Rates for Interstate Inmate Calling Services, 40340-40353 [2021-14729]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 86, Number 142 (Wednesday, July 28, 2021)]
[Rules and Regulations]
[Pages 40340-40353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-14729]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[WC Docket No. 12-375, FCC 21-60; FRS 35682]


Rates for Interstate Inmate Calling Services

AGENCY: Federal Communications Commission.

ACTION: Final rule; denial of reconsideration.

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[[Page 40341]]

SUMMARY: In this Order on Reconsideration, the Federal Communications 
Commission (Commission) denies a petition for reconsideration filed by 
Global Tel*Link Corp. (GTL) seeking reconsideration of the 2020 ICS 
Order on Remand, released on August 7, 2020. The Commission reiterates 
that the jurisdictional nature of a telephone call from a prison or 
jail depends, for purposes of charging consumers, on the physical 
location of the originating and terminating endpoints of the call. To 
the extent the endpoints of any particular call from a prison or jail 
could be either intrastate or interstate and such endpoints are not 
known or easily knowable, consistent with Commission precedent, rates 
or charges for such calls may not exceed any applicable federally 
prescribed rates or charges.

DATES: Effective July 28, 2021.

ADDRESSES: Federal Communications Commission, 45 L Street NE, 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Minsoo Kim, Pricing Policy Division of 
the Wireline Competition Bureau, at (202) 418-1739 or via email at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
on Reconsideration, FCC 21-60, released on May 24, 2021. This summary 
is based on the public redacted version of the document, the full text 
of which can be obtained from the following internet address: https://docs.fcc.gov/public/attachments/FCC-21-60A1.pdf.

I. Introduction

    1. Unlike virtually everyone else in the United States, 
incarcerated people have no choice in their telephone service provider. 
Instead, their only option typically is to use a service provider 
chosen by the correctional facility, and once chosen, that service 
provider typically operates on a monopoly basis. Egregiously high rates 
and charges and associated unreasonable practices for the most basic 
and essential communications capability--telephone service--impedes 
incarcerated peoples' ability to stay connected with family and loved 
ones, clergy, and counsel, and financially burdens incarcerated people 
and their loved ones. Never have such connections been as vital as they 
are now, as many correctional facilities have eliminated in-person 
visitation in response to the COVID-19 pandemic.
    2. The Commission adopts an Order on Reconsideration denying GTL's 
petition for reconsideration of the 2020 ICS Order on Remand, published 
at 85 FR 67450 (Oct. 23, 2020), and reiterates that the jurisdictional 
nature of a telephone call for purposes of charging consumers depends 
on the physical location of the originating and terminating endpoints 
of the call. To the extent the endpoints of any particular call could 
be either intrastate or interstate and such endpoints are not known or 
easily knowable, consistent with the Commission's precedent, rates or 
charges for such calls may not exceed any applicable federally 
prescribed rates or charges.
    3. The Commission expects today's actions to have immediate 
meaningful and positive impacts on the ability of incarcerated people 
and their loved ones to satisfy the Commission's universal, basic need 
to communicate. Although the Commission uses various terminology 
throughout this item to refer to the intended beneficiaries of the 
Commission's actions herein, unless context specifically indicates 
otherwise, these beneficiaries are broadly defined as the people 
placing and receiving inmate calling services (ICS) calls, whether they 
are incarcerated people, members of their family, or other loved ones 
and friends. The Commission also may refer to them, generally, as 
consumers.

II. Background

    4. Access to affordable communications services is critical for 
everyone in the United States, including incarcerated members of our 
society. Studies have long shown that incarcerated people who have 
regular contact with family members are more likely to succeed after 
release and have lower recidivism rates. Because correctional 
facilities generally grant exclusive rights to service providers, 
incarcerated people must purchase service from ``locational 
monopolies'' and subsequently face rates far higher than those charged 
to other Americans.

A. Statutory Background

    5. The Communications Act of 1934, as amended (Communications Act 
or Act) divides regulatory authority over interstate, intrastate, and 
international communications services between the Commission and the 
states. Section 2(a) of the Act empowers the Commission to regulate 
``interstate and foreign communication by wire or radio.'' This 
regulatory authority includes ensuring that ``[a]ll charges, practices, 
classifications, and regulations for and in connection with'' 
interstate or international communications services are ``just and 
reasonable'' in accordance with section 201(b) of the Act. Section 
201(b) also provides that ``[t]he Commission may prescribe such rules 
and regulations as may be necessary in the public interest to carry 
out'' these provisions.
    6. Section 2(b) of the Act preserves states' jurisdiction over 
``charges, classifications, practices, services, facilities, or 
regulations for or in connection with intrastate communication 
service.'' The Commission is thus ``generally forbidden from entering 
the field of intrastate communication service, which remains the 
province of the states.'' Stated differently, section 2(b) ``erects a 
presumption against the Commission's assertion of regulatory authority 
over intrastate communications.''
    7. Section 276 of the Act directs the Commission to prescribe 
regulations that ensure that payphone service providers, including 
inmate calling services providers, ``are fairly compensated for each 
and every completed intrastate and interstate call using their 
payphone.'' The statute explicitly exempts telecommunications relay 
service calls for hearing disabled individuals from the requirement 
that providers must be compensated for ``each and every'' completed 
call. Although the Telecommunications Act of 1996 (1996 Act) amended 
the Act and ``chang[ed] the FCC's authority with respect to some 
intrastate activities,'' with respect to section 276, the U.S. Court of 
Appeals for the District of Columbia Circuit has held that ``the 
strictures of [section 2(b)] remain in force.'' Accordingly, that court 
concluded that section 276 does not authorize the Commission to 
determine ``just and reasonable'' rates for intrastate calls, and that 
the Commission's authority under that provision to ensure that 
providers ``are fairly compensated'' both for intrastate and interstate 
calls does not extend to establishing rate caps on intrastate services. 
Judge Pillard dissented from this view, finding permissible the 
Commission's contrary interpretation of the meaning of ``fairly 
compensated'' in section 276.

B. History of Commission Proceedings Prior to 2020

    8. In 2003, Martha Wright and her fellow petitioners, current and 
former incarcerated people and their relatives and legal counsel 
(Wright Petitioners), filed a petition seeking a rulemaking to address 
``excessive'' inmate calling services rates. The petition sought to 
prohibit exclusive inmate calling services contracts and collect-call-
only restrictions in correctional facilities. In 2007, the Wright 
Petitioners filed an alternative petition for rulemaking in

[[Page 40342]]

which they emphasized the urgency of the need for Commission action due 
to ``exorbitant'' inmate calling services rates. The Wright Petitioners 
proposed benchmark rates for interstate long distance inmate calling 
services calls and reiterated their request that providers offer debit 
calling as an alternative option to collect calling. The Commission 
sought and received comment on both petitions.
    9. In 2012, the Commission commenced an inmate calling services 
rulemaking proceeding by releasing the 2012 ICS Notice seeking comment 
on, among other matters, the proposals in the Wright Petitioners' 
petitions and whether to establish rate caps for interstate inmate 
calling services calls.
    10. In the 2013 ICS Order, in light of record evidence that rates 
for calling services used by incarcerated people greatly exceeded the 
reasonable costs of providing those services, the Commission adopted 
interim interstate rate caps of $0.21 per minute for debit and prepaid 
calls and $0.25 per minute for collect calls. These interim interstate 
rate caps were first adopted in 2013, were readopted in 2015, and 
remain in effect as a result of the vacatur, by the D.C. Circuit, of 
the permanent rate caps adopted in the 2015 ICS Order. Under the 
Commission's rules, ``Debit Calling'' means ``a presubscription or 
comparable service which allows an Inmate, or someone acting on an 
Inmate's behalf, to fund an account set up [through] a Provider that 
can be used to pay for Inmate Calling Services calls originated by the 
Inmate.'' ``Prepaid Calling'' means ``a presubscription or comparable 
service in which a Consumer, other than an Inmate, funds an account set 
up [through] a Provider of Inmate Calling Services. Funds from the 
account can then be used to pay for Inmate Calling Services, including 
calls that originate with an Inmate.'' ``Collect Calling'' means ``an 
arrangement whereby the called party takes affirmative action clearly 
indicating that it will pay the charges associated with a call 
originating from an Inmate Telephone.'' In the First Mandatory Data 
Collection, the Commission required all inmate calling services 
providers to submit data on their underlying costs so that the agency 
could develop permanent rate caps. In the 2014 ICS Notice, the 
Commission sought comment on reforming charges for services ancillary 
to the provision of inmate calling services and on establishing rate 
caps for both interstate and intrastate calls. Ancillary service 
charges are fees that providers assess on calling services used by 
incarcerated people that are not included in the per-minute rates 
assessed for individual calls.
    11. The Commission adopted a comprehensive framework for interstate 
and intrastate inmate calling services in the 2015 ICS Order, including 
limits on ancillary service charges and permanent rate caps for 
interstate and intrastate inmate calling services calls in light of 
``egregiously high'' rates for inmate calling services calls. Because 
of continued growth in the number and dollar amount of ancillary 
service charges that inflated the effective price paid for inmate 
calling services, the Commission limited permissible ancillary service 
charges to only five types and capped the charges for each: (1) Fees 
for Single-Call and Related Services--billing arrangements whereby an 
incarcerated person's collect calls are billed through a third party on 
a per-call basis, where the called party does not have an account with 
the inmate calling services provider or does not want to establish an 
account; (2) Automated Payment Fees--credit card payment, debit card 
payment, and bill processing fees, including fees for payments made by 
interactive voice response, web, or kiosk; (3) Third-Party Financial 
Transaction Fees--the exact fees, with no markup, that providers of 
calling services used by incarcerated people are charged by third 
parties to transfer money or process financial transactions to 
facilitate a consumer's ability to make account payments via a third 
party; (4) Live Agent Fees--fees associated with the optional use of a 
live operator to complete inmate calling services transactions; and (5) 
Paper Bill/Statement Fees--fees associated with providing customers of 
inmate calling services an optional paper billing statement. The 
Commission relied on sections 201(b) and 276 of the Act to adopt rate 
caps for both interstate and intrastate inmate calling services. The 
Commission relied on sections 201(b) and 276 of the Act to adopt rate 
caps for both interstate and intrastate inmate calling services. The 
Commission set tiered rate caps of $0.11 per minute for prisons; $0.14 
per minute for jails with average daily populations of 1,000 or more; 
$0.16 per minute for jails with average daily populations of 350 to 
999; and $0.22 per minute for jails having average daily populations of 
less than 350. The Commission calculated these rate caps using 
industry-wide average costs based on data from the First Mandatory Data 
Collection and stated that this approach would allow providers to 
``recover average costs at each and every tier.'' The Commission did 
not include site commission payments in its permanent rate caps, 
finding these payments were not costs reasonably related to the 
provision of inmate calling services. The Commission also readopted the 
interim interstate rate caps it had adopted in 2013, and extended them 
to intrastate calls, pending the effectiveness of the new rate caps, 
and sought comment on whether and how to reform rates for international 
inmate calling services calls. At the same time, the Commission adopted 
a Second Mandatory Data Collection to identify trends in the market and 
form the basis for further reform as well as an annual filing 
obligation requiring providers to report information on their current 
operations, including their interstate, intrastate, and international 
rates as well as their ancillary service charges.
    12. In the 2016 ICS Reconsideration Order, the Commission 
reconsidered its decision to entirely exclude site commission payments 
from its 2015 permanent rate caps. The Commission increased those 
permanent rate caps to account for claims that certain correctional 
facility costs reflected in site commission payments are directly and 
reasonably related to the provision of inmate calling services. The 
Commission set the revised rate caps at $0.13 per minute for prisons; 
$0.19 per minute for jails with average daily populations of 1,000 or 
more; $0.21 per minute for jails with average daily populations of 350 
to 999; and $0.31 per minute for jails with average daily populations 
of less than 350.

