FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Telstra Corporation Limited [2010] FCA 790

THE COURT ORDERS THAT:

1.                  The parties confer for the purpose of agreeing upon minutes of orders.

2.                  The parties file any agreed minutes of orders on or before 4:00pm on 16 August 2010.

3.                  The parties file and serve any written submissions as to orders sought and not agreed (including orders as to costs) on or before 4:00pm on 16 August 2010.

4.                  The parties file and serve any reply submissions on a before 4:00pm on 23 August 2010.

5.                  The parties advise the Court on or before 4:00pm on 23 August 2010 whether they agree to the further orders being made upon the written submissions without the need for any further appearance.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

INTRODUCTION

Application

1                     In this proceeding the Australian Competition and Consumer Commission (‘ACCC’) seeks:

(a)               Declarations under s 21 of the Federal Court of Australia Act 1976 (Cth) (‘Federal Court Act’),

(b)               Pecuniary penalties under s 570 of the Telecommunications Act 1997 (Cth) (‘Telecommunications Act’),

(c)               Injunctions under s 564 of the Telecommunications Act  and s 152BB and s 80 of the Trade Practices Act 1974 (Cth) (‘TPA’),

in respect of two related categories of conduct engaged in by the division of the respondent (‘Telstra’) known as Telstra Wholesale. 

2                     The first category of conduct involves the rejection of requests made to Telstra by access seekers for interconnection of their facilities with the facilities of Telstra at the Bulwer (WA), Carlton (VIC), Northcote (VIC), Paddington (QLD), Port Melbourne (VIC), South Perth (WA) and St Peters (SA) exchanges (‘the Seven Exchanges’).  

3                     The second category of conduct involves the publication by Telstra of notices on the Telstra Wholesale website containing representations that there was no capacity on the Main Distribution Frame (‘MDF’) at the Seven Exchanges that could be made available for use by access seekers to interconnect their facilities (‘the Capped Sites Notices’).

Telstra’s Admissions

4                     Telstra has admitted, for the purposes of this proceeding, that by rejecting the requests for interconnection from access seekers in relation to the Seven Exchanges it has:

(a)               on 27 occasions failed to comply with s 152AR(5)(c) of the TPA and a condition of its carrier licence and contravened s 68(1) of the Telecommunications Act;

(b)               on 22 occasions failed to comply with cl 17 of Sch 1 to the Telecommunications Act and a condition of its carrier licence and contravened s 68(1) of the Telecommunications Act;

(c)               made representations to access seekers that were incorrect and thereby engaged in conduct that was misleading or deceptive or likely to mislead or deceive contrary to s 52(1) of the TPA.

5                     Telstra has also admitted, for the purposes of this proceeding, that by publishing Capped Sites Notices in relation to the Seven Exchanges between 1 September 2007 and 10 April 2008 it made representations that were incorrect and thereby engaged in conduct that was misleading or deceptive or likely to mislead or deceive contrary to s 52(1) of the TPA.

6                     The ACCC does not press any contraventions of law alleged in the Amended Statement of Claim (‘ASOC’) beyond those admitted by Telstra.

7                     In addition to admitting the above contraventions, Telstra has admitted, for the purpose of this proceeding, the majority of the ACCC’s allegations of fact contained in the ASOC.  However, not all allegations of fact have been admitted.

Penalty and Other Remedies

8                     The parties are in dispute as to the level of pecuniary penalty that ought to be paid by Telstra under s 570(1) of the Telecommunications Act, and as to other remedial relief to be ordered by the Court. 

9                     Section 570 of the Telecommunications Act provides for the imposition of a pecuniary penalty in respect of a contravention of s 68(1) of the Telecommunications Act.

10                  In determining the pecuniary penalty, the Court must have regard to all relevant matters, including:

(a)               the nature and extent of the contraventions;

(b)               the nature and extent of any loss or damage suffered as a result of the contraventions;

(c)               the circumstances in which the contraventions took place; and

(d)               whether the person has previously been found by the Court in proceedings under the Telecommunications Act to have engaged in any similar conduct.

11                  The pecuniary penalty is not to exceed $10 million for each contravention.

12                  A person is not liable to more than one pecuniary penalty in respect of the same conduct (see s 570(5) of the Telecommunications Act).

