global tel*link, et al., no. 15-1461 and consolidated cases

BEFORE THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

GLOBAL TEL*LINK, et al., No. 15-1461 andconsolidated cases

Petitioners,

v.

FEDERAL COMMUNICATIONS COMMISSION Oral Argument on theand the UNITED STATES OF AMERICA, Merits Not Yet

ScheduledRespondents.

SECURUS TECHNOLOGIES, INC.

EMERGENCY MOTION FOR PARTIAL STAY

OF FCC ORDER 15-136 PENDING REVIEW

(PUBLIC VERSION – SEALED MATERIAL DELETED)

Andrew D. LipmanMORGAN, LEWIS & BOCKIUS LLP2020 K Street, N.W.Washington, D.C. 20006202.373.6033 DD202.373.6001 [email protected]

Stephanie A. JoyceARENT FOX LLP1717 K Street, N.W.Washington, D.C. 20036202.857.6081 DD202.857.6395 [email protected]

Counsel to Securus Technologies, Inc.

Dated: January 27, 2016

USCA Case #15-1461 Document #1595628 Filed: 01/27/2016 of 50

TABLE OF CONTENTS

BASIS FOR REQUESTING EXPEDITED CONSIDERATION.............................1

STATEMENT PURSUANT TO CIRCUIT RULE 18(A) ........................................1

CERTIFICATION PURSUANT TO CIRCUIT RULE 18(A)(2).............................2

FACTUAL BACKGROUND....................................................................................2

ARGUMENT .............................................................................................................3

I. STANDARD OF REVIEW.............................................................................3

II. SECURUS IS LIKELY TO PREVAIL ON THE MERITS OF ITSAPPEAL OF THE INMATE RATE ORDER ...................................................3

A. The FCC’s Rules Restricting So-Called “Ancillary Service Charges”Are Unlawful.........................................................................................4

B. The FCC’s Rules Prohibiting Recovery of Costs of PremiumCalling Services Are Arbitrary and Capricious ..................................10

C. The Commission’s Definition of “Site Commissions” IsFatally Vague and Overly Broad.........................................................12

D. The Commission Has No Jurisdiction to Impose Requirementsof Any Kind on Video Services ..........................................................14

II. SECURUS WILL SUFFER IRREPARABLE HARMABSENT A STAY ........................................................................................15

A. Securus Could Not Allow Online Credit Card ProcessingUnder the New Caps............................................................................16

B. Securus Would Have to Discontinue Text2Connect and PayNowUnder the New Caps............................................................................17

C. The Financial Loss Securus Will Incur Under the New Rules MayPrevent It From Complying With Covenants To Its Banks................17


ii

D. Securus Would Face a Significant Regulatory Burden Under Rule64.6060 as Well as Sanctions for Innocent Non-Compliance ............18

III. THIRD PARTIES WILL NOT BE UNDULY HARMED BY A STAY.....18

IV. THE PUBLIC INTEREST FAVORS A STAY ............................................19

CONCLUSION........................................................................................................20

CORPORATE DISCLOSURE STATEMENT filed Dec. 28, 2015.

ADDENDUM A: RELEVANT STATUTES AND RULES

ADDENDUM B: CERTIFICATE AS TO PARTIES, RULINGS, ANDRELATED CASES

ATTACHMENTS: Affidavit of Richard Smith, Chief Executive Officer(January 20, 2016) (REDACTED VERSION)

Affidavit of Geoffrey Boyd, Chief Financial Officer(January 20, 2016) (REDACTED VERSION)

Affidavit of Danny de Hoyos, Vice President – Operations(January 20, 2016)

APPENDIX (separately bound)


iii

TABLE OF AUTHORITIES

* Signifies authorities upon which Securus principally relies

Cases

* American Library Ass’n v. FCC, 406 F.3d 689 (D.C. Cir. 2005) ..........................6

Barnhart v. Sigmon Coal Co., 534 U.S. 438 (2002)..................................................4

Cellco Partnership v. FCC, 357 F.3d 88 (D.C. Cir. 2004)......................................14

FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009) ....................................14

Forester v. Consumer Prod. Safety Comm’n, 559 F.2d 774(D.C. Cir. 1977) ..................................................................................................15

FPC v. Hope Nat. Gas Co., 320 U.S. 591 (1944)......................................................7

Gustafson v. Alloyd Co., 513 U.S. 561 (1995)...........................................................5

* La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355 (1986) ...........................................4

McGuire v. Ameritech Services, Inc., 253 F. Supp. 2d 988(S.D. Ohio 2003)...........................................................................................13 n.7

Miranda v. Michigan, 168 F. Supp. 2d 685 (E.D. Mich. 2001) ........................13 n.7

Penn Central Co. v. Pub. Utils. Comm’n of Connecticut, 296 F. Supp.893 (D. Conn. 1969) ...........................................................................................16

Robinson v. Shell Oil Co., 519 U.S. 337 (1997)........................................................5

* Salzer v. FCC, 778 F.2d 869 (D.C. Cir. 1985) ...............................................12, 14

Time Warner Entm’t Co. v. FCC, 56 F.3d 151 (D.C. Cir. 1995) ..............................9

U.S. v. Locke, 529 U.S. 89 (2000)............................................................................18

United Sav. Ass’n of Tex. v. Timbers of Inwood Forest Assoc., Ltd.,484 U.S. 365 (1988)..............................................................................................5


iv

* Virginia Petroleum Jobbers Ass’n v. FPC, 259 F.2d 921(D.C. Cir. 1958) ..............................................................................................3, 19

* Washington Metro. Area Transit Comm’n v. Holiday Tours, Inc.,559 F.2d 841 (D.C. Cir. 1977)..............................................................................3

Wisconsin Gas Co. v. FERC, 758 F.2d 669 (D.C. Cir. 1985) ...........................15, 18

Administrative Decisions

Rates for Interstate Inmate Calling Services, First Report and Order,FCC 13-113 (rel. Sept. 26, 2013) ..............................................................9 & n.2

Represcribing the Authorized Rate of Return for Interstate Svcs. ofLocal Exch. Carriers, 5 FCC Rcd. 7507 (1990).............................................8 n.1

Requests for Waiver of Various Petitioners to Allow the Establishmentof 700 MHz Interoperable Pub. Safety Wireless BroadbandNetworks, Order, 25 FCC Rcd. 5145 (2010) ..................................................8 n.1

Statutes

5 U.S.C. § 553(b) .....................................................................................................15

47 U.S.C. § 151..........................................................................................................5

47 U.S.C. § 152(a) .....................................................................................................5

47 U.S.C. § 157(a) .....................................................................................................9

47 U.S.C. § 276(d) .....................................................................................................4


REDACTED VERSION

Petitioner Securus Technologies, Inc. (“Securus”), pursuant to Fed. R. App.

