In Telstra Corporation Limited v Melbourne City Council [2020] FCA 285 (the Telstra decision) the Federal Court ruled that installation of Telstra’s new payphones is authorised by Schedule 3 to the Telecommunications Act 1997 (the Telecommunications Act) because it involves the installation of ‘low impact’ facilities. In doing so, the Court operated on the assumption that the use of the digital screens to display third party advertising would require a planning permit.

The Telstra decision has implications for councils responding to permit applications for third party advertising on the new payphones.

What's happened?

In November 2018, Telstra lodged permit applications to Melbourne City Council (MCC) for the display of promotional signage on 81 new payphones throughout Melbourne, with the intention of making similar applications in Brisbane and Sydney and rolling out 1,800 new payphones across Australia.

The permit applications requested approval of the change of content on the proposed digital screens from promoting Telstra standard telephone services to third-party commercial advertising. At the time of making the applications, Telstra asserted that the installation of the payphones was permitted as ‘low impact’ facilities under the Telecommunications Act and therefore did not require a permit.

MCC refused the applications on the grounds that the proposed payphones with digital screens intended for third party advertising were not ‘low impact’ facilities and subject to the Melbourne Planning Scheme.

Telstra then applied to the Federal Court for a declaration that the payphones are ‘low impact’ facilities and installation is authorised without a planning permit pursuant to Telstra’s powers as a telecommunications carrier under the Telecommunication Act.

Telstra’s powers

Clause 6 of Schedule 3 to the Telecommunications Act provides Telstra, as a telecommunications carrier, with land access powers and immunity from state planning and environment laws for:

installation of declared ‘low impact’ facilities

‘Low impact’ facilities are defined in Part 6 of the Schedule to the Telecommunications (Low-impact Facilities) Determination 2018 (Cth) (the Determination) as including:

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 decision

MCC argued that Telstra’s intended use of the new payphones for third party advertising meant that they fell foul of the definition of ‘low impact’ facilities in the Determination. MCC argued:

The reasons why it is not a low-impact facility include, and indeed included [as] their most important reason, the fact that it is plain that the facility is to be used for the display of third-party commercial advertising…^[1]

^[i]t is apparent from the evidence that Telstra…[is] seeking to take advantage of Part 6 of the Determination to install structures that act as electronic billboards for third-party commercial advertising. ^[2]

The Court did not agree. Instead, the Court found that whether Telstra is able to eventually display commercial advertising on the payphones is a matter for the relevant local planning authority. In coming to this finding the Court asked:

…whether, if planning permission to display commercial advertising were granted, (i) the New Payphone Cabinets would continue properly to be characterised as low-impact facilities, ⁽ⁱⁱ⁾ installation of any such cabinets would be “invalidated”, or (iii) Telstra’s statutory powers and immunities would be relevantly affected, may never arise.^[3]

The Court therefore determined that installation of the payphones was permitted because, at the time of installation, the payphone can only display advertising related to Telstra’s standard telephone services. This accounts for the possibility that, although Telstra intends to use the screens for third party advertising, this may never eventuate.

The effect of the Court’s decision is that Telstra can install payphones with digital screens capable of being used for any type of advertising. At the point Telstra wants to use the screens for third party advertising, the Court operated on the assumption that it will require a planning permit.

What type of planning approval is required for third party advertising?

Given the Federal Court’s decision, we expect that Telstra will soon lodge applications for approval to display third party advertising on the new payphones as part of its national rollout.

This gives rise to a critical question facing Victorian councils - what type of approval does Telstra actually require in order to change the content of the screens to allow for third party advertising?

Permission to change the advertising content of the digital screens

The Court stated:

town planning approval is required to use those digital screens to display third-party commercial advertising.bria

With respect, it is difficult to see what planning approval the Court is referring to in the context of the Victorian Planning Schemes.

Electronic screens displaying advertising would usually be considered to be a ‘promotion sign’ under the planning scheme. Clause 52.05 (Signs) regulates the development of land for a sign. However, as far as we can see, no building or works are needed in order to change the digital screen content to third party advertising.

Since the approval of Amendment VC148 on 31 July 2018, it is clear that clause 52.05 does not regulate the use of land for a sign. Therefore, there is no ‘use’ trigger in respect of the electronic screens to display third party advertising.

A change of content of a sign does not require a planning permit unless it would result in a new type of sign. This is clearly not the case with the Telstra payphones as the sign embedded in the payphones would be considered an electronic promotion sign whether it advertises standard telephone services or third-party content.

Despite the comments by the Court and Telstra, we cannot see how it would be possible for Telstra to apply for a permit to ‘use’ the digital screens to display third party advertising.

Permission for the use of land for ’telecommunications facilities’

There is a further issue to consider regarding the permission to use land for ‘telecommunications facilities’. This issue does not seem to have been argued before by the Court.

In many zones, use of land for a telecommunications facility requires a planning permit. Given that a payphone is “part of the infrastructure of a Telecommunications network”, a payphone is by definition (clause 73.03) a telecommunications facility.

Carriers rely on clause 62.01 and clause 52.19 of the planning scheme to provide an exemption for the requirement to obtain approval for the use of land for a telecommunications facility. One of the exemptions is ‘telecommunications facilities’ that meet the criteria for a ‘low-impact’ facility defined under the Telecommunications Act.

However, once third party advertising is displayed on the digital screens, the payphones will no longer be considered a ‘low impact’ facility, given that the payphones would fail criteria (d) of the definition in the Determination. There is a real issue therefore as to whether the use of the land for telecommunications facility will continue to fall within the exemption in clause 62.01 and 52.19 of the Scheme.

It will need to be determined whether, once the content on the screens changes to third party advertising, the use of the land for a telecommunications facility will be subject to the provisions of the Victorian Planning Scheme and result in the requirement for a permit.

This is particularly so given the Court’s observations at paragraphs 117 and 118 of its reasons:

However, Telstra’s contention that criterion (d) in the Determination does not require a facility to continue to operate, or to continue to be used, as a low-impact facility after its “installation” derives no support from the language of the Determination.

In my view, the fact that cl 6(1) of Schedule 3 to the Telecommunications Act empowers a carrier to “carry out the installation of a facility if… the facility is a low-impact facility” is no basis for reading into criterion (d) in the Determination the words limitation “at the time of installation”. …

Way forward for councils

The Telstra decision presents an interesting dilemma for councils and VCAT particularly because, in our view, there appears to be no scope for a permit requirement to be triggered by the change in advertising content.

At the very least we recommend that councils that receive applications for a permit to authorise the display of third party advertising on payphones request the permit applicant to specify the provisions under the planning scheme that trigger the permit requirement.

There is then the question of whether the change in content to third party advertising triggers the need for a permit to use the land for telecommunications facility.