2018-07-23 - Consolidated Joint Reply Comments COMMENT by c/o Squire Patton Boggs (US) LLP ITC-T/C-20180612-00109 2018-07-23 - Consoli

2018-07-23 - Consoli

COMMENT submitted by c/o Squire Patton Boggs (US) LLP

2018-07-23 - Consolidated Joint Reply Comments

2018-07-23

This document pretains to ITC-T/C-20180612-00109 for Transfer of Control on a International Telecommunications filing.

IBFS_ITCTC2018061200109_1471088

Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of the Joint Application of )
)
TKC Holdings, Inc., Transferor )
)
Inmate Calling Solutions, LLC d/b/a )
ICSolutions, Licensee )
) WC Docket 18-193
and )
) ITC-T/C-20180612-00109
Securus Technologies, Inc., Transferee )
)
For Grant of Authority Pursuant to Section 214 )
of the Communications Act of 1934, as )
amended, and Sections 63.04 and 63.24 of the )
Commission’s Rules to Transfer Ownership and )
Control of Inmate Calling Solutions, LLC d/b/a )
ICSolutions to Securus Technologies, Inc. )
)

CONSOLIDATED JOINT REPLY COMMENTS OF TKC HOLDINGS, INC., INMATE
CALLING SOLUTIONS, LLC D/B/A ICSOLUTIONS, AND SECURUS
TECHNOLOGIES, INC.

Howard M. Liberman Paul C. Besozzi
Paige K. Fronabarger Peter M. Bean
Wilkinson Barker Knauer, LLP Squire Patton Boggs (US) LLP
1800 M Street, N.W., Suite 800N 2550 M Street, N.W.
Washington, DC 20036 Washington, DC 20037
202-783-4141 (tel) 202-457-6000 (tel)
202-783-5851 (fax) 202-457-6315 (fax)
hliberman@wbklaw.com paul.besozzi@squirepb.com
pfronabarger@wbklaw.com peter.bean@squirepb.com

Counsel for TKC Holdings, Inc. and Inmate Andrew D. Lipman
Calling Solutions, LLC d/b/a ICSolutions Russell M. Blau
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave., N.W.
Washington, DC 20004
202-373-6033 (tel)
202-739-3001 (fax)
andrew.lipman@morganlewis.com
russell.blau@morganlewis.com

Counsel for Securus Technologies, Inc.

Dated: July 23, 2018

Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of the Joint Application of )
)
TKC Holdings, Inc., Transferor )
)
Inmate Calling Solutions, LLC d/b/a )
ICSolutions, Licensee )
) WC Docket 18-193
and )
) ITC-T/C-20180612-00109
Securus Technologies, Inc., Transferee )
)
For Grant of Authority Pursuant to Section 214 )
of the Communications Act of 1934, as )
amended, and Sections 63.04 and 63.24 of the )
Commission’s Rules to Transfer Ownership )
and Control of Inmate Calling Solutions, LLC )
d/b/a ICSolutions to Securus Technologies, )
Inc. )

CONSOLIDATED JOINT REPLY COMMENTS OF TKC HOLDINGS, INC., INMATE
CALLING SOLUTIONS, LLC D/B/A ICSOLUTIONS, AND SECURUS
TECHNOLOGIES, INC.

TKC Holdings, Inc. (“TKC”), Inmate Calling Solutions, LLC d/b/a ICSolutions (“ICS”),

and Securus Technologies, Inc. (“STI,” and collectively, with TKC and ICS, “Applicants”),

acting through counsel and in accordance with the Federal Communications Commission’s

(“FCC” or “Commission”) Public Notice,1 hereby submit these consolidated joint reply

comments in response to five comments2 submitted concerning the captioned Joint Application.

1
Application Filed for the Transfer of Control of Inmate Calling Solutions, LLC d/b/a
ICSolutions to Securus Technologies, Inc., Public Notice, DA 18-684 (rel. Jul. 2, 2018) (“Public
Notice”). These Consolidated Joint Reply Comments are timely filed in accordance with the
Public Notice.
2
According to the ECFS, two individuals (Sarah Froio and Sheila Bryan) and two organizations
(Human Rights Defense Center (“HRDC”) and Corrections Accountability Project (“CAP”))
timely submitted comments by July 16. Another individual (Andre Wooten) submitted an
untimely comment on July 17.

In general, the comments allege potential negative impacts of the transfer on future

competitors for contracts and resulting charges to end-users for inmate telephone services

(“ITS”). One commenter, referring to the “prison industrial complex,” specifically asserts that

STI uses patent rights to exert excessive “control” over competition in the ITS marketplace.

