. (“Bellcore”),119 took on additional functions in the years following the MFJ, including the creation of a series of

“‘generic requirements’ documents that described the architecture, operation and function of almost every aspect of the telecom network,” thereby facilitating the expansion of the telecommunications network through interoperability.120 Bellcore also inherited the role of North

American Numbering Plan Administrator (“NANPA”) from AT&T, which had served in this capacity since the 1940s,121 and administered the Service Management System, the centralized database containing current and past service 800 numbering information.122 Bellcore oversaw “the basic numbering scheme that permits interoperable telecommunications service” by assigning numbers to parties requesting them and maintaining both administrative databases, which “list information such as the number, to whom the number was assigned, and the date of that assignment,” and network support databases, which “contain numbers, what network elements they are associated with and other information.”123

118 Western Electric, 569 F. Supp. at 1114. 119 New York Telephone Co. v. Public Service Commission of State of N.Y., 258 A.D.2d 234, 236, (1999), rev'd, 731 N.E.2d 1113 (2000). 120 Cliff Halevi, “The Evolution of Telecom Standards,” 1, Pipeline (Oct. 2011) (“Halevi Article”) (“The result was an explosion of creativity and entrepreneurship that saw the creation of thousands of new entrants who started to make “GR conformant” equipment as part of an ever-growing ecosystem of vendors. Almost overnight, an industry that was reliant on a few large manufacturers became a dynamic competitive arena with carriers now having the freedom to engage with a multiplicity of vendors.”), http://www.pipelinepub.com/1011/OSS_BSS/Telcordia-and- Telecom-Standards-1.php. 121 Administration of the North American Numbering Plan, 11 FCC Rcd 2588, ¶ 10 (1995) (“NANPA Order”). 122 Provision of Access for 800 Service, 3 FCC Rcd 721, ¶¶ 38-39 (1988). 123 NANPA Order ¶¶ 3, 11, n.25.

26 Reply Comments of Global Tel*Link Corporation January 15, 2021

Two such network databases were the Bellcore-Traffic Routing Administration (“TRA”)

Routing Data Base System (“RDBS”), which included a complete description of all local exchange company networks in World Zone 1 and facilitated “message routing and common channel signaling call setup routing,” and the Bellcore Rating Input Database System (“BRIDS”), which was comprised of rating data for North American Numbering Plan (“NANP”) countries and

Mexico that was utilized for billing purposes.124 Carriers populated RDBS and BRIDS, either directly or through a third party, with 0/1XX and NXX codes,125 switching entities, Rate Centers,

Localities, Revenue Accounting Offices, Business Offices, and Special Calling Cards.126 These databases then provided output critical to call rating and routing. Specifically, BRIDS provided the Terminating Point Master and NPA-NXX Vertical and Horizontal Coordination Data databases used for toll message rating purposes,127 while RDBS provided databases for routing purposes across the PSTN: the NPA-NXX Activity Guide and the Local Exchange Routing Guide,128 “the

124 NANPA Order n.25; CC Docket No. 96-98, Implementation of the Local Competition Provisions of The Telecommunications Act of 1996, Reply Comments of BellSouth Corporation, 4 (Dec. 4, 1996) (“BellSouth Comments”). 125 “An NXX code is the first three numbers of a typical seven digit telephone number. Each NXX code includes a block of 10,000 telephone numbers. The function of the code is to instruct switches to communicate with other switches in the processing of a call. The codes are assigned by Bellcore to telephone companies nationwide, which reserve some for their own use and assign some to other carriers, such as independent telephone companies and cellular carriers.” Need to Promote Competition and Efficient Use of Spectrum for Radio Common Carrier Services, 2 FCC Rcd 2910, n.32 (1987). 126 BellSouth Comments at 4. 127 CC Docket No. 99-200, Numbering Resource Optimization, Reply Comments of Telcordia Technologies, Inc., 2-3 (Aug. 30, 1999) (“BRIDS is the system used by telephone carriers to rate calls from one point to another. BRIDS associates a unique rating point, designated by V (vertical) and H (horizontal) coordinates, with each NPA- NXX. . . . For [local vs. intraLATA toll vs. interLATA toll] the switch needs unambiguous geographic designations for telephone numbers. . . . The switch analyzes the NPA-NXX of the dialed digits and then determines on this basis which carrier the call should be routed through.”). 128 Industry Numbering Committee, Central Office Code (NXX) Assignment Guidelines, 3-4 (Apr. 1997), attached as Exhibit 1 to CC Docket No. 97-121, Application by SBC Communications Inc., Southwestern Bell Telephone Company, and Southwestern Bell Communications Services, Inc. d/b/a Southwestern Bell Long Distance for Provision of In-Region, InterLATA Services in Oklahoma, Southwestern Bell's Reply to Comments on Its Application for Provision of In-Region, InterLATA Services In Oklahoma, And Opposition To Petitions To Deny, Appendix – Volume 1 (May 27, 1991); BellSouth Comments at 4.

27 Reply Comments of Global Tel*Link Corporation January 15, 2021 database which enables carriers to send traffic to, and receive traffic from, a given telephone number.”129

In 1996, the Commission designated an independent, non-governmental entity as NANPA, pursuant to the requirements of the Telecommunications Act of 1996.130 Bellcore nonetheless continued to maintain both RDBS and BRIDS.131 In the same year, due to “changes in the telecommunications industry and increased specialization and competition among the RBOCs . . . the RBOCs decided to sell their individual interests in Bellcore to Science Applications

International Corporation.”132 The transaction was consummated in 1997, and the company changed its name to Telcordia Technologies, Inc. (“Telcordia”) in 1998.133 In 2012, Ericsson completed its acquisition of Telcordia; the following year, the company’s interconnection business was separated from its research and consulting interests and renamed iconectiv.134