P. 18 and Circuit Rule 27(f), files this Emergency Motion for Partial Stay of an

order of the Federal Communications Commission (“FCC” or “Commission”)

titled Rates for Interstate Inmate Calling Services, WC Docket No. 12-375, Second

Report and Order and Third Further Notice of Proposed Rulemaking, FCC 15-136

(rel. Nov. 5, 2015), published at 80 Fed. Reg. 79136 (Dec. 18, 2015) (“Second

Inmate Rate Order” or “Order”) pending review. A complete copy of that order is

provided herewith as Appendix A in the documents accompanying this Motion.

BASIS FOR REQUESTING EXPEDITED CONSIDERATION

Undersigned counsel has phoned the Clerk to explain the following: The

Second Inmate Rate Order imposes a new regime for interstate inmate calling

services that will become effective, in part, on March 17, 2016. This new regime

will dramatically reduce Securus’s rates for several services and may prevent their

continued provision.

Securus sought this relief at the FCC on December 22, 2015, and, in

response to the FCC’s request, agreed to wait until January 22, 2016, for the FCC’s

decision. Securus respectfully requests that this motion be resolved by February

26, 2016, or as soon thereafter as practicable.

STATEMENT PURSUANT TO CIRCUIT RULE 18(A)

Securus filed a Petition for Stay with the FCC on December 22, 2015,


2 REDACTED VERSION

requesting action on or before January 15, 2016 (Appendix B), but later agreed to

a January 22 decision date. The Wireline Competition Bureau of the FCC denied

the Petition. WC Docket No. 12-375, Order Denying Stay Petitions, DA 16-83 (rel.

Jan. 22, 2016) (“Bureau Order”) (Appendix C).

CERTIFICATION PURSUANT TO CIRCUIT RULE 18(A)(2)

Counsel for Securus certifies that she contacted FCC counsel of record by

phone prior to filing this motion; the date for response also was discussed.

FACTUAL BACKGROUND

Securus and the other Petitioners in related case Securus Techs., Inc., et al.,

No. 13-1280 and consolidated cases (D.C. Cir.) have provided this Court, in their

Motions to Stay and in the Petitioners’ Brief, with a detailed background of Inmate

Calling Services (“ICS”), as the FCC calls them, and the underlying rulemaking in

WC Docket No. 12-375. Securus therefore confines this section to a summary of

the portions of the Second Inmate Rate Order for which it seeks a stay. The Rules

at issue are reproduced at Addendum A-3 to A-5.

The FCC adopted unprecedented caps on financial transaction fees to ICS

consumers in new Rule 64.6020: $3.00 for automated transactions, $5.95 when a

live agent is used. Addendum at A-4. It further prohibited any “Ancillary Service

Charge” unless specifically permitted by rule; and imposed permanent price ceil-

ings on five types of charges that are permitted. Id. Rule 64.6100 adds minimum


3 REDACTED VERSION

and maximum transaction limits on prepaid and debit accounts, in order to limit

fees for replenishing these accounts. Id., A-5. The FCC also imposed revised

reporting obligations in Rule 64.6060 including an item – Site Commissions – that

is defined both vaguely and too broadly, and video services, which are not telepho-

ny and which the Commission expressly has refused to regulate before. Id., A-4-5.

ARGUMENT

I. STANDARD OF REVIEW

The Court applies this four-part test to evaluate motions for stay:

(1) Has the petitioner made a strong showing that it is likely toprevail on the merits of its appeal? … (2) Has the petitionershown that without such relief, it will be irreparably injured? …(3) Would the issuance of a stay substantially harm otherparties interested in the proceedings? … (4) Where lies thepublic interest? … .

Virginia Petroleum Jobbers Ass’n v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958). It is

not necessary to show that success on the merits is more likely than not; rather,

“[t]he necessary ‘level’ or ‘degree’ of possibility of success will vary according to

the court’s assessment of the other factors.” Washington Metro. Area Transit

Comm’n v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977).

II. SECURUS IS LIKELY TO PREVAIL ON THE MERITS OF ITSAPPEAL OF THE INMATE RATE ORDER

The Second Inmate Rate Order is likely to be overturned on any of several

independent grounds. Securus presented all of these errors to the FCC, but they


4 REDACTED VERSION

were simply repeated in, rather than resolved by, the Bureau’s order denying the

Petition (Appendix C).

A. The FCC’s Rules Restricting So-Called “Ancillary ServiceCharges” Are Unlawful

The Order asserts sweeping authority over so-called “ancillary service

charges” billed by some ICS providers. These rules exceed the FCC’s jurisdiction

by regulating financial transactions, not communications services; prevent ICS

providers from recovering their costs, including a return on investment; and arbi-

trarily and capriciously deter the introduction of new services in the future.

First, the FCC lacks statutory authority to set rates or prohibit charging for

financial transactions. The FCC “literally has no power to act, … unless and until

Congress confers power upon it.” La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355,

374 (1986). That power must be found in “the language of the statute enacted by

Congress. … [Courts] will not alter the text in order to satisfy the policy prefer-

ences” of an administrative agency. Barnhart v. Sigmon Coal Co., 534 U.S. 438,

461-62 (2002).

The FCC’s authority under Title II generally, and under Section 276 specifi-

cally, is limited to communications services. The FCC largely relies upon the

undefined term “ancillary services” in the statutory definition of “payphone ser-

vices,” 47 U.S.C. § 276(d), as justifying its action here. Securus does not dispute

that this definition gives the FCC authority over communications services offered


5 REDACTED VERSION

by ICS providers, but it cannot be read as authorizing the FCC to regulate credit

card processing fees, billing statement fees, and other fees relating to funding of a

payment account rather than charges for a particular call.

The definition of “payphone services” as well as the overall statutory

scheme both require that the term “ancillary” be interpreted in a limited sense.

Courts must “avoid ascribing to one word a meaning so broad that it is inconsistent

with its accompanying words, thus giving ‘unintended breadth to the Acts of

Congress.’” Gustafson v. Alloyd Co., 513 U.S. 561, 575 (1995) (quoting Jarecki v.

G. D. Searle & Co., 367 U.S. 303, 307 (1961)). A statute’s meaning is determined

from “the language itself, the specific context in which that language is used, and

the broader context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U.S.

337, 341 (1997). “A provision that may seem ambiguous in isolation is often

clarified by the remainder of the statutory scheme ... because only one of the per-

missible meanings produces a substantive effect that is compatible with the rest of

the law.” United Sav. Ass’n of Tex. v. Timbers of Inwood Forest Assoc., Ltd., 484

U.S. 365, 371 (1988).

The purposes of the Act include “to make available … a rapid, efficient, Na-

tion-wide, and world-wide wire and radio communication service with adequate

facilities at reasonable charges … .” 47 U.S.C. § 151 (emphasis added). Section

2(a) states that the Act applies to “communication by wire or radio ….” 47 U.S.C.


6 REDACTED VERSION

§ 152(a). The purpose of the Act is to regulate communications, not to regulate

financial transactions or sales of other goods or services.

In American Library Ass’n v. FCC, 406 F.3d 689, 691-92 (D.C. Cir. 2005),

this Court rejected an FCC justification strikingly similar to that found here: “Title

I does not authorize the Commission to regulate receiver apparatus after a

transmission is complete. As a result, … [t]here is no statutory foundation for the

broadcast flag rules, and consequently the rules are ancillary to nothing.”

