New Telstra payphone booths found not to be low impact facilities by the Federal Court

The appeal to the Full Court of the Federal Court of Australia in Melbourne City Council v Telstra Corporation Limited [2020] FCAFC 200 has resulted in a ruling that the controversial payphones currently being installed by Telstra across major Australian capital cities (New Payphone Cabinets) are not classified as ‘low-impact facilities’ (LIFs) for the purposes of the Telecommunications Act 1997 (Telco Act).

This appeal overturned the earlier decision of the Federal Court in Telstra Corporation Limited v Melbourne City Council [2020] FCA 285.

The practical effect of the judgement is that (subject to the same factual circumstances being established in South Australia) the New Payphone Cabinets are not exempted from state laws, including the need for development approval under the Development Act 1993 and authorisation under the Local Government Act 1999.

Background

In 2017, Telstra began modernising its public payphone network. This process involved installation of 1,860 New Payphone Cabinets across the country. This roll-out was planned in partnership with AdBooth, a wholly owned subsidiary of multinational advertising corporation JCDecaux. This is a commercially important issue, given that some estimates have shown that these billboards would earn up to $8,000[1] each per week.

The New Payphone Cabinets are equipped with wi-fi hotspots, a charging station and a traditional payphone. Controversially, they are also fitted with a 75-inch digital advertising screen which stands 2.64m tall. A number of these have been installed in metropolitan Adelaide.

Previous Litigation

The proceedings began when Telstra lodged planning permit applications to Melbourne City Council (MCC) for the display of promotional signage on 81 New Payphone Cabinets. The permit applications related solely to the advertising signage. Telstra claimed that approval for the installation of the New Payphone Cabinets was not required as they were LIFs as defined in the Telco Act. However, approval for displaying promotional material was still required under the Melbourne Planning Scheme. MCC refused the application on the grounds that the New Payphone Cabinets were not LIFs and therefore required a planning permit to be installed.

Following this refusal, Telstra applied to the Federal Court for a declaration that the New Payphone Cabinets are LIFs and installation is authorised without a planning permit. This proceeding was reported in Telstra Corporation Limited v Melbourne City Council [2020] FCA 285 (Initial Proceedings).

In the Initial Proceedings, Telstra argued that their New Payphone Cabinets were able to be installed on land belonging to another person without planning approval due to schedule 3 to the Telco Act, which relates to certain powers and immunities granted to telecommunications carriers. This schedule provides for a number of things; however, relevant to the current case, it allows a carrier to install certain facilities on land owned by others. Importantly, the legislation gives this power primacy over State and Territory town planning laws.

The effect of this is that certain items do not need planning approval. These items include LIFs. Clause 6(3) allows LIFs to be defined by the Minister through a legislative instrument. Accordingly, LIFs have been defined in Part 6 of the schedule to the Telecommunications (Low-impact Facilities) Determination 2018 (Cth) (the Determination) as a:

Public payphone cabinet or booth:

(a) used solely for carriage and content services; and

(b) not designed for other uses (for example, as a vending machine); and

(c) not fitted with devices or facilities for other uses; and

(d) not used to display commercial advertising other than advertising related to the supply of standard telephone services.

(emphasis added)

In the Initial Proceedings, the court determined that the New Payphone Cabinets were in fact LIFs and, as such, their installation was permitted without approval.

This was due to the fact that at the time of installation, the New Payphone Cabinets would only display advertising related to Telstra’s standard telephone services. This results in the New Payphone Cabinets fulfilling the definition of an LIF. The court did not think that it was relevant that the evidence showed Telstra had designed the New Payphone Cabinets to be used as a billboard and had intentions of doing so once they were installed and approval to do so was granted or that the roll-out of the New Payphone Cabinets was being carried out via a contractual arrangement with a multinational advertising corporation. MCC appealed from this decision.

The Decision

On 20 November 2020, the Full Court of the Federal Court handed down its findings in this appeal. The key question in this proceeding was whether or not the New Payphone Cabinets are classified as LIFs. Overturning the decision of the lower court, O’Bryan J (with Gleeson J agreeing) determined that the New Payphone Cabinets did not meet the criteria for an LIF. O’Bryan J said (at 162):

“In my view, the evidence establishes that the New Payphone Cabinets, which are proposed to be installed by AdBooth and Telstra pursuant to the Advertising Program Agreement, are not low-impact facilities because they fail to satisfy condition (d) of Item 6-1 of the Determination. In short, one of the functions which the proposed New Payphone Cabinets is designed to serve is the display of commercial advertising other than advertising related to the supply of standard telephone services.”

He continues (at 169):

“In my view, the evidence adduced at trial requires a conclusion that the proposed New Payphone Cabinets are not low-impact facilities because the function they are designed to service is the display of commercial advertising. As stated earlier, Item 6-1 of the Determination must be construed in a practical manner and, by the same reasoning, must be applied in a practical manner. It can be accepted that a future use of the proposed New Payphone Cabinets to display commercial advertising that is remote or speculative would not satisfy condition (d). However, in this case, commercial advertising is not remote or speculative. Such use is one of the central functions that the New Payphone Cabinets is designed to serve.”

Take Home Messages

Effect of this Decision – Do All New Payphone Cabinets Require Planning Approval?

This decision clearly places the New Payphone Cabinets that were the subject of the appeal outside the definition of LIFs in the Telco Act and the Determination.

While the judgement turned substantially on the evidence of the contractual arrangements in place between Telstra and its advertising partner in the eastern states, it may be assumed that similar contractual arrangements exist in South Australia. If that is true, then the effect of the judgement is that the New Payphone Cabinets are not exempt from South Australian planning and local government laws. As such, Telstra would require both development approval under the Development Act, and a permit under the Local Government Act in order to lawfully install the New Payphone Cabinets.

High Court Appeal

An application for special leave to appeal this decision was filed at the High Court of Australia on 18 December 2020. At the date of publishing this article, there is no date set for when that application will be decided. However, it is important to note that this means that the determination in the judgment as to the status of the New Payphone Cabinets may be adjusted or overturned by the High Court on appeal.

For more specific information on any of the material contained in this article please contact Peter Psaltis on +61 8 8210 1297 or ppsaltis@normans.com.au or Lachlan Goddard on +61 8 8210 1227 or lgoddard@normans.com.au

[1] https://www.abc.net.au/news/2019-02-12/telstra-billboard-payphones-arriving-in-south-australia/10800876