129 Numbering Policies for Modern Communications, 28 FCC Rcd 5842, ¶ 41 (2013); cf. Personal Communications Services N00 NXX Code Assignment Guidelines, 25 (May 12, 1993) (defining LERG as “[a] Bellcore document which contains information about local routing data obtained from the Routing Data Base System (RDBS).. . . reflect[ing] the current network configuration and scheduled network changes for all entities originating or terminating within the NANP excluding Canada”), attached as Exhibit 2 to Letter from Ronald R. Conners, Director NANP Administration, to Kathleen Levitz, Esq., Acting Chief, Common Carrier Bureau, Federal Communications Commission (June 23, 1993). 130 Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 19392, ¶¶ 264-265 (1996) (subsequent history omitted); see also 47 U.S.C. § 251(e)(1) (directing the Commission to “create or designate one or more impartial entities to administer telecommunications numbering and to make such numbers available on an equitable basis”). 131 Cf. CC Docket No. 92-237, Administration of the North American Numbering Plan, Bellcore’s Response to the North American Numbering Council (NANC) for a new North American Numbering Plan Administrator (NANPA), 3-6 (Apr. 3, 1997) (“Specifically, with regard to routing, rating, and billing, Bellcore, but not the NANPA organization, has developed, maintained and published the contents of the routing and rating databases used by the North American network operators to ensure accuracy in the routing and billing of calls handled by their networks.”). 132 New York Telephone Co., 258 A.D.2d at 236; see Mark Landler, “Bellcore Agrees to Purchase by Big Research Company,” The New York Times (Nov. 22, 1996), https://www.nytimes.com/1996/11/22/business/bellcore- agrees-to-purchase-by-big-research-company.html. 133 Implementation of the Local Competition Provisions of the Telecommunications Act of 1996; et al., 16 Communications Reg. (P&F) 947, n.9 (1999). 134 Ericsson, Ericsson acquired Telcordia, https://www.ericsson.com/en/about-us/history/company/the- consequences-of-expansion/ericsson-acquired- telcordia#:~:text=In%20February%202013%2C%20Ericsson%20announced,Solutions%2C%20had%20been%20re named%20iconectiv.

28 Reply Comments of Global Tel*Link Corporation January 15, 2021

Telcordia proceeded to integrate BRIDS, RDBS, and other legacy Bellcore databases into the TRA Business Integrated Rating and Routing Database System (“BIRRDS”),135 “a centralized database used to collect pertinent data that supports the routing and rating of local exchange calls within the [PSTN].”136 In 2014, Telcordia (now operating as iconectiv) summarized its provision of “routing information relied upon by nearly every Public Switched Telephone Network connected telecommunications provider, whether wireline, wireless or VoIP, through the LERG

Routing Guide and the Business Integrated Routing and Rating Database System (“BIRRDS”). . .

. systems that are critical to the operation of the U.S. telecommunications network.”137

As presently managed by iconectiv, BIRRDS “permits companies in the local service arena to share pertinent routing and rating data with the ever-changing number of companies that need such information,” facilitating a data exchange between and among the thousands of included companies that “support call origination and termination within the area covered by the NANP.”138

As under Bellcore, local service providers (“SPs”) – including wireline local carriers, cellular carriers, personal communication services providers, and paging companies – enter data directly or indirectly into BIRRDS “relating to Central Office Codes (also known as prefixes, exchanges,

135 CC Docket Nos. 92-237, Administration of the North American Numbering Plan, 99-200, Number Resource Optimization, Comments of Verizon Wireless, 12 (July 2, 2002). 136 iconectiv, TruOps Telecom Routing Administration (TRA) Fair Share Plan, 3 (July 2018) (“Fair Share Plan”); see Alliance for Telecommunications Industry Solutions, “Business Integrated Routing and Rating Database System (BIRRDS)” (2019) (“The iconectiv® Business Integrated Routing and Rating Database System contains data in the routing and rating of calls. Contains a complete description of all Local Exchange Companies’ networks in the NANP area and pertinent information relating to the networks of other code holders. This provides information for, (1) message routing, (2) common channel signaling call setup routing, and (3) operator service access routing. Data . . . covers all Numbering Plan Areas (NPAs) administered under the North American Numbering Plan (NANP).”), https://glossary.atis.org/glossary/birrds/. 137 WC Docket No. 09-109, Petition of Telcordia Technologies, Inc. To Reform or Strike Amendment 70, To Institute a Competitive Bidding for Number Portability Administration, and To End the LLC’s Interim Role in Number Portability Administration Contract Management; CC Docket No. 95-116, Telephone Number Portability, Comments of Telcordia Technologies, Inc. d/b/a iconectiv, 6 (July 25, 2014). 138 Fair Share Plan at 4.

29 Reply Comments of Global Tel*Link Corporation January 15, 2021 and NXXs), switch-to-switch homing, switch services, operator-to-operator routing, and other routing data.”139 BIRRDS output includes “the monthly LERG™ Routing Guide that serves as an accepted standard for common and consistent reporting of routing information to interexchange carriers and the telecommunications industry in general” and “a monthly TPM™ Data Source product that serves as an accepted standard for common and consistent reporting of rating information.”140 Both the LERG141 and TPM Data Source142 continue to be comprised of central office code (NPA-NXX) and thousands-block number pooling (NPA-NXX-X) numbering resource assignments that lack telephone line-level information.143 Taken as a whole, the iconectiv suite of rating and routing products serve “[w]ireline, wireless and interconnected VoIP service providers, competitive local exchange carriers, value-added resellers and other service providers” in an equivalent manner.144

Given the foregoing, a direct line can be drawn, both technologically and temporally, between Bellcore and iconectiv as the unitary administrator of centralized information repositories that enable the routing of calls across the PSTN and facilitate their rating by telecommunications service providers.145 Notably, a similar continuity can be accorded the LERG, both systematically

