If it walks like a duck… Telstra’s new payphones and what they mean for the streetscape

If it walks and quacks like a duck, it’s probably a duck… This is what the Full Court of the Federal Court decided in considering whether or not Telstra’s new payphone cabinets, which feature large digital billboards, constituted ‘low-impact facilities’ (which would be exempt from State and Territory planning laws).[1]

Importance of decision

The decision is important as Telstra has been planning to install up to 1800 new payphone cabinets throughout the country. Telstra, subject to receiving necessary regulatory approval, intended to display commercial advertising on the digital billboards attached to the cabinets.

The Court’s decision means that the payphone cabinets don’t constitute low-impact facilities, Telstra will be required to seek local planning authority to install the cabinets.

The 1.9 metre screens would have provided significant competition for other out-of-home advertisers and a significant disincentive for local councils to enter into contracts with street furniture providers (who generally make a return on their investment via advertising on the furniture). A number of these payphones had already been installed in capital cities throughout Australia. They are positioned prominently on footpaths, at the eye line of pedestrians, and compete directly with other out of home media that are positioned at transport stops and similar street furniture.

However the decision may have an impact on how Telstra funds the installation and maintenance of public payphones, and whether payphones are upgraded as Telstra had planned.

Low-impact facility

Clause 6 of Division 3 of Schedule 3 of the Telecommunications Act 1997 (Telco Act) allows carriers to install a facility, if the facility is a low-impact facility for purposes connected with the supply of a carriage service.[2]

The Telecommunications (Low‑impact Facilities) Determination 2018 (Determination) provides that a public payphone cabinet or booth will be a low-impact facility provided that it is:

1. 1. used solely for carriage and content services; and
   2. not designed for other uses (for example, as a vending machine); and
   3. not fitted with devices or facilities for other uses; and
   4. not used to display commercial advertising other than advertising related to the supply of standard telephone services.

Importantly, Clause 37 of Division 7 of Schedule 3 to the Telco Act provides that an activity carried out under Divisions 2, 3 or 4 of Schedule 3 is exempt from various State or Territory Laws, including those relating to town planning.

Telstra sought to rely on this exemption to install its payphones without applying for planning approvals, arguing that as the screens would not display commercial advertising at the time of installation, or until necessary approval was received, the installation of the cabinets did not offended condition (d).

Background

In 2019 Telstra began to install these new payphone cabinets. Urbis Pty Ltd as agent for Telstra made 81 applications to Melbourne City Council to display commercial advertising on 81 new payphone cabinets. Melbourne City Council rejected the applications and applied to Victorian Civil and Administrative Tribunal (VCAT) seeking declarations under s 149A of the Planning and Environment Act 1987 (Vic) that the payphone cabinets were not low-impact facilities.

Telstra applied to the Federal Court at first instance for a determination that the payphone cabinets were low-impact facilities. Brisbane City Council and the City of Sydney Council joined those proceedings. The Court at first instance found in favour of Telstra.[3] This case was an appeal from that initial decision.

Appeal to Full Federal Court

In brief, the case turned on whether the installation of the new payphone cabinets offended condition (d) of Item 1 of Part 6 of the Determination.

As mentioned above, Telstra argued that as the screens would not display commercial advertising at the time of installation, or until necessary approval was received to do so, the installation of the cabinets did not offended condition (d). However the Court commented on the apparent paradox in this argument, pointing out that if the evidence shows that, at the time that of the installation the activity of displaying commercial advertising was expected to be undertaken, the installation will not be authorised by Schedule 3 of the Telco Act.

The Court held by a majority that a central function of the new cabinets is to display commercial advertising[4]. This was evidenced by the fact that Telstra had entered into an Advertising Program Agreement with AdBooth (a subsidiary of JCDecaux, a major out of home advertising company) in relation to the digital billboards, and that new cabinets (which were the subject of the appeal) were proposed to be installed after receiving approval to display commercial advertising.[5]

Universal Services Obligation

Telstra is obliged to provide payphones throughout the country under the Universal Services Obligation. Under the Telecommunications Universal Services Obligation Performance Agreement (TUSOPA), the Commonwealth pays Telstra $44 million per year for Telstra to “supply, install and maintain public payphones and supply public carriage services so that payphones are reasonably accessible to all people in Australia on an equitable basis.”[6] The Determination is intended to aid Telstra to meet its obligations under the TUSOPA by allowing it to install payphones in appropriate locations, without having to undergo the planning approvals process.

The TUSOPA expires in 2032. Some may consider it curious that Telstra could profit off of a facility which is otherwise paid for and maintained by the Commonwealth. It is hard to predict whether public payphones will exist in 2032 or beyond. If they do, perhaps the Determination could be amended to allow them to be more easily commercialised, to subsidise their installation and maintenance. If this occurred, the contribution from the taxpayer could be reduced or possibly even removed.

However in the writers’ opinion, this does not justify Telstra calling these cabinets ‘payphones’, when in fact they are advertising panels that happen to also house a public telephone.

Authored by:

Antoine Pace, Partner
Gabe Abfalter, Associate

[1] Melbourne City Council v Telstra Corporation Limited [2020] FCAFC 200.

[2] Paragraph 6(1)(b) of Schedule 3 to the Telecommunications Act 1997.

[3] Telstra Corporation Limited v Melbourne City Council [2020] FCA 305.

[4] Melbourne City Council v Telstra Corporation Limited [2020] FCAFC 200 at [169].

[5] Melbourne City Council v Telstra Corporation Limited [2020] FCAFC 200 at [166] and [167].

[6] https://www.communications.gov.au/who-we-are/department/funding-reporting/telecommunications-contract-and-grant-registers.