FEDERAL COURT OF AUSTRALIA

Telstra Corporation Ltd v Seven Cable Television Pty Ltd [2000] FCA 1160

TRADE PRACTICES – telecommunications – promotion of competition in relation to analogue cable television services – facilitation of access under Part XIC of Trade Practices Act 1974 – specification of eligible services by Australian Competition and Consumer Commission (“ACCC”) pursuant to transitional legislation – whether invalid by reference to elements purportedly specified – effect of invalidity – whether void ab initio – later declaration by ACCC of services pursuant to s 152AL of the Trade Practises Act – whether earlier specification if valid was deemed a declaration under s 152AL – whether could co-exist with later declaration of services dealing with same subject matter – whether revocation of earlier declaration necessary

TRADE PRACTICES – telecommunications – declaration of listed services by ACCC pursuant to s 152AL of Trade Practices Act – ACCC required to have regard to extent declaration likely to result in achievement of objective of promotion of competition in markets for listed services – whether required to define relevant market – whether took into account irrelevant considerations or did not take into account relevant considerations – whether no evidence for findings – extent of judicial review of ACCC

ADMINISTRATIVE LAW – JUDICIAL REVIEW - appeal from review of administrative decision – determination by ACCC in relation to promotion of competition – relevance of expert evidence to reviewing judge – whether failure to take into account relevant considerations – alleged taking account of irrelevant considerations – alleged predetermination – alleged error of law – whether no evidence to support conclusions – whether sought impermissible review of merits

ADMINISTRATIVE LAW – effect of invalidity of determination – whether void ab initio – co-existence of declarations where one is a deemed exercise of other power – whether can be later declaration if earlier declaration in existence

PRACTICE AND PROCEDURE – expert economic evidence – admissibility – trail judge discretion – relevance to judicial review of ACCC findings

Trade Practices Act 1974 (Cth)

Telecommunications Act 1997 (Cth)

Telecommunications (Transitional Provisions and Consequential Amendments) Act 1997 (Cth)

Acts Interpretation Act 1901(Cth)

Administrative Decisions (Judicial Review) Act 1977 (Cth)

Telecommunications Act 1997 (Cth)

Trade Practices Amendment (Telecommunications) Act 1997(Cth)

Broadcasting Services Act 1992 (Cth)

Ousley v R (1997-8) 192 CLR 69

Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1

Calvin v Carr [1980] AC 574

Hoffman Laroche v Trade Secretary [1975] AC 295

Reg v Wilks [1998] AC 92

Forbes v New South Wales Trotting Club Ltd (1979) 143 CLR 242

South Australia v The Commonwealth (1942) 65 CLR 373

GJ Coles v Retail Trade Industry Tribunal (1987) 7 NSWLR 503

Re Governor; ex parte Eastman (1999) 73 ALJR 1324

Rail Access Corporation v NSW Mineral Council Ltd (1998) 87 FCR 517

Hammersley Iron Pty Ltd v National Competition Council (1999) 164 ALR 203

In re Sydney International Airport [2000] ACompT 1

Price v Elder [2000] FCA 133

Foster v Minister for Customs & Excise (2000) HCA 38; (2000) 13 Leg Rep 23

Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259

Minister for Immigration & Multicultural Affairs v Eshetu (1999) 197 CLR 611

Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24

Reg. v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45

Abebe v Commonwealth of Australia (1999) 162 ALR 1 Abebe v Commonwealth of Australia (1999) 197 CLR 510

Waterford v Commonwealth (1987) 163 CLR 54

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321

Minister for Immigration & Multicultural Affairs v Epeabaka (1999) 84 FCR 411

TELSTRA CORPORATION LIMITED, TELSTRA MULTIMEDIA PTY LIMITED AND TELSTRA MEDIA PTY LIMITED v SEVEN CABLE TELEVISION PTY LIMITED, TELEVISION AND RADIO BROADCASTING SERVICES AUSTRALIA PTY LIMITED, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, FOXTEL MANAGEMENT PTY LIMITED, SKY CABLE PTY LIMITED, THE NEWS CORPORATION LIMITED AND NEWS LIMITED

NO N 508 of 2000

FOXTEL MANAGEMENT PTY LIMITED v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

NO N 527 of 2000

FOXTEL MANAGEMENT PTY LIMITED v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

NO N 528 of 2000

FOXTEL MANAGEMENT PTY LIMITED, SKY CABLE PTY LIMITED, THE NEWS CORPORATION LIMITED AND NEWS LIMITED v SEVEN CABLE TELEVISION PTY LIMITED TELEVISION AND RADIO BROADCASTING SERVICES AUSTRALIA PTY LIMITED, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, TELSTRA CORPORATION LIMITED, TELSTRA MULTIMEDIA PTY LIMITED AND TELSTRA MEDIA PTY LIMITED

NO N 529 of 2000

JUDGES: BEAUMONT, MOORE & GYLES JJ

DATE: 18 AUGUST 2000

PLACE: SYDNEY

THE COURT ORDERS THAT:

1.                  In appeal N 527 of 2000, the appeal is dismissed, with costs.

2.                  In each of the appeals N 508 of 2000 and N 529 of 2000:-

(a)                The appeal is allowed in part, with no order as to costs. It is ordered that orders 1 and 3 made at first instance on 8 May 2000 be set aside; and that, in lieu thereof, it be declared that the Deeming Statement dated 30 June 1997 is void; and that there be no order for the costs of proceedings N 1095 of 1999 – at first instance. Appeal otherwise dismissed, with costs.

(b)               The cross-appeal is dismissed, with no order as to costs.

3. In appeal N 528 of 2000, the appeal, and the cross-appeal, are dismissed, with no order as to costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

INDEX

INTRODUCTION....................................................................................................... 4

(a) The Declaration made in September 1999............................................... 6

(b) The Deeming Statement made in June 1997............................................. 7

THE CHALLENGES TO THE DEEMING STATEMENT AND THE PRIMARY JUDGE’S RESPONSE 9

(1) The terms of the statement....................................................................... 9

(2) The summary of the statement published in the Gazette........................... 13

(3)               The grounds of the challenges to the validity of the Deeming

Statement before the primary Judge....................................................... 15

(4)               His Honour’s conclusions...................................................................... 16

(a)                Did the publication in the Gazette comply with

s39(9) and if not, did this invalidate the Deeming

Statement?................................................................................ 16
(b) Could reference be made to Attachment B in

considering the meaning and operation of

the Deeming Statement in the context of the

argument that the Deeming Statement was

uncertain?................................................................................. 16
(c) Was Attachment B uncertain?.................................................... 16
(d) Did the reference to the optional adjunct services

made in the context of a description of a single

service render the Deeming Statement uncertain?....................... 17
(e) Severability of the Deeming Statement........................................ 18

THE CHALLENGES TO THE DECLARATION AND THE PRIMARY JUDGE’S RESPONSE 18

(1)               The legislative scheme........................................................................... 18

(2)               The background – the ACCC Report.................................................... 20

(3)               The challenges to the Declaration and the primary Judge’s response....... 30

(4)               Telstra’s application to amend its defence and cross-claim..................... 33

CONCLUSIONS ON TELSTRA’S CHALLENGES.............................................. 34

The 1999 Declaration: whether two declarations could co-exist........................ 34

What if the 1997 Deeming Statement was invalid?............................................. 36

Other grounds of attack on the 1999 declaration – FOXTEL issues................... 38

Validity of the Deeming Statement..................................................................... 38

1999 Declaration – FOXTEL arguments........................................................... 40

CONCLUSIONS ON FOXTEL’S CHALLENGE TO THE DECLARATION ON ADMINISTRATIVE LAW GROUNDS 42

ORDERS ............................................................................................................ 51

REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION

1                     These are appeals, and cross-appeals, from orders made by a Judge of the Court (Wilcox J) in four proceedings which arose out of claims for access to cable television facilities by programme providers. The proceedings were associated with other proceedings (N 1095 of 1999) dealt with by another Judge (Tamberlin J) in which appeals were heard by us and in which we have also given judgment today (N 309 and N 324 of 2000). These reasons should be read in conjunction with our reasons in N 309 and N 324 of 2000.

2                     In the first proceeding (N 1088 of 1999 (on appeal N 527 of 2000)), FOXTEL Management Pty Ltd (“FOXTEL Management”) challenged the validity of a declaration (“the Declaration”) made by the Australian Competition and Consumer Commission (“the ACCC”) under s 152AL(3) of the Trade Practices Act 1974 (Cth) (“the TPA”). This provision is in Part XIC of the TPA dealing with a telecommunications access regime. One feature of the regime is that if a carrier or carriage service provider supplies “declared services”, it will be taken to be an “access provider” with “standard access obligations”.

3                     Section 152AL(3) provides that the ACCC may declare that a specified “eligible service” is a “declared service” in certain circumstances. An “eligible service” is a “listed carriage service” (or a service that facilitates the supply of a listed carriage service) within the meaning of the Telecommunications Act 1997 (Cth) (“the TEA”) where the service is supplied, or is capable of being supplied, by a carrier or a carriage service provider (whether to itself or to other persons). The definition of “listed carriage service” in the TEA includes (s 16(1)(a)) a carriage service between a point in Australia and one or more other points in Australia. “Carriage service” is defined to mean (s 7) a “service for carrying communications by means of guided and/or unguided electromagnetic energy”. It is common ground that the service in question is an “eligible service” provided by Telstra Multimedia Pty Ltd.

4                     As noted, a declaration under s 152AL(3) may only be made if certain circumstances exist, that is to say:

·                    The ACCC has held a public inquiry under Part 25 of the TEA (s 152AL(3)(a)); and

·                    The ACCC has prepared, and published within a specified time, a report about the inquiry under s 505 of the TEA (s 152AL(3)(b) and (c)); and

·                    The ACCC is satisfied that the making of the Declaration will promote the long-term interest of end-users (“the LTIE”) of carriage services or of services provided by means of carriage services (s 152AL(3)(d)).

5                     In determining whether a particular thing promotes the LTIE, regard must be had to the extent to which the thing is likely to result in the achievement of specified objectives, including the objective of promoting competition in markets for listed services (s 152AB(2)(c)), and encouraging the economically efficient use of, and economically efficient investment in, the infrastructure by which listed services are supplied (s 152AB(2)(e)).

(a) The Declaration made in September 1999

6                     The Declaration which is the subject of the proceeding, and which took effect on 8 September 1999, declared that the Analogue Subscription Television Broadcast Carriage Service there described is a “declared service” for the purposes of Part XIC of the TPA. The service is there described as follows:

“The Analogue Subscription Television Broadcast Carriage Service is:

A service for the carriage, by means of lines, of analogue signals used for the purposes of transmitting a subscription television service from a facility owned, controlled or operated by a carrier or carriage service provider to any point on, or in, a line link, customer cabling, or customer equipment connected to that facility.

Examples of this service are the delivery of analogue signals used for the purposes of transmitting a subscription television service to:

(a)               an end-user’s television set;

(b)               conditional-access customer equipment of an end-user, or potential end-user, of a subscription television service;

(c)               a wall socket at the premises of an end-user, or potential end-user, of a subscription television service;

(d)               a point on a line link from which a lead-in connection may be run to the premises of an end-user, or potential end-user, of a subscription television service …”

7                     Thus the purported effect of the Declaration was to subject analogue subscription television broadcast carriage services to the statutory competition regime.

8                     In this matter Wilcox J rejected FOXTEL’s challenge, and made a declaratory order that the Declaration was valid. FOXTEL now appeals from this order.