13                  The Federal Court is also empowered to grant injunctive relief:

(a)        under s 152BB of the TPA in respect of contraventions of the standard access obligations;

(b)       under s 564 of the Telecommunications Act in respect of contraventions of that Act; and

(c)        under s 80 of the TPA in respect of contraventions of s 52 of the TPA.

14                  The Federal Court also empowered to make declaratory orders (see s 21 of the Federal Court Act).

RELEVANT STATUTORY PROVISIONS

15                  Part XIC of the TPA sets out a telecommunications access regime.  It was inserted into the TPA by the Trade Practices Amendment (Telecommunications) Act 1997 as part of a legislative package which included the enactment of the Telecommunications Act.

16                  Section 3 of the Telecommunications Act provides that the main object of that legislation, when read together with Pt XIB and Pt XIC of the TPA, is to provide a regulatory framework that promotes:

(a)        the long-term interests of end-users of carriage services or of services provided by means of carriage services; and

(b)       the efficiency and international competitiveness of the Australian telecommunications industry.

17                  It is also provided that the other objects of the Telecommunications Act, when read together with the TPA, include:

(a)        to promote the supply of diverse and innovative carriage services and content services;

(b)       to promote the development of an Australian telecommunications industry that is efficient, competitive and responsive to the needs of the Australian community; and

(c)        to promote the effective participation by all sectors of the Australian telecommunications industry in markets.

18                  Section 152AB of the TPA provides that the object of Pt XIC is to promote the long term interests of end-users of carriage services or of services provided by means of carriage services.  This is amplified in s 152AB(2) which states that, in determining whether a particular thing promotes the long term interests of end-users, regard must be had to the extent to which the thing has the following objectives:

(a)        promoting competition in markets for listed services;

(b)       achieving any-to-any connectivity in relation to carriage services that involve communication between end-users; and

(c)        encouraging the economically efficient use of, and the economically efficient investment in, the infrastructure by which listed services are supplied and any other infrastructure by which listed services are, or are likely to become, capable of being supplied.

19                  A participant in the Australian telecommunications industry, like Telstra, is not only to be concerned with its own self interest.  As commented by the High Court in Telstra Corporation Limited v The Commonwealth (2008) 234 CLR 210 at p 228 [33] per Gleeson CJ, Gummow, Kirby, Hayne, Heydon, Crennan and Kiefel JJ: 

…

The objects thus identified in the 1997 Telecommunications Act and in Pt XIC of the Trade Practices Act are wider than and different from that narrow self interest which, statute apart, is all that one participant in a market would ordinarily consult when striking a bargain with another participant in that market.

20                  Under s 152AL, the ACCC may declare certain services for the purposes of the application of Pt XIC.  The Unconditioned Local Loop Service (‘ULLS’) and the Line Sharing Service (‘LSS’) (to which I will return) were active declared services (as defined in s 152AR(2) of the TPA) under s 152AL.

21                  Section 152AR sets out standard access obligations in respect of active declared services.  As a consequence, Telstra has been required to comply with the standard access obligations set out in s 152AR(3)(a) and s 152AR(5)(c) in respect of the ULLS and the LSS.

Defined Terms

22                  The relevant statutory provisions use a number of defined terms.  For convenience, commonly used defined terms are as follows:

Service provider is defined in s 152AC of the TPA and s 86 of the Telecommunications Act to mean a carriage service provider or a content service provider.  Relevantly, a carriage service provider is a person who supplies a listed carriage service to the public (s 87 of the Telecommunications Act) which is a service for carrying communications between discrete points (s 7 and s 16 of the Telecommunications Act).  The standard access obligations in s 152AR of the TPA apply for the benefit of service providers.

Access seeker is defined in s 152AG of the TPA to mean, in relation to a particular declared service under Pt XIC of the TPA, a service provider who makes or proposes to make a request in relation to that service or who wants access to the service.  In the present context, the terms “service provider” and “access seeker” can be used interchangeably.

Access provider is defined in s 152AR(2) of the TPA to mean a carrier or carriage service provider who supplies a declared service.  Telstra was an access provider in relation to the ULLS and the LSS.