406 F.3d at 692. Similarly, the FCC could regulate the amount that can be with-

drawn from a prepaid account for a particular call, but that does not mean it can

regulate all transactions into and out of that account after the call is complete.

The Bureau Order argues in footnote 171 that American Library is irrelevant

because the FCC was not exercising Title I jurisdiction in the Order, but rather was

implementing Section 276. That is a distinction without a difference, as the same

principles of statutory interpretation apply to the entire Act. And labelling the

services “Title I” does not ipso facto make them so.

Second, even if it acted within its jurisdiction, the FCC arbitrarily and capri-

ciously set rate caps that are below the reasonable costs of providing certain ancil-

lary services. It authorized a maximum Automated Payment Fee of $3.00 per use,

for processing a credit card or debit card payment. Rules 64.6000(a)(1),

64.6020(b)(1). For processing by a live agent, it set a maximum fee of $5.95 per


7 REDACTED VERSION

transaction. Rules 64.6000(a)(3), 64.6020(b)(3). Securus showed that its cost of

processing credit card payments is considerably higher than either of these

amounts. Smith Aff. ¶ 5. The Bureau Order (¶ 43) erroneously asserts that Se-

curus enables credit card payments in Alabama where “similar rate caps” are in

effect. Alabama’s ICS regulations are not in effect—they were stayed pending

appeal, as Securus explained to the FCC in its Reply Comments (Appendix D).

“Price control is ‘unconstitutional … if arbitrary [or] discriminatory.’” Per-

mian Basin Area Rate Cases, 390 U.S. 747, 769-70 (1968) (quoting Nebbia v.

People of State of New York, 291 U.S. 502, 539 (1934)). Courts reviewing agency

ratemaking decisions focus on whether the regulated rates permit the entity to

obtain a return on its investment “sufficient to assure confidence in the financial

integrity of the enterprise, so as to maintain its credit and to attract capital.” FPC v.

Hope Nat. Gas Co., 320 U.S. 591, 602 (1944). Rates that are below the direct cost

of service, by definition, cannot provide any return on investment and therefore

cannot be just and reasonable.

Third, the FCC found that third-party money transfer charges are not within

the scope of Section 276, and therefore may be passed through to consumers.

Order ¶ 170. However, it determined that ICS providers could not charge any

additional fee, no matter how modest, for processing these incoming transfers and

depositing funds into the consumer’s account. Id. ¶ 171. If an ICS provider incurs


8 REDACTED VERSION

any cost at all to accept such money transfers, this rule will prohibit it from recov-

ering that cost.

The FCC claimed that ICS providers had failed to explain what functions

they perform in processing incoming money transfers, id., but it had received

extensive cost submissions in the Mandatory Data Collection and apparently made

no effort to review them. The Bureau Order (¶ 47 & n.195) suggests that such

evidence of transaction-specific costs was irrelevant anyway, because “[a]ny

administrative costs incurred with processing the customer’s payment is part of

routine business overhead.” This argument hides an implied conclusion that the

costs of providing optional services should be borne in part by users who do not

use those options, which was never stated or explained in the Order and therefore

is independently arbitrary and capricious.

In addition, the Commission’s failure to allow similar recovery in this case is

contrary to its own precedent, as well as arbitrary and capricious on its face.1

Further, the FCC’s prohibition of any addition to third-party money transfers

is inconsistent with its treatment of other costs in this proceeding. Its discussion of

basic calling rates throughout the Order repeatedly expresses an intent to set rates

1 E.g., Represcribing the Authorized Rate of Return for Interstate Svcs. ofLocal Exch. Carriers, 5 FCC Rcd. 7507, 7532 ¶ 213 (1990); Requests for Waiverof Various Petitioners to Allow the Establishment of 700 MHz Interoperable Pub.Safety Wireless Broadband Networks, Order, 25 FCC Rcd. 5145, 5154 ¶ 30 (2010)(“… PSST will incur limited but legitimate transaction costs in preparing andexecuting these leases, which we conclude they should be allowed to recover.”).


9 REDACTED VERSION

that allow for a reasonable level of profit.2 Yet, when it comes to charges for

financial transactions, the FCC is perfectly willing to prohibit providers from

earning any profit, regardless of what investments they have made to add the

capability to handle these transactions. Even if the FCC could regulate financial

transactions as part of ICS, it cannot arbitrarily subject them to pricing standards

that eliminate any possible recovery of costs.3

Fourth, the FCC’s blanket prohibition on all ancillary service charges not

specifically authorized is arbitrary and capricious, as it deters the development and

introduction of any new services in the future. This result is contrary to the stated

policy of the FCC, and of Congress. In the First Inmate Rate Order, the FCC

stated, “[w]e encourage continued innovation and efficiencies to improve the

quality of service for ICS.”4 And Section 7 of the Communications Act declares,

“[i]t shall be the policy of the United States to encourage the provision of new

technologies and services to the public.” 47 U.S.C. § 157(a). There is no point in

incurring costs to develop a new service if the FCC will not permit recovery of

2 See, e.g., Order ¶¶ 47, 49 (“a fair profit”), 53, 56, 58, 61, 66, 114; see alsoWC Docket No. 12-375, First Report and Order, FCC 13-113 ¶ 61 (rel. Sept. 26,2013) (“the costs of providing interstate ICS … include fair compensation (includ-ing a reasonable profit) …”) (“First Inmate Rate Order”).3 Time Warner Entm’t Co. v. FCC, 56 F.3d 151, 173-74 (D.C. Cir. 1995)(reversing FCC orders, in part, for failing to allow a meaningful opportunity forrecovery of external costs).4 First Inmate Rate Order ¶ 71; see also Order Denying Stay Petitions andPetition to Hold In Abeyance, DA 13-2236 ¶ 56 (rel. Nov. 21, 2013).


10 REDACTED VERSION

those costs. The Order fails to justify this deviation from the agency’s stated

policy, as well as from the declared policy of Congress, and therefore is arbitrary

and capricious.

The FCC may argue that it has not entirely precluded the introduction of

new services by ICS providers, because a provider may petition the agency for

either a waiver or an amendment to the rules to permit a new Ancillary Service

Charge. But such a procedural hurdle to new services in itself deters innovation

through (a) the expense and delay of the agency process, which would significant-

ly reduce the potential return on investment, (b) the risk of rejection of the petition,

which investors would factor in to estimates of the potential return, leading them to

demand above-market returns on their capital, and (c) the reality that the petitioner

would have to explain exactly what the new service is and how it would be offered,

which would become available to its competitors, thereby destroying any competi-

tive advantage that the petitioner might have hoped to gain by being the first to

offer a new service capability.