C. Judicial Actions

    13. In January 2014, in response to providers' petitions for review 
of the 2013 ICS Order, the D.C. Circuit stayed the application of 
certain portions of the 2013 ICS Order but allowed the Commission's 
interim rate caps to remain in effect. Later that year, the court held 
the petitions for review in abeyance while the Commission proceeded to 
set permanent rates. In March 2016, in response to providers' petitions 
for review of the 2015 ICS Order, the D.C. Circuit stayed the 
application of the 2015 ICS Order's permanent rate caps and ancillary 
service charge caps for Single Call Services while the appeal was 
pending. Single-Call Services mean ``billing arrangements whereby an 
Inmate's collect calls are billed through a third party on a per-call 
basis, where the called party does not have an account with the 
Provider of Inmate Calling Services or does not want to establish an 
account.'' Later that month, the court stayed the application of the 
Commission's interim rate caps to

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intrastate inmate calling services. In November 2016, the D.C. Circuit 
also stayed the 2016 ICS Reconsideration Order, pending the outcome of 
the challenge to the 2015 ICS Order.
    14. In 2017, in GTL v. FCC, the D.C. Circuit vacated the permanent 
rate caps adopted in the 2015 ICS Order. First, the panel majority held 
that the Commission lacked the statutory authority to cap intrastate 
calling services rates. The court explained that the Commission's 
authority over intrastate calls is, except as otherwise provided by 
Congress, limited by section 2(b) of the Act and nothing in section 276 
of the Act overcomes this limitation. In particular, section 276 
``merely directs the Commission to `ensure that all providers [of 
calling services to incarcerated people] are fairly compensated' for 
their inter- and intrastate calls,'' and it ``is not a `general grant 
of jurisdiction' over intrastate ratemaking.'' The court noted that it 
``need not decide the precise parameters of the Commission's authority 
under Sec.  276.''
    15. Second, the D.C. Circuit concluded that the ``Commission's 
categorical exclusion of site commissions from the calculus used to set 
[inmate calling services] rate caps defie[d] reasoned decision making 
because site commissions obviously are costs of doing business incurred 
by [inmate calling services] providers.'' The court noted that some 
site commissions were ``mandated by state statute,'' while others were 
``required by state correctional institutions'' and were thus also a 
``condition of doing business.'' The court directed the Commission to 
``assess on remand which portions of site commissions might be directly 
related to the provision of [inmate calling services] and therefore 
legitimate, and which are not.'' The court did not reach the providers' 
remaining arguments ``that the exclusion of site commissions denies 
[them] fair compensation under [section] 276 and violates the Takings 
Clause of the Constitution because it forces providers to provide 
services below cost.'' Instead, the court stated that the Commission 
should address these issues on remand when revisiting the categorical 
exclusion of site commissions. Judge Pillard dissented from this view, 
noting that site commissions are not legitimate simply because a state 
demands them.
    16. Third, the D.C. Circuit held that the Commission's use of 
industry-wide averages in setting rate caps was arbitrary and 
capricious because it lacked justification in the record and was not 
supported by reasoned decision making. Judge Pillard also dissented on 
this point, noting that the Commission has ``wide discretion'' under 
section 201 of the Act to decide ``which costs to take into account and 
to use industry-wide averages that do not necessarily compensate `each 
and every' call.'' More specifically, the court found the Commission's 
use of a weighted average per-minute cost to be ``patently 
unreasonable'' given that such an approach made calls with above-
average costs unprofitable and thus did ``not fulfill the mandate of 
Sec.  276 that `each and every' '' call be fairly compensated. 
Additionally, the court found that the 2015 ICS Order ``advance[d] an 
efficiency argument--that the larger providers can become profitable 
under the rate caps if they operate more efficiently--based on data 
from the two smallest firms,'' which ``represent[ed] less than one 
percent of the industry,'' and that the Order did not account for 
conflicting record data. The court therefore vacated this portion of 
the 2015 ICS Order.
    17. Finally, the court remanded the ancillary service charge caps. 
The D.C. Circuit held that ``the Order's imposition of ancillary fee 
caps in connection with interstate calls is justified'' given the 
Commission's ``plenary authority to regulate interstate rates under 
Sec.  201(b), including `practices . . . for and in connection with' 
interstate calls.'' The court held that the Commission ``had no 
authority to impose ancillary fee caps with respect to intrastate 
calls.'' Because the court could not ``discern from the record whether 
ancillary fees can be segregated between interstate and intrastate 
calls,'' it remanded the issue so the Commission could determine 
whether it could segregate ancillary fee caps on interstate calls 
(which are permissible) and on intrastate calls (which are 
impermissible). The court also vacated the video visitation annual 
reporting requirements adopted in the 2015 ICS Order.
    18. In December 2017, after it issued the GTL v. FCC opinion, the 
D.C. Circuit in Securus v. FCC ordered the 2016 ICS Reconsideration 
Order ``summarily vacated insofar as it purports to set rate caps on 
inmate calling service'' because the revised rate caps in that 2016 
Order were ``premised on the same legal framework and mathematical 
methodology'' rejected by the court in GTL v. FCC. The court remanded 
``the remaining provisions'' of that Order to the Commission ``for 
further consideration . . . in light of the disposition of this case 
and other related cases.'' As a result of the D.C. Circuit's decisions 
in GTL and Securus, the interim rate caps that the Commission adopted 
in 2013 ($0.21 per minute for debit/prepaid calls and $0.25 per minute 
for collect calls) remain in effect for interstate inmate calling 
services calls.

D. 2020 Rates and Charges Reform Efforts

    19. 2020 ICS Order on Remand and Notice. In February 2020, the 
Wireline Competition Bureau (Bureau or WCB) issued a public notice 
seeking to refresh the record on ancillary service charges in light of 
the D.C. Circuit's remand in GTL v. FCC. This Public Notice was 
published in the Federal Register. In the Ancillary Services Refresh 
Public Notice, the Bureau sought comment on ``whether each permitted 
[inmate calling services] ancillary service charge may be segregated 
between interstate and intrastate calls and, if so, how.'' The Bureau 
also sought comment on any steps the Commission should take to ensure, 
consistent with the D.C. Circuit's opinion, that providers of 
interstate inmate calling services do not circumvent or frustrate the 
Commission's ancillary service charge rules. The Bureau also defined 
jurisdictionally mixed services as `` `[s]ervices that are capable of 
communications both between intrastate end points and between 
interstate end points' '' and sought comment on, among other issues, 
how the Commission should proceed if any permitted ancillary service is 
``jurisdictionally mixed'' and cannot be segregated between interstate 
and intrastate calls.
    20. In August 2020, the Commission adopted the 2020 ICS Order on 
Remand and 2020 ICS Notice. The Commission responded to the court's 
remands and took action to comprehensively reform inmate calling 
services rates and charges. First, the Commission addressed the D.C. 
Circuit's directive that the Commission consider whether ancillary 
service charges--separate fees that are not included in the per-minute 
rates assessed for individual inmate calling services calls--can be 
segregated into interstate and intrastate components for the purpose of 
excluding the intrastate components from the reach of the Commission's 
rules. The Commission found that ancillary service charges generally 
are jurisdictionally mixed and cannot be practicably segregated between 
the interstate and intrastate jurisdictions except in the limited 
number of cases where, at the time a charge is imposed and the consumer 
accepts the charge, the call to which the service is ancillary is 
clearly an intrastate call. As a result,