(b) The Deeming Statement made in June 1997

9                     In the second proceeding (N 1150 of 1995 (on appeal N 528 of 2000)), FOXTEL challenged the validity of a decision of the ACCC being a statement “Deeming” certain “Telecommunications Services” to be “declared services” (“the Deeming Statement”). It was made on 30 June 1997 under s 39 of the Telecommunications (Transitional Provisions and Consequential Amendments) Act 1997 (Cth) (“the Transitional Act”). Section 39 relevantly provides:

“(1) As soon as practicable after this section commences, but, in any event, before 1 July 1997, the ACCC must prepare a written statement specifying [certain matters not material here].

…

(5)               The ACCC must also specify in the statement an eligible service that is:

(a)               necessary for the purposes of enabling the supply of a broadcasting service by means of line links that deliver signals to end-users; and

(b)               of a kind that was used for those purposes on 13 September 1996.

…

(7) The ACCC must consult AUSTEL [the Australian Telecommunications Authority] about the preparation or variation of the statement.

(8)   The ACCC must not prepare or vary the statement unless the ACCC has first:

(a)               published a draft of the statement or variation and invited people to make submissions to the ACCC on the draft; and

(b)               considered any submissions that were received within the time limit specified by the ACCC when it published the draft.

(9) A copy of the statement, and of any variation of the statement, is to be published in the Gazette.

(10) Part XIC of the [TPA] has effect, in relation to an eligible service specified in the statement, as if the ACCC had:

(a)               made an instrument under subsection 152AL(3) of the Act declaring the service to be a declared service; and

(b)               complied with the requirements set out in subsection 152AL(3) of that Act in relation to the instrument.

(11)           This section does not prevent the instrument referred to in paragraph 10(a) from being varied or revoked by the ACCC in accordance with section 152AO of the [TPA].”

10                  The services specified in the Deeming Statement made pursuant to s 39 included:

“(xi) Broadcasting access service

An analogue service necessary for the purposes of enabling the supply of a broadcasting service by means of line links that deliver signals to end-users, and of a kind that was used for those purposes on 13 September 1996. This is an access service which provides a basic carriage and distribution access function together with other functions as requested.”

11                  A summary of the statement was published in the Gazette on 9 July 1997.

12                  Wilcox J upheld FOXTEL’s challenge in part, concluding the statement was invalid to the extent that it purported to include the last sentence. Accordingly, his Honour made a declaratory order that the Deeming Statement –

“is valid and effective in law to the extent, and only to the extent, that it specifies as an access service the following service:

‘The service, being an analogue service supplied by an (access provider), necessary for the purposes of enabling the supply by an (access seeker) of a broadcasting service by means of line links that deliver signals to end-users, and of a kind that was used for those purposes on 13 September 1996’.”

13                  FOXTEL now appeals from this order, seeking a declaratory order that the statement was wholly invalid. The ACCC has filed a notice of contention seeking to uphold his Honour’s order for other reasons. The ACCC has also cross-appealed, seeking a variation of his Honour’s declaration.

14                  In the third proceeding (N 1095 of 1999 (on appeal N 508 and N 529 of 2000)) Seven Cable Television Pty Limited (“Seven”) sought negative declaratory orders that no relevant “protected contractual right” and no relevant “deprivation” within the meaning of s 152AR(4) existed. In this proceeding FOXTEL and Sky Cable Pty Ltd cross-claimed for positive declarations on that subject. The Telstra parties cross-claimed for similar relief. They also cross-claimed for orders that the Deeming Statement and the Declaration were void or voidable and for orders setting them aside. (There are also interlocutory appeals in this matter – see below.)

15                  On 28 January 2000, Tamberlin J directed that the “public law” issues raised in the cross claims be referred to Wilcox J and be tried by his Honour at the same time as proceedings N 1088 and N 1150 of 1999.

16                  In the fourth proceeding (N 217 of 2000 (on appeal N 526 of 2000)), instituted after the commencement of the hearing by Wilcox J of the three earlier proceedings, FOXTEL and FOXTEL Cable Television Pty Ltd (“FOXTEL Cable”) sought a negative declaration that neither of them was a “carrier” or a “carriage service provider” within the meaning of the TEA. Wilcox J refused the negative declaration and instead made a declaratory order that both FOXTEL and FOXTEL Cable, as the suppliers of the service known as “FOXTEL subscription television service”, together constitute a “carriage service provider” within the TEA. Both FOXTEL parties have appealed from this order. Seven has cross-appealed on the form of the order, seeking that it be varied so that it may be read distributively. We have dealt with this appeal and cross-appeal in separate reasons published today.

17                  As mentioned, also before this Full Court are two interlocutory appeals by leave granted in N 1095 of 1999. In that matter, the Telstra parties applied to Wilcox J during the hearing to amend their defence and cross-claim. His Honour refused the application, which was renewed before Tamberlin J, who also refused it. Wilcox J has granted leave to appeal.

THE CHALLENGES TO THE DEEMING STATEMENT AND THE PRIMARY JUDGE’S RESPONSE

(1)               The terms of the statement

18                  As has been noted, s 39(1) and (5) of the Transitional Act, which commenced operation on 3 May 1997, shortly after the commencement of Part XIC of the TPA, required the ACCC no later than 1 July 1997 to prepare a written statement specifying an eligible service that was (a) necessary for the purposes of enabling the supply of a broadcasting service by means of line links that deliver signals to end-users; and (b) of a kind that was used for those purposes on 13 September 1996. A copy of the statement, and of any variation, was to be published in the Gazette (s 39(a)). The ACCC prepared the Deeming Statement, bearing date 30 June 1997 in the following format: (1) a summary including a table of services specified (“Table A”); (2) the content of the statement dealing with the following topics: Introduction, Rationale of Part XIC, Framework for deeming of services, Deeming of services covered by existing access agreements, Deeming of (advanced mobile phone system) services, Deeming of broadcast carriage services, Operation of (the) regime, and Conclusion; and (3) Two appendices (“Attachments A and B”) being (a) a specification of other deemed services (not presently relevant); and (b) a specification of broadcast access service.

19                  In the Introduction, the ACCC stated:

“The deeming process is intended to achieve a smooth introduction of the new telecommunications access regime by essentially retaining existing access rights for carriers, extending those rights to existing service providers and new entrants and providing access to the carriage of broadcasting services over cable networks. On an ongoing basis, declarations may take place on the recommendation of the Telecommunications Access Forum (TAF) or after a public inquiry by the Commission.

Carriage services and services that facilitate the supply of carriage services will be eligible for declaration under the regime …”

20                  The ACCC described its understanding of the legislation’s rationale:

“The primary rationale underlying the telecommunications access regime is that the interests of end-users of telecommunications services can be promoted through the introduction of effective competition into potentially competitive markets which require the services of certain ‘bottleneck’ infrastructure. In particular, certain network elements may exhibit natural monopoly characteristics such that a single network element can produce all relevant market output at a lower cost than two or more elements. Typically, this will reflect economies of scale and scope in production.

In the absence of an access regime, the owners of such natural monopoly network elements may be in a position to inhibit or distort competition in markets which require the use of the bottleneck services. For instance, the owner of a local [customer access network] may be able to obstruct competition in the market for long-distance telephone services through denying or restricting access to the local network. The incentive to try to limit competition in the related market may be present where the owner of the bottleneck facility has a commercial arm in the related market.

The access regime establishes rights for service providers to negotiate access to bottleneck services on reasonable terms and conditions. This is designed to create greater competition in the markets which rely on the bottleneck services, and thereby promote more efficient production and lower prices for consumers.”

21                  In explaining the framework for deeming services, the ACCC said:

“Consistent with Part IIIA [the general access regime of Part IIIA of the TPA], the telecommunications access regime provides for the declaration of a service provided by means of an infrastructure facility rather than declaration of the infrastructure itself. This recognises that a facility may be used to provide multiple services, only some of which it might be in the interests of end-users to declare.

The declaration of services that facilitate the supply of carriage services is intended to allow for access obligations to be attached to blocks of functionality, or other inputs, which, while not carriage services themselves, may be used to produce a carriage service. In this regard, it will facilitate the efficient unbundling of services.”

22                  The subject of deeming broadcast carriage services, important for present purposes, was dealt with by the ACCC as follows:

“The Commission is not required to take account of the LTIE criteria when deciding whether to deem services under s.39(5) (although the criteria would be relevant should a carrier seek an exemption from the standard access obligations which apply to active declared services). Consequently, the key issue is how broadcasting carriage and related support services should be specified in the deeming statement.

The Commission understands that such a carriage service would include carriage services for the transmission of pay TV over the Telstra and Optus cable networks, as well as Pay TV carriage services for AUSTAR’s network in Darwin and Northgate’s network in Ballarat.

The TAF has proposed a technical specification of this service which has been revised from a previous version included in the Commission’s draft Statement of 2 June. The TAF’s revisions reflect the concerns of the TAF to specify the service so that it is only applicable to broadcast services provided by cable networks (as opposed to other type of networks, such as satellite networks) consistent with s.39(5).”

23                  Reference was made to concerns expressed by a potential access seeker with the “bundled” nature of the services proposed by the TAF. Their concern was that the access seeker would be required to acquire not just the distribution or carriage function but also the network management access function, the conditional access function and servicing functions. The ACCC said:

“Bundled nature of service

The Commission has also received comments from a potential access seeker to this service who is concerned at the bundled nature of this product. Under the TAF’s definition, an access seeker would be required to acquire not just the distribution or carriage function but also the network management access function, the conditional access function and servicing function. It can be expected that where technically feasible, such functions may be able to be carried out by the access seeker directly. As an example, an access seeker may choose to supply their own subscriber authorisation services. As technologies and markets develop, it can be anticipated that this will be a feature of the provision of such services and will provide access seekers with greater access to, and control over, their customers.

On the present state of technology, particularly the current use of analogue-based delivery systems, the Commission understands that it may be prohibitively expensive for the access seeker to provide these functions itself. It should be noted that the service description in Attachment B is only applicable to current analogue cable technology.

In this context, it is relevant that the standard access obligations in section 152AR(8) of Part XIC of the TPA, which apply upon deeming or declaration of a service, allow an access seeker, if they choose, to request the supply of conditional access services (including the use of conditional access customer equipment) where these services are already being used by the access provider. Consistent with this optional nature of obtaining such a service, the description of the broadcasting carriage service should ensure that access seekers would only be obliged to acquire those service elements which they require. For example, it is doubtful that a free to air broadcaster would necessarily require the use of conditional access systems or equipment in providing their service on cable networks.

The description of the service in Attachment B has been accordingly amended from that proposed by the TAF, to ensure that it only applies to the current analogue environment, and that access seekers are not obliged to acquire service elements which they do not require as part of the provision of the service.”

24                  In specifying the broadcast access service in Attachment B, the ACCC stated:

“Broadcasting Access Service Description

The service, being an analogue service supplied by an [access provider], necessary for the purposes of enabling the supply by an [access seeker] of a broadcasting service by means of line links that deliver signals to end-users, and of a kind that was used for those purposes on 13 September 1996, is an access service which provides a basic carriage and distribution access function and which may also include, if requested, one or more of the following elements:

(a)               network management access function;

(b)               conditional access function; and

(c)               subscriber premises servicing function.”

(2) The summary of the statement published in the Gazette

25                  As has been mentioned, the Deeming Statement included a summary. It was published in the Gazette dated 9 July 1997. The summary was as follows:

“Section 39 of the [Transitional Act] provides for the Australian Competition and Consumer Commission to prepare a statement, in consultation with AUSTEL, specifying certain services to be deemed as declared services. The services which are eligible to be deemed under s.39 include certain services covered by registered access agreements between the three existing carriers and certain broadcasting carriage services.

