As for scalability... I was thinking that for sure free access to internet would be very hard to monitor, but say you limit it to email: That would be certainly much, much easier (hence cheaper) to monitor than what we currently have.

Every written letter must be opened and read, possibly with an horrible script which takes time to "decipher". Besides, I don't know if they keep copies of all the mail in case something happens, but it would be orders of magnitude harder to index and search than email anyway. Phone calls are even worse, since you need at least as much time to monitor the conversation as the conversation lasts.

Maybe introducing email would shift some of the friends and family to use this cheaper means of communication, reducing costs. Or maybe Jevons paradox applies here and the number of emails would go up to such an extent that the improved efficiency would not make up for the increased traffic.

P.S.: just to make it clear, I'm not advocating for the inmates to have their phone calls replaced for emails.