[[Page 40344]]

the Commission concluded that inmate calling services providers are 
generally prohibited from imposing any ancillary service charges other 
than those permitted by the Commission's rules, and providers are 
generally prohibited from imposing charges in excess of the 
Commission's applicable ancillary service fee caps.
    21. Second, the Commission proposed rate reform of the inmate 
calling services within its jurisdiction. As a result of the D.C. 
Circuit's decisions, the interim interstate rate caps of $0.21 per 
minute for debit and prepaid calls and $0.25 per minute for collect 
calls that the Commission adopted in 2013 remain in effect today. 
Commission staff performed extensive analyses of the data it collected 
in the Second Mandatory Data Collection as well as the data in the 
April 1, 2020, annual reports. In the 2015 ICS Order, the Commission 
directed that the Second Mandatory Data Collection be conducted ``two 
years from publication of Office of Management and Budget (OMB) 
approval of the information collection.'' The Commission received OMB 
approval in January 2017, and Federal Register publication occurred on 
March 1, 2017. Accordingly, on March 1, 2019, inmate calling services 
providers submitted their responses to the Second Mandatory Data 
Collection. WCB and the Office of Economics and Analytics (OEA) 
undertook a comprehensive analysis of the Second Mandatory Data 
Collection responses, and conducted multiple follow-up discussions with 
providers to supplement and clarify their responses, in order to 
conduct the data analysis upon which the proposals in the August 2020 
ICS Notice are based. Based on that analysis, the Commission proposed 
to lower the interstate rate caps to $0.14 per minute for debit, 
prepaid, and collect calls from prisons and $0.16 per minute for debit, 
prepaid, and collect calls from jails. In so doing, the Commission used 
a methodology that addresses the flaws underlying the Commission's 2015 
and 2016 rate caps (which used industry-wide averages to set rate caps) 
and that is consistent with the mandate in section 276 of the Act that 
inmate calling services providers be fairly compensated for each and 
every completed interstate call. The Commission's methodology included 
a proposed 10% reduction in GTL's costs to account, in part, for 
seemingly substantially overstated costs. The Commission also proposed 
to adopt a waiver process that would permit providers to seek waivers 
of the proposed rate caps on a facility-by-facility or contract basis 
if the rate caps would prevent a provider from recovering the costs of 
providing interstate inmate calling services at a facility or 
facilities covered by a contract. The 2020 ICS Notice also proposed 
``to adopt a rate cap formula for international inmate calling services 
calls that permits a provider to charge a rate up to the sum of the 
inmate calling services provider's per-minute interstate rate cap for 
that correctional facility plus the amount that the provider must pay 
its underlying international service provider for that call on a per-
minute basis (without a markup).'' The Commission explained that this 
cap ``would enable inmate calling services providers to account for 
widely varying costs,'' be consistent with the ``just and reasonable' 
standard in section 201(b) of the Act, and comport with the ``fair 
compensation'' provision of section 276 of the Act.
    22. In response to the 2020 ICS Notice, the Commission received 
over 90 comments and reply comments and 9 economic studies. Filers 
included providers of calling services to incarcerated people, public 
interest groups and advocates for the incarcerated, telecommunications 
companies, organizations representing individuals who are deaf or hard 
of hearing, and providers of telecommunications relay service.
    23. Intrastate Rate Reform Efforts. By April 1 of each year, inmate 
calling services providers file annual reports with the Commission that 
include rates, ancillary service charges, and site commissions. In an 
effort to compare interstate inmate calling services rate levels with 
intrastate rate levels, Commission staff analyzed the intrastate rate 
data submitted as part of the providers' April 1, 2020, annual reports. 
Commission staff's review revealed that intrastate rates for debit or 
prepaid calls exceed interstate rates in 45 states, with 33 states 
allowing rates that are at least double the Commission's interstate cap 
and 27 states allowing ``first-minute'' charges that can be more than 
25 times that of the first minute of an interstate call. For example, 
one provider reported a first-minute intrastate rate of $5.34 and 
additional per-minute intrastate rates of $1.39 while reporting the 
per-minute interstate rate of $0.21 for the same correctional facility. 
Similarly, another provider reported a first-minute intrastate rate of 
$6.50 and an additional per-minute intrastate rate of $1.25 while 
reporting the per-minute interstate rate of $0.25 for the same 
correctional facility. Further, Commission staff identified instances 
in which a 15-minute intrastate debit or prepaid call costs as much as 
$24.80--almost seven times more than the maximum $3.15 that an 
interstate call of the same duration would cost.
    24. In light of these data, in September 2020, former Chairman Pai 
and Brandon Presley, then president of the National Association of 
Regulatory Utility Commissioners (NARUC), jointly sent a letter to the 
co-chairs of the National Governors Association urging state 
governments to take action to reduce intrastate rates and related fees. 
At least one state has enacted a law to reduce intrastate inmate 
calling services rates and fees, at least one state commenced a 
regulatory proceeding aimed at reducing intrastate inmate calling 
services rates and fees, and several states are considering 
legislation.

III. Order On Reconsideration

    25. The Commission denies the GTL Petition in full on the merits 
and, independently, dismisses that petition as procedurally defective, 
insofar as it relies on arguments the Commission already considered and 
rejected in the underlying order. The Commission considered and 
rejected GTL's arguments regarding so-called Commission ``precedent'' 
purporting to establish a general policy of reliance on NPA-NXX as a 
proxy for jurisdiction and whether the Commission's statement required 
prior notice and an opportunity to comment. GTL seeks reconsideration 
of a single sentence from the 2020 ICS Order on Remand, reiterating 
that ``the jurisdictional nature of a call depends on the physical 
location of the endpoints of the call and not on whether the area code 
or NXX prefix of the telephone number . . . associated with the 
account, are associated with a particular state.'' GTL claims that this 
sentence (1) ignores telecommunications carriers' historical reliance 
on NPA-NXX codes to classify calls as interstate or intrastate; (2) 
unfairly singles out providers of calling services for incarcerated 
people; (3) presents implementation issues; (4) potentially compromises 
state programs funded by assessments on intrastate revenues; and (5) 
promulgates a new rule without notice and an opportunity to comment. 
The Commission finds each of these claims to be without merit and 
affirm the Commission's continued use of the traditional end-to-end 
jurisdictional analysis relied upon in the 2020 ICS Order on Remand.

E. Background

    26. Last year, the Commission responded to the D.C. Circuit's 
directive that it consider whether ancillary

[[Page 40345]]

service charges can be segregated into interstate and intrastate 
components to exclude the intrastate components from the reach of the 
Commission's rules. The Bureau issued the Ancillary Services Refresh 
Public Notice, published at 85 FR 9444 (Feb. 19, 2020), seeking to 
refresh the record in light of the D.C. Circuit's remand. Based on the 
record developed in response to that public notice, the Commission 
found that ``ancillary service charges generally cannot be practically 
segregated between the interstate and intrastate jurisdiction except in 
the limited number of cases where, at the time a charge is imposed and 
the consumer accepts the charge, the call to which the service is 
ancillary is a clearly intrastate-only call.'' Thus, the Commission 
concluded that providers are generally prohibited from imposing 
ancillary service charges, other than those explicitly permitted by the 
Commission's rules, and are also generally prohibited from imposing 
ancillary service charges in excess of the permitted ancillary service 
fee caps in the Commission's rules.
    27. In the 2020 ICS Order on Remand, the Commission addressed 
record debate about the jurisdictional classification methodology for 
certain inmate calling services calls and the ancillary services 
provided in connection with those calls by reminding providers that 
``the jurisdictional nature of a call depends on the physical locations 
of the endpoints of the call,'' rather than on the area codes or NXX 
prefixes of the telephone numbers used to make and receive the call. 
GTL and Securus objected to this approach, asserting that relying on a 
call's endpoints was inconsistent with prior Commission decisions and 
with providers' practice of using NPA-NXX codes as proxies for 
jurisdiction. GTL and Securus raised these objections in ex parte 
filings during the public circulation period of the 2020 ICS Order on 
Remand but before the Commission adopted that Order on August 6, 2020. 
GTL and Securus also claimed that the Commission's clarification 
regarding how carriers are to determine the jurisdictional nature of a 
call required prior notice and an opportunity to comment. In addition, 
NCIC questioned ``the FCC's determination that [inmate calling 
services] providers will be able to determine the location of the 
terminating point of an [inmate calling services] wireless call--and 
thus determine whether the call is intrastate or interstate in 
nature.''
    28. In response to these objections, the Commission explained that 
although it has allowed the use of proxies to determine the 
jurisdictional nature of certain calls, it has done so only in specific 
contexts ``typically related to carrier-to-carrier matters or payment 
of fees owed'' and that it ``never adopted a general policy allowing 
the broad use of such proxies.'' The Commission distinguished the so-
called ``precedent'' cited by GTL and Securus, explaining that none of 
those decisions established actual Commission policy or practice 
regarding the use of jurisdictional proxies and that the examples 
provided ``relate specifically to carrier-to-carrier arrangements 
involving intercarrier compensation or applicable federal fees due 
between carriers and the Commission, not to using a proxy for charging 
a customer a higher or different rate than it would otherwise be 
subject to based on whether the customer's call is interstate or 
intrastate.'' The Commission, therefore, rejected GTL's and Securus's 
argument that application of the end-to-end analysis required prior 
notice and an opportunity to comment, explaining that it was merely 
clarifying ``the long-established standard that inmate calling services 
providers must apply in classifying calls for purposes of charging 
customers the appropriate rates and charges.'' The Commission further 
explained that the Bureau's public notice seeking to refresh the record 
on ancillary service charges in light of the D.C. Circuit's remand 
provided ``notice of, and a full opportunity to comment on, the 
jurisdictional status of inmate calling services calls'' because the 
public notice sought comment on how to proceed if ancillary services 
were ``jurisdictionally mixed'' and defined jurisdictionally mixed 
services as those that are ``capable of communications both between 
intrastate end points and between interstate end points.''
    29. In November 2020, GTL filed a petition seeking reconsideration 
of the application of the end-to-end jurisdictional analysis in the 
2020 ICS Order on Remand. The Bureau released a Public Notice 
announcing the filing of GTL's Petition and establishing deadlines for 
oppositions and replies to the Petition. The Bureau received comments 
from Pay Tel and replies from NCIC and GTL.

