Capitalism and Communication

James Kwak
4 min readMay 4, 2023
Photo by Eduardo Sánchez on Unsplash

Think about your phone. In addition to all the other things you can do with it, you can call or text people—family, friends, the dogwalker, the babysitter, the pizza place—in an instant. And, for most people in these days of unlimited calling and texting, the marginal cost of communication is zero. Even with the limited amount of competition in the American cellular industry, companies know they have to offer free calls and texts or lose their customers.

Unless, that is, you are in jail or prison, where it is especially important to be able to communicate with people in the outside world. There, phone calls are typically routed through a single monopoly provider, provided by a company most people have never heard of, at extortionate prices. And while cellular carriers are known for poor customer service, prison phone companies are far worse.

Last year, a federal judge approved a $67 million settlement by Global Tel*Link of claims that it stole money from customers by unilaterally closing prepaid accounts that been inactive for 90 days, without up-front agreement to that policy and without notice of impending closure. (Here’s the proposed settlement.) The settlement also required GTL to obtain prior consent from account holders, extend the inactivity period to 180 days, and provide 30 days’ notice. During the lawsuit, GTL falsely insisted that its customers had agreed to its inactive account policy. According to federal judge Amy Totenberg, however, “Critical discovery testimony and responses—and in turn, a centerpiece of GTL’s defense in this litigation—were based on a misrepresentation that boils down to a lie. . . . GTL insisted, over and over again in different variants, that this lie was the truth.”

I’m thinking about this case now because, next week, the Southern Center for Human Rights (of which I am a board member) is going to honor Caplan Cobb, the firm that brought the lawsuit against GTL, not only for this case but for many years of fighting to protect the rights of people caught up in the criminal legal system. Notably, Caplan Cobb was our co-counsel in the lawsuit against the infamous South Fulton Municipal Regional Jail, where women with mental illnesses were held in conditions that a federal judge called “repulsive.” (If you’re in the Atlanta area, you can register for the event here; I was going to attend, but I can’t make it because of family complications.)

But egregious as GTL’s behavior was, the depressing thing is that they only got busted for a technical contract violation: not obtaining consent for their policy of cleaning out inactive accounts. The much bigger problem with prison telephone companies is that they charge exorbitant amounts to literally captive customers. Even after years of campaigning and advocacy pioneered by the Prison Policy Initiative, the average 15-minute call still costs $3 from a jail and about half that from a prison. And, in a business practice reminiscent of the retail banking industry, prison phone companies add assorted fees that historically averaged almost 40 percent of charges for calls themselves.

Earlier this year, President Biden signed a bill that gave the FCC authority to regulate in-state calls from prisons and jails, which is a positive step. However, the FCC has regulated the price of out-of-state calls for almost a decade, and, while rates have declined, they still remain much higher than for people who are not incarcerated. In addition, the prison phone companies have responded to regulation of phone calls by expanding into other services such as video calls, which are more expensive, and even lobbying corrections agencies to eliminate in-person visits in favor of video-only visits.

The underlying problem here is that we are relying on market competition to regulate something that is not a market at all. People in prison or jail have no ability to shop around between different service providers. They face a monopoly provider chosen by a government agency that most emphatically does not have their interests in mind. The people working for that government agency choose a phone company based not on the price of phone calls, but on how much the company is willing to kick back to the agency (or, perhaps, on the dining and entertainment provided by that company’s sales representatives). In other words, phone companies are paying money to prisons for the right to make even more money off the people in those prisons.

This is far from the only context in which both private companies and government agencies see defendants and inmates not as people, but as sources of revenue. Another obvious example is the private probation industry, in which for-profit companies use the power of the state (notably, the power to jail people) in order to extract money from people on probation and pass some of that money back to the local government that hired them.

This is what capitalism does when unleashed on the criminal legal system: it pays off or captures the government in order to exploit defenseless people. In the process, it makes it harder for people to maintain connections with their communities or climb out of a pit of criminal system debt, increasing both hardship and recidivism—ultimately making all of us less safe.

For much more on the failings of the criminal legal system, see my new book with Stephen Bright, The Fear of Too Much Justice: Race, Poverty, and the Persistence of Inequality in the Criminal Courts, available from the New Press on June 20.



James Kwak

Books: The Fear of Too Much Justice, Take Back Our Party, Economism, White House Burning, 13 Bankers. Former professor. Co-founder, Guidewire Software. Cellist.