B. The FCC’s Rules Prohibiting Recovery of Costs of PremiumCalling Services Are Arbitrary and Capricious

The FCC also barred carriers from charging more than the new calling rate

caps for premium billing options, which the Order and rules refer to as “single-call

and related services,” except for a pass-through (without markup) of third-party

transaction fees. Order ¶¶ 182-189; Rule 64.6000(a)(2), 64.6020(b)(2). These


11 REDACTED VERSION

services “are billing arrangements whereby an ICS provider’s collect calls are

billed through third-party billing entities on a call-by-call basis to parties whose

carriers do not bill collect calls.” Order ¶ 182. Traditionally, collect calling has

only been available to landline telephones, which are used by a declining percent-

age of the population. Most inmate calls now are charged against prepaid accounts,

not made as collect calls; but there are some situations, as just after an individual

has been arrested, when some other billing option is essential. Securus therefore

developed two optional services,5 Text2Connect and PayNow permit the conven-

ience of a collect call to a non-landline phone by using a third-party billing agent to

charge the call to the recipient’s wireless bill or to a credit/debit card account. As

Securus explained to the FCC in its January 2015 Comments (at 27-28), these are

not “ancillary” to any other service; they are optional billing methods for comple-

tion of a basic telephone call (Appendix E).

Although the FCC acknowledged that “some efficiencies may derive from”

these services, it also cited concerns about the rates being charged,6 and about end-

5 The FCC claims that some consumers may be unaware that these servicesare optional. The De Hoyos Affidavit, however, recites the audible disclosures thatevery called party hears when an inmate attempts to call them via Text2Connect orPayNow. De Hoyos Aff. ¶ 4. They make it clear that the services are optional.6 Optional, convenient payment methods often carry fees. Chase bank, forexample, charges $14.95 for after-hours credit card payments. Seehttp://www.kiplinger.com/article/credit/T016-C000-S002-fast-ways-to-pay-your-credit-card-bill.html.


12 REDACTED VERSION

user “confusion” about these services. Order ¶ 182. It ignored all evidence about

the costs of providing these services, and instead arbitrarily limited the prices for

single-call services to the maximum per-minute rate allowed for any other call,

plus a pass-through of third-party transactions fees, without any markup. Order ¶

187; Rule 64.6020(b)(2). It also ignored the DeHoyos Affidavit (¶ 4) which shows

that call recipients have two opportunities to reject the call and the charge.

Even assuming arguendo that the record established a need for the FCC to

impose some ceiling on rates for single-call services, it was still arbitrary and

capricious to prevent any recovery of costs specific to these services. Securus

demonstrated that it made substantial investments to develop the software and

billing arrangements necessary to offer these services. Boyd Aff. ¶ 7. Because the

FCC rule precludes any possible recovery of these costs, it is arbitrary and capri-

cious for the same reasons discussed above in connection with the no-markup rule

for financial transaction fees. See pp. 8-10 above.

C. The Commission’s Definition of “Site Commissions” Is FatallyVague and Overly Broad

Rule 64.6060 requires reporting of all “site commissions,” but the definition

of that term is vague, undoubtedly overbroad, and attempts to regulate correctional

facility operations that are outside the reach of the Communications Act.

FCC regulations that are vague will be vacated, because regulated entities

are deprived of notice as to what conduct will be deemed unlawful. Salzer v. FCC,


13 REDACTED VERSION

778 F.2d 869, 875-76 (D.C. Cir. 1985) (vacating denial of low-power television

licenses). Here, the definition of “site commission” contains such a variegated

assortment of items – payment, service, good, fee, or product – all preceded with

the modifier “any form”, such that the FCC has made it impossible to tell what is a

site commission and what is not. Being unable to discern, after much considera-

tion, what the definition of “site commission” covers, Securus is likewise unable to

know how to comply with the reporting obligation in Rule 64.6060.

The other side of the vagueness coin is that “site commission” has been

drawn far too broadly by the FCC. Because it seems to cover all “services”,

“goods”, and “products”, the definition unlawfully strays into the authority of

correctional facilities which are entrusted by statute to operate jails and prisons

safely and efficiently.7 Whatever “service” or “good” or “product” the facility

chooses, the FCC definition would appear to treat it as a “site commission.”8

The FCC has no meaningful response to this problem, other than to postulate

that OMB is going to re-write the definition on its behalf, Bureau Order ¶ 31, and

to offer that “typically” the FCC will “help guide” companies through the process

7 Choice of telephone service is squarely within the authority of correctionalauthorities. McGuire v. Ameritech Services, Inc., 253 F. Supp. 2d 988 (S.D. Ohio2003); Miranda v. Michigan, 168 F. Supp. 2d 685, 691 (E.D. Mich. 2001).8 “We reiterate that we will, however, continue to monitor the ICS market andwill not hesitate to take additional action to prohibit site commissions, ifnecessary.” Second Inmate Rate Order ¶ 129.


14 REDACTED VERSION

“in almost all cases.” Id. n.118. Both of these arguments concede that “help” is

needed and OMB intervention required, thus adding to Securus’s showing that the

definition is likely to be overturned.

D. The Commission Has No Jurisdiction to Impose Requirements ofAny Kind on Video Services

Rule 64.6060 also requires reporting of data on video visitation services, but

the FCC lacks authority to regulate these video services. The new reporting re-

quirement is a form of regulation, e.g., Cellco Partnership v. FCC, 357 F.3d 88,

101-102 (D.C. Cir. 2004) (retention of FCC reporting requirements for wireless

carriers was reasonable regulation), as the Bureau concedes. Bureau Order ¶ 57

(“not in dispute”). The Bureau fails, however, to grapple with the fact that Cellco

Partnership addressed reporting on wireless communications services, not video

service, which the FCC knows it cannot regulate.

Video service provided by wireline common carriers, which include ICS

providers, constitute video conference service, which the FCC held in 2010 falls

within the ambit of unregulated “information services.”9 The FCC offered no

explanation whatsoever of its departure from this precedent, which alone is enough

to make its action arbitrary and capricious. FCC v. Fox Television Stations, Inc.,

9 GN Docket No. 10-127, Framework for Broadband Internet Service, Noticeof Inquiry, 25 FCC Rcd. 7866, 7909-10 ¶ 107 (2010) (“we do not intend to addressin this proceeding the classification of information services such as … video con-ferencing).


15 REDACTED VERSION

556 U.S. 502, 515 (2009).

In addition, the Administrative Procedure Act, 5 U.S.C. § 551, et seq.

(“APA”), requires that “[g]eneral notice of proposed rule making” shall include

“either the terms or substance of the proposed rule or a description of the subjects

and issues involved.” 5 U.S.C. § 553(b); see also Forester v. Consumer Prod.

Safety Comm’n, 559 F.2d 774, 787 (D.C. Cir. 1977).

The FCC did not give notice that video regulation was coming; it discussed

video only in the context of the hearing impaired. It also benignly sought comment

on what kinds of advances services are now available for the inmate market. The

Bureau’s response is that the First Inmate Rate Order imposed reporting obliga-

tions on inmate telephone calls, so Securus should have known that reporting on an

information service was coming. Bureau Order ¶ 59. They are comparing apples

and oranges: past regulation of telecommunications service does not give notice of

new regulation of information services, jurisdictional barriers aside.