F. Discussion

    30. Standard of Review. Any interested party may file a petition 
for reconsideration of a final action in a rulemaking proceeding. 
Reconsideration ``may be appropriate when the petitioner demonstrates 
that the original order contains a material error or omission, or 
raises additional facts that were not known or did not exist until 
after the petitioner's last opportunity to present such matters.'' 
Petitions for reconsideration that do not warrant consideration by the 
Commission include those that: ``[f]ail to identify any material error, 
omission, or reason warranting reconsideration; [r]ely on facts or 
arguments which have not been previously presented to the Commission . 
. . ; [r]ely on arguments that have been fully considered and rejected 
by the Commission within the same proceeding;'' or ``[r]elate to 
matters outside the scope of the order for which reconsideration is 
sought.'' The Commission may consider facts or arguments not previously 
presented if: (1) They ``relate to events which have occurred or 
circumstances which have changed since the last opportunity to present 
such matters to the Commission;'' (2) they were ``unknown to petitioner 
until after [their] last opportunity to present them to the Commission, 
and [the petitioner] could not through the exercise of ordinary 
diligence have learned of the facts or arguments in question prior to 
such opportunity;'' or (3) ``[t]he Commission determines that 
consideration of the facts or arguments relied on is required in the 
public interest.''

1. GTL's Substantive Arguments Against the End-to-End Analysis Do Not 
Warrant Reconsideration

    31. GTL's Petition provides no new substantive facts or arguments 
that justify reconsideration of the Commission's application of the 
end-to-end jurisdictional analysis to calling services for incarcerated 
people. Although GTL cites various documents it claims establish a 
general Commission policy on the use of jurisdictional proxies for 
classifying interstate and intrastate calls, none of the cited 
documents establish such a policy, especially in the provision of 
inmate calling services. The Commission is also unpersuaded by GTL's 
arguments regarding the possible discriminatory treatment of providers 
of these calling services, its reliance on third parties to make 
jurisdictional determinations, or its unsubstantiated claims about the 
effects the Commission's jurisdictional analysis may have on state 
programs.
    32. GTL first argues that the end-to-end analysis ignores what it 
claims is the industry custom and practice of using NPA-NXX codes to 
determine whether a call is interstate or intrastate. GTL asserts that 
the ``Commission's prior statements have recognized that using NPA-NXX 
is an appropriate industry standard for determining whether a call is 
interstate or intrastate.'' In this regard, GTL

[[Page 40346]]

emphasizes the 2003 Starpower Damages Order. For its part, NCIC argues 
that the Commission's ``precedent'' has been ``correctly cited by 
GTL,'' and that the Commission should ``continue to follow that 
precedent'' in the context of calling services for incarcerated people.
    33. The Commission disagrees. The Commission reaffirms the 
Commission's prior conclusion that not one of the decisions cited in 
GTL's Petition adopted a general policy allowing broad use of 
jurisdictional proxies, such as NPA-NXX codes. Those decisions 
primarily concern the use of jurisdictional proxies to determine the 
appropriate rating between and among various types of service providers 
routing calls originating from one NPA-NXX code to a terminating NPA-
NXX code and vice versa. None of them allow for the use of 
jurisdictional proxies in the context of inmate calling services for 
which consumers may be charged different rates based on whether a call 
is classified as interstate or intrastate. Instead, the decisions GTL 
cites merely reflect that the Commission ``has allowed carriers to use 
proxies for determining the jurisdictional nature of calls in specific 
contexts, typically related to carrier-to-carrier matters or payment of 
fees owed.''
    34. At bottom, GTL requests that the Commission engraft into its 
inmate calling services rules a jurisdictional proxy--relying on NPA-
NXX codes for all telephone calls from incarcerated people to a called 
party regardless of the called parties' service provider of choice--
that the Commission has never suggested might be used in determining 
the jurisdictional classification of an inmate calling services call. 
The Commission thus is not persuaded that GTL's approach reflects a 
reasonable interpretation of the Commission's existing rules.
    35. GTL seizes on certain language in the Starpower Damages Order 
that, GTL claims, establishes a ``historical'' or ``consistent'' use of 
NPA-NXX codes. Contrary to GTL's assertions, however, the Starpower 
decision did not announce a general policy permitting the use of 
jurisdictional proxies. Rather, Starpower was narrowly concerned with 
an intercarrier compensation dispute, the resolution of which hinged on 
the treatment of traffic under a Verizon tariff. In the liability phase 
of the proceeding, Starpower obtained an order from the Commission 
obligating Verizon to pay reciprocal compensation under an 
interconnection agreement ``for whatever calls Verizon South bills to 
its own customers as local calls under the Tariff, regardless of 
whether a call is jurisdictionally interstate.'' In the damages phase, 
Verizon argued that, under its tariff definition, the physical location 
of the called parties, and not the telephone numbers, determined 
whether service was ``local.'' But the Commission concluded that 
Verizon rated and billed ISP-bound traffic under its tariff by looking 
to the telephone numbers of the parties to a call and not the parties' 
physical locations. The Commission held that since Verizon treated ISP-
bound calls as ``local under the Tariff,'' Verizon was obligated to pay 
reciprocal compensation under the interconnection agreement. Thus, 
although Starpower contains passing references to the use of NPA-NXX to 
determine the jurisdictional nature of certain traffic, the decision 
ultimately turned on the Commission's interpretation of Verizon's 
tariff and Verizon's own practices in applying that tariff. 
Accordingly, Starpower does not establish any Commission or industry-
wide policy on the use of jurisdictional proxies. The fact that 
Starpower involved internet service provider-bound traffic--i.e., 
traffic to another type of service provider, which at the time was a 
separate unsettled jurisdictional issue, rather than an end user 
telephone subscriber--alone, makes this case entirely inapposite.
    36. In any event, it is simply not reasonable or reliable now, nor 
has it been for many years, to assume that a called party is physically 
located in the geographic area (rate center) of the switch to which the 
party's NPA-NXX code is native. Before Congress adopted the 1996 Act, 
when incumbent LECs controlled 99% of the local voice marketplace, one 
could reasonably assume that a called party was physically located in 
the geographic area associated with a particular NPA-NXX, as NPA-NXX 
codes were associated only with a particular incumbent's rate center. 
Since that time, however, number porting between and among competing 
wireline LECs, wireless carriers, and fixed and nomadic VoIP providers 
has rendered NPA-NXX codes an all-too-frequently unreliable means to 
determine whether a called party is physically located within a 
particular state when it receives and answers a given call.
    37. In the 1996 Act, Congress included the requirement that each 
LEC ``provide, to the extent technically feasible, number portability 
in accordance with requirements prescribed by the Commission.'' This 
definition now appears in section 3(37) of the Act. The number 
portability rules subsequently adopted by the Commission, as modified 
over time, limit number porting between wireline incumbents and 
wireline competitors to ports within the same rate center. With respect 
to wireline-to-wireless porting, the Commission requires wireline 
carriers to port to requesting wireless carriers ``where the requesting 
wireless carrier's `coverage area' overlaps the geographic location in 
which the customer's wireline number is provisioned, provided that the 
porting-in carrier maintains the number's [NPA-NXX] original rate 
center designation following the port.'' In other words, when the 
wireline number is ported to the wireless carrier's customer, the 
original rate center designation is maintained for routing and rating 
purposes by other service providers. A wireless carrier may only port a 
number to a wireline carrier if the number is associated with the rate 
center of the wireline carrier where the customer is located. Nomadic 
VoIP ``is usually a VoIP phone installed in a portable computer which 
can be taken with the subscriber'' so that ``[c]alls can be made from 
anywhere in the world.'' By comparison, fixed VoIP is not movable. 
``The [fixed] service is provided by a cable company, for example, 
where the telephone does not leave the residence.'' The Commission 
began its work implementing the 1996 Act's number portability 
requirement with its 1996 First Number Portability Order, in which it 
adopted an initial set of rules governing wireline-to-wireline, 
wireless-to-wireless, and wireline-to-wireless number portability 
obligations. It required that LECs in the 100 largest Metropolitan 
Statistical Areas (MSAs) begin implementing a long-term number 
portability methodology on a phased deployment schedule, and that CMRS 
providers be able to port numbers by the wireline carriers' deadline to 
complete number portability implementation and to support network-wide 
roaming thereafter. The Commission also established LEC number 
portability implementation obligations outside of the 100 largest MSAs. 
Subsequently, in 2007, the Commission extended local number portability 
obligations to interconnected VoIP providers, both fixed and nomadic. 
In 2015, the Commission opened direct access to numbering resources to 
interconnected VoIP providers.
    38. Today, consumers increasingly rely on nomadic VoIP and mobile 
voice services for telephone service. Nomadic interconnected VoIP 
services are provided as over-the-top applications and are not 
associated with any specific geographic location. ``In this way, 
nomadic interconnected VoIP service is