139 Fair Share Plan at 2-3. 140 Fair Share Plan at 3; see iconectiv, TruOps Telecom Routing Administration Catalog of Products and Services, 6-8 (October 2020) (“TRA Catalog”) (summarizing BIRRDS output products, including the legacy NPA NXX Activity Guide), https://trainfo.iconectiv.com/sites/microsites/files/2020-10/tra_catalog_Final_10.20.2020.pdf. 141 TRA Catalog at 13. 142 TRA Catalog at 26, 28. 143 Cf. TRA Catalog at 10 (“Note that TRA data products have been developed to support a wide range of users with varying needs. In this regard, some data elements such as NPA NXX block information are an integral part of, and common across, several products.”). 144 iconectiv, Route It Right Every Time with LERG OnLine, 2 (2019) (describing use of LERG for call rating and routing functions by SPs for standardized tasks and functions), https://iconectiv.com/sites/default/files/2019- 11/TruOps_TRA_LERGOnLineBrochure.pdf. 145 Cf. ET Docket No. 04-186, Unlicensed Operation in the TV Broadcast Bands, Comments of Telcordia Technologies Proposal Seeking to be Designated as a TV Band Device Manager, 7-8 (Jan. 4, 2010) (noting that the Telcordia Routing Administration “has enabled the efficient exchange of NANP-Wide Routing, Rating & Billing Data for the last 35 years. . . . manag[ing] over 1 million constantly evolving routing and rating data records and the 30 Reply Comments of Global Tel*Link Corporation January 15, 2021 as an output of RDBS and BIRRDS, and functionally, given its reliance on NPA-NXX proxies to enable consistent and interoperable call routing.146 While the LERG has evolved over time – most notably in its support for non-RBOCs, such as wireless carriers, competitive local exchange carriers, and Internet Service Providers147 – it continues to be “used by all SPs within the NANP to report to other SPs their routing and numbering information, especially planned changes, in a common and accepted manner.”148 The LERG therefore occupies a central position in the nation’s call completion framework, as shown in the following diagram submitted to the Commission by iconectiv:149

Telcordia LERG™ Routing Guide and the Telcordia TPM™ Data Source are the industry standards for exchange or routing and rating information respectively”). 146 Compare iconectiv, TruOps Telecom Routing Administration (TRA) LERG™ Routing Guide General Information, 1 (“TRA Routing Guide”) (May 2, 2019), 1 (“The basis of the LERG is a requirement set by the 1984 MFJ (Modified Final Judgment) for the then Regional Bell Operating Companies (RBOCs) and GTE, to provide points in their networks (e.g. tandems and switches), to where specific calls (based on NPA-NXX data) could be routed by interexchange carriers, and especially as a means to notify others when changes in that routing data are scheduled to occur.”), https://trainfo.iconectiv.com/sites/microsites/files/2019-06/LERG_Routing%20Guide%20- %20General%20Info_05_01_18_new_5_31_19.pdf with Numbering Resource Utilization in the United States: Status As of Dec. 31, 2018 (rel. Oct. 1, 2020) (noting that the LERG is comprised of NPA-NXX data), 2020 WL 6196260, at *6. 147 See, e.g., iconectiv, Industry Option Comparison of IPNNI-2014-020, utilization of Existing Industry Database Systems for the exchange of data to support Routing of E.164 Addressed Communications over IP Network- to-Network Interconnection (NNI), 8 (Apr. 2014) (“Industry Option Comparison”) (“BIRRDS/LERG and NPAC database systems and processes have efficiently evolved to support new network routing and interconnection data exchange for the past many years. These systems are likewise deeply imbedded into service provider operations and business processes for billing, reporting, network engineering, least cost routing, and service activation, among others.”); GN Docket No. 13-5, Technology Transitions Policy Task Force Request for Comments on Potential Trial, Comments of Telcordia Technologies, Inc. d/b/a iconectiv, 4 (July 8, 2013) (“The LERG has served as a comprehensive, equitable, and standardized means of routing data exchange among service providers for many years. As the need to support IP next-generation network elements has evolved, iconectiv, in consultation with the industry, has added or modified fields in BIRRDS and the LERG to allow numbering resources to be associated with softswitches, as well as related routing arrangements for IP interconnection.”). 148 TRA Routing Guide at 1. 149 GN Docket No. 13-5; Technology Transitions Policy Task Force; WC Docket No. 13-97, Numbering Policies for Modern Communications, Letter from Louise L.M. Tucker, Vice President-Regulatory and Senior Counsel, iconectiv, to Marlene H. Dortch, Secretary, Federal Communications Commission, Att. at 5 (Mar. 5, 2014); cf. TRA Routing Guide at 1 (“The LERG is a snapshot of information contained in BIRRDS at the point in time a given LERG is produced.”); cf. Industry Option Comparison at 7 (“Based on service providers’ local methods and procedures, the LERG data is loaded into service providers’ pre-provisioning systems and is used for switch translations, trunk engineering, numbering administration, legal and regulatory support, forecasting, intercompany billing support, and numerous other functions within the company. Based on service providers’ local methods and 31 Reply Comments of Global Tel*Link Corporation January 15, 2021

In short, for more than thirty-five years the telecommunications industry has relied on an indivisible hierarchical framework for call rating and routing, following from the AT&T monopoly that stretched back decades more. As this framework vests call classification functions within the authority of a single entity – an entity that predicates such functions on NPA-NXX – ICS providers manifestly lack the technological or administrative infrastructure to effectuate the definitive jurisdictional determination the Commission prescribes. Nor is there any cognizable basis by which ICS providers might be deemed technologically distinct as to justify the creation of an alternative call rating and routing system; the iconectiv system is itself technologically agnostic, operating on the input of service criteria common to all telecommunications service providers.150

procedures, the LERG data in service providers’ pre-provisioning systems is made accessible to switch translations engineers to configure the switch translation and routing tables.”). 150 See Fair Share Plan at 2 (“The TRA data collection process provides local service providers (wireline local carriers, cellular carriers, personal communication services providers, paging companies, etc.) with the ability to report data relating to Central Office Codes (also known as prefixes, exchanges, and NXXs), switch-to-switch homing, switch services, operator-to-operator routing, and other routing data.”). Relatedly, the Commission has rejected technological distinctions for purpose of certain exchange access and intercarrier compensation obligations, holding the fact that VoIP-PSTN traffic postdated the passage of the Telecommunications Act of 1996 inapposite for purposes 32 Reply Comments of Global Tel*Link Corporation January 15, 2021

As discussed in GTL’s Petition for Reconsideration, the provision of ICS runs upward through third-party telecommunications service providers that rely on the NPA-NXX data in the

LERG for call completion and, with respect to call rating, down through third-party call classification databases that leverage NPA-NXX data contained in BIRRDS for all types of calls.

