The Kickback Problem: A Look at the Captive Prison Telecommunication Market

Abstract

Within the last few decades, the American prison population has grown at an unprecedented rate and is now a multi-billion dollar market. Telecommunication companies have reaped great profits from this expansion of a captive prison market due to their abundant state-granted monopolies throughout the United States. However, these contracts often come with commissions, or the more appropriate label of ""kickbacks," that have played a key role in creating inequitable and exorbitant phone rates. These price rates, unmatched anywhere else in the United States, arc defended as a necessary cost due to additional security measures required with prison-originated calls. However, evidence shows that these claims are outdated at best and deceptive at worst. Additionally, these high rates fall squarely on the shoulders of struggling family members and underfunded legal counsel that wish to contact an individual on prison. Large phone bills thus cut into the already strapped pockets of those who can afford it least so that the state and the contracted telecommunication firm are able to protect its already monopolistic-sized profit margins. These practices continue in spite of the extensive literature demonstrating the benefits of familial contact on recidivism. This paper conducts a literature review detailing how this system came about and what its current implications are in the United States. An economic eye will be turned to the effects of kickbacks while also examining the broader context in which the current prison telecommunication industry plays a role. Offering analysis using economic concepts to demonstrate the inefficiencies and flaws currently found in the industry, I ultimately lend my support for the current arguments set before the Federal Communications Commission brought on by the Wright Petitioners by utilizing the analysis found in the Dawson Affidavit and the Wood Study.