Ex-Communication: Competition and Collusion in the U.S. Prison Telephone Industry

This paper explores the political economy of the prison telephone industry, with special emphasis on changes in the industry since the mid-1980s. Contrary to the expectations of competition advocates, the principal outcome of deregulation in the prison telephone sector has been a sharp increase in price, as new market entrants compete for monopoly service contracts on the basis of steadily escalating commissions paid to state and private prison authorities*/costs which are then passed on to the (literally) captive market through exorbitant end-user rates. The sheer magnitude of such rate increases, together with explosive growth in the national prison population over the same period, has turned the prison telephone sector into a lucrative and largely invisible growth center for the U.S. telecommunication industries as a whole.