This statement is the Commission’s written statement under Section 39, and fulfils the Commission’s obligation under s.39(1) and s.39(5) of the Transitional Act.

On or after 1 July 1997, carriers and service providers will be able to be provided with the deemed services and specified ancillary services, on request, from any carrier or carriage service provider supplying the services. The terms and conditions of access may be determined by commercial negotiation, an undertaking submitted by the access provider and which has been accepted by the Commission, or, in the event that the parties are unable to agree, by arbitration by the Commission.

The Commission in preparing this statement, published a draft and invited submissions in accordance with s.39(8). The Commission released a draft statement on 4 June 1997. Parties were provided with fourteen days to respond. Within that time the Commission met with many interested parties and received 22 written submissions. The Commission gave due consideration to all representations and submissions in relation to this matter in preparing the statement.

Table A specifies the services deemed as declared services under s.39. The approach employed by the Commission in determining which eligible services to deem, on the basis of the legislative criteria relating to the promotion of the long-term interests of end-users, is outlined in the statement. Attachments A and B contain more detailed service descriptions of the services specified in the statement. The Commission has adopted service descriptions developed by the TAF for those deemed services where they have been available and are considered appropriate. The service descriptions in the attachments outline the elements and features of the service and provide guidance to access providers and access seekers in negotiating the terms and conditions under which the service will be provided.

The Commission raised in its draft deeming statement its interest in ensuring that additional eligible services, for which early access is considered important, are considered for declaration either by the TAF or the Commission under s.152AL of the [TPA]. On the basis of comments received, the Commission intends to announce a public inquiry into the declaration of additional services soon after the commencement of the new regime.”

26                  As stated, Table A was also then published in the Gazette. It will be recalled that Table A included the following:

“(xi) Broadcasting access service

An analogue service necessary for the purposes of enabling the supply of a broadcasting service by means of line links that deliver signals to end-users, and of a kind that was used for those purposes on 13 September 1996. This is an access service which provides a basic carriage and distribution access function together with other functions as requested.”

27                  The Gazette publication of the summary was accompanied by the following:

“Deeming of Telecommunications Services:

A statement pursuant to section 39 of the Telecommunications (Transitional Provisions and Consequential Amendments) Act 1997

Following is a copy of the summary of the Deeming of Telecommunications Services statement released by the Australian Competition and Consumer Commission on 30 June 1997. Copies of the full statement are available from the ACCC’s Internet website http://www.accc.gov.au.

Section 39 of the [Transitional Act] provides for the Australian Competition and Consumer Commission to prepare a statement, in consultation with AUSTEL, specifying certain services to be deemed as declared services. The services which are eligible to be deemed under s.39 include certain services covered by registered access agreements between the three existing carriers and certain broadcasting carriage services.

This statement is the Commission’s written statement under Section 39, and fulfils the Commission’s obligation under s.39(1) and s.39(5) of the Transitional Act.”

(3) The grounds of the challenges to the validity of the Deeming Statement before the primary Judge

28                  Relevantly, these grounds were:

(a)                that the publication made in the Gazette did not comply with s 39(9) of the Transitional Act;

(b)                that the service specified in the Deeming Statement was uncertain;

(c)                that even if the service could be rendered certain by resort to Attachment B, it was not an “eligible service” within the meaning of s 39(15);

(d)                that the ACCC had failed to “specify” a broadcasting service;

(e)                that the other functions or services specified in Attachment B are not, within the meaning of s 39(3)(a), “necessary” for the purpose of enabling the supply of a broadcasting service, so that the Deeming Statement was beyond the ACCC’s power and void;

(f)                  that the Deeming Statement did not specify a “single” broadcasting service; and

(g)                that the broadcasting access service that the ACCC purported to specify was not “of a kind” used on 13 September 1996, as required by s 39(5)(b).

29                  Wilcox J observed of these grounds (para 65):

“Point (a) stands apart from the others; it does not depend upon the content of any deeming statement but merely upon the consequences of non-compliance with s39(5) of the [Transitional] Act. The remaining six points arise out of the wording of this particular deeming statement. They raise a question as to the extent (if any) to which it is legitimate to have regard to Attachment B.”

30                  It will be convenient to refer to the issues thus raised in the sequence adopted by his Honour.

(4) His Honour’s conclusions

(a)               Did the publication in the Gazette comply with s 39(9) and if not, did this invalidate the Deeming Statement?

31                  His Honour said (para 69) that the ACCC failed to comply with s 39(9): “what was published was not a copy of the whole statement – that is, all 80 pages – but only a summary of it”. However, Wilcox J held (para 79) that gazettal of the statement was not a condition precedent to its operation. Rather, Parliament’s intention was that the statement would take effect immediately it was made. It followed, his Honour held (para 81), that the omission to comply with s 39(9) did not invalidate the statement.

(b)               Could reference be made to Attachment B in considering the meaning and operation of the Deeming Statement in the context of the argument that the Deeming Statement was uncertain?

32                  Wilcox J held (para 88) that the complaint of uncertainty should be evaluated in the light of the whole of the Deeming Statement, including the Attachments.

(c)                Was Attachment B uncertain?

33                  Wilcox J said (para 96):

“Specification of a service must require identification of the service, although not necessarily of the provider of the service. ACCC did this when, in Attachment B, it referred to ‘an analogue service supplied by an (access provider), necessary for the purposes of enabling the supply by an (access seeker) of a broadcasting service by means of line links that deliver signals to end-users, and of a kind that was used for those purposes on 13 September 1996’. The nature of that service was further explained in section 1 of Attachment B, headed ‘Distribution Access Function’. Technical information was set out in Attachment A. Particularly in the light of that material, it cannot be said there is any uncertainty about the ACCC’s intention in relation to the basic distribution service.”

34                  Moreover, his Honour held (para 98), there was no uncertainty about the nature of the optional adjunct services described, i.e. the network management access function, the conditional access function and the subscriber premises servicing function.

(d)               Did the reference to the optional adjunct services made in the context of a description of a single service render the Deeming Statement uncertain?

35                  His Honour said (para 101):

“If the statement is seen as a specification of a single service, it is uncertain as to content. A reader of the statement would not be able to determine, in advance of a particular request, what must be provided by an access provider to an access seeker.”

36                  Wilcox J went on to hold (para 101) that the requirements of s 39(5) “cannot be discharged by specifying, as a single eligible service, a service of variable content. It must be remembered that, while the request for the adjunct services is optional, from the access seeker’s point of view, from the viewpoint of the access provider, supply is compulsory”.

37                  His Honour discerned (para 102) some ambivalence in the Deeming Statement as to the question whether the ACCC:

“… meant to specify a single eligible service, with a variable content depending on the wishes of the particular access seeker, or a basic eligible service (the distribution network service) and a menu of other eligible services, each of which was accessible on request in conjunction with a request for access to the basic service. On the one hand, chapter 6 of the deeming statement suggests that ACCC saw itself as specifying only a single service, but with access seekers being free only ‘to acquire those service elements which they require’: see the penultimate paragraph in the passage quoted in [para 23 of these reasons]. On the other hand, chapter 3 speaks of the ‘declaration of services’ … [para 21 of these reasons] and the Summary refers to Attachments A and B containing ‘more detailed service descriptions of the services specified in this statement’.”

38                  Wilcox J resolved the ambivalence by resort to the opening words of Attachment B – “[t]he service, being an analogue service supplied by an [access provider] … is an access service which provides a basic carriage and distribution access function and which may also include, if requested, one or more of” the three optional adjunct elements. His Honour said (para 103):

“In other words, the specified service consists only of a distribution service to which may be added other elements at the option of the access seeker. On that interpretation, and subject to arguments about severability to which I will come later, the specification is void for uncertainty.”

(e)               Severability of the Deeming Statement

39                  Wilcox J held that it was possible to sever the invalid material from the valid portion. His Honour said (paras 139 – 140):

“The evidence in the present case indicates ACCC did not intend access providers would necessarily make the distribution access function available to access seekers without the three optional elements specified in Attachment B. ACCC was concerned to make the optional elements available to access seekers. However, s46(1)(b) of the Acts Interpretation Act does not depend upon the subjective intention of the relevant authority. It provides a rule of general application, designed to save from invalidity as much as possible of an instrument made by an authority.

In the present case, I do not think it can be said that the valid and invalid points of the specification are so interlinked that one cannot stand without the other or that severance would yield a contrary effect. If the portion of the broadcasting access service description in Attachment B that commences with the words ‘and which may also include’ were severed from the remainder of the description, this would leave a comprehensible description that would be entirely valid. It cannot be – and has not been – disputed that the distribution access function is necessary for any cable television service, whether subscription or free-to-air.”

THE CHALLENGES TO THE DECLARATION AND THE PRIMARY JUDGE’S RESPONSE

(1)               The legislative scheme

40                  In order to understand the issues arising here, it will be necessary to refer to the relevant provisions of Part XIC of the TPA as follows.

41                  Section 152AB states the objects of the Part. Subsection (1) provides that the object of the Part is to promote the long-term interests of end-users of carriage services, or of services provided by means of carriage services. Subsection (2) relevantly provides:

“(2) For the purposes of this Part, in determining whether a particular thing promotes the long-term interests of end-users of either of the following services (the ‘listed services’):

(a)                carriage services;

(b)                services supplied by means of carriage services;

regard must be had to the extent to which the thing is likely to result in the achievement of the following objectives:

(c)                the objective of promoting competition in markets for listed services;

(d)                [relates to ‘any-to-any’ connectivity, not here relevant]

(e)                the objective of encouraging the economically efficient use of, and the economically efficient investment in, the infrastructure by which listed services are supplied.”

42                  Subsection (3) states that subs (2) is intended to limit the matters to which regard may be had. As will be seen, subs (4) relates to subs 2(c) and states one of the factors to which regard must be had in determining the extent to which a particular thing is likely to result in the achievement of the objective of promoting competition in markets for listed services in subs 2(c); and subs (6) relates to the factors to which regard must be had in determining the extent to which a particular thing is likely to result in the achievement of the objective listed in subs (2)(e) –

“(4) In determining the extent to which a particular thing is likely to result in the achievement of the objective referred to in paragraph (2)(c), regard must be had to the extent to which the thing will remove obstacles to end-users of listed services gaining access to listed services.

(5) Subsection (4) does not, by implication, limit the matters to which regard may be had.

(6) In determining the extent to which a particular thing is likely to result in the achievement of the objective referred to in paragraph (2)(e), regard must be had to the following matters:

(a)                whether it is technically feasible for the services to be supplied and charged for, having regard to:

(i)                 the technology that is in use or available; and

(ii)               whether the costs that would be involved in supplying, and charging for, the services are reasonable; and

(iii)             the effects, or likely effects, that supplying, and charging for, the services would have on the operation or performance of telecommunications networks;

(b)                the legitimate commercial interests of the supplier or suppliers of the services, including the ability of the supplier or suppliers to exploit economies of scale and scope;

(c)                the incentives for investment in the infrastructure by which the services are supplied.

(7) Subsection (6) does not, by implication, limit the matters to which regard may be had.”

43                  Section 152AG provides that a person is taken to be an “access seeker”, in relation to a declared service, if three conditions are fulfilled. First, the person must be a “service provider”. Secondly, the person must wish to have access to that service, or to change their existing access arrangements (s 152AG(3)). Thirdly, the person wishing to have access, or to change access arrangements must have requested, or must propose to request, access to the service under s 152AR of the TPA (s 152AG(2)). Section 152AC of the TPA provides that the term “service provider” has the same meaning as in the TEA (s 86); that is, either a “carriage service provider”, or a “content service provider” (see ss 87 and 97).