23                  Section 152AR(3)(a) provides that an access provider must, if requested to do so by an access seeker, supply an active declared service (in this case, the ULLS and the LSS) to the access seeker in order that the access seeker can provide carriage services and/or content services.

24                  Section 152AR(5)(c) provides that if an access provider owns or controls one or more facilities, it must, if requested to do so by an access seeker, permit interconnection of those facilities with the facilities of the access seeker for the purpose of enabling the access seeker to be supplied with active declared services (in this case, the ULLS and the LSS) in order that the access seeker can provide carriage services and content services. 

25                  By virtue of virtue of s 62 of the Telecommunications Act and s 152AZ of the TPA, it is a condition of Telstra’s carrier licence that Telstra complies with the standard access obligations referred to above.

26                  By s 61 of the Telecommunications Act, it is a condition of Telstra’s carrier licence that Telstra complies with the provisions of Sch 1 of the Telecommunications Act.  By cl 17 of Sch 1 of the Telecommunications Act, Telstra must, if requested to do so by another carrier, give the other carrier access to Telstra’s facilities for the purpose of enabling the other carrier to provide competitive carriage services provided that:

(a)        the other carrier’s request is reasonable;

(b)       the other carrier gives Telstra reasonable notice that the other carrier requires the access; and

(c)        Telstra’s facilities were in place on 30 June 1991 or were not in place on 30 June 1991 and were not obtained after that date by Telstra solely by means of commercial negotiation.

27                  Each Local Loop, MDF, Digital Subscriber Line Access Module (‘DSLAM’) and exchange building was a facility within the meaning of Pt XIC of the TPA and the Telecommunications Act.  Further, in respect of the Seven Exchanges, the exchange building and land forming part of the exchange, the MDF within the exchange and the Local Loops terminating at the exchange were in place on 30 June 1991 or were not in place on 30 June 1991 and were not obtained after that date by Telstra solely by means of commercial negotiation.

28                  By s 68(1) of the Telecommunications Act, Telstra is required to comply with the conditions of its carrier licence.  Subsection 68(1) is a civil penalty provision (see s 68(3)).  It is s 68(1) that has been contravened by Telstra which gives rise to the pecuniary penalties sought by the ACCC under s 570(1) of the Telecommunications Act.  Section 570(1) enables the Court to order the payments of any pecuniary penalty to be made, in respect of each contravention, as the Court determines to be appropriate.

FACILITIES INTERCONNECTION AND COMPETITION

Technical Overview

29                  This proceeding concerns requests by access seekers to interconnect their facilities with Telstra’s facilities within the Seven Exchanges in order to acquire the ULLS and/or the LSS and thereby supply telecommunications services to end-users in competition with Telstra.

30                  The facilities of access seekers and Telstra that must be interconnected for this purpose are described in the Agreed Statement of Facts – Technical Overview dated 23 December 2009 (‘Technical Overview’).  The facts in the Technical Overview have been agreed by the parties under s 191 of the Evidence Act 1995 (Cth).

Use of Telstra’s PSTN to Supply Competing Telecommunications Services

31                  Telstra owns and operates a public switched telephone network (‘PSTN’).  The PSTN is Australia’s largest nation-wide fixed line telecommunications network.  It is used, among other things, to provide retail and wholesale telecommunications services.  As at 30 June 2008, there were approximately 9.86 million fixed line services connected to the PSTN.

32                  Telstra has been able to supply, and has supplied, telecommunications services (including voice telephony and broadband internet services) to end-user premises connected to the PSTN.  Broadband internet services supplied using Telstra’s PSTN are known as digital subscriber line (‘DSL’), xDSL or ADSL services (ADSL is an acronym for asymmetric digital subscriber line - ‘asymmetric’ refers to the fact that ADSL download speeds and capacity are much higher than upload).

33                  Service providers have also been able to supply, and have supplied, telecommunications services (including voice telephony and ADSL broadband internet services) to end-user premises connected to the PSTN in competition with Telstra.  There are two primary means by which service providers have been able to supply those services.