[[Page 40347]]

similar to mobile service, but distinct from fixed telephony service.'' 
``Over-the-top'' VoIP providers are VoIP providers that are not 
facilities-based. The consumer of an over-the-top VoIP service ``uses 
an independent data service over a broadband connection.'' The 
Commission's December 2019 FCC Form 477 data reflected 12.9 million 
over-the-top VoIP subscriptions in the United States at that time. 
Subscribers to these services can readily move to other rate centers 
throughout the country while retaining their telephone numbers. And 
nearly half of all assigned telephone numbers are associated with 
wireless phones, which is unsurprising given that the majority of 
households in the United States no longer subscribe to a landline 
service. The combination of the Commission's number portability orders 
and the significant technological changes to the communications 
marketplace means that NPA-NXX codes reflected in telephone numbers are 
often subject to movement across state lines, on a permanent, nomadic, 
or mobile basis, making them unreliable as a geographic indicator of 
endpoints for a given call. As the foregoing analysis suggests, only 
where the calling party (here, the incarcerated person) and the called 
party each have wireline telephone numbers, can an inmate calling 
services provider reasonably and reliably determine the jurisdictional 
nature of a call between those parties based on the NPA-NXX codes of 
the originating and terminating telephone numbers. That is the case 
because the Commission's rules require the NPA-NXX of a wireline 
telephone subscriber to necessarily physically remain within the 
particular rate center from which each wireline telephone number 
originated. Unlike for wireless voice service and nomadic VoIP service, 
the Commission's number porting rules do not permit telephone numbers 
of wireline subscribers to port across rate center boundaries.
    39. GTL next complains that the Commission's confirmation of the 
end-to-end analysis inappropriately ``singles out [inmate calling 
services] providers,'' and that the Commission ``cannot target 
particular classes of telecommunications service providers in its 
rulemaking when the legal basis for it (and the criticisms that 
undergird it) are of universal applicability.'' This complaint is 
completely without merit. The Commission has not singled out inmate 
calling services providers for disparate treatment. The end-to-end 
analysis is, and remains, the generally applicable, default standard 
for all telecommunications carriers--not just inmate calling services 
providers--for determining the jurisdictional classification of a 
telephone call. In addition, inmate calling services providers are 
unlike other telecommunications carriers. Calling service providers 
have a captive consumer base at each correctional facility they serve 
for which they rarely, if ever, offer all-distance calling plans with 
uniform rates and charges for intrastate and interstate calls as do 
most, if not all, other telecommunications services providers. Indeed, 
inmate calling services providers typically have a myriad of different 
rates and charges applicable to different jurisdictional call types 
(i.e., intraLATA intrastate, interLATA intrastate, intraLATA 
interstate, and interLATA interstate). And while providers have not 
explained in detail what their resale arrangements with underlying 
telecommunications carriers entail, it is the Commission's 
understanding that providers typically pay a flat rate for all minutes 
of use (except for international calling) regardless of the 
jurisdictional nature of the call. Calling service providers continue 
to charge incarcerated people (or their families) different rates and 
charges purportedly based on differences in costs to serve these 
different call types, even though those rates are based on fictional 
determinations that have nothing to do with actual geographic 
endpoints, except in the case of wireline-to-wireline calls.
    40. As explained above, the generally accepted method of 
determining the jurisdictional nature of any given call is by an end-
to-end analysis. Thus, contrary to the providers' claims, 
jurisdictional proxies are the exception, not the rule. It is only 
``[w]here the Commission has found it difficult to apply an end-to-end 
approach for jurisdictional purposes, [that] it has proposed or adopted 
proxy or allocation mechanisms to approximate the end-to-end result.'' 
The Commission subsequently adopted permissible proxies for determining 
what portion of such jurisdictionally indeterminate VoIP services to 
attribute to the interstate jurisdiction for Universal Service Fund 
(USF) payment purposes, but such proxies did not pertain to classifying 
the underlying calls as either interstate or intrastate for purposes of 
billing consumers different rates for telephone calls. In the Vonage 
Order, for example, the Commission expressly declined to adopt the use 
of proxies for determining whether a call was jurisdictionally 
intrastate or interstate or to address the conflict between federal and 
state regulatory regimes. Indeed, GTL itself recognized the general 
applicability of the end-to-end analysis in its comments on the 
Ancillary Services Refresh Public Notice, explaining that ``[t]he 
jurisdictional nature of calls themselves is easily classified as 
either interstate or intrastate based on the call's points of 
origination and termination. This accords with the Commission's 
traditional end-to-end analysis for determining jurisdictional 
boundaries `beginning with the end point at the inception of a 
communication to the end point at its completion.' '' GTL fails to 
explain how the application of the Commission's long-established 
approach for determining the appropriate jurisdiction of a call 
unfairly singles out providers of calling services for incarcerated 
people given that, by GTL's own admission, the Commission generally 
applies this ``traditional'' analysis to all telecommunications 
providers.
    41. Because an NPA-NXX code frequently fails to provide any 
indication of the actual physical location of a called party (unless it 
is known that the called party is a wireline telephone subscriber), it 
generally cannot be relied upon to determine the jurisdictional nature 
of a call. As the Commission stated in the 2020 ICS Order on Remand, to 
do so would undercut interstate callers' federal protection from unjust 
and unreasonable interstate charges and practices.
    42. GTL also alleges, through reliance on decades-old discussions 
of rating based on NPA-NXX and industry guides, that there are 
technical barriers that prevent providers of calling services for 
incarcerated people from applying the traditional end-to-end analysis. 
These allegations arise from the fact that providers rely on third 
parties to classify the jurisdiction of calls. As GTL explains it, 
calls from correctional facilities, whether to wireline, wireless, or 
VoIP numbers, ``are handed off to unaffiliated third-party 
telecommunications service providers that route them across the public 
switched telephone network to their appropriate termination point, 
based on the called number's entry in the Local Exchange Routing 
Guide.'' The Local Exchange Routing Guide (LERG) is ``an industry guide 
generally used by carriers in their network planning and engineering 
and numbering administration. It contains information regarding all 
North American central offices and end offices.'' GTL adds that 
``[inmate calling services] providers assess charges on

[[Page 40348]]

inmate calls by purchasing access to third-party databases that 
classify them as intrastate, interstate, or international'' and that 
these databases do not provide the ``actual geographical location 
associated with a particular device or service.'' Relatedly, Securus 
explains that these third parties use ``telephone numbers or, since the 
advent of local number portability, the Local Routing Number . . . as a 
proxy for . . . jurisdiction,'' and lack ``the information needed to 
apply the end-to-end analysis.'' The Local Routing Number is a 
``telephone number assigned in the local number portability database 
for the purposes of routing a call to a telephone number that has been 
ported. When a call is made to a number that has been ported, the 
routing path for the call is established based on the L[ocal] R[outing] 
N[umber] rather than on the dialed number.'' GTL concludes that 
``[g]iven indicia that classification determinations have, for decades, 
been under the control of entities over which many providers exercise 
no authority, critical logistical and financial questions present 
themselves, such as the costs attendant upon [inmate calling services] 
providers should they be required to design, deploy, and implement an 
alternative call classification system.''
    43. The Commission finds these arguments unpersuasive. The 
Commission's rules specify that providers of inmate calling services 
are currently prohibited from charging more than $0.21 per minute for 
interstate Debit Calling, Prepaid Calling, or Prepaid Collect Calling 
and prior to today's accompanying Report and Order more than $0.25 per 
minute for interstate Collect Calling. The current rule language tracks 
the language adopted in 2013 but adds the term ``interstate.'' The term 
``interstate'' was added to section 64.6030 of the Commission's rules 
as a non-substantive change to reflect a D.C. Circuit decision that the 
Commission's regulation of inmate calling services rates could extend 
no further than the extent of its authority over interstate (and 
international) calls. The fact that the addition of ``interstate'' was 
a non-substantive change to reflect a court decision limiting the 
Commission's inmate calling services rate regulations to the limit of 
the Commission's authority further reinforces the reasonableness of 
interpreting ``interstate'' consistent with the Commission's historical 
jurisdictional approach. The Commission's interpretation of the term 
``interstate'' in its rule accords not only with the use of that 
terminology in the Communications Act, but also with the Commission's 
traditional approach to defining jurisdiction. It is the provider's 
responsibility to ``appropriately comply[] with this most basic 
regulatory obligation of telecommunications service providers with 
respect to their customers--determining the proper jurisdiction of a 
call when charging its customers the correct and lawful rates for those 
calls using the end-to-end analysis.'' Providers did not express any 
concerns about their ability to determine the jurisdiction of any given 
call when the Commission's adopted ``interim rate caps . . . for 
interstate [inmate calling services]'' in 2013. Nor did they express 
such concerns in the following years, as those interim rate caps 
continued to apply. Indeed, despite GTL's claims here, it and other 
providers use the Commission's historical approach when defining the 
terms ``interstate'' and ``intrastate'' in at least some of their 
tariffs and price lists. It is unclear why GTL, or any provider, would 
base its rates on the geographic locations of the parties to a call if 
the service provider could not, in fact, determine where the parties 
are located at the time of the call. The record also provides no 
indication that the third parties upon which GTL and others claim they 
rely for determining the jurisdiction of their calls could not 
accurately determine whether a consumer is making calls between NPA-NXX 
codes assigned to wireline, wireless, or nomadic VoIP numbers to 
determine whether those calls are subject to the Commission's 
interstate rate caps without relying on another methodology to 
determine the actual endpoints of the call.
    44. Further, many of the guides and brochures to which GTL cites in 
this regard relate predominantly to call routing rather than rating. 
For example, GTL cites to the iconectiv brochure ``Route It Right Every 
Time with LERG OnLine.'' That brochure contains precisely two 
references to rating, neither of which relate to the billing of end-
user customers. GTL also points to an iconectiv Catalog of Products and 
Services, but that document is similarly unhelpful for GTL. Finally, 
the iconectiv catalog to which GTL cites notes that the Telecom Routing 
Administration's products ``are a mainstay in supporting the various 
offerings of service providers . . . and, bottom line, in ensuring 
calls placed by their customers and through their network complete 
without any problems.'' In other words, the Telecom Routing 
Administration provides data that supports the routing of calls. 
Nowhere in that catalog does it state that providers should rely solely 
on NPA-NXX codes for rating calls to end users. The Commission also 
disagrees with GTL's characterization of the Local Exchange Routing 
Guide as requiring the use of NPA-NXXs for determining the 
jurisdictional nature of a call. Once again, GTL conflates the 
relationship of an NPA-NXX code to that code's original rate center 
designation, reflected in the Local Exchange Routing Guide for routing 
purposes, with using the same rate center information to determine 
whether the terminating call to that NPA-NXX code is jurisdictionally 
intrastate or interstate. The original rate center designation of an 
NPA-NXX number has no bearing on where calls to that number actually 
terminate when the called party is a customer of a wireless or nomadic 
VoIP provider, at a minimum. But even if it did, that would have no 
bearing on inmate calling services providers' obligations to charge 
incarcerated people and those whom they call lawful rates.
    45. To the extent that the technical issues raised by GTL make it 
impracticable or impossible to determine whether a call is interstate 
or intrastate based on the geographical endpoints of the call, the 
Commission does not require providers of calling services for 
incarcerated people to redesign or deploy other call classification 
systems. Instead, the Commission reaffirms that providers must charge a 
rate at or below the applicable interstate cap for that call. Pay Tel 
complains that today's Order ``effectively classif[ies] all [inmate 
calling services] calls as jurisdictionally `interstate.''' Pay Tel 
asserts that, as a consequence, consumers will face significant rate 
increases due to assessment of federal Universal Service Fund charges 
on all calls, in addition to a host of other concomitant consequences. 
The Commission finds such concerns misplaced. Under the Commission's 
end-to-end analysis, charges for a call that is jurisdictionally 
indeterminant may not exceed the applicable interim interstate rate 
cap, but where a state has a lower rate cap in place for intrastate 
calls, charges for a call of indeterminate nature must comply with the 
lower state rate cap. The Commission also disagrees that there would 
necessarily be a significant impact on Universal Service Fund 
assessments as Pay Tel and Securus allege. First, the Commission does 
not reclassify any calls as interstate calls; and second providers may 
continue to use whatever proxy or good faith