(2)               The background – the ACCC Report

44                  As noted, the Declaration took effect on its gazettal on 8 September 1999. It was made in accordance with a report by the ACCC dated August 1999 (“the Report”). It will be recalled that the service was declared in these terms:

“The Analogue Subscription Television Broadcast Carriage Service is:

A service for the carriage, by means of lines, of analogue signals used for the purposes of transmitting a subscription television service from a facility owned, controlled or operated by a carrier or carriage service provider to any point on, or in, a line link, customer cabling, or customer equipment connected to that facility.”

45                  His Honour noted (para 144) that this declaration contrasted with the Deeming Statement in two significant respects:

“(a) it is confined to a service for transmitting a subscription television service; that is, it does not include a free-to-air service; and

(b) it does not include reference to any of the three optional adjunct services described in Attachment B of the 1997 deeming statement.”

46                  Wilcox J added (para 144):

“However, the declaration covers a service extending to any one of several end-points: ranging from a point on the line link leading to the end-user’s premises to the end-user’s television set. This means it not only covers that portion of the line link owned by Telstra Multimedia (the HFC cable) but, at least potentially, facilities owned by subscription television providers like FOXTEL and C & W Optus.”

47                  It will be necessary to refer to some of the contents of the Report.

48                  The Report commenced (Ch 1):

“Following consideration of the information received over the course of the inquiry, the Commission proposes to declare an analogue-specific subscription television service limited to line links.

The Commission expects that declaration will influence the development of competition for subscription television services, primarily in those areas where a subscription television service using line links is currently operating.

Declaration of the subscription television service enables service providers to reach end users in order to deliver a wider range of services than currently available, and reduces the need for full duplication of communications networks.

The Commission expects that declaration of subscription television services will promote competition and provide end-users with the ability to choose between different suppliers of subscription television program packages, particularly in areas of niche programming.”

49                  (The Report indicated that “niche programming” describes services, in particular those containing non-English language programs, that are aimed at a particular cross-section of viewers and of that type the entry of which, the ACCC found, had generally been achieved by the suppliers of the content of such programs compiling their own channels and selling them to existing service providers for distribution as an added option in their “package” of programs: see Ch 4.)

50                  The Report refers (Ch 2) to the wording of the declaration in the Deeming Statement noting that “[its] precise wording … allows access seekers to choose which services are covered by [it]. Because of this, concerns have been raised about [its] validity”. The Report stated:

“The Commission considers that the existing service declaration is valid. However, in order to provide certainty, the Commission commenced inquiries into whether to declare ‘analogue-specific subscription television broadband carriage services’ and ‘technology-neutral subscription television broadband carriage services’.”

51                  The ACCC noted Telstra’s argument that, given the assumption that the Deeming Statement is valid, the ACCC could only justify the declaration proposed if it would promote the LTIE more than the Deeming Statement. The Report went on:

“The Commission considers that the greater certainty provided by the proposed declaration would promote competition beyond the level that could be expected under the existing declaration. Although the Commission considers the existing declaration to be valid, the Commission considers that access seekers may be reluctant to seek to enforce their rights under it while there is uncertainty in the industry as to its validity. The Commission considers it unlikely that the advantages which might otherwise arise from increased competition would be realised in these circumstances.

The Commission considers that there is no legal impediment to the Commission declaring the proposed service while the existing one is in force. However the Commission would be concerned at any confusion which arose because of the existence of two declarations covering similar services. Given that the declarations are likely to overlap, the Commission intends to hold a public inquiry under Part 25 of the [TEA] to consider revocation of the existing declaration.”

52                  The ACCC also noted submissions that proper public consultation under Part XIC was not possible while the status of the existing service was uncertain. The ACCC, however, “consider[ed] that it ha[d] met [these] statutory obligations …”.

53                  In considering the LTIE and its application, the ACCC noted the statement of objectives in s 152AB (see para 41 above) and stated (Ch 2.4):

“The Commission will only have regard to these matters in determining whether declaration promotes the long-term interests of end-users. However, in the Commission’s view these objectives are essentially ‘secondary objectives’. They are not ends in themselves but are the means by which the primary objective (of promoting the long-term interests of end-users) is to be realised.

Where declaration is likely to result in the achievement of one or more of these objectives, it will generally promote the long-term interests of end-users. For instance, if declaration is likely to promote competition in a market for the supply of local telephony services to end-users, then end-users are likely to benefit through lower prices and improved customer service. Similarly, encouraging efficient investment would be expected to promote end-users’ interests through enhancing the efficiency with which telecommunications services are supplied. The enhanced efficiency would be generally reflected in lower prices. The Commission may also conclude that efficient investment will be likely to increase service diversity.”

54                  The Report proceeded (Ch 2.4):

“To consider the likely result of declaration on a secondary objective, the Commission finds it helpful to use a ‘with and without test’. That is, the Commission considers the future without declaration and compares this to the future with declaration. This ‘with and without test’ is not a test in its own right but is used to isolate the effects which are likely to occur as a result of declaration. Moreover, given that many aspects of the future will be speculative, the Commission may not be able to describe the future in a high degree of detail, or determine the full range of possible scenarios. The Commission will seek to examine those aspects of the future (primarily competition and efficiency considerations) which have a direct bearing on the issues before it.”

55                  In considering the nature of the services to be the subject of a declaration, the ACCC noted the importance of correct specification: too narrow a specification may unnecessarily limit the services that access providers must supply to access seekers, while too broad a specification “may lead to uncertainty and have undesirable consequences in terms of innovations and investment” (Ch 3). It rejected the possibility of declaring a “technology neutral” subscription television broadband carriage service rather than the limited analogue line links declaration made. It also considered the question of whether to declare only the individual elements of systems, or to “bundle” elements together. The Report stated (Ch 3.2):

“In developing appropriate service descriptions, the Commission considered whether to prepare service descriptions for individual elements or whether to bundle particular elements together. Unbundling services completely to their component elements ensures that access seekers need only acquire the individual elements which they want, but has the potential to increase costs for the access provider.

Access seekers provided a range of models in their submissions. These ranged from a service which consisted purely of carriage of broadcasting signals to a bundled or ‘integrated’ service which consisted of carriage, modulation and demodulation, encryption and decryption, installation and maintenance of set-top units, marketing, billing and revenue collection.

A number of submitters criticised the Commission’s draft report for favouring a model of ‘direct access’ to customers, in which access seekers had a direct retail relationship with the customer. The Commission does not favour any model in particular. The service description, when combined with the access obligations in Part XIC of the Act, allows access seekers some flexibility in whether they acquire a bundled or an unbundled service. Direct access to customers is possible, under the declaration, if access seekers wish to provide services in this manner, but it is not mandatory.”

56                  The Report went on to state that the ACCC did not find it necessary to include in the Declaration a “Network Management Service” which would have included customer access and subscriber information systems because the ACCC –

“considers that the standard access obligations imposed on access providers by section 152AR cover services ancillary to the carriage of pay television signals sufficiently to enable service providers to supply pay television content, if they obtain access to the proposed declared service.”

57                  The Report continued:

“Of the services that together make up a subscription television service, the Commission considers that carriage, modulation and demodulation, encryption and decryption, installation and maintenance of set-top units would either fall under the Standard Access Obligations or be matters about which the Commission could make an arbitral determination under Division 8 of Part XIC of the Act. Access seekers are free to negotiate for the access provider to provide additional elements such as sales and marketing support, or retail services such as billing and revenue collection. Access seekers are not obliged to accept such services if they do not require them, and access providers are not obliged to provide them.

To ensure that deletion of the Network Management Service did not have the unintended consequence that the service description would operate to allow access seekers to have their programming carried only to existing pay television subscribers, it was necessary to amend the description of the carriage service (Annexure A of the service description included in the discussion paper). In particular, the service description was amended to apply to both the carriage of signals to the conditional access customer equipment of existing subscribers and also to potential points of interconnection with the access provider’s cable network (to allow access seekers to connect up households that are not currently subscribers in order that the cable network can be used to deliver content to them). The Commission intends that there should be an obligation upon access providers to provide access to a service that includes conditional access functions performed by set-top units, where these are required by access seekers. The service description has been amended to make this clear.

…

Submitters have raised questions about whether an access provider who provides a carriage service to a set-top unit, but who does not own the set-top unit, could be required to provide access to the set-top unit. The Commission considers that to the extent that access providers exercise control over set-top units, they will be required by the Standard Access Obligations to supply access to the units.”

58                  In considering how declaration might promote the LTIE, the Report addressed the topic “Promoting competition” (Ch 4). It commenced:

“In general, declaration of an eligible service is likely to promote competition where:

·                    the eligible service is an input used for the supply of carriage services or services provided by means of carriage services; and

·                    the supplier (or suppliers) of the eligible service has (or have) substantial market power which can be used to influence competition between suppliers of carriage services or services provided by means of carriage services.

This is because declaration constrains the ability of the supplier of the eligible service to exercise market power in respect of the supply conditions. This constraint on market power may enable more efficient competitors to enter markets for carriage services or services supplied by means of carriage services, win custom from less efficient competitors, and thereby promote competition in those markets.

These are not the only circumstances in which declaration is likely to promote competition.

To examine whether declaration would be likely to promote competition, often it will be appropriate for the Commission to consider the market in which the eligible service is or would be supplied in addition to the market in which competition would be promoted (where these are separate markets).”

59                  The Report then dealt with market definition. It noted that markets involved four dimensions: “product”, “geographic”, “function” and “time”. The Report said (Ch 4):

“In identifying relevant markets, Part XIC of the Act does not require the Commission to take a definitive stance on market definition. Furthermore, over time, declaration itself might affect the dimensions of these markets, particularly in relation to the functional dimension. Accordingly, market analysis under Part XIC should be seen in the context of shedding light on how declaration would promote competition rather than in the context of developing ‘all purpose’ market definitions.”

60                  The ACCC nevertheless undertook an analysis of two aspects of the relevant market: “Eligible services – wholesale carriage” and “Downstream services – retail pay TV”.

61                  In considering “wholesale carriage”, the Report said (Ch 4.1.2):

“Identification of the relevant market in which analogue pay TV cable carriage services are supplied involves an analysis of actual or potential close substitutes to these services. The Commission looks to the substitution possibilities on both the demand and supply side, both in the product and geographic dimensions.”

62                  The Report then considered the “product dimension”, distinguishing cable delivered retail television from delivery by microwave distribution systems (MDS) and satellite (the only systems used in Australia). It concluded that the different forms of retail pay TV services were close substitutes for cable delivery and were therefore in the same wholesale market.

63                  The Report then dealt with the “geographic dimension”. It categorised geographical areas in Australia in terms of supply-side characteristics; that is to say, cabled and non-cabled areas. The Report rejected a submission that there were no barriers to entry into the wholesale carriage market. It considered the effect of competition with respect to cable networks, MDS and Broadband Wireless (LMDS) system types, satellite, digital free-to-air services, and took into account the factors “import competition” and “vertical integration”.

64                  Turning to “Downstream services – retail pay TV” (i.e. a multi-channel television entertainment and news service delivered to the home by either cable, satellite or MDS and made available to the general public on payment of subscription fees), the Report considered that all retail pay TV services were part of one market irrespective of delivery means. The ACCC distinguished cinema, radio, newspapers, magazines and home video rentals as “insufficiently close substitutes” to be considered part of the same retail market as pay TV. It also concluded that free-to-air television was not in the same market, although “potentially the closest substitute” for pay TV. It then stated that it would keep these matters “under review as convergence and digital broadcasting develop”.