II. SECURUS WILL SUFFER IRREPARABLE HARM ABSENT ASTAY

Irreparable harm “must be both certain and great; it must be actual and not

theoretical.” Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985). It

includes unrecoverable financial losses as well as recoverable losses that “threat-

en[] the very existence of the movant’s business.” Id. Courts also find irreparable

harm where an agency’s actions would require discontinuance of the affected


16 REDACTED VERSION

services. Penn Central Co. v. Pub. Utils. Comm’n of Connecticut, 296 F. Supp.

893, 898 (D. Conn. 1969) (enjoining order against railroad company).

A. Securus Could Not Allow Online Credit Card Processing Underthe New Caps

According to the Securus CFO, “[t]he impact to Securus of implementing

the new caps for online credit card funding transactions is an approximate

CONFIDENTIAL ** $ ** million annual reduction in our EBITDA.” Boyd

Aff. ¶ 5 (Confidential Version). With the per-transaction costs that Securus provid-

ed to the FCC, “Securus would lose several dollars per transaction under the

new financial transaction fee caps.” Smith Aff. ¶ 5 (emphasis in original). The

substantial and unrecoverable losses that the new Ancillary Charge caps will create

may force Securus to stop permitting online credit card transactions. Id. In that

case, “the FCC would have set the industry back to the days when payment could

be made only by check or money order.” Id. ¶ 7. The Bureau ignores these facts,

because it must, with the false statement, “Securus provides no evidence,” and

asserts, despite sworn evidence in the record, that Securus can do these transac-

tions under caps that are half its costs. Bureau Order ¶ 66.

The FCC and the Bureau ignored detailed evidence of Securus’s costs and

estimated losses. In addition, the Bureau refused to accept Securus’s attempt to

address false information put in the record by the sole Opposition that was filed

against its request for stay. In any event, the demonstrable, unrecoverable harm to


17 REDACTED VERSION

Securus under the new fee caps warrants a stay.

B. Securus Would Have to Discontinue Text2Connect and PayNowUnder the New Caps

Securus cannot continue to provide Text2Connect or PayNow under the new

caps. Smith Aff. ¶ 7. Securus has made a substantial investment in Text2Connect

and PayNow. Geoff Boyd states that “Securus has spent well in excess of

CONFIDENTIAL** $ ** million to be able to offer these optional convenience

features.” Boyd Aff. ¶ 6 (Confidential Version). Under the new “Single-Call Ser-

vices” rate cap, Securus will suffer “an approximate CONFIDENTIAL ** $ **

million annual reduction in our EBITDA.” Id. The Bureau again ignores these facts

and instead introduces a red herring: Securus’s pledge not to discontinue traditional

inmate calling services, see Bureau Order ¶ 67, does not undercut Mr. Smith’s

testimony that Securus “will be forced to stop providing” Text2Connect and

PayNow. Smith Aff. ¶ 9.

C. The Financial Loss Securus Will Incur Under the New Rules MayPrevent It From Complying With Covenants To Its Banks

According to CFO Geoff Boyd, Securus faces “an approximate

CONFIDENTIAL ** $ ** Million annual reduction in EBITDA.” Boyd Aff. ¶

8. That figure represents “approximately CONFIDENTIAL ** % ** of Se-

curus’s expected 2015 EBITDA.” Id.

The tremendous, unrecoverable financial losses that the new rate caps will


18 REDACTED VERSION

bring to Securus actually threaten the sustainability of its business. As Mr. Smith

states, “I am concerned that Securus will not be able to service its debt and could

be in default of certain covenants with its banks.” Smith Aff. ¶ 13. The Bureau

does not even acknowledge this evidence. Where a movant’s very business is in

jeopardy, the D.C. Circuit will find irreparable harm even if, unlike here, the

financial loss could be recouped. Wisconsin Gas Co., 758 F.2d at 674.

D. Securus Would Face a Significant Regulatory Burden Under Rule64.6060 as Well as Sanctions for Innocent Non-Compliance

The overbreadth and vagueness of Rule 64.6060, demonstrated in Sections

I.C. and I.D. above, require that the rule be stayed pending appeal. The definition

of “Site Commission” is so implausibly broad that Securus cannot fathom how to

apply it, and thus Securus has a reasonable concern that whatever it files in its

April 1 annual report will be somehow incorrect and subject to sanction. Where a

regulation engenders “innocent noncompliance,” it imposes an unreasonable bur-

den and should not be enforced. See U.S. v. Locke, 529 U.S. 89, 116 (2000) (re-

manding state regulations governing oil spills). The Bureau’s hope (¶ 68) that

OMB will fix the FCC’s errors has no supportive precedent and would be an

unlawful delegation of Communications Act authority.

III. THIRD PARTIES WILL NOT BE UNDULY HARMED BY A STAY

Consumers of ICS will not be materially harmed by the partial stay of the

Second Inmate Rate Order which Securus requests. In fact, consumers will benefit


19 REDACTED VERSION

from a stay, because Securus would not be forced to discontinue innovative, con-

venient services on which consumers have relied.

Credit card transactions are optional: customers who do not want to fund

their accounts using a credit card or debit card may, for example, do so by check or

money order. Text2Connect and PayNow are optional: customers who do not want

to pay the premium fee for calls billed to their mobile phone account do not have

to accept those calls. The Bureau’s only answer to the fact that these services are

additive, voluntary, and include full rate disclosures is to claim that consumers

cannot understand this. As to Rule 64.6060, no party would be harmed by a stay of

the overbroad reporting requirement for site commissions or the ultra vires report-

ing requirement for video visitation service.

IV. THE PUBLIC INTEREST FAVORS A STAY

The public interest will be gravely impaired if the portions of the Second

Inmate Rate Order challenged herein become effective. Securus will be forced to

remove Text2Connect, PayNow, and most credit card transactions from the market

or incur significant, unrecoverable financial losses. “[P]reserving the economic

viability of existing public services” is a public good that warrants a stay of an

agency order. Virginia Petroleum Jobbers, 259 F.2d at 925.

The public would be doubly harmed if the Single-Call Services caps are not

stayed. Text2Connect and PayNow “keep people safe.” Smith Aff. ¶ 8. They also


21 REDACTED VERSION

202.373.6001 Fax 202.857.6295 [email protected] [email protected]

Counsel to Securus Technologies, Inc.


REDACTED VERSION

CERTIFICATE OF SERVICE

I hereby certify on this 27th day of January, 2016, that the foregoing

Emergency Motion for Partial Stay of FCC Order 15-136 Pending Review

(Redacted Version), with the Addendum, Attachments, and Appendix (Redacted

Version), was served by hand and electronic mail * on all Respondents:

Loretta E. LynchSolicitor General of the United StatesUnited States Department of Justice950 Pennsylvania Avenue, N.W.Washington, D.C. 20530-0001

Sarah Citrin *Office of General CounselFederal Communications Commission445 12th Street, S.W.Washington, D.C. [email protected]

All other parties have appeared and will receive the filing via ECF notice.