[[Page 40349]]

determination of interstate revenue for purposes of universal service 
contributions that they have used in the past for this traffic. The 
Commission's actions today go only to the question of the appropriate 
jurisdictional treatment for purposes of determining the rates 
providers may charge for telephone calls to consumers. The Commission's 
actions neither limit the ability of providers to avail themselves of 
applicable proxies or safe harbors used for purposes of Universal 
Service Fund reporting nor suggest that providers have been incorrectly 
complying with the Commission's universal service contribution rules. 
Finally, the Commission takes this opportunity to remind providers that 
they are permitted but not required to pass through universal service 
charges to their end users. As the Commission explained in the 2020 ICS 
Order on Remand, ``where the Commission has jurisdiction under section 
201(b) of the Act to regulate rates, charges, and practices of 
interstate communications services, the impossibility exception extends 
that authority to the intrastate portion of jurisdictionally mixed 
services `where it is impossible or impractical to separate the 
service's intrastate from interstate components' and state regulation 
of the intrastate component would interfere with valid federal rules 
applicable to the interstate component.'' There is no dispute that the 
Commission has jurisdiction over providers' interstate rates, and GTL 
does not dispute the Commission's authority to regulate 
jurisdictionally indeterminate services. Accordingly, to the extent 
that GTL and other providers find it impossible or impracticable to 
determine the actual endpoints, hence the actual jurisdictional nature 
of a call, they must treat that call as jurisdictionally indeterminate 
and must charge a rate at or below the applicable interstate cap.
    46. The Commission rejects GTL's argument that the Commission's 
application of the end-to-end analysis violates the jurisdictional 
limitation in section 221(b) of the Act. That section has been narrowly 
interpreted to ``enable state commissions to regulate local exchange 
service in metropolitan areas . . . which extend across state 
boundaries.'' Section 221(b), which refers to ``telephone exchange 
service'' says nothing about payphone service, which is separately 
defined in section 276 of the Act. ``Telephone exchange service'' is 
broadly defined as ``service within a telephone exchange'' or 
``comparable service provided through a system of switches, 
transmission equipment, or other facilities (or combination thereof) by 
which a subscriber can originate and terminate a telecommunications 
service.'' Indeed, the statute recognizes and treats payphone service 
separately from exchange service in section 276(a), which prevents Bell 
operating company-owned payphones from receiving subsidies ``from . . . 
telephone exchange service operations.'' The Commission has previously 
recognized this distinction, explaining that although states 
traditionally regulated payphones, including by setting local rates, 
that role was ``in the context of LECs providing local payphone service 
as part of their regulated service.'' By disallowing LEC payphones from 
receiving subsidies from their basic exchange service, the Commission 
emphasized that section 276 ``greatly changes the way in which states 
set local coin rates.'' In sum, the Act treats the exchange service in 
section 221(b) separate from payphone service in section 276, and the 
courts have narrowly interpreted section 221(b) to apply only to a 
state's ability to regulate local exchange service. The Commission is 
therefore unpersuaded by GTL's argument that the Commission violated 
section 221(b) or acted in a manner precluded by the implementation of 
that provision by reiterating that providers of calling services for 
incarcerated people must charge their end users for interstate and 
intrastate calls based on the physical endpoints of the call.
    47. The Commission is also unpersuaded by GTL's claim that the 
Commission's jurisdictional analysis might have some ``potential 
impact'' on state communications programs that depend on assessments of 
intrastate revenues or that the Commission is somehow limiting the 
ability of state commissions to use NPA-NXX as a jurisdictional proxy. 
GTL provides no evidence that applying an end-to-end analysis for 
purposes of complying with the federal interstate rate cap for inmate 
calling services charges would either interfere with state authority to 
use NPA-NXX as a proxy for determining which calls are within their 
jurisdiction or would somehow result in the ``reclassification of all 
telecommunications traffic that relies on NPA-NXX . . . as 
interstate.'' The Commission does not disturb state and local laws or 
regulations that use NPA-NXX or other proxies to determine, for 
example, the application of state fees and taxes. The end-to-end 
jurisdictional analysis that the Commission reaffirms today only 
affects what calling providers may charge incarcerated people and their 
loved ones for jurisdictionally indeterminant telephone calls, and as 
the Commission has indicated above, continued compliance with 
applicable state and local laws that are not in conflict with federal 
law remain unaffected.

2. GTL's Procedural Arguments Do Not Warrant Reconsideration

    48. The Commission rejects GTL's claim that the Commission needed 
to provide additional notice and an additional opportunity for comment 
before it clarified in the 2020 ICS Order on Remand that providers must 
use the geographical endpoints of a call rather than the area code or 
NXX prefix of the call's recipient to determine whether the call is 
interstate or intrastate. The Commission rejects this claim on 
procedural grounds insofar as the Commission considered and responded 
to these arguments in the 2020 ICS Order on Remand, 35 FCC Rcd at 8502-
04, paras. 52-54. The Commission also rejects it on substantive grounds 
as discussed herein. GTL mischaracterizes the Commission's 
clarification as a ``new and unprecedented [r]ule'' and a ``serious 
departure from prior practice.'' On the contrary, after identifying 
confusion and debate in the record, the Commission ``remind[ed]'' and 
``clarifie[d]'' for providers the end-to-end analysis it ``has 
traditionally used to determine whether a call is within its interstate 
jurisdiction'' to ensure that providers of calling services for 
incarcerated people do not ``circumvent or frustrate [the Commission's] 
ancillary service charge rules.'' Providers of calling services for 
incarcerated people have been on notice since the Commission adopted 
interstate rate caps in 2013 that they could not charge more than the 
capped amounts for interstate calls. By interpreting the rate cap rule 
as requiring that inmate calling services calls be classified based on 
their endpoints, the Commission applied the ordinary meaning of the 
term ``interstate'' as that term is defined in the Communications Act. 
The Communications Act defines ``interstate communication'' or 
``interstate transmission'' as [C]ommunication or transmission (A) from 
any State, Territory, or possession of the United States (other than 
the Canal Zone), or the District of Columbia, to any other State, 
Territory, or possession of the United States (other than the Canal 
Zone), or the District of Columbia, (B) from or to the United States to 
or from the Canal Zone, insofar as such communication or transmission 
takes place within the United States, or (C) between points within the 
United States