These allegations and assertions are (a) belied by market realities, (b) factually inaccurate

or (c) general and unsupported. None of the submissions supports a Commission conclusion that

the Joint Application should be denied or delayed or that the grant thereof is not in the public

interest.

I. BACKGROUND

On June 12, 2018, the Applicants requested approval of the transfer of control of ICS’s

domestic and international Section 214 authority through a transaction involving TKC and Keefe

Group, LLC (“Transaction”).3 As a result of the Transaction, ICS would become a wholly-

owned subsidiary of STI.

As reflected in the Joint Application, the consummation of the Transaction will not result

in an interruption, reduction, loss, impairment, or disruption of any service provided by ICS.

The Transaction does not involve a transfer of ICS’s operating authority, assets or customers.

Moreover, the existing ICS management team will remain substantially the same and

ICS’s corporate identity, name and operations will remain in place. Post-closing, ICS will

3
Joint Application of TKC Holdings, Inc., Transferor, Inmate Calling Solutions, LLC d/b/a
ICSolutions, Licensee, and Securus Technologies, Inc., Transferee, For Grant of Authority
Pursuant to Section 214 of the Communications Act of 1934, as amended, and Sections 63.04
and 63.24 of the Commission’s Rules to Transfer Ownership and Control of Inmate Calling
Solutions, LLC d/b/a ICSolutions to Securus Technologies, Inc., WC Docket 18-193 (filed June
12, 2018), ITC-T/C-20180612-00109 (filed June 12, 2018) (“Joint Application”).

2

remain operational as a separate business from STI and its parent entities. ICS will continue to

honor its correctional facility contracts and in doing so will continue to provide and support the

technologies and services enjoyed by its customers.

Any future changes in the rates, terms and conditions of service to ICS’s correctional

facility and end-user customers will be undertaken in accordance with the applicable federal and

state law, including notice and tariff requirements and ICS’s contractual obligations. As a result,

the change in ownership will be entirely transparent to ICS’s correctional facility customers and

the end-users of ICS’s services. Again, rates, terms and conditions of service, which are

governed in part by contractual relationships between ICS and governmental agencies (as well as

tariffs where required), will not change while such contracts remain in force.

Approval of the Transaction will not foreclose the opportunity for continued competitive

bidding to provide ITS to facilities in various states in which STI and ICS operate. As the

Commission and commenters know, there are a number of ITS providers operating across the

U.S.

Additionally, after closing, and where permitted by the governmental entities operating

the correctional facilities serviced by ICS, inmates who use the ICS services now will have

access to the use of inmate tablets that provide controlled internet access, including, as part of

that program, access to education (e.g., the ability to obtain a GED), media content and job

opportunities upon release. Inmate calling can also be permitted from such tablets, further

facilitating the ability of inmates to connect with their friends and family. ICS’s correctional

facility customers also will gain access to STI-developed advanced technology, including an

expanded set of law enforcement-related service and investigative technologies offered by STI.

3

None of the commenters specifically addresses or substantively contests these

representations.

II. COMMENTER CLAIMS ARE BELIED BY MARKET REALITIES,
FACTUALLY INACCURATE, OR GENERAL AND UNSUPPORTED

The commenters generally assert that approval of the Transaction will inevitably lead to

reduced competition in the form of fewer bidders on ITS contracts, particularly those for larger

facilities. None of the comments contains any analysis of recent bidding in the marketplace to

support this assertion.4 Yet, a genuine review of what actually has occurred in the market

indicates that there are ample competitors other than ICS, STI and Global Tel*Link Corporation

who compete and win such contracts, even at facilities with average daily inmate populations of

1,000 or more.5

The Applicants address a number of these issues in detail in their concurrently filed

Opposition to a formal petition to deny the Joint Application filed by the Wright Petitioners and

others, particularly as it relates to competitive bidding options.6 As demonstrated therein, bald

assertions that after the Transaction STI will have “control over many of its supposed

4
For example, Sheila Bryan asserts that following the acquisition of ICS “Securus will become
the largest company in the industry by nearly any measure.” See Comments of Sheila Bryan, WC
Docket No. 18-193 (filed Jul. 16, 2018) (“Bryan Comments”). Ms. Bryan provides no economic
or other analysis to support this allegation; nor does she define what “any measure” might be.
5
The commenters do not define what they mean by larger facilities.
6
Opposition to Petition to Deny by The Wright Petitioners, Citizens United for Rehabilitation of
Errants, Prison Policy Initiative, Human Rights Defense Center, The Center for Media Justice,
Working Narratives, United Church of Christ, OC Inc., and Free Press, WC Docket 18-193;
ITC-T/C-20180612-00109, at 15-28 (filed Jul. 23, 2018). The information provided therein is
hereby incorporated by reference.
4

competitors” and there will be the “end [of] competitive bidding for contracts” are wholly

without realistic basis in the marketplace.7

Moreover, claims in support of these unfounded assertions are false. For example, CAP

claims that, as part of “a . . . campaign . . . to remove its competition through acquisitions,” STI

has spent “almost $600 million since 2012 swallowing up its smaller competitors.”8 The article

upon which CAP relies in support of this statement states that the company “has made 17

acquisitions totaling $596.75 million” since 2012.9 Nowhere in that article is it alleged that

STI’s acquisitions have been of competitors in the ITS market, and the assertion is flat out

wrong.

