Installation of Telstra's payphone cabinets not exempt from planning approval

Telstra Corporation Limited v Melbourne City Council [2021] HCASL 82
Melbourne City Council v Telstra Corporation Limited [2020] FCAFC 200

What you need to know

• The High Court has refused Telstra special leave to appeal a recent decision of the Full Federal Court of Australia, which concerned the installation of Telstra payphone cabinets in the cities of Melbourne, Brisbane and Sydney (Telstra Corporation Limited v Melbourne City Council [2021] HCASL 82).
• The Full Federal Court held that the installation of the Telstra payphone cabinets was not exempt from planning laws (Melbourne City Council v Telstra Corporation Limited [2020] FCAFC 200). 
• The exemption for "low-impact facilities" did not apply because the payphone cabinets were intended to display commercial advertising on large digital screens (Telecommunications (Low-impact Facilities) Determination 2018 (Cth) and Schedule 3 Telecommunications Act 1997 (Cth)).

What you need to do

• Telecommunications providers and State and Local Government approval bodies should be aware that the "low-impact facilities" exemption may not cover evolving telecommunications technology.  Telecommunications facilities outside this exemption cannot be installed without State, Territory and local government approvals. 
• Telecommunications providers should carefully consider the classification of  facilities proposed to be installed under the "low-impact facilities" exemption.  If the exemption does not apply, additional time and resources will be required in order to obtain the necessary approvals and land access.
• Owners and managers of public land and infrastructure, who routinely receive Land Access and Activity Notice (LAANs) in relation to the installation of "low impact facilities" should consider and confirm whether new types of facility are exempt under the Determination.  The installation of non-exempt telecommunications facilities will require permission to access and occupy land, and rent may be payable.

High Court refuses to grant special leave to appeal

The High Court of Australia in Telstra Corporation Limited v Melbourne City Council [2021] HCASL 82 has denied Telstra Corporation Limited special leave to appeal the Full Federal Court of Australia decision in Melbourne City Council v Telstra Corporation Limited [2020] FCAFC 200.

The Full Federal Court found that, as Telstra's new payphones (referred to as New Payphone Cabinets) would display commercial advertising, they were not "low-impact facilities" for the purpose of the Telecommunications (Low-impact Facilities) Determination 2018 (Cth) (Determination) and therefore not authorised to be installed as such under schedule 3 of the Telecommunications Act 1997 (Cth) (the Telco Act).  Telstra sought special leave to appeal to the High Court.

The High Court held that Telstra's appeal lacked sufficient prospects of success and dismissed the application. The Full Federal Court decision is therefore authority on this matter.

How did we get here?

Telstra designed an updated phone cabinet which was more than three metres high and one metre wide and included a 75 inch LCD advertising screen on its back (New Payphone Cabinet).  The front of the cabinet included a shelf, a payphone and a smaller 32 inch screen.

Following the installation of an initial tranche of 34 New Payphone Cabinets in the Melbourne CBD, Melbourne City Councillors raised concerns in the media about the size and impact of the New Payphone Cabinets on the streetscape and footpath traffic.  Councillors also questioned the number and density of cabinets installed in key locations, and the use of public land to generate advertising revenue for Telstra without rental cost or compensation.

In 2019, JCDecaux Australia, working with Telstra, submitted planning permit applications to Melbourne City Council (Council) for the display of "electronic signs" on a second tranche of New Payphone Cabinets.  Telstra did not seek approval for the installation of the payphone cabinet structures, as under the Telco Act, Telstra has powers to install payphone cabinets as low-impact facilities, without needing to obtain planning permission.

Council refused the permit applications on the grounds that it considered that the New Payphone Cabinets were not low-impact facilities within the definition of the Determination, meaning the structures were subject to the controls in the Melbourne Planning Scheme, and that the cabinets were not acceptable under urban design, built environment, safety and public amenity clauses.  Council also initiated declaration proceedings in the Victorian Civil and Administrative Tribunal in relation to these applications.

In anticipation of proceeding with a national roll-out of the New Payphone Cabinets, Telstra subsequently commenced proceedings against Council in the Federal Court, seeking a declaration that the New Payphone Cabinets were in fact low-impact facilities  Brisbane and Sydney City Councils joined Council in the proceedings (together, the Councils).  On 10 March 2020, the primary judge in Telstra Corporation Limited v Melbourne City Council [2020] FCA 205 (Federal Court Decision) ruled in favour of Telstra and found that the New Payphone Cabinets were low-impact facilities.