65                  With respect to the “geographic dimension”, the Report stated that the most significant effects of declaration on competition would be felt in the market for the supply of retail pay TV services in cabled metropolitan areas, as this was the geographic market for the supply of retail pay TV services “which would attract the most interest from pay television service providers”.

66                  The Report noted that in the cabled metropolitan market for retail pay TV, there were significant barriers to entry for carriage service providers, derived from delivery and programming constraints then mentioned. The Report added (Ch 4.2.3):

“Compounding the delivery and programming constraints is the fact that the relevant retail pay TV markets in Australia are relatively small. The 6.2 million television households in Australia compare with 99 million in the US and 22 million in the U.K.

Because the most attractive programming is now held exclusively by [FOXTEL] and C&W Optus on a long term basis, declaration would not be likely to result in competition in the mainstream of the retail pay television market. Pay television service providers would not be able to acquire the subscription drivers needed to compete effectively with [FOXTEL] and C&W Optus for customers who subscribed on the basis of movies and sports.”

67                  Turning to “niche programming”, the Report stated (Ch 4.2.3):

“End-users already have access to some niche programming through existing pay TV suppliers. However, declaration will allow some underserved niche audiences access to programming which might not otherwise have been available.”

68                  The ACCC observed that, in this area, competition would be promoted “to a noticeable extent” by declaration and that –

“Consumers of niche services (particularly foreign language services) are widely spread throughout Australian society, and will be likely to benefit in terms of price, quality and diversity of services.”

69                  The Report concluded that declaration would be likely to promote competition to a material degree through customers gaining access to a wider range of services because (Ch 4.2.3) –

“Ÿ the high entry barriers in the retail pay TV industry caused by delivery and programming constraints would be alleviated by requiring access to the existing Telstra and C&W Optus broadband cable networks [in areas in which market entry by another delivery infrastructure is least likely]

Ÿ                    niche pay TV service providers (as typified by TARBS [Television and Radio Broadcasting Services Australia Pty Limited], Multicultural Marketing Network) can offer an alternative range of programming to those offered by [FOXTEL] and C&W Optus (which often offer the same niche channels).”

70                  The Report added (Ch 4.2.3):

“The Commission considers that declaration would promote competition to a greater extent in single-cabled metropolitan areas than in dual-cabled metropolitan areas. The market structures of single-cabled and dual-cabled areas are similar but with the significant difference that single-cabled markets are more highly concentrated and far less competitive. Currently, competition only occurs at the niche end of the market and in those areas where MDS is receivable and TARBS competes with one or other of the cable services or the [FOXTEL] satellite service. In certain areas there is currently no competition at all.”

71                  The Report next addressed the issue of “Encouraging efficiency”. The ACCC’s conclusions were stated (Ch 6.3):

“It is technically feasible for the subscription television broadband carriage service to be supplied and charged for. While there will be costs in complying with the standard access obligations, these costs are reasonable, and can be met by access seekers without affecting their commercial viability.

Access providers and access seekers can negotiate access prices which enable the access provider to earn a commercially acceptable return on investment. These prices would protect incentives for investment in alternative infrastructure.

Declaration of the subscription television broadband carriage service will enable service providers to make efficient decisions about whether to roll out alternative infrastructure.

Declaration of the subscription television broadband carriage service is likely to facilitate investment in telecommunications infrastructure by reducing the risks associated with entry, leading to more innovative services and greater competition on price and quality of service.”

72                  In expressing the ACCC’s overall conclusions, the Report “compared two future scenarios – one with declaration and the other without declaration”. The Report stated (Ch 7.2):

“The Commission notes that there is competition between the major providers of retail subscription television services over cable. Nonetheless, the Commission considers that the structure of the markets is such that regulatory intervention is necessary. Each of the carriage providers has an incentive to restrict access to the infrastructure it controls, because of the vertical links between the carriage and retail pay television services. Subscription television services provided by access seekers over the cable infrastructure would compete with the retail services provided by the owners of infrastructure, or by companies in which the owner has a major shareholding. Submitters have described the difficulties they have faced in negotiating access to the cable infrastructure.

Because of their vertical integration with the retail pay television services, the carriage providers can restrict access to their cable infrastructure without serious penalties in terms of loss of wholesale business. In these circumstances, programming services that might otherwise compete successfully with existing retail pay television services or channels cannot do so effectively. The Commission considers competition in the retail pay television market would be promoted if such programming services were given the opportunity to be provided to customers. Therefore the key issue is not merely one of whether existing pay television charges are excessive, but whether there is sufficient choice of programming.

The Commission notes the submissions that draw attention to the costs to access providers and seekers that may accrue from declaration. Where such costs do arise, the Commission notes that access seekers have shown a preparedness to meet the reasonable costs to cable owners of providing the service.

The Commission would be concerned if declaration of the analogue service inhibited the deployment of infrastructure to deliver broadband services, including pay television. However, the Commission notes that the declaration of a similar service in July 1997 had no noticeable effect on the existing or proposed roll out of services. In addition, the regulatory framework provides for exemptions from the standard access obligations where this will promote [the LTIE].”

(3) The challenges to the Declaration and the primary Judge’s response

73                  The primary ground of challenge by the Telstra parties was that it was not open to the ACCC to make the Declaration while the Deeming Statement was still in place. It was argued by the Telstra parties that the making of the Declaration constituted an impermissible second exercise of a power intended to be exercised once only.

74                  His Honour rejected the argument, holding (para 182) that the ACCC had not exhausted its powers in the circumstances. His Honour referred to s 33(1) of the Acts Interpretation Act 1901, as enabling a power to be exercised from time to time as occasion requires. His Honour held (para 182) that in any event, and “[a]lthough there is no substantial difference in effect” between a specification under s 39(5) of the Transitional Act and a declaration under s 152AL of the TPA, “these are exercises of distinct statutory powers”, so that “the exercise of the first power would not preclude the exercise of the second”.

75                  For its part, FOXTEL challenged the Declaration on several administrative law grounds. It was said that the ACCC’s decision was invalid for failure to take into account relevant considerations; for taking into account irrelevant considerations; for error of law in relation to the consideration of the LTIE; and for the making of findings of fact for which there was no evidence.

76                  His Honour did not accept the argument that there had been a failure to take into account relevant considerations (ss 5(1)(e) and 5(2)(b) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the AD(JR) Act”)). Wilcox J held (para 187) that a decision by a statutory body is liable to be set aside for such an omission only where it is required that the factor be accounted for, and that if the relevant statute does not require consideration of a particular subject, “the decision is not vitiated by failure to consider that subject, however much others may think it desirable that the decision-maker had done so” (para 195). Wilcox J concluded that that the ACCC had not failed to consider the extent of existing competition in the particular market or the extent to which a declaration might promote this; nor did it fail to consider the effect of a declaration on the two prospective access providers (paras 193 – 194).

77                  Wilcox J next addressed FOXTEL’s contention that the ACCC had taken into account an irrelevant consideration. FOXTEL argued that the question, whether the LTIE would be promoted by declaration, depended on determining whether the service proposed to be declared is a “bottleneck” service which it described as services that are uneconomic to duplicate, or which “occupy a strategic position in the industry in the sense that access to elements of the services is necessary to compete upstream or downstream”. FOXTEL contended that the ACCC fell into the error of taking into account an irrelevant consideration by not restricting itself to the question whether the service proposed to be declared is a “bottleneck” service. His Honour noted (para 196) a related argument that was pressed by FOXTEL, viz that the ACCC did not even consider whether cable television is a “bottleneck” service, “thereby presumably failing to take into account a relevant consideration”. Wilcox J rejected the arguments (para 197), saying that the statutory objective of promoting competition was a wider objective than simply the elimination of “bottleneck” services; and that the situation found to exist by the ACCC fitted, in any event, within FOXTEL’s description of a “bottleneck” service.

78                  FOXTEL further argued that the ACCC made two errors of law within the meaning of s 5(1)(f) of the AD(JR) Act.

79                  First, it was contended that the ACCC applied the “with and without declaration” test inconsistently or erroneously. FOXTEL submitted that, in some parts of the Report, the ACCC accepted the validity of the Deeming Statement (in saying that due to the existence of the Deeming Statement, the effect of declaration would not be material); yet, at other points in the Report, it assumed the Deeming Statement was invalid, by stating that the effect of declaration would be to promote competition to a noticeable extent. Wilcox J said that the argument was a misunderstanding of the ACCC’s reasoning: what the passages in question showed was no more than that the ACCC believed the Deeming Statement to be valid, but was taking account of the concerns expressed about is validity. In this respect, there was “a case for making a new declaration” in order to put those concerns at rest (paras 202 – 203). No error of law was involved (para 205).

80                  The second error of law alleged related to the requirements of s 152AL(3)(d) in respect of the LTIE. It was said that the ACCC misunderstood how it could be “satisfied” that declaration would promote these interests. Wilcox J rejected the argument, saying (para 206):

“Counsel say that, in reaching its state of satisfaction, ‘ACCC failed to address or reach any requisite state of ‘satisfaction’ that elements of the service it declared were ‘bottleneck services’. It did not need to do this.”

81                  Finally, it was contended before his Honour that the ACCC based its determination as to the relevant market and as to niche programming on considerations for which there was no evidence, and on the existence of facts that did not exist (cf. ss 5(1)(h) and 5(3) of the AD(JR) Act). The conclusion that was said to lack factual basis was that the relevant market did not include free-to-air television. Wilcox J did not accept the argument, holding that this was not a case in which the Court had to form a view about the proper delineation of the market; the facts were for the ACCC to determine, including the identity and nature of the market; and, in any event, the ACCC did not base its decision on its view that the relevant market did not include free-to-air television (paras 210 – 211).

82                  Wilcox J noted (para 212) that the ACCC did, however, base its decision partly on its views about niche programming. But his Honour held that FOXTEL had not made out a case falling within s 5(3) of the AD(JR) Act, and that no error of law had been shown. His Honour considered that, even if it could be said that the material before the ACCC relating to niche programming opportunities was unpersuasive, that circumstances would not establish the negative proposition required by s 5(3). For that subsection to be satisfied, FOXTEL would have to establish that a declaration would not be likely to promote competition in respect of niche programming to a material degree. Wilcox J said that where the facts (i.e. the possible result of declaration) were obscure (or unknowable), the statutory decision-maker’s view about the facts should prevail, unless it is shown that that view was incorrect, something that it would be “virtually impossible”, in this case, for FOXTEL to demonstrate (para 213).

(4) Telstra’s application to amend its defence and cross-claim

83                  On 14 March 2000, during the final hearing, Wilcox J dismissed an application by the Telstra parties to amend their defence and cross-claim in their challenge to the validity of the Deeming Statement (proceedings N 1095 of 1999).

84                  The basis for the application for leave to amend was the circumstances that ACCC documents had only recently come to the Telstra parties’ attention which, they said, showed the description of “broadcast access service” that was considered by a meeting of the ACCC prior to the making of the Deeming Statement was different from the description finally contained in the Statement. The contention sought to be raised by the amendment was that the power given to the ACCC under s 39 of the Transitional Act was a non-delegable power, and that the new documents sought to be relied on showed that the specification of “broadcast access service”, said to be a “key element” in the making of the Deeming Statement, was carried out by a committee of the ACCC, rather than the full Commission, and accordingly, the statement was beyond power.