[[Page 40350]]

but through a foreign country; but shall not, with respect to the 
provisions of subchapter II of this chapter (other than second 223 of 
this title), include wire or radio communication between points in the 
same State, Territory, or possession of the United States, or the 
District of Columbia, through any place outside thereof, if such 
communication is regulated by a State commission. There has been no new 
legislative rule that would have required notice and an opportunity to 
comment. The Commission's reminder clearly served the purpose of an 
interpretive rule. The Administrative Procedure Act (APA) exempts 
interpretive rules from the procedural requirements of notice and 
comment rulemaking. An interpretive rule is a clarification or 
explanation of existing laws or regulations rather than a substantive 
modification in or adoption of new regulations.
    49. In essence, GTL contends that ``interstate'' as used in the 
Commission's inmate calling services rules had a different meaning than 
``interstate'' as used in the Communications Act and therefore that it 
could classify as intrastate a call that originates in one state and 
terminates in another state based solely on NPA-NXX codes. GTL's claim 
is unavailing and has no bearing on the question of whether the 
Commission was required to provide additional notice and an additional 
opportunity to comment prior to clarifying that ``interstate'' as used 
in the inmate calling services rules continues to have the same meaning 
as ``interstate'' as used in the Communications Act and historical 
Commission usage of the term.
    50. In any event, the Ancillary Services Refresh Public Notice 
fully apprised all interested parties that the Commission would be 
considering how it should proceed in the event an ancillary service 
could not ``be segregated between interstate and intrastate calls.'' 
That public notice also invited comment on what additional steps the 
Commission should take to ensure that providers of interstate inmate 
calling services do not circumvent or frustrate the Commission's 
ancillary service charge rules. GTL claims that the Ancillary Services 
Refresh Public Notice was insufficient to inform stakeholders that the 
Commission might reexamine ``the methodology used to determine whether 
a call or charge is interstate or intrastate.'' But the Public Notice 
made clear that the Commission would be considering when an ancillary 
service is interstate, which necessarily involves a determination 
whether the calls in connection with that service are interstate. For 
this reason, the Commission also rejects Pay Tel's assertion that the 
Ancillary Services Refresh Public Notice did not contemplate an 
evaluation of the jurisdictional classification of inmate calling 
services calls. And, when the record revealed that certain providers 
were using NPA-NXX codes, rather than endpoints, to classify calls as 
interstate or intrastate, the Commission properly clarified, consistent 
with the text of the Act and long-standing precedent, that using the 
geographic endpoints was the proper method to determine call 
jurisdiction. Thus, the Commission's clarification that providers must 
use an end-to-end analysis in classifying calls as interstate or 
intrastate was, at the very least, a logical outgrowth of the Ancillary 
Services Refresh Public Notice. Indeed, absent such clarification, the 
Commission could not have responded fully to the D.C. Circuit's 
directive to ascertain on remand whether ancillary service charges 
could be segregated between interstate and intrastate components.
    51. For the reasons stated herein, the Commission denies GTL's 
petition on the merits and dismiss it as procedurally defective.

IV. Severability

    52. All of the rules and policies that are adopted in the 
Commission's Third Report and Order and this Order on Reconsideration 
are designed to ensure that rates for inmate calling services are just 
and reasonable while also fulfilling the Commission's obligations under 
sections 201(b) and 276 of the Act. Each of the separate reforms the 
Commission undertakes here serves a particular function toward these 
goals. Therefore, it is the Commission's intent that each of the rules 
and policies adopted herein shall be severable. If any of the rules or 
policies is declared invalid or unenforceable for any reason, the 
remaining rules shall remain in full force and effect.

V. Procedural Matters

    53. People with Disabilities. The Commission asks that requests for 
accommodations be made as soon as possible in order to allow the agency 
to satisfy such requests whenever possible. Send an email to 
[email protected] or call the Consumer and Governmental Affairs Bureau at 
(202) 418-0530.
    54. Congressional Review Act. The Commission will not send a copy 
of this Order on Reconsideration to Congress and the Government 
Accountability Office pursuant to the Congressional Review Act (CRA), 
see 5 U.S.C. 801(a)(1)(A), because it does not adopt any rule as 
defined in the CRA, 5 U.S.C. 804(3).
    55. Supplemental Final Regulatory Flexibility Act Analysis. As 
required by the Regulatory Flexibility Act of 1980, as amended (RFA), 
the Commission has prepared a Supplemental Final Regulatory Flexibility 
Analysis (FRFA) relating to the Order on Reconsideration. The FRFA is 
set forth below.
    56. Final Paperwork Reduction Act Analysis. The Order on 
Reconsideration does not contain new or modified information collection 
requirements subject to the Paperwork Reduction Act of 1995, Public Law 
104-13. Therefore, it does not contain any new or modified information 
collection burdens for small business concerns with fewer than 25 
employees, pursuant to the Small Business Paperwork Relief Act of 2002, 
Public Law 107-198, see 44 U.S.C. 3506(c)(4).

VI. Supplemental Final Regulatory Flexibility Analysis

A. Need for, and Objectives of, the Order on Reconsideration

    57. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Second Further Notice of Proposed Rulemaking in the 
Commission's Inmate Calling Services proceeding. The Commission sought 
written public comment on the proposals in that Notice, including 
comment on the IRFA. The Commission did not receive comments directed 
toward the IRFA. Thereafter, the Commission issued a Final Regulatory 
Flexibility Analysis (FRFA) conforming to the RFA. This Supplemental 
FRFA supplements that FRFA to reflect the actions taken in the Order on 
Reconsideration and conforms to the RFA.
    58. The Order on Reconsideration denies a Petition for 
Reconsideration of the 2020 ICS Order on Remand and reiterates that the 
jurisdictional nature of an inmate calling services telephone call 
depends on the physical location of the originating and terminating 
endpoints of the call.

B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    59. The Commission did not receive comments specifically addressing 
the rules and policies proposed in the IRFA.

[[Page 40351]]

C. Response to Comments by the Chief Counsel for Advocacy of the Small 
Business Administration

    60. The Chief Counsel did not file any comments in response to the 
proposed rules in this proceeding.

D. Description and Estimate of the Number of Small Entities to Which 
Rules Will Apply

    61. The RFA directs agencies to provide a description of, and, 
where feasible, an estimate of, the number of small entities that may 
be affected by the rules adopted herein. The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. Pursuant to 5 U.S.C. 601(3), the statutory definition of a small 
business applies ``unless an agency, after consultation with the Office 
of Advocacy of the Small Business Administration and after opportunity 
for public comment, establishes one or more definitions of such term 
which are appropriate to the activities of the agency and publishes 
such definition(s) in the Federal Register.'' A ``small business 
concern'' is one which: (1) Is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(SBA).
    62. Small Businesses. Nationwide, there are a total of 
approximately 27.9 million small businesses, according to the SBA.
    63. Wired Telecommunications Carriers. The U.S. Census Bureau 
defines this industry as ``establishments primarily engaged in 
operating and/or providing access to transmission facilities and 
infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired communications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies. Establishments in this industry use 
the wired telecommunications network facilities that they operate to 
provide a variety of services, such as wired telephony services, 
including VoIP services, wired (cable) audio and video programming 
distribution, and wired broadband internet services. By exception, 
establishments providing satellite television distribution services 
using facilities and infrastructure that they operate are included in 
this industry.'' The SBA has developed a small business size standard 
for Wired Telecommunications Carriers, which consists of all such 
companies having 1,500 or fewer employees. U.S. Census Bureau data for 
2012 show that there were 3,117 firms that operated that year. Of this 
total, 3,083 operated with fewer than 1,000 employees. The available 
U.S. Census Bureau data does not provide a more precise estimate of the 
number of firms that meet the SBA size standard. Thus, under this size 
standard, the majority of firms in this industry can be considered 
small.
    64. Local Exchange Carriers (LECs). Neither the Commission nor the 
SBA has developed a size standard for small businesses specifically 
applicable to local exchange services. The closest applicable NAICS 
Code category is Wired Telecommunications Carriers. Under the 
applicable SBA size standard, such a business is small if it has 1,500 
or fewer employees. U.S. Census Bureau data for 2012 show that there 
were 3,117 firms that operated for the entire year. Of that total, 
3,083 operated with fewer than 1,000 employees. Thus under this 
category and the associated size standard, the Commission estimates 
that the majority of local exchange carriers are small entities.
    65. Incumbent Local Exchange Carriers (incumbent LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The closest 
applicable NAICS Code category is Wired Telecommunications Carriers. 
Under the applicable SBA size standard, such a business is small if it 
has 1,500 or fewer employees. U.S. Census Bureau data for 2012 indicate 
that 3,117 firms operated the entire year. Of this total, 3,083 
operated with fewer than 1,000 employees. The available U.S. Census 
Bureau data does not provide a more precise estimate of the number of 
firms that meet the SBA size standard. Consequently, the Commission 
estimates that most providers of incumbent local exchange service are 
small businesses that may be affected by its actions. According to 
Commission data, one thousand three hundred and seven (1,307) Incumbent 
Local Exchange Carriers reported that they were incumbent local 
exchange service providers. Of this total, an estimated 1,006 have 
1,500 or fewer employees. Thus, using the SBA's size standard the 
majority of incumbent LECs can be considered small entities.
    66. The Commission has included small incumbent LECs in this 
present RFA analysis. As noted above, a ``small business'' under the 
RFA is one that, inter alia, meets the pertinent small business size 
standard (e.g., a telephone communications business having 1,500 or 
fewer employees), and ``is not dominant in its field of operation.'' 
The SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent LECs are not dominant in their field of operation because any 
such dominance is not ``national'' in scope. The Small Business Act 
contains a definition of ``small business concern,'' which the RFA 
incorporates into its own definition of ``small business.'' See 15 
U.S.C. 632(a); see also 5 U.S.C. 601(2). SBA regulations interpret 
``small business concern'' to include the concept of dominance on a 
national basis. See 13 CFR 121.102(b). The Commission has therefore 
included small incumbent LECs in this RFA analysis, although it 
emphasizes that this RFA action has no effect on Commission analyses 
and determinations in other, non-RFA contexts.
    67. Competitive Local Exchange Carriers (Competitive LECs), 
Competitive Access Providers (CAPs), Shared-Tenant Service Providers, 
and Other Local Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate NAICS Code category is Wired 
Telecommunications Carriers and under that size standard, such a 
business is small if it has 1,500 or fewer employees. U.S. Census 
Bureau data for 2012 indicate that 3,117 firms operated during that 
year. Of that number, 3,083 operated with fewer than 1,000 employees. 
The available U.S. Census Bureau data does not provide a more precise 
estimate of the number of firms that meet the SBA size standard. Based 
on these data, the Commission concludes that the majority of 
Competitive LECS, CAPs, Shared-Tenant Service Providers, and Other 
Local Service Providers, are small entities. According to Commission 
data, 1,442 carriers reported that they were engaged in the provision 
of either competitive local exchange services or competitive access 
provider services. Of these 1,442 carriers, an estimated 1,256 have 
1,500 or fewer employees. In addition, 17 carriers have reported that 
they are Shared-Tenant Service Providers, and all 17 are estimated to 
have 1,500 or fewer employees. Also, 72 carriers have reported that 
they are Other Local Service Providers. Of this total, 70 have 1,500 or 
fewer employees. Consequently, based on internally researched FCC data, 
the Commission estimates that most providers of competitive local 
exchange service,