In addition to ITS, STI offers a number of ancillary services to its correctional facility

and end-user customers. STI has facilitated the technological development and deployment of

those services in part by acquiring businesses that developed or deployed those ancillary

services. The proposed Transaction is STI’s first acquisition of a provider of ITS.

CAP makes further accusations that STI acquires and uses patent rights and litigation

threats to thwart ITS competition and somehow gain “a stake in the businesses of many”

competitive providers.10 First, STI has developed all of its major patents internally and, like any

business, has a legitimate and justifiable right to protect its substantial investments in that regard.

7
Comments of the Corrections Accountability Project, WC Docket No. 18-193, at 1 (Jul. 16,
2018) (“CAP Comments”).
8
Id. at 2.
9
Eric Markowitz, Amid Death Threats, An Embattled Prison Phone Company CEO Speaks Out,
International Business Times, Jan. 26, 2016, available at https://www.ibtimes.com/amid-death-
threats-embattled-prison-phone-company-ceo-speaks-out-2276551.
10
See CAP Comments at 3; see also id. at 2 (alleging that STI hoards intellectual property and is
a frequent patent litigator and troll).
5

The fact that STI exercises such legal rights does not translate into control over any competitor

ITS providers.

Second, STI has had an amicable long-term patent licensing agreement with ICS. STI

has no patents that prevent an ICS competitor from bidding successfully, and, in particular,

competing for the business currently sought by ICS. STI currently licenses its patented

technology to various ITS competitors that allows them to conduct their respective businesses

without fear of patent infringement lawsuits. STI is currently not pursuing patent litigation

against any ITS provider. ICS has no patents relating to its ITS platform. Thus, the Transaction

will have no net effect at all on the holdings of patents within the ITS industry. And contrary to

CAP’s uninformed assertions, there are no barriers (either with respect to STI or ICS) that would

make it more difficult for various competitors of ICS from bidding successfully for ICS

opportunities.

Finally, the commenters’ claims that rates for ITS will unquestionably rise11 ignore the

Joint Application’s express representation that there will be no changes in ICS’s rates, terms and

conditions under the contracts that ICS currently has in place.12 Thereafter, any changes in such

rates would be in accordance with applicable Federal or state requirements, including applicable

rate caps or tariffing requirements.13 Commenters’ bare assertions are without support in the

11
See e.g., CAP Comments at 5; Comments of Sarah Froio, WC Docket No. 18-193 (filed Jul.
13, 2018); Bryan Comments.
12
See Joint Application at 4; supra Section I.
13
In addition to being filed late, Mr. Wooten bases his comments on complaints about rate and
billing procedures at the Oahu Community Correctional Center (“OCCC”) in Hawaii. Neither
STI nor ICS currently provides services in Hawaii. The OCCC is in fact served by
GlobalTel*Link Corporation, so this comment is irrelevant to the Transaction. See State of
Hawaii, Department of Public Safety, Ohau Community Correction Center,
http://dps.hawaii.gov/about/divisions/corrections/occc/.
6

face of these commitments. Additionally, the commenters fail to recognize that STI does not

unilaterally dictate rates or commission levels to its customers. Jail administrators and counties

set rate and commission levels after balancing the needs of inmates, friends, family members and

those of public safety.14

III. CONCLUSION

The few commenters lodge unfounded assertions about the impact of the Transaction on

ITS competition and rates. As noted in response to the formal petition to deny, there are ample

successful competitors even for larger facilities. CAP’s claims about STI’s defense of its patents

to “control” competition are uninformed speculation. Claims about inevitable increases in ITS

rates to end users are nothing more than base assertions without evidence and fail to take into

account contractual and competitive realities. The Commission should summarily reject all

arguments that these comments use to justify rejection or delay in acting on the Joint

Application.

14
HRDC’s assertion that the ICS industry “controls the ability of prisoners to communicate with
their loved ones” is simply wrong — correctional facility administrators make decisions about
when, where and how prisoners are able to communicate. Comments of the Human Rights
Defense Center WC Docket No. 18-193, at 1 (filed Jul. 13, 2018).

7

Document Created: 2018-07-23 18:00:01
Document Modified: 2018-07-23 18:00:01

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