85                  Wilcox J dismissed the application. His Honour noted that the application was made after the trial had commenced, and did not accept Telstra’s claim that the amendment would not raise any new factual issues. His Honour said that if granted, the amendment would be likely to disrupt the orderly progress of the trial. His Honour further referred to the delay on the part of Telstra in bringing the application.

86                  (It is convenient to note here that the Telstra parties also appeal from a decision of Tamberlin J made by way of ex tempore judgment on 8 May 2000 (the reasons for which were given on 17 May 2000). Tamberlin J dismissed Telstra’s notice of motion for leave to amend its defence and cross-claim as part of its challenge to the validity of the Deeming Statement. Tamberlin J refused the application essentially because, in his Honour’s opinion, it sought to raise matters that Wilcox J had already dealt with in refusing Telstra leave to amend. Tamberlin J indicated that the appropriate course was for Telstra to canvass the point on its appeal from the judgment of Wilcox J.)

CONCLUSIONS ON TELSTRA’S CHALLENGES

The 1999 Declaration: whether two declarations could co-exist

87                  The question as to whether the Deeming Statement and the Declaration could co-exist was live before his Honour, as he had upheld the validity of the Deeming Statement, and we shall consider the matter, firstly, on that basis. The result of the judgment below is that both the Deeming Statement and the Declaration are valid and in force. This is a surprising result, as, on any view, each relates to a similar service but in a somewhat different fashion.

88                 In our opinion, s 39 of the Transitional Act cannot be seen as a “separate source of power”, in the relevant sense, from s 152AL of the TPA. They are, of course, separate sources of power. Section 39 was only applicable in particular circumstances and for a particular period. Section 152AL operates after that period and without all of the restrictions. A statement pursuant to s 39 continues to operate after s 152AL came into force. However, s 39 is found in an Act the purpose of which was to “enact transitional provisions, and to make consequential amendments, in connection with the enactment of a Telecommunications Act 1997 and for other purposes”. Part 3 is headed “Transitional” and Div 3 of Part 3 (which includes s 39) is headed “Transitional Provisions Relating to the Telecommunications Access Regime”. The Transitional Act was passed immediately following the Trade Practices Amendment (Telecommunications) Act 1997 (“Trade Practices Amendment Act”), which introduced s 152AL. Section 152 AL(3) was not effective until 1 July 1997, when Part 25 of the TEA was to come into force. Some time would necessarily elapse after that time before any declaration could be made. So far as s 152AL(2) is concerned, when the Trade Practices Amendment Actcame into force there was no TAF.

89                 The purpose of the Bill was described in the Second Reading speech as follows:

“This Bill makes arrangements to facilitate the transition from the current regulatory regime to the post-1997 regime. …

The proposed transitional arrangements are aimed at preventing a hiatus when the post-1997 telecommunications regime commences by continuing, where appropriate, existing regulatory instruments into the new regime. …

The arrangements also permit necessary action to occur before 1 July 1997 so that the benefits of the new regulatory regime flow from the earliest possible date. This is particularly important to achieve a fully functional access regime on 1 July 1997.”

90                  Concerning access, the Minister said:

“Fully effective access and interconnection arrangements are critical to achieving a competitive telecommunications industry. The complex nature of such arrangements means that preparatory work must commence on access issues as early as possible, to ensure a smooth transition into the new access regime. …

Transitional arrangements included in this bill will establish, on Day 1 of the new regime, access rights broadly equivalent to those which existing carriers enjoy. In addition, these provisions give effect to our election commitment to bring within the access regime the carriage of subscription television services over broad-band cable networks.”

91                  In discussing the Transitional Bill in relation to the Trade Practices Amendment Bill, the Minister said:

“A smooth introduction to the new access regime depends critically on transitional arrangements. Transitional arrangements contained in the Telecommunications (Transitional Provisions & Consequential Amendments) Bill 1996 will essentially retain existing access rights for carriers, extend those rights to service providers and fulfil the Government’s election commitment to achieve open access in regard to the carriage of broadcasting services over cable networks.”

and later:

“In addition, the ACCC is required to declare a carriage service to bring within this access regime the supply of broadcasting services over cable networks. This fulfils our election commitment to remove the exemption of pay television carriage from the access regime given by the previous Government.”

92                  We would not conclude that an instrument brought into being for transitional purposes of this kind could coexist with or survive the exercise of the substantive power unless that result were compelled by the language of the transitional provision. In our opinion, here, the language of the transitional provision has the effect which might be expected. Section 39(10) relates, in terms, to the effect of Part XIC of the TPA with the result that it is as if an instrument under that Part had declared the service to be a declared service and that the instrument had complied with the requirements of the relevant subsection. It must be borne in mind that this is the only section which gives any operative effect to the s 39 statement – ss (10) is the only cross-over with the TPA so far as the substance of obtaining access is concerned. The end result is that the specified eligible service is a declared service within the meaning of s 152AL for the purposes of s 152AR of the TPA. The terms of ss (11) of s 39 emphasise this reading of ss (10). It describes the statement as an instrument referred to in s 10(a) and plainly contemplates the deemed statement being varied or revoked in accordance with s 152AO of the TPA. The fact that s 152AO actually applies ss 33(3) of the Acts Interpretation Act 1901 (with changes) does not affect the point. In our opinion, subsection (8) of s 39 is not inconsistent with this construction. It is limited to things done prior to 1 July 1997. The transitional period ends at that date. In our opinion, the status of a specified eligible service as a declared service pursuant to s 152AL(3) cannot be altered except in accordance with s 152AO, namely, in accordance with ss 33(3) of the Acts Interpretation Act 1901 except if the variation is of a minor nature.

93                  It may well be possible to have a declaration framed so that it adds to a declared service, and so co-exists with an earlier declaration in that sense, but, even if so, the Declaration is not framed in that fashion. It is self-contained. It purports to deal with the topic again in an exhaustive fashion. Even though it may go beyond the previous Deeming Statement, it plainly overlaps most of it. In our opinion, there was no power to do this without revoking or varying the 1997 Deeming Statement. As with most deeming provisions, there are some difficulties with the statutory language, no matter which construction is preferred. That problem is best resolved by considering the overall statutory scheme. When this is done, we conclude that there cannot be a later declaration if an earlier declaration (deemed or otherwise) in respect of the service is extant.

What if the 1997 Deeming Statement was invalid?

94                  The ACCC submits that if the Deeming Statement is held not to be a lawful exercise of the power, then there was no deemed declaration and, thus, no barrier to the de novo exercise of the power granted by s 152AL(3). Telstra submits that, even if the Court holds the Deeming Statement to be invalid, it has had since its date, and continues to have, legal and practical effect on those persons and entities affected by its terms. It submits that there is no such thing as a complete nullity, citing Aronson & Dyer, Judicial Review of Administrative Action (1996) p 653 and Gummow J in Ousley v R (1997-8) 192 CLR 69 at 130-131.

95                  What Gummow J actually said Ousley was:

“The more appropriate principle is that the validity of an administrative act or decision and the legality of steps taken pursuant to it are presumed valid until the act or decision is set aside in appropriate proceedings. Where “acts are of an official nature … everything is presumed to be rightly and duly performed until the contrary is shown”.” (emphasis added)

96                  The context of what is said in Aronson & Dyer is as follows:

“The truth is that there is no such thing as a complete nullity; it always takes a court decision to say so. Even a so-called bare declaration of invalidity amounts to more than just a snapshot of the void; it establishes voidness with an authority which the bureaucracy does not dispute.” (emphasis added)

97                  Whilst there may be a question as to whether an administrative act is void or voidable, and as to the significance and effect of such an act pending a declaration of invalidity by a court (for example, being able to appeal – Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1; Calvin v Carr [1980] AC 574, 590), it is fundamental that the purported exercise of a statutory power which does not accord with the statute is of no effect and may be disregarded – it does not impose duties or create rights. For certain (interlocutory) purposes, an administrative act may be presumed regular until set aside (Hoffman Laroche v Trade Secretary [1975] AC 295, 365; Reg v Wilks [1998] AC 92 at 115G). Once a court has declared the invalidity, then it follows that the act is avoided ab initio (Forbes v New South Wales Trotting Club Ltd (1979) 143 CLR 242 per Aickin J at 277), like a statute which is declared invalid if it is beyond power (South Australia v The Commonwealth (1942) 65 CLR 373 per Latham CJ at 408). A possible exception to this principle is the so-called de facto officers doctrine, which has no relevance here (GJ Coles v Retail Trade Industry Tribunal (1987) 7 NSWLR 503, 519-520, 525-527; Re Governor; ex parte Eastman (1999) 73 ALJR 1324, 1357).

98                  In our opinion, the de facto existence of the Deeming Statement would not affect the validity of the exercise of the power granted by s 152AL as such, because, if invalidity is established in these proceedings, then it will be invalidity ab initio. It is possible that it might have affected the exercise of such a power if, for example, the existence and validity of the statement pursuant to s 39(5) was an express foundation for a later declaration, for example, if further services are added by declaration to a service specified in the s 39(5) statement. In that case, however, it would be the falsification of that foundation which would have the effect. That has not been argued here. In our opinion, if the Deeming Statement is declared invalid, then the attack upon the Declaration based upon the existence of the Deeming Statement must fail.

Other grounds of attack on the 1999 Declaration – FOXTEL issues

99                  FOXTEL raises a number of other grounds for invalidating the 1999 declaration. It is convenient to consider these grounds (if necessary) after consideration of the attack upon the validity of the Deeming Statement.

Validity of the Deeming Statement

100               The trial Judge held that the Deeming Statement did not accord with s 39(5) in the form that it was made, and held that it was saved only by severance of the invalid elements. Virtually all that his Honour had to say on this topic is the subject of dispute by one party or the other, with notices of contention and cross appeals as well as appeals. This is not surprising. The provision in question was a transitional one directed towards a new system, so far as Australia was concerned of regulation of communications, with the power granted by it exercised by a body which had not hitherto had direct involvement in the field. In addition, the proceedings were urgently prepared, and heard and determined with commendable dispatch, notwithstanding that the primary Judge was burdened by a mass of material. The concepts are not familiar, and are further complicated because of the fact that the legislation deals with both telephony and other forms of communication, including cable television. The complication is compounded when it is appreciated that the general regulatory control of television is provided for by another set of legislative provisions, the BSA, with yet another regulatory body.

101               Consideration of the relevant Second Reading speeches makes clear what the legislators contemplated.

102               “… The ACCC is required to declare a carriage service to bring within this access regime the supply of broadcasting services over cable networks. This fulfils our election commitment to remove the exemption of pay television carriage from the access regime given by the previous Government.”

and

“Transitional arrangements included in this Bill will establish, on Day One of the new regime, access rights broadly equivalent to those which existing carriers enjoy. In addition, these provisions give effect to our election commitment to bring within the access regime the carriage of subscription television services of the broad band cable networks.”

The intention was to have the access regime applicable to the existing cable television services, including FOXTEL, as at 1 July 1997.

103               There is also no doubt, from the Report, what it was that the ACCC intended. Chapter 6 of the Report (much of which is set out above) exposes the ACCC’s understanding of the matter and its intentions. It seems clear enough that the ACCC was intending to specify carriage services for the transmission of pay TV over (inter alia) the Telstra and Optus cable networks and like services, but in a way which avoided any mandatory bundling of the service. The issue is whether this was possible, and, if so, whether it was achieved. It may be useful to look at some general considerations before returning to the issue.