By: s/Stephanie A. JoyceStephanie A. Joyce


ADDENDUM A

A-1

RELEVANT STATUTES AND RULES

5 U.S.C. § 553

(a) This section applies, according to the provisions thereof, except to the extentthat there is involved--

(1) a military or foreign affairs function of the United States; or

(2) a matter relating to agency management or personnel or to public property,loans, grants, benefits, or contracts.

(b) General notice of proposed rule making shall be published in the FederalRegister, unless persons subject thereto are named and either personally served orotherwise have actual notice thereof in accordance with law. The notice shallinclude--

(1) a statement of the time, place, and nature of public rule making proceedings;

(2) reference to the legal authority under which the rule is proposed; and

(3) either the terms or substance of the proposed rule or a description of thesubjects and issues involved.

Except when notice or hearing is required by statute, this subsection does notapply--

(A) to interpretative rules, general statements of policy, or rules of agencyorganization, procedure, or practice; or

(B) when the agency for good cause finds (and incorporates the finding and abrief statement of reasons therefor in the rules issued) that notice and publicprocedure thereon are impracticable, unnecessary, or contrary to the publicinterest.

(c) After notice required by this section, the agency shall give interested persons anopportunity to participate in the rule making through submission of written data,views, or arguments with or without opportunity for oral presentation. Afterconsideration of the relevant matter presented, the agency shall incorporate in therules adopted a concise general statement of their basis and purpose. When rules


ADDENDUM A

A-2

are required by statute to be made on the record after opportunity for an agencyhearing, sections 556 and 557 of this title apply instead of this subsection.

(d) The required publication or service of a substantive rule shall be made not lessthan 30 days before its effective date, except--

(1) a substantive rule which grants or recognizes an exemption or relieves arestriction;

(2) interpretative rules and statements of policy; or

(3) as otherwise provided by the agency for good cause found and publishedwith the rule.

(e) Each agency shall give an interested person the right to petition for theissuance, amendment, or repeal of a rule.

47 U.S.C. § 276

* * *

(d) “Payphone service” defined

As used in this section, the term “payphone service” means the provision of publicor semi-public pay telephones, the provision of inmate telephone service incorrectional institutions, and any ancillary services.


ADDENDUM A

A-3

Revised Rule 64.6000 – Definitions (excerpts)

a. Ancillary Service Charge means any charge Consumers may be assessfor the use of Inmate Calling services that are not included in the per-minute charges assessed for individual calls. Ancillary ServiceCharges that may be charged include the following. All otherAncillary Service Charges are prohibited.

1. Automated Payment Fees means credit card payment, debitcard payment, and bill processing fees, including fees forpayments made by interactive voice response (IVR), web, orkiosk;

2. Fees for Single-Call and Related Services means billingarrangements whereby an Inmate’s collect calls are billedthrough a third party on a per-call basis, where the called partydoes not have an account with the Provider of Inmate CallingServices or does not want to establish an account;

3. Live Agent Fee means a fee associated with the optional use ofa live operator to complete Inmate Calling Servicestransactions;

4. Paper Bill/Statement Fees means fees associated with providingcustomers of Inmate Calling Services an optional paper billingstatement;

5. Third-Party Financial Transaction Fees means the exact fees,with no markup, that Providers of Inmate Calling Services arecharged by third parties to transfer money or process financialtransactions to facilitate a Consumer’s ability to make accountpayments via a third party.

t. Site Commission means any form of monetary payment, in-kindpayment, gift, exchange of services or goods, fee, technologyallowance, or product that a Provider of Inmate CallingServices or affiliate of an Provider of Inmate Calling Servicesmay pay, give, donate, or otherwise provide to an entity thatoperates a correctional institution, an entity with which theProvider of Inmate Calling Services enters into an agreement to


ADDENDUM A

A-4

provide ICS, a governmental agency that oversees acorrectional facility, the city, county, or state where a facility islocated, or an agent of any such facility.

Revised Rule 64.6020 – Ancillary Service Charge

(a) No Provider shall charge an Ancillary Service Charge other than thosepermitted charges listed in Section 64.6000.

(b) No Provider shall charge a rate for a permitted Ancillary Service Charge inexcess of:

(1) For Automated Payment Fees—$3.00 per use;

(2) For Single-Call and Related Services—the exact transaction feecharged by the third-party provider, with no markup, plus the adopted,per-minute rate;

(3) For Live Agent Fee—$5.95 per use;

(4) For Paper Bill/Statement Fee—$2.00 per use;

(5) For Third-Party Financial Transaction Fees—the exact fees, with nomarkup that result from the transaction.

Revised Rule 64.6060 – Annual Reporting and Certification Requirement

(a) Providers must submit a report to the Commission, by April 1st of each year,regarding interstate, intrastate, and international Inmate Calling Services forthe prior calendar year. The report shall be categorized both by facility typeand size and shall contain:

(1) Current interstate, intrastate, and international rates for Inmate CallingServices;

(2) Current Ancillary Service Charge amounts and the instances of use ofeach;

(3) The Monthly amount of each Site Commission paid;


ADDENDUM A

A-5

(4) Minutes of use, per-minute rates and ancillary service charges forvideo visitation services;

(5) The number of TTY-based Inmate Calling Services calls provided perfacility during the reporting period;

(6) The number of dropped calls the reporting Provider experienced withTTY-based calls,; and

(7) The number of complaints that the reporting Provider received relatedto e.g., dropped calls, poor call quality and the number of incidencesof each by TTY and TRS users.

(b) An officer or director of the reporting Provider must certify that the reportedinformation and data are accurate and complete to the best of his or herknowledge, information, and belief.

New Rule 64.6080 – Per-Call, or Per-Connection Charges

No Provider shall impose a Per-Call or Per-Connection Charge on a Consumer.

New Rule 64.6090 – Flat-Rate Calling

No Provider shall offer Flat-Rate Calling for Inmate Calling Services.

New Rule 64.6100 – Minimum and Maximum Prepaid Calling AccountBalances

(a) No Provider shall institute a minimum balance requirement for a Consumerto use Debit or Prepaid Calling.

(b) No Provider shall prohibit a consumer from depositing at least $50 pertransaction to fund a Debit or Prepaid Calling account.


ADDENDUM B

B-1

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES

Global Tel*Link Corp. v.Federal Communications Commission and the United States of America

No. 15-1461

Pursuant to Circuit Rule 28.1, the hereby provides this Certificate as

to Parties, Rulings, and Related Cases.

I. INTERESTED PARTIES

The following parties participated in the rulemaking proceeding at the

Federal Communications Commission that gave rise to the order under review in

this matter:

ACLU of Idaho

Adair County Sheriff’s Office

Alabama PSC

Alabama Sheriffs Association

Alameda Co., CA Sheriff’s Office

Alliance of Baptists

American Bar Association

American Civil Liberties Union

American Immigration Lawyers Association

American Jail Association

Andrew Lipman

Arizona Community Colleges

Arizona Corporation Commission

Arizona Department of Corrections

Asian American Justice Center


ADDENDUM B

B-2

The Center for Media Justice

Communications Workers of America

Free Press

The Leadership Conference on Civil and Human Rights

National Association for the Advancement of Colored People

National Council of La Raza

National Hispanic Media Coalition

National Organization for Women Foundation

National Urban League

New America Foundation’s Open Technology Institute

Public Knowledge

United Church of Christ Office of Communications Inc.