Having failed to offer any practical means by which this circuit can be interrupted – and faced with the documented prospect of a legally unwarranted de facto preemption of state authority over calls outside of its jurisdiction – the Commission’s proposed application of interstate ICS rate caps cannot be permitted to stand.

The alternative would have profound effects on the telecommunications industry as a whole. Given that the Commission’s definitive jurisdictional determination pronouncement is predicated on its traditional end-to-end analysis,151 all telecommunications service providers would have to undertake the compliance actions demanded of ICS providers because the same end-to-end analysis applies to any entity classified as a “telecommunications service provider” under the Act.152 More broadly, compliance, in the form of a rating and routing framework exogenous to the PSTN, would undermine a decades-old centralized architecture that made possible the development and seamless cross-platform implementation of a variety of technologies, such as synchronous optical networking, Integrated Services Digital Network,

of applying Section 251(g) of the Act. See Connect America Fund et al., 26 FCC Rcd 17663, ¶¶ 956-958 (2011) (“USF/ICC Transformation Order”). 151 See 2020 FNPRM ¶ 54. 152 As the Commission has explained, jurisdiction (but not the specific rules that apply) is determined through application of the same end-to-end analysis, regardless of whether, for example, that service is provided by a facilities- based carrier or a reseller. See AT&T Corp. Petition for Declaratory Ruling Regarding Enhanced Prepaid Calling Card Services; et al., 20 FCC Rcd 4826, ¶¶ 27-28 (2005); see also Petition for Emergency Relief and Declaratory Ruling Filed by the BellSouth Corporation, 7 FCC Rcd 1619, ¶¶ 8-16 (1992) (applying traditional end-to-end analysis to enhanced voicemail service, noting that a call to it qualifies as a “jurisdictionally interstate communication” and observing that it constitutes an “interstate telecommunications capability”).

33 Reply Comments of Global Tel*Link Corporation January 15, 2021

Common Channel Signaling/Signaling System No. 7, and Digital Subscriber Line;153 compromise the vital national security154 and emergency155 functions of an interconnected and unified communications platform; and vitiate the principle of integration and interoperability that has served as a bedrock for Commission regulatory action for decades.156 Unless and until these

153 See Halevi Article at 1. 154 See Western Electric, 569 F. Supp. at 1115, n.253 (“The delegation of national security and emergency responsibilities to the CSO is largely unchallenged. The Court has always insisted that legitimate Department of Defense interests be fully protected, and the CSO provisions of the plan carry out that objective. The security and emergency responsibilities will be executed by a specialized group within the CSO which will set and enforce technical standards to the extent that security and emergency needs demand that telephone equipment be ‘capable of being interconnected nationwide.’”) (internal citations omitted); Robert B. Friedrich, Regulatory and Antitrust Implications of Emerging Competition in Local Access Telecommunications: How Congress and the FCC Can Encourage Competition and Technological Progress in Telecommunications, 80 Cornell L. Rev. 646, 648 (1995) (“Consequently, the regulatory challenge for the Federal Communications Commission (FCC) is twofold: first, to update the present regulatory scheme to accommodate fast paced technological changes and integration, and second, to protect the social welfare goals that justify the FCC's regulatory presence. These social welfare concerns have traditionally included . . . protecting the national security interests in maintaining the integrity of the telecommunications networks.”); Robert Pear, “New Antitrust Leader Vows to Break Up AT&T,” The New York Times (Apr. 10, 1981) (summarizing concerns expressed by the Department of Defense over the potential breakup of the Bell System, per “the strategic importance of an effective, integrated communications network”). Inherent in the China Mobile decision was the ability of the named Executive Branch agencies to forestall a foreign government’s apparent interest in accessing domestic communications by denying China Mobile USA’s attempt to interconnect with a solitary nationwide network. The Commission was accordingly presented with a binary proposition – whether to grant China Mobile USA authorization to operate as “a common carrier, to connect to the network in the United States” with direct “access to the telephone lines, fiber-optic cables, cellular networks, and communication satellites that make up the network,” or not. China Mobile ¶ 27. Insisting upon the creation of networks parallel to the PSTN would vitiate this all-or-nothing proposition, opening alternative pathways and access points for foreign actors to monitor, collect, and disrupt U.S. communications. Cf. id. ¶ 27, n.82. 155 Cf. Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities E911 Requirements for IP-Enabled Service Providers, 23 FCC Rcd 11591, 11601 (2008) (“The record reflects a general consensus that Internet-based forms of TRS should have a uniform numbering system to facilitate interoperability between deaf and hearing users and to support comprehensive E911 service. There is further consensus that the numbering system should utilize numbers from the NANP. Use of NANP telephone numbers will allow Internet-based TRS users to reach and be reached by both hearing users of the PSTN and other Internet-based TRS users by doing something most Americans take for granted -- dialing a ten-digit phone number. Such a system also will help to ensure that persons using Internet-based TRS can promptly access functionally equivalent 911 service.”); Emergency Access Advisory Comm. (EAAC) Report on TTY Transition, 2013 WL 6234486 (Mar. 11, 2013) (emphasizing “interoperability with the old” in transitioning to a new TTY technology, given “that people be able to call 9-1-1 on the devices they use every day and are familiar with, rather than expecting them to think of, find, and figure out a new technology in the middle of an emergency”). 156 See, e.g., Structure and Practices of the Video Relay Service Program Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing & Speech Disabilities, 26 FCC Rcd 17367, 17369 (2011) (explaining historical basis for proposed Commission action to enhance Video Relay Service interoperability and portability); cf. Administration of the North American Numbering Plan, 20 FCC Rcd 2957, ¶ 5 (2005) (“Granting SBCIS direct access to telephone numbers is in the public interest because it will facilitate SBCIS' ability to efficiently interconnect to the PSTN, and thereby help to achieve the Commission's goals of fostering innovation and speeding the delivery of advanced services to consumers.”).