34                  First, service providers have been able to acquire a wholesale carriage service from Telstra and resell that service to the end-user.  In respect of voice telephony services, the relevant wholesale carriage services supplied by Telstra to service providers include the Local Carriage Service (‘LCS’), the Wholesale Line Rental Service (‘WLR’), the Domestic PSTN Originating Access Service and the Domestic PSTN Terminating Access Service (each of which was an active declared service within the meaning of Pt XIC of the TPA).  In respect of broadband internet services, Telstra has supplied service providers with the Wholesale DSL Service.  When a service provider uses a wholesale carriage service supplied by Telstra, the service provider does not use its own facilities to effect the carriage of the communication; instead, the communication is carried by Telstra using its facilities.

35                  Secondly, service providers have been able to acquire the ULLS or the LSS from Telstra.  The use of the ULLS or LSS by service providers is described in more detail below.  In summary, the service provider interconnects its own telecommunications facilities (typically a DSLAM and backhaul transmission capability) with the facilities of Telstra (the Local Loops which connect to a particular end-user’s premises) in order to supply the carriage service to the end-user.

36                  I am prepared to accept that the competitiveness of the telecommunications services supplied by service providers, in terms of both price and quality, is affected by whether the telecommunications services are supplied using the ULLS/LSS or a wholesale service such as the LCS/WLR (voice) and the Wholesale DSL Service (internet).

37                  The importance of the ULLS/LSS services in facilitating telecommunications competition in Australia was discussed in the determinations of the ACCC declaring the ULLS and LSS services respectively.  The ACCC’s final determination dated July 2006 concerning the declaration of the ULLS concluded that:

In areas where xDSL technology is viable, the ULLS service is an important platform for competition in basic access, voice and broadband services.  In the absence of effective facilities-based competition and ULLS declaration, retail competition in customer access, voice and broadband services would be limited to service providers on-selling Telstra’s wholesale products.  Retail competition would be stifled as customers would not have the same degree of customer choice as is available via ULLS based competition.

This view is supported by comments from the Competitive Carriers Coalition which states that ULLS allows competitors to differentiate their prices and products and reduce their reliance on Telstra.

38                  The ACCC’s final decision dated October 2007 concerning the declaration of the LSS stated that:

In practice the LSS has been used by internet service providers (ISPs) such as iiNet and internode to be first to market high-speed broadband services via ADSL2+ technology.  These access seekers have been able to fully utilise the functionality of the LSS to compete aggressively on the basis of high-quality, differentiated retail broadband offerings.  In turn, telecommunications providers, such as Telstra and Optus, have responded to these market developments by also offering ADSL2+ services to consumers.  Thus, LSS based competition has been effective in promoting rivalry, innovation and customer choice in the retail market for high-speed broadband services.

39                  Telstra’s PSTN is not the only fixed line telecommunications network in Australia that is connected to residential premises, but it has the largest coverage of residential premises.  In addition to the PSTN, Telstra and Optus each own a Hybrid Fibre Coaxial (‘HFC’) network that is connected to numerous residential premises in Adelaide, Brisbane, Gold Coast, Melbourne, Perth and Sydney.  The Telstra and Optus HFC networks are able to be used to supply broadband internet services to the premises passed by the networks as an alternative to ADSL services supplied using the PSTN.  Neighbourhood Cable also operates an HFC network to provide broadband, pay TV and voice telephony services in the regional Victorian cities of Ballarat, Mildura and Geelong. 

Facilities Interconnection

40                  The ULLS and the LSS involve the use by access seekers of the copper wire pairs that connect end-users’ premises to Telstra’s exchanges.  The copper wire pairs are also known as Local Loops to which I have already referred.  The Local Loops form part of Telstra’s PSTN. 

41                  In order to use the ULLS or the LSS, an access seeker must connect its own equipment to the Local Loop over which the service is to be supplied.  The equipment to be connected is typically a DSLAM.  This enables the access seeker to use the ULLS or LSS to supply voice and data communication services over that Local Loop.

42                  The access seeker’s DSLAM is interconnected with the Local Loop over which the ULLS or the LSS is to be provided on the MDF in the exchange.  Accordingly, when an access seeker requests the supply of the ULLS or LSS in respect of a Local Loop connected to the premises of a particular end-user, the Local Loop is disconnected from Telstra’s network equipment (assuming the end-user was a Telstra customer at the time of request) and is connected to the access seeker’s equipment.  The technical steps involved are described in more detail in the Technical Overview.

