Since the Pennsylvania police arrested Anthony Kofalt last March for walking out of a Walmart with 21 boxes of Crest White Strips he had not paid for, his wife, Heather, has spent $3,000 — about $60 a week — on phone calls to the prisons and jails where he has been held.
The cost of a 15-minute call is $12.95, although Mr. Kofalt is in a prison only a few hours’ drive from his wife’s home in Franklin, Pa. The cost for a similar non-prison call would be about 60 cents.
And every time Ms. Kofalt deposits $25 into the prison phone account, the private company that runs the system charges her $6.95.
“I don’t drive,” said Ms. Kofalt, 39, who works as a home health care aide and lives with her 19-year-old son, his girlfriend and their two children. “This is all we have. The people in jail did wrong, but the only people being punished are the families.”
Until the 1990s, inmates could place and receive calls to lawyers and family members at rates similar to those outside prison walls. But the prison phone system is now a $1.2 billion-a-year industry dominated by a few private companies that manage phones in prisons and jails in all 50 states, setting rates and fees far in excess of those established by regular commercial providers. The business is so considerable — some 500 million prison and jail phone calls totaling more than six billion minutes in 2014 — that it has caught the eye of private equity firms.
Now, after years of complaints from prison-rights groups and families of the incarcerated, the Federal Communications Commission is investigating the financial intricacies of the industry, which has been largely unregulated.
At the core of the inquiry are the hundreds of millions of dollars in concession fees, known as commissions, paid by the phone companies to state and local prison systems in exchange for exclusive contracts. The fees help drive phone charges as high as $1.22 per minute, and the leading companies say they need to charge at least 20 cents per minute, compared with typical commercial rates of about 4 cents a minute.
In 2013, a total of $460 million in concession fees was paid to jails and prisons, and to state, county and local governments, according to the F.C.C. The fees are legal, and they cover a range of expenses within prisons as well as outside.
The agency is expected to rule this year on whether to ban the concession fees and limit the costs of prison phone calls.
An analysis released in 2013 by the F.C.C. said the fees “have caused inmates and their friends and families to subsidize everything from inmate welfare to salaries and benefits, states’ general revenue funds and personnel training.”
It added, “The companies compete not based on price or service quality, but on the size of the commission.”
The possibility of eliminating the fees has met fierce opposition from prisons and jails, sheriff’s departments and local officials. Some law enforcement groups have said changes could stoke inmate violence against prison guards because there might be less money for security.