34 Reply Comments of Global Tel*Link Corporation January 15, 2021 critically deleterious effects are redressed – and the technological and legal impediments to isolating ICS providers from core components of the PSTN confronted – the Commission’s application of interstate rate caps “to all calls that a provider identifies as interstate and to calls that the provider cannot definitively identify as intrastate” is wholly indefensible.

IX. NO ADDITIONAL ACTION ON ANCILLARY SERVICE CHARGES IS WARRANTED AT THIS TIME

The requests of some commenters to take additional action on ancillary service charges should be rejected as premature.157 Ancillary service charges are significantly regulated today, following the Commission’s 2015 rulemaking.158 Aside from “encourag[ing] providers to make clear to consumers that they have other payment options available to them,” the Commission endorsed the use of various payment options at “the consumer’s discretion and desire . . . because, for example they want to speak to the incarcerated person as quickly as possible in order to arrange their release.”159 The Commission ultimately promulgated a schedule of limited ancillary service charges, whereby ICS providers could recover the cost associated with providing certain types of funding and billing services invoked at the election of the end user. Those regulations remain in force today.

Similarly, the Public Interest Parties’ attacks on revenue-sharing agreements associated with ancillary service charges also should be rejected.160 Revenue-sharing agreements are neither

157 See, e.g., Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 13-15; NCIC at 2-3. 158 See generally 2015 ICS Order. 159 2015 ICS Order ¶¶ 186, 189, 278 (“We believe that transparency in rates, terms, and fees will facilitate compliance with the reforms and ensure that consumers are informed of their choices.”). Relatedly, the Commission rejected “high purchase minimum requirements,” given the apparent risk of “unfair consumption by forcing consumers to deposit relatively large sums of money even if they only want to make one short call or by driving consumers to more expensive calling options.” See 2015 ICS Order ¶¶ 176, 178. 160 See, e.g., Wright Petitioners, Prison Policy Initiative, and Public Knowledge at 14. The Public Interest Parties also cite to a proceeding before the Iowa Utilities Board (“IUB”) in support of their claims. Yet the IUB, in reviewing this issue, has repeatedly held that ICS providers “can charge both the $3 fee for specified ancillary services and a corresponding credit card processing fee, as long as those fees are provided for in the tariff and are fees charged by a 35 Reply Comments of Global Tel*Link Corporation January 15, 2021 inherently unlawful nor even legally suspect under Commission precedent;161 as the repeated comments of Verizon and Verizon Wireless make clear, revenue-sharing agreements are not only permissible, but may also be beneficial.162 In the USF/ICC Transformation Order, the

Commission found “broad support in the record” for the conclusion that payments made by a local exchange carrier (“LEC”) under “an access revenue sharing agreement are not properly included as costs in the rate-of-return LEC’s interstate switched access revenue requirement.”163 In other words, the use of access stimulation revenues pursuant to a revenue-sharing agreement was not relevant to determining whether switched access rates are just and reasonable in accordance with

Section 201(b) of the Act.164 Accordingly, the Commission determined “[a] ban on all revenue sharing arrangements could be overly broad,” given that such arrangements do not constitute “a per se violation of section 201(b) of the Act.”165

The specific context in which the Commission regulates Third-Party Transaction Fees is also important to consider. In the 2015 ICS Order where, pursuant to its finding that third-party

third-party company that are passed through without markup.” Iowa Utilities Board Docket No. TF-2019-0039, Global Tel*Link Corporation, Order Requiring Filing of Revisions to Revised Tariff and Denying Confidential Treatment, 7 (Dec. 11, 2020); accord Iowa Utilities Board Docket No. TF-2019-0270, Smart Communications Holding, Inc., Order Requiring Filing of Revisions to Revised Tariff, 2 (Dec. 11, 2020); Iowa Utilities Board Docket No. TF-2019-0270, Encartele, Inc., Order Requiring Filing of Revisions to Revised Tariff, 2-3 (Dec. 11, 2020); see Iowa Utilities Board Docket No. TF-2019-0026, Reliance Telephone of Grand Forks, Inc., Order Requiring Filing of Revisions to Revised Tariff, 5-6 (Dec. 11, 2020). 161 Indeed, the Prison Policy Initiative’s “State of Prison Phone Justice” report’s discussion of revenue-sharing agreements appears wholly predicated on a 2014 e-mail chain between an ICS provider and Western Union, a 2015 contractual amendment between an ICS provider and Western Union, and a comic strip entitled “Captive Market.” See https://www.prisonpolicy.org/phones/state_of_phone_justice.html. 162 See WC Docket No. 12-375, Comments of Verizon and Verizon Wireless, at 3 (March 25, 2013) (“Notably, the Commission did not ban revenue sharing agreements. . . . And the Commission acknowledged that in some instances ‘shared’ access revenues were used for a beneficial purpose, such as broadband deployment.”); see also WC Docket No. 12-375, Comments of Verizon and Verizon Wireless, at 2 (January 12, 2015) (stating the FCC has “made clear that these [revenue-sharing] arrangements are permissible”). 163 USF/ICC Transformation Order ¶ 686. 164 USF/ICC Transformation Order ¶¶ 684, 686 165 USF/ICC Transformation Order ¶ 672; see also generally AT&T Corporation v. Jefferson Telephone Company, 16 FCC Rcd 16130 (2001); AT&T Corp. v. All American Telephone Co, et al., 28 FCC Rcd 3477 (2013).