104               The genesis for this legislation is Part IIIA of the TPA,introduced in 1995, dealing with access to services which, in turn, has its genesis in the United States “essential services” doctrine. In the context of Part IIIA, it is clear that a “service” is something separate and distinct from a facility – indeed, one facility may provide a number of different kinds of service, as well as a number of different instances or occasions of the same kind of service (Rail Access Corporation v NSW Mineral Council Ltd (1998) 87 FCR 517, 524C; Hammersley Iron Pty Ltd v National Competition Council (1999) 164 ALR 203, 214; In re Sydney International Airport [2000] ACompT 1 par 14-17). There is no special definition of “service” in Part XIC, the Transitional Act or the TEAwhich is the same as the definition in Part IIIA. The same result, however, would follow from the ordinary meaning of the word “service”. The second to fifth meanings of the word identified in the Macquarie Dictionary are as follows:

“2. the supplying or supplier of any articles, commodities, activities, etc., required or demanded. 3. the providing or a provider of some accommodation required by the public, as messengers, telegraphs, telephones, or conveyance. 4. the organised system of apparatus, appliances, employees, etc., for supplying some accommodation required by the public. 5. the supplying or a supplier of water, gar, or the like to the public.”

105               A broadcasting service is different from, and encompasses more than, the physical infrastructure involved. Subsection 39(5) contemplates delivery of signals to end-users and “broadcasting service” means a service that delivers television programmes … to persons having equipment appropriate for receiving that service (Transitional Act s 39(15); BSA s 6). In other words, the service involved is the supply of television programmes to viewers by means of line links, rather than other means of delivery, to persons having line link connections and the other equipment necessary to receive and view the programme. The service must be supplied or be capable of being supplied by a carrier or carriage service provider (whether to itself or to other persons) (Transitional Act s 39(15); TPAs 152AL). The Telstra cable utilised by FOXTEL is a line link (Transitional Act s 39(15); TEA ss 6, 30). The telecommunications network is defined by s 22 of the TEA. Wilcox J described the FOXTEL system in operation, as set out earlier in these reasons. The facilities to the wall plate in the consumer’s premises, including optical fibre, coaxial cable, ducts and conduits (including the smartcard) are the property of Telstra or Telstra Multimedia. Beyond the wall plate, FOXTEL equipment is used to connect the television set of the subscriber to the network by means of fly cables connecting the wall plate to the STU and the STU to the subscriber’s set. We assume that the fly cables and STU are part of the telecommunications network and that fly cables are line links. Even if this is not so, the eligible service is not, in our opinion, limited to the cable up to the wall plate, because it is defined to include a service that facilitates the supply of a listed carriage service (within the meaning of the TEA), namely, a service for carrying communications by means of guided and/or unguided electro-magnetic energy between a point in Australia and one or more other points in Australia (TEA s 7, 16).

106               His Honour the trial Judge noted the ambivalence apparent in the Report, as to whether one service or four separate services were specified. This ambivalence is no doubt occasioned by the desire to unbundle as well as specify the service. The question of substance is whether each can be achieved or, put another way, whether unbundling is contemplated by s 35(5).

107               The trial Judge’s preference was to construe the service as one service rather than four, although he considered each alternative. We agree with this view. It seems to us that the relevant language of Table A is expressed in that fashion. This is underlined by the way in which Attachment B is framed. It describes one service, but four functions.

108               Perhaps more importantly, it seems to us that s 39(5) of the Transitional Act points in the same direction. The object is to actually facilitate getting a signal to the subscriber, with a television set, cable connections to it and with an existing provider. For the purposes of this transitional provision, it is not necessary to be concerned with who actually supplies the service, provided that the service is adequately specified so that it may be identified. The cable broadcasting service must exist in order to be specified. Indeed, as we have pointed out, if it exists it must be specified. In our opinion, the defect in the Deeming Statement is that it does not specify such a service – it specifies part of the service, together with what might be described as subscribers’ optional extras. However, the optional extras are necessary to supply the cable broadcasting service – to carry the programmes so that they may be received. They must be provided by someone. The actual access which is to be given is governed by s 152AR of the TPA rather than by s 39 of the Transitional Act. In our opinion, it is at that level that bundling is, or may be, relevant. The attempt to deal with unbundling brought the Deeming Statement undone.

109               The trial Judge found invalidity (due to uncertainty) by an analysis which is not very different to the foregoing, but the difference is important in relation to the question of severance. The severance proposed by his Honour, and that now proposed by the ACCC, each make even clearer what we regard as the fatal defect – a complete service would not be specified. We should say that, in our opinion, if resort to the Second Reading speeches is legitimate it is, as we have said, plain enough that the legislators were aiming to ensure that at least the existing cable broadcasting services of FOXTEL and Optus would be specified. This much is also clear from the ACCC Report. Unfortunately, this was not done, and severance does not assist.

110               This conclusion makes it unnecessary to consider a number of arguments advanced as to the invalidity of the Deeming Statement, including the effect, if any, of the alleged failure to Gazette the full text of a copy of the ACCC Deeming Statement. Accordingly we will formally dismiss Appeal N 528 of 2000, making no order as to costs. Nor need we consider Telstra’s appeal from the refusal to permit it to raise additional grounds of challenge to the Deeming Statement. On the other hand, it makes it necessary to consider the remaining arguments advanced against the validity of the Declaration.

CONCLUSION ON FOXTEL’S CHALLENGE TO THE DECLARATION ON ADMINISTRATIVE LAW GROUNDS

111               As has been noted, his Honour rejected this challenge, holding that FOXTEL had not demonstrated that the ACCC had misconstrued Part XIC, or taken into account irrelevant considerations, or failed to take into account relevant considerations. FOXTEL now appeals from these conclusions.

112               In order to put the appeal into its statutory context, the relevant provisions of Part XIC should be recalled.

·                    The object of the Part is to promote the LTIE (s 152AB(1)).

·                    In determining whether a particular thing (i.e. the Declaration) promotes the LTIE, regard must be had (by the ACCC) to the extent to which the Declaration is likely to result in the achievement (relevantly) of the following objectives: (i) promoting competition in markets for listed services; and (ii) encouraging the economically efficient use of, and the economically efficient investment in, the infrastructure (s 152AB(2)).

·                    For the purposes of (i) above, regard must be had to the extent to which the Declaration will remove obstacles to end-users (s 152AB(4)).

·                    For the purposes of (ii), above, regard must be had to (a) technical feasibility; (b) the legitimate commercial interests of the suppliers; and (c) the incentives for investment in the infrastructure (s 152AB(6)).

·                    The ACCC may declare a service if satisfied that its making will promote the LTIE (s 152AL(3)(d)).

113               Much of the contents of the ACCC’s Report has already been mentioned. However, for our immediate purposes, it will be necessary for us to refer again to some aspects of the Report as follows.

114               As has been seen, in its Report, the ACCC specifically addressed the issue of the promotion of competition, and concluded that declaration would be likely to do this because of high entry barriers; and because niche TV service providers, e.g. TARBS, could offer a range of programming alternative to those offered by FOXTEL and Optus which often offer the same niche channels.

115               In its final conclusions, the ACCC considered that, absent declaration, it was unlikely that viable entry to the retail pay TV market in areas already cabled would be possible for new providers. The ACCC also referred to barriers to entry, including the unavailability of premium programming, and the cost and limitations of alternative means of carrying the services. The ACCC considered these to be “significant” barriers. In addition, the Report noted the vertical integration between the retail pay TV service providers and the providers of the cable carriage service. This, the ACCC said, provided an incentive for the latter to restrict access to their cables. The ACCC considered that, absent declaration, it was likely that a narrower range of programming would be available, and at high prices.

116               The ACCC also specifically addressed the issue of the encouragement of efficiency, including economically efficient investment in infrastructure. The ACCC concluded that it was “technically feasible” to supply, and charge for, the declared services. With respect to economically efficient investment in infrastructure, the ACCC discussed the legitimate commercial interests of the access providers, including the ability to exploit economies of scale and scope, and their interest in earning a normal commercial return on investment. The ACCC concluded that declaration was unlikely to affect these interests detrimentally. The Report went on to discuss incentives for investment in the infrastructure. The ACCC said that it would have been concerned if declaration had the consequence that Telstra or Optus decided not to expand their networks; but the ACCC was of the view that this was not a likely outcome of declaration. The Report proceeded to discuss the impact of declaration upon incentives for investment in other infrastructure, concluding that declaration was likely to encourage efficient investment here. The ACCC considered that declaration would facilitate market entry and enable service providers to obtain information about demand characteristics and the likely responses of competitors, thus reducing the risks associated with infrastructure deployment, and thereby enabling service providers to make efficient decisions about when to deploy additional infrastructure.

117               In the ultimate statement of its conclusions, the ACCC said.

“The fundamental argument [against] declaration … is that regulatory intervention should only address clear market failure, and that no such failure is evident in any of the markets relevant to this inquiry. Telstra, Foxtel and Cable & Wireless Optus argue that the necessary conditions for the exercise of market power do not exist in these markets. In particular, they argue that there is no ‘bottleneck’ in the market for carriage of subscription television services, and that without such a bottleneck, there is no basis for the Commission finding that declaration would be in the long term interests of end users. Further, they argue that prices being charged are close to or below cost, so that no monopoly pricing is involved.

The Commission notes that there is competition between the major providers of retail subscription television services over cable. Nonetheless, the Commission considers that the structure of the markets is such that regulatory intervention is necessary. Each of the carriage providers has an incentive to restrict access to the infrastructure it controls, because of the vertical links between the carriage and retail pay television services. Subscription television services provided by access seekers over the cable infrastructure would compete with the retail services provided by the owners of infrastructure, or by companies in which the owner has a major shareholding. Submitters have described the difficulties they have faced in negotiating access to the cable infrastructure.

Because of their vertical integration with the retail pay television services, the carriage provides can restrict access to their cable infrastructure without serious penalties in terms of loss of wholesale business. In these circumstances, programming services that might otherwise compete successfully with existing retail pay television services or channels cannot do so effectively. The Commission considers competition in the retail pay television market would be promoted if such programming services were given the opportunity to be provided to customers. Therefore the key issue is not merely one of whether existing pay television charges are excessive, but whether there is sufficient choice of programming.”

118               The Report went on:

“The [ACCC] notes the submissions that draw attention to the costs to access providers and seekers that may accrue from declaration. Where such costs do arise, the [ACCC] notes that access seekers have shown a preparedness to meet the reasonable costs to cable owners of providing the service.

The [ACCC] would be concerned if declaration of the analogue service inhibited the deployment of infrastructure to deliver broadband services, including pay television. However, the [ACCC] notes that the declaration of a similar service in July 1997 had no noticeable effect on the existing or proposed roll out of services. In addition, the regulatory framework provides for exemptions from the standard access obligations where this will promote the long term interests of end users.”

119               The Report concluded with the statement that, in the ACCC’s view, declaration would promote the LTIE.

120               In support of its appeal, FOXTEL first challenges the rejection by Wilcox J of opinion evidence sought to be tendered by FOXTEL from an economic expert, Dr P L Williams. In his affidavit, sworn on 2 February 2000, Dr Williams referred to a report he had prepared on the Declaration, and said that, in summary, his opinion was that the approach, analysis and tests adopted by the ACCC in making the Declaration “were not the approach, analysis and tests which an economist would have adopted in making that decision”. In his report, Dr Williams stated that “[his] aim is not to examine the merits of the ACCC’s conclusions [but] [r]ather to examine whether the ACCC adopted a sound economic approach and concluded the tests an economist would employ in reaching its view”.

121               As Wilcox J noted, in his report Dr Williams expressed an opinion on several matters, in particular market definition, which appeared to depart from the approach taken by the ACCC in those areas.