Barnstable Co, MA Sheriff

Butler Co, PA Prison Board

California Department of Corrections and Rehabilitation

California Immigrant Policy Center

California State Association of Counties

California State Sheriffs’ Association

Center on the Administration of Criminal Law

CenturyLink

Chief Probation Officers of California

Clackamas County Sheriff’s Office

Clark County Sheriff’s Office

Coconino County Children of Incarcerated Parents (CIP) Task Force

Coconino County Sheriff’s Office

Columbia Legal Services

Combined Public Communications

Community Initiatives for Visiting Immigrants in Confinement


ADDENDUM B

B-3

Community Justice Project

Campaign for Prison Phone Justice

Congressional Black Caucus

Congressman Tom Reed

Congresswoman Bonnie Coleman

Consolidated Telecom

Cook County, IL

County of Santa Clara Department of

Corrections

DeafCAN

Delaware Co, PA

Deschutes County Sheriff’s Office

DisAbility Rights Idaho

Don Wood

Dr. Artika Tyner

EagleTel

Elmore County Sheriff’s Office

Embracing Lambs Ministries

Emerald Correctional Management

Florida Sheriffs Association

Georgia DOC

Global Tel*Link Corporation

Hampden Co, MA Sheriff

Helping Educate to Advance the Rights of the Deaf

Hemphill Co, TX Judge

Human Rights Defense Center

ICSolutions

Idaho Department of Correction


ADDENDUM B

B-4

Idaho Sheriffs’ Association

Illinois Campaign for Prison Phone Justice

Immigration Equality

Imperial Co, CA Sheriff’s Office

Indiana Utility Regulatory Commission

Interfaith Coalition for Immigrant Rights

Iowa CURE

Jail Education Solutions

Jefferson County Sheriff’s Office

Johnson Co, IA Sheriff’s Office

King George County, VA

Kansas Department of Corrections

Kern Co, CA Sheriff’s Office

Lake County Sheriff

Lancaster Co., NE Department of Corrections

Lattice

The Leadership Conference on Civil and

Human Rights

Legal Center for People with Disabilities and Older People

Colorado Developmental Disabilities Council

Legal Services for Prisoners with Children

Los Angeles County, CA Sheriff’s Department

Louisiana Department of Public Safety & Corrections

Marion County Detention Center

Marion Co, IN Sheriff

Martha Wright, et. al.

The D.C. Prisoners’ Legal Services Project, Inc.

Citizens United for Rehabilitation of Errants


ADDENDUM B

B-5

Prison Policy Initiative

The Campaign for Prison Phone Justice

Michael S. Hamden

Michigan Citizens for Prison Reform

Minority Media and Telecommunications Council

Mississippi Department of Corrections

Missouri State Public Defender System

MMTC and Rainbow PUSH

Montana Department of Corrections

Moultrie County Sheriff’s Office

National Association of Regulatory Utility Commissioners

National Association of State Utility Consumer Advocates

National Association of the Deaf

Telecommunications for the Deaf and Hard of Hearing, Inc.

Deaf and Hard of Hearing Consumer Advocacy Network

Association of Late-Deafened Adults, Inc. Hearing Loss Associationof America California Coalition of Agencies Serving the Deaf andHard of Hearing

Cerebral Palsy and Deaf Organization

National Consumers League

National Disability Rights Network

National Lawyers Guild

National Sheriffs’ Association

National State Attorneys General Program

Network Communications International Corp.

Nevada Department of Corrections

New Jersey Advocates for Immigrant Detainees

New York University School of Law Immigrant Rights Clinic


ADDENDUM B

B-6

New Jersey Institute for Social Justice

A New Way of Life Re-Entry Program

Ohio Department of Rehabilitation and Correction

Oklahoma Department of Corrections

Open Access Connections

Orange Co, CA Sheriff’s Department

Oregon Department of Corrections

Oregon State Sheriffs’ Association

Pennsylvania Public Utility Commission

Pay Tel Communications, Inc.

Praeses LLC

Prison Law Office

Prisoners Legal Services of Massachusetts

Prison Policy Initiative

Promise of Justice Initiative

Protection and Advocacy for People with Disabilities, Inc.

Public Service Commission of the District of Columbia

Rev. Craig Scott

Rhode Island Institute of Technology Deaf and Hard of HearingStudents

Riverside Co, CA Sheriff’s Association

Rochester Institute of Technology Student Researchers NationalTechnical Institute for the Deaf

Rock County Sheriff

Rosen Bien Galvan & Grunfeld LLP

Routt County Sheriff’s Office

San Bernardino Co, CA Sheriff’s Department

San Diego County Sheriff’s Department


ADDENDUM B

B-7

Santa Barbara Co, CA Sheriff

Securus Technologies, Inc.

Shasta Co, CA Sheriff’s Office

Sophia Lewis

South Dakota Department of Corrections

Stephen A. Raher

Taylor Co, TX Judge

TechFreedom

Telmate, LLC

Tennessee DOC

Texas Civil Rights Project

Texas Jail Project

US Conference of Catholic Bishops

Thurston County Sheriff’s Office

Ventura Co, CA Sheriff’s Office

Vera Institute of Justice

Verizon and Verizon Wireless

Virginia Association of Regional Jails

Washington Lawyers’ Committee

Williamson Co, TX Sheriff

II. RULINGS UNDER REVIEW

Pursuant to Circuit Rule 28(a)(1)(B), Securus states that the following

agency decision is under review:

WC Docket No. 12-375, Rates for Interstate Inmate Calling Services,Second Report and Order and Third Further Notice of ProposedRulemaking, FCC 15-136 (FCC Nov. 5, 2015), published at 80 Fed.Reg. 79136 (Dec. 18, 2015).


ADDENDUM B

B-8

III. RELATED CASES

Pursuant to Circuit Rule 28 (a)(1)(C), Securus states that this appeal is

related to an existing appeal, Securus Techs., Inc., et al. v. FCC, No. 13-1280 and

consolidated cases (D.C. Cir.) which seeks review of the FCC’s prior order in this

proceeding titled WC Docket No. 12-375, Rates for Interstate Inmate Calling

Services, First Report and Order and Second Further Notice of Proposed

Rulemaking. That appeal has been held in abeyance since December 16, 2014

(Dkt. 1527663).

By: s/Stephanie A. JoyceStephanie A. Joyce

Attorney for Petitioner SecurusTechnologies, Inc.


ATTACHMENTS

(PUBLIC VERSIONS –SEALED MATERIAL

DELETED)


1

BEFORE THEUNITED STATES COURT OF APPEALS


GLOBAL TEL*LINK, et al.,

Petitioners,

v. No. 15-1461 andconsolidated cases

FEDERAL COMMUNICATIONS COMMISSIONand the UNITED STATES OF AMERICA,

Respondents.