36 Reply Comments of Global Tel*Link Corporation January 15, 2021 financial transactions, standing alone, do “not constitute ‘ancillary services’ within the meaning of section 276,” the Commission limited the scope of its regulatory action to ban additional fees or markups on such transactions, and pointedly refused to act upon its proposal to “prohibit ICS providers from entering into revenue sharing arrangements with money transfer services, receiving payments from such services, or including the costs of such services in their rates.”166 This bifurcated approach ensures ICS providers pass along third-party transaction fees exactly to the consumer, regardless of whether such providers maintain a revenue-sharing agreement with the third-party financial entity.167

166 2015 ICS Order ¶¶ 170-172; cf. AT&T’s Private Payphone Compensation Plan, 7 FCC Rcd 7135, ¶ 2 (1992) (“The Bureau correctly found that it is not unlawful per se for AT&T to pay commissions to [private payphone companies] PPCs to compensate them for their costs in making operator services available to the end user. PPCs are not customers of AT&T's ‘0 +’ services and, therefore, the commissions paid to the PPCs based on ‘0 +’ revenues do not constitute unlawful rebates of tariffed charges. Although PPCs subscribe to AT&T's ‘0 +’ service, the PPCs are not customers for purposes of evaluating whether the commissions constitute unlawful rebates. Based on the record in this case, it is clear that the customer is the caller or the billed party; that is the entity receiving and paying for long distance service pursuant to AT&T's applicable tariff. Because the customer continues to pay AT&T the tariffed rate, there can be no unlawful rebate.”). 167 Cf. USF/ICC Transformation Order ¶¶ 657-58.

37 Reply Comments of Global Tel*Link Corporation January 15, 2021

CONCLUSION

Accordingly, the Commission should adopt a reasonable backstop rate cap regime, and

GTL’s other recommendations and proposals as described herein and in GTL’s initial comments.

Respectfully submitted,

GLOBAL TEL*LINK CORPORATION

/s/ Chérie R. Kiser Chérie R. Kiser Angela F. Collins Matthew L. Conaty* CAHILL GORDON & REINDEL LLP 1990 K Street, NW, Suite 950 Washington, DC 20006 202-862-8900 [email protected] [email protected] [email protected]

Dated: January 15, 2021 Its Attorneys

*Admitted in NY only.

38 Reply Comments of Global Tel*Link Corporation January 15, 2021

ATTACHMENT Before the Federal Communications Commission Washington, D.C.

In the Matter of ) ) Rates for Interstate Inmate Calling Services ) WC Docket No. 12-375 )

Supplemental Report in Support of Comments of Global Tel*Link Corporation Regarding the FCC’s Report and Order on Remand and Fourth Further Notice of Proposed Rulemaking

Paul E. Godek, Ph.D. Economists Incorporated January 15, 2021

Table of Contents

I. Assignment ...... 1

II. Overview and Summary ...... 1

III. The Cost Data Were Reported Differently by the ICS Providers...... 2

IV. The Brattle Report Offers No Justification for Rate Regulation ...... 5

V. The Brattle Report Offers No Basis for the FCC’s Rate Caps or Site Commission Allowances, Much Less for Reduced Rate Caps or Site Commission Allowances ...... 7

ii I. Assignment

1. On November 23, 2020, I submitted a “Report in Support of Comments of Global Tel*Link Corporation Regarding the FCC’s Report and Order on Remand and Fourth Further Notice of Proposed Rulemaking” (“Godek Report”). My qualifications are described therein.

2. As noted therein, I have been retained by counsel for Global Tel*Link Corporation (“GTL”), a provider of inmate calling services (“ICS”), to analyze certain issues raised by the Federal Communications Commission (“FCC”) in the Report and Order on Remand and Fourth Further Notice of Proposed Rulemaking, released August 7, 2020 (“2020 FNPRM”).

3. Since filing that report, I have been asked to review the confidential filings submitted by the various other parties in response to the 2020 FNPRM. In particular, I have been asked to review and comment upon the confidential report submitted by The Brattle Group on behalf of the Wright Petitioners, Prison Policy Initiative, and Public Knowledge.1 Herein are my comments regarding the Brattle Report. This Supplemental Report presents the results of my research and analysis to date. As additional information becomes available it is my intention to review that material and, if appropriate, to amend or supplement my original report and this supplemental report.

II. Overview and Summary

4. First, nothing in the Brattle Report, nor in any of the other responses to the 2020 FNPRM, has caused me to reconsider any of the analyses or change any of the conclusions described in the Godek Report. I summarized those conclusions as follows:

a) the 2020 FNPRM offers no basis for its assertions that GTL’s reported costs are exaggerated or indicative of market power; b) the 2020 FNPRM confounds the obvious differences in how the cost data have been submitted, rendering invalid the FCC’s empirical analyses of costs;

1 Coleman Bazelon, Paroma Sanyal, and Andrea Helfant: Comments on “Rates for Interstate Inmate Callining [sic] Services” The Federal Communication Commission’s Report and Order on Remand and Fourth Further Notice of Proposed Rulemaking (WC Docket No. 12-375), November 22, 2020 (“Brattle Report”).

c) GTL’s actual rates refute the FCC’s allegations about GTL’s supposed market power; and d) because the FCC ignores the extent and level of site commissions and the processes by which those site commissions are determined, its suggested site commission allowance of $0.02 per minute has no valid economic or regulatory basis.2

5. With regards to the Brattle Report, I offer the following conclusions:

● The Brattle Report recognizes at least some of the problems associated with the FCC’s use of the cost data. Nonetheless, the Brattle Report ignores these problems, accepts the FCC’s basic methodology, and proceeds with its analysis. ● The Brattle Report offers no justification for rate regulation in the first instance. Instead, it incongruously refers to the various ICS providers as “monopolists” and does not consider the competitive process underlying the award of ICS contracts. ● The Brattle Report offers no justification for the methods used to establish the FCC’s proposed rate caps and site commission allowances, much less for the even lower rate caps and site commission allowances suggested in the Brattle Report.