122               The primary Judge ruled that Dr Williams’ opinion evidence was inadmissible as irrelevant, essentially for the reason that, by virtue of the terms of the applicable statutory provisions, “it was for ACCC (not a hypothetical economist) to determine what steps it needed to undertake in order to consider those matters and achieve satisfaction”.

123               So far as Dr Williams’ opinion on market definition was concerned, in the absence of a claim of Wednesbury perversity (and that claim was not advanced before us), Wilcox J ruled that “it was for the ACCC to determine the facts pertinent to its exercise of statutory power”. Nor, in his Honour’s opinion, was market definition itself an issue in this proceedings because it was not an operative part of the ACCC process of reasoning.

124               We are not persuaded that his Honour erred in principle in declining to accept this evidence as not relevant to an issue in a claim for judicial review such as this. This is not to deny that, in other statutory contexts, expert economic opinion evidence may be admissible as capable of illuminating the issues for decision. Clearly, in some cases, it can especially if the meaning of a technical term is involved. But here the essential question for his Honour, as was explicitly recognised in his reasons, was whether the ACCC had erred in law (not fact) in addressing the statutory issue, namely, whether the ACCC is satisfied that declaration will promote the LTIE, as there defined. It is true that this definition picks up several concepts, for instance the notion of competition, which are complex. But none of them has any special technical meaning or trade usage that requires explication by an expert economist.

125               In our opinion, the question whether the views of Dr Williams on these matters would assist the Court in determining whether the ACCC committed an error of law in performing its statutory function, was essentially a matter for his Honour’s assessment at the hearing. Wilcox J had to make an assessment, during the proceeding, whether FOXTEL had demonstrated the nexus necessary to establish the adjectival relevance of the material tendered. As the trial Judge, his Honour’s views are entitled to respect, particularly in this area. Moreover, we are now concerned with the question at the level of substantive relevance – a more difficult threshold for FOXTEL to pass; and there still remains the question whether rejection of the evidence had any material consequence in terms of his Honour’s overall approach.

126               We are not persuaded that his Honour erred in ruling that the opinions of Dr Williams would not assist in the determination of the legal issues before his Honour. Again, it should be emphasised that his Honour was not attempting a review on the merits. If he had been, the input of Dr Williams would, no doubt, have assisted that very different process.

127               FOXTEL further argues that his Honour should not have rejected the evidence of Mr T Mockridge, its Chief Executive Officer, in his affidavit sworn on 1 February 2000, expressing an opinion on the future profitability of a foreign or other “niche” channels. Again, whilst it may be possible to envisage other situations where evidence of this kind could clarify an issue, his Honour, as the trial Judge, thought otherwise. We are not persuaded that we should interfere with that assessment. Similar comments may be made of his Honour’s rejection of evidence sought to be tendered from Mr Cowley.

128               Turning now to FOXTEL’s wider challenges, it is submitted that the ACCC misconstrued and failed properly to apply ss 152AB and 152AL. The submission was developed by an elaborate argument. In essence, it was said that the ACCC’s analysis of the relevant market was flawed, with the consequence that the ACCC’s determination of the critical question, whether competition was likely to be promoted by declaration was also flawed, since it was said, irrelevant considerations were taken into account on the one hand, and relevant considerations ignored on the other. Specifically, it was contended that the ACCC’s perception of the significance of niche programming was flawed.

129               In developing the argument, counsel for FOXTEL contended for a specific market definition, comprehensively challenging the views expressed by the ACCC in this area, but emphasised some particular aspects, for instance, the product dimension, substitutability of pay TV services and free-to-air TV, the geographic dimension, the time dimension, and the “bottleneck” analysis.

130               As noted, FOXTEL’s argument laid particular emphasis on the ACCC’s approach to niche programming. It was said that the ACCC’s analysis failed to give consideration to the following: the existing state of competition; the size of the markets for niche programming; the niche programming presently offered by existing operators; other niche programming that might be available; the revenues that might be generated from niche programming; and the ability of potential access seekers to be viable in the long term. It is submitted that, in this regard, the ACCC “failed to consider critically relevant matters”.

131               We do not accept the submission that these were “relevant matters” for judicial review purposes. As Black CJ, Sackville and Emmett JJ said in Price v Elder [2000] FCA 133 (at par 13):

“Failure to take into account a relevant consideration can only be made out as a ground of review of an administrative decision if the decision maker fails to take into account a consideration that he or she is bound to take into account in making that decision. What factors a decision maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion. If the relevant factors are not expressly stated in the statute, they must be determined by implication from the subject matter, scope and purpose of the Act. Where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject matter, scope and purpose of the statutes some implied limitation on the factors to which the decision maker may legitimately have regard. Where a discretion is unconfined by the terms of the statute, a court will not find that the decision maker is bound to take particular matter into account unless an implication that he or she is bound to do so is to be fund in the subject matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39 –40.”

132               And, as Gleeson CJ and McHugh J have explained (Foster v Minister for Customs & Excise (2000) HCA 38 at paras 22 – 23); (2000) 13 Leg Rep 23 at 27):

“In Minister for Aboriginal Affairs v Peko-Wallsend Ltd, Brennan J said:

‘The Court has no jurisdiction to visit the exercise of a statutory power with invalidity for failure to have regard to a particular matter unless some statute expressly or by implication requires the repository of the power to have regard to that matter or to matters of that kind as a condition of exercising the power.’

The level of particularity with which a matter is identified for the purpose of applying this principle may be significant. A related question arises where the failure complained of is not a complete failure to address a certain subject, but a failure to make some inquiry about facts said to be relevant to that subject. The argument in this Court does not assert lack of procedural fairness, or unreasonableness to the degree that may constitute a ground for treating a decision as invalid.”

133               In the present case, no claim is made (at least before us) of a lack of procedural fairness, or of “unreasonableness” to the point of perversity.

134               What does the language of the statute tell us about the matters which the ACCC is bound to take into account in declaring? In our view, when regard is had to the relevant provisions of Part XIC it appears that the matters said by FOXTEL to be relevant are not to be found, expressly or by implication, in the statutory scheme at all. Rather, the operation of that scheme depends upon quite different concepts. This is made clear by the express language of the legislation, and there appears to be no room whatsoever for any implication, in the statutory scheme, of the different notions advocated on behalf of FOXTEL. This is not to say that some reference could not legitimately be made to some of the FOXTEL concepts in the course of a process of reasoning in performance of the ACCC’s statutory function here. But it does not at all follow that the ACCC was bound to take that notion into account for present purposes.

135               The matter may be tested this way. Inter alia, the statute requires the ACCC to have regard to the extent to which declaration “is likely to result in the achievement of … the objective of promoting competition in markets for listed services …”. On behalf of FOXTEL it is submitted, particularly in the context of niche programming, that the ACCC was, as noted above, bound to take into account the size of the markets for niche programming and the existing state of competition in that market; and that, when assessing this particular state of competition, it was “necessary” that the ACCC make an assessment of, inter alia, the nature and extent of that market.

136               We cannot accept the argument which, in our opinion, seeks impermissibly to substitute a different statutory scheme. There was no obligation imposed on the ACCC under this legislation to make any specific finding on any particular market or sub-market. Rather, the statutory function was expressed in the more general language of the extent of the achievement of the objective stated in s 152AB(2)(c). Although this provision mentions “market”, the central idea there expressed is the achievement of the objective of the promotion of competition in this area. This is a far more generalised notion than the specific issue of market definition. Clearly, “competition” and “market” are related concepts, and, as has been said, it can be expected that in performing its function here, the ACCC would, and did, refer to the market, but in a general way. In our view, the ACCC’s approach accorded with the provisions of the statutory scheme. Put differently, there was nothing in the legislation which bound the ACCC to make the specific findings on market definition, especially in connection with niche programming, contended for by FOXTEL.

137               In short, in our opinion, this aspect of FOXTEL’s challenge is, in truth, an impermissible attempt to obtain judicial review by an attack of the ACCC’s process of reasoning on the facts or the merits (see Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272; Minister for Immigration & Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 629, 651 – 656, 659 and 669). As noted, his Honour the primary Judge rejected FOXTEL’s argument for essentially the same reasons. We agree with his Honour’s approach. Similarly, we would reject FOXTEL’s claim that the ACCC took into account irrelevant considerations. For a consideration to be irrelevant in this sense the statute must expressly or impliedly prohibit consideration of it – Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 40; Reg. v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49 – 50. On the contrary, as his Honour held, and as the structure and language of the Report indicated, the ACCC had regard to the matters prescribed by Part XIC and to no other matters. Its judgment, in terms of its “satisfaction” or process of reasoning, is not itself amenable to judicial review, unless a claim of a perverse decision is advanced, and that is no longer pursued (cf. Abebe v Commonwealth of Australia (1999) 197 CLR 510 at 579).

138               Ground 8 of FOXTEL’s notice of appeal is as follows:

“8. His Honour the trial judge erred in not deciding that there was no evidence or other material to justify the making of the decision, within the meaning of and for the purposes of sections 5(1)(h) and 5(3)(a) and/or 5(3)(b) of the Administrative Decisions (Judicial Review) Act 1977, in relation to:

(a)               the finding that the principal advantage of declaration is likely to be increased competition by niche service providers in those households which are already subscribers to an existing service.

(b)               The finding that competition will be promoted to a noticeable extent by the 1999 Declaration.”

139               This ground was debated at some length before us. There may be more than one answer to it. For our purposes, however, it is sufficient to mention one. As was submitted on behalf of the ACCC, and we agree, this ground identifies conclusions that are not factual matters at all, but rather are matters of value judgment.

140               Finally, it was submitted for FOXTEL that the ACCC erred in applying the “with and without [declaration]” test. However, the test is not required by the statute. Rather, it was no more than an analytical tool employed by the ACCC in the course of its process of reasoning. In our view, this yardstick was not applied, as FOXTEL suggested, in any inconsistent way. Rather, as has been seen, in applying it, the ACCC had to acknowledge the existence of the doubts expressed about the validity of the Deeming Statement. Even if some inconsistency had crept in, this would not, of itself, make the decision amenable to judicial review (Waterford v Commonwealth (1987) 163 CLR 54 at 77; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 357; Minister for Immigration & Multicultural Affairs v Eshetu (above) at 626 – 627; Minister for Immigration & Multicultural Affairs v Epeabaka (1999) 84 FCR 411 at 421).

141               In our view, the administrative challenges to the Declaration were correctly rejected by Wilcox J, essentially for the reasons his Honour gave.

142               The 1999 Declaration is therefore valid.

ORDERS

143               Accordingly, we make the following orders:

1. In appeal N 527 of 2000, the appeal is dismissed, with costs.

2. In each of the appeals N 508 of 2000 and N 529 of 2000:-

(a) The appeal is allowed in part. It is ordered that Orders 1 and 3 made at first instance on 8 May 2000 be set aside; and that, in lieu thereof, it be declared that the Deeming Statement dated 30 June 1997 is void; and that there be no order for the costs of proceedings N 1095 of 1999 at first instance. The appeal is otherwise dismissed with no order as to costs of the appeal.

(b) The cross-appeal is dismissed, with no order as to costs.

3. In appeal N 528 of 2000, the appeal, and the cross-appeal, are dismissed, with no order as to costs.

144               As has been seen, we have made no order for the costs of proceedings N 1095 of 2000 at first instance. This is because, in our view, the Deeming Statement is void, requiring the setting aside of Order 1 at first instance. But Order 2 at first instance upheld the validity of the Declaration, and, to this extent, the appeal was dismissed.

Associate:

Dated: 18 August 2000