43                  MDF’s comprise an iron frame consisting of two sides, referred to respectively as the “equipment” and “line” sides, onto which termination blocks are mounted.  Local Loops typically terminate on blocks on the line side.  A pair of copper wires known as a jumper will then connect that line side block to another termination block on the MDF (usually, though not necessarily on the equipment side) which will be interconnected with the equipment of Telstra or an access seeker.  Termination blocks on an MDF are commonly referred to in groups known as “verticals” which are a single column of termination blocks running from the top of the MDF to the bottom.  Each termination block on the MDF can terminate multiple copper pairs.  Over the years, the density of termination blocks, that is, the number of wire pairs able to be terminated on a particular block, has increased as technology has improved.  For example, some blocks are able to make connections between 104 wire pairs, which means that 104 jumpers are able to be connected to that block and 104 Local Loops are able to be connected to that block, effecting a connection between 104 individual jumpers and 104 individual Local Loops.

44                  In order to supply telecommunications services using the ULLS or the LSS on a commercial or economic basis, an access seeker must locate its equipment (such as a DSLAM) in or adjacent to Telstra’s exchange and run an interconnect cable from its equipment to a termination block on the MDF.  To do this, an access seeker must acquire various services from Telstra including the right to access Telstra’s exchanges to install DSLAMs and interconnect cables to termination blocks on the MDF (which services are typically referred to as Telstra Exchange Building Access services (‘TEBA services’)).  The space within which DSLAMs are located within exchanges is commonly referred to as “rack space”.

Ordering and Provisioning Procedures

45                  Telstra has supplied the ULLS and the LSS and TEBA services to access seekers pursuant to agreements which included agreements titled Customer Relationship Agreements (‘CRAs’) and Facilities Access Agreements (‘FAAs’).  These documents are in a relatively standard form.

46                  Relevantly, the CRAs and the FAAs set out the ordering and provisioning procedures to be followed by access seekers to access Telstra’s exchanges for the purpose of installing and interconnecting equipment, including DSLAMs and interconnect cables.  In summary, those procedures are as follows:

(a)        If a DSLAM is to be installed in the exchange building, access seekers must submit a Preliminary Study Request (PSR).  If a DSLAM is to be installed adjacent to the exchange, an access seeker must submit a Duct Study Request (DSR) or an External Interconnection Cable (EIC) Study Request rather than a PSR.  The PSR, DSR and EIC Study Request (as applicable) must specify, amongst other things, the number of block positions on the MDF required by the access seeker to interconnect its facilities.

(b)       Telstra is required to undertake a study based on the information contained in the PSR, DSR or EIC Study Request (as applicable) and advise the access seeker whether the access requested is able to be granted and, if not, whether alternative access may be suitable.  Telstra must use reasonable efforts to do this within 10 working days.

(c)        If Telstra indicates that access is likely to be granted, the access seeker must submit a Design and Construction Proposal (‘DCP’).

(d)       Telstra reviews the DCP and advises the access seeker whether it is approved for implementation or approved subject to conditions or rejected.  If reasonably practical, Telstra must do this within 15 working days.

(e)        If the DCP is approved, the access seeker may undertake the construction works described in the DCP at the exchange.

(f)        Following the completion of the construction works, the access seeker must submit to Telstra a Joint Completion Inspection (‘JCI’) Request following which Telstra and the access seeker conduct a joint inspection of the construction works to ensure that they are in accordance with the DCP and satisfy all of Telstra’s technical and safety requirements.

47                  Telstra’s admitted contraventions involved rejections of PSRs, DSRs and EIC Study Requests submitted by access seekers in respect of the Seven Exchanges.

Exchange Capacity Management

48                  Telstra’s exchanges have physical constraints.  Importantly, such constraints are recognised in the CRA’s and FAA’s.  In order to supply TEBA services to an access seeker, there must be rack space available, or able to be made available, in which to locate the access seeker’s DSLAMs (either within the exchange or on land adjacent to the exchange).  There must also be block positions available, or able to be made available, on the MDF to enable the access seeker to install termination blocks and run interconnect cables from its DSLAM to the termination blocks (thereby enabling interconnection with Local Loops).