Overall, the Brattle Report provides no economic basis for the FCC’s regulatory endeavor of regulating ICS rates and site commissions as set forth in the 2020 FNPRM; nor does the Brattle Report provide any defense for the use of the cost data (as processed and analyzed by the FCC) as the foundation for that endeavor.

III. The Cost Data Were Reported Differently by the ICS Providers

6. There seems to be one topic that almost all of the respondents agree upon. Each ICS provider reported their data differently, and there is no basis for the methodologies employed by the FCC to manipulate and adjust the data in search of uniformity. This renders the FCC’s resulting data base inadequate for measuring the relevant costs of providing the service at issue. The Brattle Report itself offers the following synopsis:

Some overall deficiencies about the data collection are worth noting. The costs, and their components, were not collected in a standardized format with common

2 Godek Report, page 3.

2

definitions of what constituted direct, indirect and overheard costs. As an initial matter, this makes the cost-basis for rates inconsistent.3

Well, yes. The Godek Report describes at some length the differences in the cost data. Even the FCC acknowledges some of the issues.4

7. The FCC, the Brattle Report, and the Godek Report are not alone in recognizing and describing the differences. A report submitted by the consulting firm FTI concludes:

The data collection and cost information reporting varies substantially among providers creating a number of irregularities that renders the data unusable for the FCC’s rate setting purpose. … The FCC’s methodology for calculating rate caps creates flawed results and conclusions because the data is [sic] improperly pooled together. The FCC’s simple average by contract approach is not representative of the underlying data at the provider level.5

8. A report filed by Dr. Harold Furchtgott-Roth, a former Commissioner of the FCC, concludes:

The Commission collected information on some ICS costs at one point in time and erroneously excluded site commissions; The Commission improperly excluded part of goodwill; Based on arbitrary methods, the Commission added back in $0.02 per minute as facility costs; and Based on arbitrary and unexplained methods, the Commission obtained $0.14 and $0.16 rates.6

9. A report filed by consultant Don Wood concludes:

A review of the submissions in response to the Second Mandatory Data Collection reveals that each provider keeps its accounting records in a different

3 Brattle Report, page 5.

4 See the discussion in the Godek Report, § V. 5 Declaration of Robert O. Fisher, Brian F. Pitkin, and Steven E. Turner, November 23, 2020 (“FTI Report”), page 1. 6 Harold Furchtgott-Roth, Report on the Economic Aspects of the Federal Communications Commission’s Report and Order on Remand and Fourth Further Notice of Proposed Rulemaking in WC Docket 12-375, November 2020 (“Furchtgott-Roth Report”), page 13. The point about “goodwill” is similar to and consistent with the discussion in the Godek Report about the FCC’s adjustments to GTL’s capital costs. See the Godek Report at §§ III, IV.

3

way, tracks location-specific or contract-specific costs by varying degrees and – equally importantly – had a different understanding of what information was to be provided and how it was to be presented. Unfortunately, the resulting inconsistencies that exist in the dataset cannot simply be “averaged away” or otherwise addressed using statistical analysis, however sophisticated.7

The Wood Report further concludes:

A review of the available information demonstrates that the data collection process is not sufficiently robust to be relied upon. Unlike telecommunications carriers, ICS providers do not have a uniform system of accounts and do not apply consistent record-keeping and reporting systems. A review of the submissions in response to the Second Mandatory Data Collection reveals that each provider keeps records in a different way, tracks location-specific costs by varying degrees, and had different understandings regarding what information was to be included and how it was to be presented. This resulted in inconsistent reporting of the magnitude and structure (direct versus indirect) of ICS costs. Comparing the ICS provider submissions with the database of cost data relied on by the Commission further reveals numerous discrepancies that cannot be explained with the available information. … A review of the results of the Commission’s analysis reveal numerous red flags that fully support a conclusion that the calculated costs (relied upon to develop the proposed rate caps) are simply not accurate, and that problems must exist with the underlying data collection process, the data analysis process, or (more likely) both.8

10. Given the fundamental problems just described, there is no justification for relying on the submitted cost data to develop interstate ICS rate caps and the associated site commission allowances. But the FCC and the Brattle Report do just that. They ignore the differences in the data and proceed to derive their proposed rate caps and site commission allowances.

11. For the reasons discussed in the Godek Report and herein, even with a different data set, the methods employed by the FCC and the Brattle Report would still be arbitrary and lacking any sound economic basis. In particular, there is no basis for the presumption of market power related to the provision of inmate calling services, and the consequent “cost adjustments” employed by the FCC and the Brattle Report. In addition, there is no basis for the FCC and the

7 Expert Report of Don J. Wood, MBA, CVA, MAFF on behalf of Pay Tel Communications, Inc. WC Docket No. 12-375, November 23,2020, (“Wood Report”), page 6. 8 Wood Report, pages 25-26.

4

Brattle Report to ignore the capital costs reflective of risk and depreciation, costs that have been and will continue to be incurred by ICS providers. Finally, there is no basis for the FCC and the Brattle Report to ignore the extent and level of site commissions and the processes by which those commissions are determined, considerations of which render the proposed allowances lacking any valid economic or regulatory basis.