The Councils appealed the Federal Court Decision, arguing that the New Payphone Cabinets were not low-impact facilities, because it was Telstra's intention to use the facilities for the display of third party commercial advertising once they were installed.

Key issues considered by the Full Court

The key issue in dispute was whether New Payphone Cabinets were low-impact facilities within the meaning of the Determination.

Item 6-1 of the schedule to the Determination prescribes that a "a public payphone cabinet or booth" will be a low-impact facility if meets the following four conditions:

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.

The central dispute arose in relation to the interpretation of condition (d).

Throughout the proceedings, Telstra submitted that Telstra's intention to use the New Payphone Cabinets to display commercial advertising was not relevant to the application of the Determination.  Rather, any intention of Telstra to display commercial advertising could only be considered to be a future, conditional intention. Telstra submitted that ultimately, whether the New Payphone Cabinets would display commercial advertising would depend on whether permission is granted by the relevant local authority, and as this might not occur, the New Payphone Cabinets currently satisfied condition (d).

Full Court decides that New Payphone Cabinets are not low-impact facilities

The Full Federal Court overturned the Federal Court Decision, finding that the New Payphone Cabinets were not low-impact facilities.

In reaching this decision, the Court considered two key commercial documents between Telstra and JCDecaux:

• The Advertising Program Agreement, which governs the rollout of the New Payphone Cabinets and involved a joint commercial undertaking between Telstra and JCDecaux that the New Payphone Cabinets would provide both telephone and commercial advertising services; and
• The Process Presentation, which indicated that the New Payphone Cabinets will not be installed unless and until planning approval is obtained to display commercial advertising.

Consequently, the Court found that Telstra's assertions were "artificial" as the evidence in the appeal clearly established that Telstra was "seeking to install payphone cabinets that display commercial advertising" and "nothing in the evidence to suggest that Telstra would install the New Payphone Cabinets if it does not receive planning permission to display commercial advertising" [para 124].

Furthermore the Court found that the New Payphone Cabinets are not low-impact facilities by virtue of the function they are designed for, being the display of commercial advertising.  This was made clear by the fact that the Cabinets were designed with a large screen at the rear of the cabinet (which faces away from the user of the payphone and to the public at large passing the Cabinet).

Ultimately, the Court concluded that Telstra's intended use of the New Payphone Cabinets was not a future, conditional intention to display commercial advertising as argued by Telstra.  Rather, Telstra's intended use was to display commercial advertising as evidenced by the commercial arrangements for their design and installation, and the steps taken to implement those arrangements.

As a result, the Court found that one of the functions the New Payphone Cabinets are designed to serve is "commercial advertising not limited to standard telephone advertising", and for this reason, the Cabinets do not satisfy condition (d) of Item 6-1 of the Determination, meaning they are not low-impact facilities.

Implications of the decision

This case illustrates that the interpretation of the Determination and the Telco Act can be a complex exercise, particularly when applied to new types of telecommunications infrastructure.  As telecommunications technology continues to evolve quickly, including the development of 5G and smart city networks, telecommunications providers and relevant approval bodies should be aware that the Determination may not cover evolving technology.  This may particularly be a risk where the applicable criteria in the Determination involves a consideration of the use or function of the facility, and the facility is to be used for multiple purposes.

Councils and State Governments responsible for planning approvals should note the impact of this decision for the installation of future telecommunications facilities around Australia. 

Owners and managers of public land (including roads, footpaths and structures such as bridges), should be aware that non-exempt telecommunications facilities cannot be installed without State, Territory or local government approvals and that there are also potential implications for the land access process.  Significantly, the standard land access process for low impact facilities, which involves the service of Land Access and Activity Notices (LAANs), is not available for facilities which fall outside the "low impact facility" exemption.  Consequently,  permission to access and occupy land may be required, and rent may be payable for occupying land with non-exempt facilities. 

Telecommunications providers should carefully consider the classification of facilities proposed to be installed under the "low-impact facilities" exemption, particularly if the facility is to be used for multiple purposes.  If the exemption does not apply, additional time and resources will be required in order to obtain the necessary planning approvals, and land access.

Authors: Sophie Osborn, Counsel; Tess Birch, Lawyer; Madeleine Noonan, Lawyer; Lucinda Merrett, Graduate.