49                  In order to record and manage the use of MDFs in its exchanges, Telstra created drawings using a system called CADLINK that depicted the layout of the MDFs including the termination blocks mounted on the MDF and their use (Cadlink drawings).  Cadlink drawings depicted the use of block positions on verticals on the equipment and line sides of MDFs, including whether the block positions were vacant, in use or reserved for future use.  On occasions, the Cadlink drawings also indicated whether block positions held redundant equipment.

50                  The Cadlink drawings for each of the Seven Exchanges indicated the available MDF capacity at the time that access seekers requested interconnection.  However, the Cadlink drawings were not always accurately maintained by Telstra, a matter to which I will return. 

51                  Since at least 21 September 2006, Telstra’s practices and policies in relation to the management of the capacity of MDFs in its exchanges have been set out in, amongst others, a document titled “Capacity Management of Exchanges”.  The purpose of the document was to provide guidance and rules in relation to the creation of spare capacity on MDFs.

52                  The document states that there are six planning options that can be adopted by Telstra to increase the capacity of its MDFs:

(a)        rationalisation – decommissioning and removing from the MDF any equipment or cable that is no longer required, including the movement of services from one piece of equipment to another lowly occupied piece of equipment to enable the decommissioning and subsequent removal of the first piece of equipment;

(b)       extension – adding verticals to an existing MDF within the existing available floor space;

(c)        extension with floor space recovery – creating additional floor space either through removal of redundant equipment or relocation of equipment in the exchange and extending the MDF onto the additional floor space;

(d)       extension with building alteration – creating additional floor space either through a building extension or change in internal walls to accommodate the extension of the MDF;

(e)        compression – replacing low density termination blocks with newer high density blocks (thereby decreasing the number of termination blocks on the MDF and creating vacant block positions);

(f)        use of the line side for equipment termination – using spare termination block positions on verticals on the line side of the MDF for equipment termination.

53                  The policies adopted by Telstra to manage and increase the capacity of its MDFs in exchanges included:

(a)        a general planning principle that inadequate MDF capacity should not delay or prevent the installation of new equipment and that therefore, the planning decision on the appropriate MDF capacity management option should be made in sufficient time to allow for any potential solution to be implemented prior to running out of MDF capacity;

(b)       when additional MDF capacity is required for future growth within the next three years, Telstra’s capacity planners reserve the capacity within the Cadlink drawings;

(c)        the planning option to increase the capacity of an MDF must be chosen to provide the required capacity at the least cost;

(d)       a combination of planning options to increase the capacity of an MDF may be employed to deliver the optimum outcome;

(e)        typically, the following preferential order of the planning options applies:

                 (i)                   rationalisation;

                (ii)                   extension;

              (iii)                   extension with floor space recovery;

              (iv)                   compression;

               (v)                   extension with building alteration; and

              (vi)                   use of line side block positions.

54                  It would appear that in fact Telstra had adopted the same or similar practices and policies to those documented as described above from at least April 2006. 

55                  These policies should be read as applicable subject to the requirements of the Telecommunications Act and the TPA, and the terms of the CRA’s and FAA’s.

Exchange Capping

56                  From July 2005, from time to time Telstra published on the Telstra Wholesale Website Capped Sites Notices. 

57                  The notices took different forms over time.  The initial Capped Sites Notices between July 2005 and August 2007 represented that, in respect of certain of the exchanges identified in the notice, there was no longer any space available within the exchange for the installation of access seekers’ facilities (such as DSLAMs) although, subject to the availability of MDF space, access seekers might be able to locate their DSLAM external to the exchange and apply for an external interconnection cable to connect to the MDF.

58                  In the period from on or about 1 September 2007 to the commencement of the proceeding, the Capped Sites Notices also represented that, in respect of certain of the exchanges identified in the notice, there was no longer any MDF space available for the installation of termination blocks by access seekers.  In these Notices, Telstra used the expressions:

(a)        “Racks Capped” to refer to exchanges that Telstra represented did not have any rack space or TEBA space available or that could be made available for use by service providers for the installation of their facilities; and

(b)       “MDF Capped” to refer to exchanges that Telstra represented did not have any MDF space available or that could be made available for use by service providers for the installation of termination blocks.

59                  In the period from 11 April 2008 to the commencement of the proceeding, the Capped Sites Notices also represented that, in respect of certain of the exchanges identified in the notice, floor space or MDF space may be made available to access seekers subject to the performance of works to make that space available.  Telstra used the expression “Potential” to refer to exchanges falling into that category.