12. GTL for its part has attempted to determine and report its total costs, including its capital costs accounting for risk and depreciation. As described in the Godek Report, capital investment implies the creation of long-lived and specialized assets, which provide functionality over time. For that reason, capital expenditures are generally allocated across the expected life of the assets, at appropriate rates of interest and depreciation. These values do not map neatly into the measures found in typical income statements and balance sheets. If the FCC ignores such costs in its analysis, it will arrive at price caps that do not allow for the recovery of these costs. In that case, one would expect reductions in the investments necessary to improve, and even to maintain, the requisite service.9

IV. The Brattle Report Offers No Justification for Rate Regulation

13. Neither the 2020 FNPRM nor the Brattle Report offers any credible basis for regulating ICS calling rates or site commission allowances in the manner suggested. As I conclude in the Godek Report:

There is no basis for an assumption of market power related to the provision of inmate calling services, which are contracted through competitive bidding and negotiations, and often subject to federal, state, or county regulations. There is no evidence I am aware of indicating collusion or restrictions on entry that would justify an inference of monopoly rents accruing to the providers of inmate calling services.10

9 See the discussions in the Furchtgott-Roth Report, § D.2 and the Godek Report, §§ III, IV. 10 Godek Report, page 2.

5

Instead of acknowledging the flawed premise, the Brattle Report refers to “providers with market power” and to prevailing prices being charged by “a monopoly service provider (as is the case here where inmates have no choice of providers)”11

14. Referring to the various ICS providers as comprising a monopoly is nonsense. As Dr. Furchtgott-Roth explains.

For any number of reasons including security, correctional facilities have universally decided to have a single ICS provider for a facility awarded through a competitively bid contract rather than having competing providers at the same facility. … The Commission has not asked, much less received a record to demonstrate, that bidding processes that result in higher ICS rates are the result of market power or anticompetitive conduct by bidders. The Commission has no evidence of differences in competitive bidding processes. Higher prices under competition for the contract likely reflect higher costs rather than market power. Any prospect of above-market economic profits would, in a competitive bidding process, be bid away by the competitive bidders leaving the winning bidder with nothing more than a risk-adjusted return on investment. The bidding process may result in benefits not for the ICS bidder but for the seller of the ICS rights—the prison or jail.12

15. The Wood Report also describes the process:

[T]he market to provide ICS at a given location is highly competitive. ICS providers compete for location contracts based on quality of service, enhanced capabilities, and – because of a history of the expectations of the operators of confinement facilities – the payment of site commissions.13

16. As I describe in my original report, there is no basis in the record for an assumption of market power related to the provision of inmate calling services. To the contrary, contracts for inmate calling services are allocated through competitive bidding and negotiations, and are often subject to state or county regulatory constraints. The various ICS providers compete to provide

11 Brattle Report, page 8. The Brattle Report also displays confusion in its discussion of “subcontracts” which are supposed to increase reported costs due to “double marginalization” and “double counting of the overhead costs.” Brattle Report, § V.2. Those presumptions are contrary to basic economic logic. Basic economics teaches that a firm will tend to subcontract a particular component of its product or service (to buy the component instead of making it) when it is more efficient for the firm to do so.

12 Furchtgott-Roth Report, § C.

13 Wood Report, page 6, footnote omitted.

6

these services to correctional facilities, based upon the individual requirements set forth for each facility during the competitive bidding process. These requirements are usually included in a “Request for Proposals” issued by the correctional facility, which outlines the technology and service required under the contract. There is no evidence I am aware of indicating collusion or restrictions on entry that would justify inferences of market power having been bestowed upon the providers of the service at issue.

V. The Brattle Report Offers No Basis for the FCC’s Rate Caps or Site Commission Allowances, Much Less for Reduced Rate Caps or Site Commission Allowances

Rate Caps

17. The Brattle Report claims that the FCC’s proposed rate caps are actually too high. The Brattle Report arrives at this determination by deleting some cost “outliers” on the high end of the distribution of reported costs. This deletion reduces both the mean and the standard deviation of the cost measures and thus reduces the FCC’s arbitrary range (the mean plus one standard deviation) for arriving at its proposed rate caps.

18. But the Brattle Report, like the FCC, is ignoring the simple fact that the distribution it is examining is not valid in the requisite statistical sense; it is not the distribution of consistently- reported costs across the various providers and facilities. As I note in the Godek Report, given the lack of a consistent reporting methodology, all of the FCC’s empirical analyses of costs are invalid. That invalidity also applies to the Brattle Report’s empirical analyses of means, standard deviations, and outliers. Following the FCC’s lead, the Brattle Report analyzes the distribution of a value that is not being measured consistently. As described in the Godek Report, this is like studying the variation of climates across different regions, while ignoring the fact that some regions report temperatures in Fahrenheit and others in centigrade. It is not valid to treat all of the data as being consistently reported when that is clearly not the case.14

14 At one point the Brattle Report observes that the distribution of reported costs is not “normal” and that the “standard deviation may not be the right measure of dispersion.” [Brattle Report, page 16.] There is no basis, however, for the Brattle Report to presume to know what the “right measure of dispersion” is or for the Brattle Report’s reliance on the FCC’s arbitrary mean-plus-one-standard-deviation range.

7

Site Commission Allowances

19. The Brattle Report also implicitly accepts the FCC’s bizarre methodology (see the Godek Report at § VII) for arriving at an “acceptable” level for site commission allowances. The Brattle Report then makes an adjustment to that methodology, rounding down instead of rounding up, to arrive at even lower site commission allowances. The Brattle Report’s implicit condemnation of site commissions occurs without any study of how site commissions are actually determined and what functions they serve.

20. Putting aside the methodological infirmities of both the FCC and Brattle Report approach to site commissions, it remains my understanding that, depending on the facility, site commissions are a) set or constrained by regulation, b) set by the facility at some level or within some range, or c) determined as part of the competitive process established by the facility. In other words, site commissions are determined by the facilities or by regulations; they are not determined by the ICS providers. Because the 2020 FNPRM and the Brattle Report ignore the processes by which site commissions are determined and what functions they serve, the suggested site commission allowances have no valid economic or regulatory basis.

8