[[Page 40352]]

competitive access providers, Shared-Tenant Service Providers, and 
Other Local Service Providers are small entities. The Commission has 
included small incumbent LECs in this present RFA analysis. As noted 
above, a ``small business'' under the RFA is one that, inter alia, 
meets the pertinent small business size standard (e.g., a telephone 
communications business having 1,500 or fewer employees), and ``is not 
dominant in its field of operation.'' The SBA's Office of Advocacy 
contends that, for RFA purposes, small incumbent LECs are not dominant 
in their field of operation because any such dominance is not 
``national'' in scope. The Commission has therefore included small 
incumbent LECs in this RFA analysis, although it emphasizes that this 
RFA action has no effect on Commission analyses and determinations in 
other, non-RFA contexts.
    68. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
Interexchange Carriers. The closest applicable NAICS Code category is 
Wired Telecommunications Carriers. The applicable size standard under 
SBA rules is that such a business is small if it has 1,500 or fewer 
employees. U.S. Census Bureau data for 2012 indicate that 3,117 firms 
operated for the entire year. Of that number, 3,083 operated with fewer 
than 1,000 employees. The available U.S. Census Bureau data does not 
provide a more precise estimate of the number of firms that meet the 
SBA size standard. According to internally developed Commission data, 
359 companies reported that their primary telecommunications service 
activity was the provision of interexchange services. Of this total, an 
estimated 317 have 1,500 or fewer employees. Consequently, the 
Commission estimates that the majority of interexchange service 
providers are small entities.
    69. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 213 carriers have reported 
that they are engaged in the provision of local resale services. Of 
these, an estimated 211 have 1,500 or fewer employees and two have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of local resellers are small entities that may be affected by 
the Commission's action.
    70. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 881 carriers have reported 
that they are engaged in the provision of toll resale services. Of 
these, an estimated 857 have 1,500 or fewer employees and 24 have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of toll resellers are small entities that may be affected by 
the Commission's action.
    71. Other Toll Carriers. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to Other Toll Carriers. This category includes toll carriers that do 
not fall within the categories of interexchange carriers, operator 
service providers, prepaid calling card providers, satellite service 
carriers, or toll resellers. The closest applicable size standard under 
SBA rules is for Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 284 companies reported that their primary 
telecommunications service activity was the provision of other toll 
carriage. Of these, an estimated 279 have 1,500 or fewer employees and 
five have more than 1,500 employees. Consequently, the Commission 
estimates that most Other Toll Carriers are small entities that may be 
affected by the Commission's action.
    72. Payphone Service Providers (PSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
payphone services providers, a group that includes inmate calling 
services providers. The appropriate size standard under SBA rules is 
for the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 535 carriers have reported that they are 
engaged in the provision of payphone services. Of these, an estimated 
531 have 1,500 or fewer employees and four have more than 1,5000 
employees. Consequently, the Commission estimates that the majority of 
payphone service providers are small entities that may be affected by 
the Commission's action.
    73. TRS Providers. TRS can be included within the broad economic 
category of All Other Telecommunications. Ten providers currently 
receive compensation from the TRS Fund for providing at least one form 
of TRS: ASL Services Holdings, LLC (GlobalVRS); Clarity Products, LLC 
(Clarity); ClearCaptions, LLC (ClearCaptions); Convo Communications, 
LLC (Convo); Hamilton Relay, Inc. (Hamilton); MachineGenius, Inc. 
(MachineGenius); MEZMO Corp. (InnoCaption); Sorenson Communications, 
Inc. (Sorenson); Sprint Corporation (Sprint); and ZP Better Together, 
LLC (ZP Better Together).
    74. All Other Telecommunications. The ``All Other 
Telecommunications'' category is comprised of establishments primarily 
engaged in providing specialized telecommunications services, such as 
satellite tracking, communications telemetry, and radar station 
operation. This industry also includes establishments primarily engaged 
in providing satellite terminal stations and associated facilities 
connected with one or more terrestrial systems and capable of 
transmitting telecommunications to, and receiving telecommunications 
from, satellite systems. Establishments providing internet services or 
voice over internet protocol (VoIP) services via client-supplied 
telecommunications connections are also included in this industry. The 
SBA has developed a small business size standard for All Other 
Telecommunications, which consists of all such firms with annual 
receipts of $35 million or less. For this category, U.S. Census Bureau 
data for 2012 show that there were 1,442 firms that operated for the 
entire year. Of those firms, a total of 1,400 had annual receipts less 
than $25 million and 15 firms had annual receipts of $25 million to 
$49,999,999. Thus, the Commission estimates that the majority of ``All 
Other Telecommunications'' firms potentially affected by its action can 
be considered small. Under this category and the associated small 
business size standard, a majority of the ten TRS providers can be 
considered small.

E. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities

    75. The Order on Reconsideration confirms that providers must 
properly identify the physical location of the originating and 
terminating endpoints of the call in order to determine the 
jurisdictional nature of the call. To the extent those services are 
interstate, international, or jurisdictionally mixed, the provider must 
comply with interim interstate and international inmate calling 
services caps or limits adopted by the Commission.

[[Page 40353]]

F. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    76. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): ``(1) the establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rules for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.''
    77. The Commission's rate caps differentiate between prisons, 
larger jails, and jails with average daily populations below 1,000 to 
account for differences in costs incurred by providers servicing these 
different facility types. The Commission adopts new interim interstate 
provider-related rate caps for prisons and larger jails and for collect 
calls from jails with average daily populations below 1,000. The 
Commission believes these actions properly recognize that, in 
comparison to prisons and larger jails, jails with average daily 
populations below 1,000 may be relatively high-cost facilities for 
providers to serve. The Commission also adopts rate caps for 
international calls originating from facilities of any size.
    78. The Commission adopts new interim interstate facility-related 
rate components for prisons and larger jails to allow providers to 
recover portions of site commission payments estimated to be directly 
related to the provision of inmate calling services and to separately 
list these charges on consumers' bills. Providers must determine 
whether a site commission payment is either (1) mandated pursuant to 
state statute, or law or regulation and adopted pursuant to state 
administrative procedure statutes where there is notice and an 
opportunity for public comment that operates independently of the 
contracting process between correctional institutions and providers 
(Legally Mandated facility rate component), or (2) results from 
contractual obligations reflecting negotiations between providers and 
correctional facilities arising from the bidding and subsequent 
contracting process (the Contractually Prescribed facility rate 
component). For Legally Mandated site commission payments, providers 
may pass these payments through to consumers without any markup, as an 
additional component of the new interim interstate per-minute rate cap. 
For Contractually Prescribed site commission payments, providers may 
recover an amount up to $0.02 per minute to account for these costs. To 
promote increased transparency, the Third Report and Order requires 
providers to clearly label a Legally Mandated or Contractually 
Prescribed facility rate component, as applicable, in the rates and 
charges portion of a consumer's bill, including disclosing the source 
of such provider's obligation to pay that facility-related rate 
component.
    79. The Commission recognizes that it cannot foreclose the 
possibility that in certain limited instances, the interim rate caps 
may not be sufficient for certain providers to recover their costs of 
providing interstate and international inmate calling services. To 
minimize the burden on providers, the Commission adopts a waiver 
process that allows providers to seek relief from its rules at the 
facility or contract level if they can demonstrate that they are unable 
to recover their legitimate inmate calling services-related costs at 
that facility or for that contract. The Commission will review 
submitted waivers and potentially raise each applicable rate cap to a 
level that enables the provider to recover the costs of providing 
inmate calling services at that facility. This waiver opportunity 
should benefit any inmate calling services providers that may be small 
businesses and that are unable to recover their interstate and 
international costs under the new interim rate caps.

G. Report to Congress

    80. The Commission will send a copy of the Third Report and Order 
and Order on Reconsideration, including this Supplemental FRFA, in a 
report to be sent to Congress pursuant to the Small Business Regulatory 
Enforcement Fairness Act of 1996. In addition, the Commission will send 
a copy of the Order on Reconsideration, including this Supplemental 
FRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the Order on Reconsideration, and 
Supplemental FRFA (or summaries thereof) will also be published in the 
Federal Register.

VII. Ordering Clauses

    81. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1, 2, 4(i)-(j), 201(b), 218, 220, 225, 255, 276, 
403, and 716 of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 152, 154(i)-(j), 201(b), 218, 220, 225, 255, 276, 403, and 617, 
this Order on Reconsideration is adopted.
    82. It is further ordered that, pursuant to the authority contained 
in sections 1, 2, 4(i)-(j), 201(b), 218, 220, 225, 255, 276, 403, and 
716 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 
154(i)-(j), 201(b), 218, 220, 225, 255, 276, 403, and 617, the Petition 
for Reconsideration, filed November 23, 2020, by Global Tel*Link Corp. 
is denied in full and dismissed in part as described herein.
    83. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Order on Reconsideration, including the Supplemental Final 
Regulatory Flexibility Analyses, to the Chief Counsel for Advocacy of 
the Small Business Administration.

    Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2021-14729 Filed 7-27-21; 8:45 am]
BILLING CODE 6712-01-P