60                  From time to time, and on various dates, in respect of each of the Seven Exchanges, Telstra:

(a)        decided to classify the exchange as MDF capped;

(b)       included the exchange in a Capped Sites Notice representing that there was no longer any MDF space available; or

(c)        decided to cease classifying the exchange as MDF capped and removed the exchange from the Capped Sites Notices.

61                  The management of the TEBA access requests has been the responsibility of two divisions within Telstra.  The first division was the business unit called Telstra Wholesale, which was responsible for the supply of services by Telstra to its wholesale customers.  The second division was a business unit called Telstra Operations, which was responsible for the construction, maintenance and management of all of Telstra’s network facilities including local telephone exchanges.  There was an increase substantially during the period 2006 and 2008 with a number of TEBA requests; but there was no increase in the number of staff assigned by Telstra to the facilities access group.  I accept that if and to the extent there were resource constraints within Telstra in doing proper TEBA access requests those constraints were within the control of Telstra itself.

62                  During 2006 and 2008 the facilities access group delegated the assessment of TEBA requests to TEBA access coordinators.  The role of the TACs was to liaise with others within Telstra and advise the facilities access group whether there was sufficient floor space and MDF capacity to satisfy each access request.  The Court heard evidence from some of the TACs who were responsible for the assessment of TEBA access requests (the subject of this proceeding), being:

(a)        in respect of Queensland (Paddington), Ken Ansell;

(b)        in respect of South Australia (St Peters), Greg Lines and Phil Bigg; and

(c)        in respect of Western Australia (Bulwer and Sth Perth), Colin Eggleston.

63                  The Court also heard evidence from Geoffrey Wicking who was an assistant to the Victorian TAC, Sharon Webster.  Evidence was not given by Ms Webster, nor by Graeme Wigg who was also a TAC for WA and involved in relevant decisions to refuse access.

64                  The TACs were not employed within, and were not supervised by, the Facilities Access group (within Telstra Wholesale).  Each of the TACs who gave evidence worked either within the Fundamental Planning group or the Network Engineering or Network Design groups which were part of the Telstra Operations business unit.

65                  The precise role of the TACs in respect of the allocation of MDF block positions in response to TEBA requests was not clear, but it appears that those decisions were further delegated by the TACs to persons who were appointed as ‘MDF Managers’ or ‘Area Planners’ or otherwise worked within the Fundamental Planning group.  In Queensland, Mr Ansell made recommendations to Mr Nightingale in the Fundamental Planning group of the MDF Management Team.  In Victoria, Mr Smith gave evidence that he was the MDF Manager for Melbourne metropolitan exchanges from April 2007 and was responsible for allocating space (although Mr Wicking gave evidence that he consulted Mr Halliday, who is described in Mr Wicking’s affidavit as a ‘planner’, in early 2006 in respect of the allocation of space on the MDF at the Port Melbourne exchange).  In respect of WA, Mr Eggleston said that the allocation of MDF space was the responsibility of the MDF Manager, being Mr Mawer (and in his absence Mr Shaw).  In respect of SA, Messrs Lines and Bigg gave evidence that the allocation of MDF block positions was the responsibility of the MDF manager, being Mr Pennington.

66                  Within the Fundamental Planning division, Jon Lipton was the National Networks Manager – Towers and Facilities Planning from October 2005.  A number of Telstra employees who made decisions in respect of, or were involved in, access refusals in this proceeding reported directly or indirectly to Mr Lipton.  These included Messrs Ciaglia, Nightingale, Wicking, Glowik, Ansell and Halliday.  Nevertheless, Mr Lipton only became aware of Telstra’s policies concerning MDF management sometime in 2007.  He had not taken any responsibility to ensure that the planners that reported to him were complying with those policies, and he was not aware that Telstra had published a planning policy which stated that no project should be delayed because of insufficient MDF space.

67                  There is no doubt that because of the physical constraints of the Telstra exchange’s management of the MDF capacity constraints was required.  Telstra was fully aware of these constraints and understood the need for management.