AFFIDAVIT OF RICHARD SMITH (PUBLIC VERSION)

I, Richard Smith, hereby affirm under penalty of perjury and pursuant to 18 U.S.C.§ 1621, that

1. I am the Chief Executive Officer of Securus Technologies, Inc.(“Securus”) with headquarters at 14651 Dallas Parkway, Sixth Floor,Dallas, TX 75254.

2. I am providing this Affidavit in support of the Emergency Motion forPartial Stay seeking immediate relief from the Second Inmate Rate Orderof the FCC. I have personal knowledge of the facts stated herein and couldtestify to the same.

3. I have been CEO of Securus since June 2008. I have been an executiveofficer in the telecommunications industry since 1985, most recently asCEO of Eschelon Telecom, which was acquired by Integra Telecom inAugust 2007.

4. Securus provides services exclusively to correctional facilities and lawenforcement agencies. As Securus has told the FCC, it presently servesapproximately 2,100 correctional facilities in 47 states and the District ofColumbia. It holds approximately 1,100 service contracts with state,county, and city governments.


2

5. CREDIT CARD PROCESSING FEES – The caps that the FCC hasadopted for financial transaction fees are below Securus’s costs, andSecurus put evidence in the record on that point. Specifically, for creditcard transactions, Securus must pay a third-party vendor up toCONFIDENTIAL **$ ** for every transaction. In addition, Securusmust recover internal processing costs of CONFIDENTIAL **$ ** pertransaction plus CONFIDENTIAL **$ ** per transaction to cover thecosts of bad debt and credit card fraud. These costs are far higher than the$3.00 (online transaction) and $5.95 (live agent transaction) that the FCCwill allow us to charge. Securus would lose several dollars pertransaction under the new financial transaction fee caps.

6. If the FCC rules are put into effect pending appeal, and later vacated,Securus will have no way to recover the revenues it will lose as a result ofcomplying with the FCC-mandated rate caps.

7. Securus therefore is faced with a terrible choice: incur tremendousfinancial loss that never can be recovered; or stop allowing payment bycredit card, meaning that the FCC would have set the industry back to thedays when payment could be made only by check or money order. In thelatter case, many customers would be harmed, because they would have towait days for their payments to be credited to their accounts, and would beunable to receive telephone calls from inmates during that period, whereasat present Securus is able to credit their accounts immediately upon receiptof an online credit card payment.

8. OPTIONAL, PREMIUM CALLING SERVICES (“SINGLE-CALLSERVICES”) – Securus also must pay a third-party vendor to provide theoptional, premium calling services called Text2Connect and PayNow.Text2Connect and PayNow are extremely valuable services that helppeople connect immediately to their attorneys and families – Text2Connectand PayNow keep people safe. They help people bond out of jail muchsooner, they enable arrestees to get legal advice quickly. In addition,Text2Connect and PayNow help protect inmates and detainees fromviolence including deaths, because incidents can be reported to familiesand attorneys right away. Securus provides millions of theseText2Connect and PayNow calls each year.

9. Under the new rates and rules for “Single-Call Service,” Securus will beforced to stop providing these valuable services, and millions of inmatesand detainees will lose the ability to connect to immediate lifelines.


1




Petitioners,



Respondents.

AFFIDAVIT OF GEOFF BOYD (PUBLIC VERSION)

I, Geoffrey M. Boyd, hereby affirm under penalty of perjury and pursuant to 18U.S.C. § 1621, that

1. I am the Chief Financial Officer of Securus Technologies, Inc. (“Securus”)with headquarters at 14651 Dallas Parkway, Sixth Floor, Dallas, TX75254.

2. I am providing this Affidavit in support of the Emergency Motion forPartial Stay of the Second Report and Order. I have personal knowledge ofthe facts stated herein and could testify to the same.

3. I have been Chief Financial Officer of Securus since September of 2013and have over 14 years of experience in telecommunications including tenyears as a Chief Financial Officer. From 2000 to 2007, I was ChiefFinancial Officer of Eschelon Telecom, Inc., and prior to that I was theDirector of Strategic Planning for Dobson Communications, one of thelargest rural wireless (mobile phone) providers in the country prior to itssale to AT&T.


2

4. I have reviewed the new rates and rules regarding credit card processingand “Single-Call Services” contained in the Second Report and Order.This Declaration sets forth the serious, unrecoverable financial losses thatSecurus would suffer under those new rates and rules.

CREDIT CARD PROCESSING

5. Securus incurs significant costs to enable consumers to pay bills and fundaccounts with a credit card as summarized by the Declaration of DennisRose dated January 9, 2015, which was filed with the FCC. The impact toSecurus of implementing the new caps for online credit card fundingtransactions is an approximate CONFIDENTIAL ** $ ** millionannual reduction in our EBITDA (Earnings Before Interest, Taxes,Depreciation, and Amortization).

“SINGLE-CALL SERVICES”

6. Securus provides Text2Connect and PayNow as also summarized in theDeclaration by Dennis Rose. As of this date, Securus has spent well inexcess of CONFIDENTIAL** $ ** million to be able to offer theseoptional convenience features. The impact to Securus of implementing thenew caps for single call services is an approximate CONFIDENTIAL **$ ** million annual reduction in our EBITDA .

7. In addition, our investment of over CONFIDENTIAL ** $ ** million inthese products will have been either lost or severely impaired.

FINANCIAL IMPACT OF NEW CAPS FORCREDIT CARD PROCESSING AND SINGLE-CALL SERVICES

8. All totaled, the impact of implementing the new rates results in anapproximate CONFIDENTIAL ** $ ** Million annual reduction inEBITDA, in addition to the loss of most or all of its initial investment thatwas in excess of $20 million. That annual EBITDA loss representsapproximately CONFIDENTIAL ** % ** of Securus’s expected 2015EBITDA.

9. I emphasize that the reductions stated above are of earnings beforeinterest. Securus obtains a significant portion of its financing through bankloans, and the amount of interest it will have to pay on those loans will notbe reduced in proportion to the reduction in earnings.


1




Petitioners,



Respondents.

AFFIDAVIT OF DANNY DEHOYOS

I, Danny DeHoyos, hereby affirm under penalty of perjury and pursuant to 18U.S.C. § 1621, that

1. I am Senior Vice President – Operations of Securus Technologies, Inc.(“Securus”) with headquarters at 14651 Dallas Parkway, Sixth Floor, Dallas,TX 75254. I have been Senior Vice President – Operations since September2015. I joined Securus in September 2008, as Vice President – Service andTechnical Operations.

2. I am providing this Affidavit in support of the Emergency Motion for PartialStay of the Second Report and Order. I have personal knowledge of thefacts stated herein and could testify to the same.

3. Specifically, this Affidavit sets out the audible prompts and instructions thata consumer hears when they receive an inmate call that is made viaText2Connect or PayNow.

4. When an inmate makes a phone call using Text2Connect, the called partyhears several instructions, including:


global tel*link, et al., no. 15-1461 and consolidated cases

Documents