68                  I should say something more about the Cadlink drawings.  The TACs and MDF Managers who had responsibility for TEBA access requests were aware of and used the Cadlink drawings.  In their affidavits, many of them said that the Cadlink drawings were not always completely accurate.  No adequate explanation was provided by any Telstra witness as to why measures were not taken to keep the Cadlink drawings up to date.  Regardless, no evidence was adduced by Telstra to demonstrate that the Cadlink drawings for the Seven Exchanges were materially inaccurate, as opposed to having minor inaccuracies.  A review of the Cadlink drawings for the Seven Exchanges in light of the events that occurred, including subsequent MDF audits and the uncapping of the exchanges, reveals that the Cadlink drawings were substantially accurate.  Most significantly, the Cadlink drawings for the Seven Exchanges identified vacant and unreserved block positions that were available for use by access seekers at the time of their requests. 

69                  The Telstra’s policies and procedures concerning MDF capacity management were not communicated effectively or efficiently to TACs or to MDF Managers.  Therefore, despite the existence of written policies, the evidence uniformly revealed that the policies were not well known by employees responsible for TEBA access requests.

70                  However, I do accept that the witnesses called by Telstra did appreciate generally the obligations upon Telstra to provide access.

71                  I find that Telstra did not have any consistent policy, protocol or procedure for making decisions about capping exchanges.  Mr Semmen’s, the Manager, Facilities Access – Wholesale Deliveries and Operations for Telstra Wholesale, who in his affidavit set out what he described as a “process for capping and exchange” indicated that he did not know the criteria to be applied in connection with capping, nor was he informed of what process would be undertaken prior to capping.  He was unclear as to who had the authority within Telstra to cap an exchange.  There seemed to be also no process to reassess the capping of an exchange.  Telstra readily capped exchanges without any proper form of assessment.  However, Telstra was very slow to uncap exchanges after October 2007, where a process of verification and audit took up to six months.  I will return to this delay later in these reasons.

CIRCUMSTANCES OF THE CONTRAVENING CONDUCT AT THE SEVEN EXCHANGES

72                  There was a substantial amount of time spent at the hearing on evidence concerning the circumstances surrounding each contravention.  By the time final submissions were made, most of the primary facts did not seem to be in contention.  Significantly, the chronology of events which occurred at each exchange, and the actions of the relevant employees of Telstra did not seem to be greatly disputed.  The credit of the witnesses called by Telstra was not put in issue, although the ACCC did submit that all the evidence presented to the Court by Telstra should not necessarily be accepted.

73                  The circumstances of the contravening conduct can be summarised as follows.

Bulwer Exchange

74                  In WA, the MDF Manager was responsible for MDF allocations.  This was Wayne Mawer and, in his absence, Greg Shaw.  Whilst Mr Mawer indicated that he did not have sufficient time to assess thoroughly MDF requests and that the workload was a bit overwhelming, I do not consider this was the reason for the refusals occurring in the manner in which they did.  Further, whilst Mr Mawer agreed that in August 2007 there was not much pressure on him from Telstra management to free up MDF space for access seekers, and that to his knowledge he had never refused an MDF allocation requested by Telstra because of a lack of MDF capacity, he was generally aware of the obligation to provide access where possible to access seekers.  The actions of Mr Mawer in checking the Cadlink drawings and discussing matters with others, as well as considering Telstra’s criteria for allocating MDF space, confirm that Mr Mawer took his responsibilities to allocate space seriously and conscientiously.

75                  There was a queue for access at Bulwer after an Optus PSR was approved on 11 July 2006.  Between September 2006 and September 2007, the following access seekers submitted the PSRs:

76                  In response to each of the PSRs referred to in the above table, Telstra advised the access seeker that there was a queue for access to the Bulwer exchange and placed the PSRs on hold.  At first, the WA TAC, Mr Eggleston, placed the PSRs in a queue pending receipt of Optus’ DCP (which required an air conditioning audit).  Telstra approved the Optus DCP on 9 January 2007.  Despite that, the queue did not advance.  When Chime submitted version 2 of its PSR on 17 January 2007, it was told the PSR was queued pending completion of the Optus JCI.  Even when Telstra approved Optus’ JCI on 10 April 2007, the queue did not advance.  When PowerTel submitted its PSR on 4 June 2007, the queue remained in place. 

77                  Although MDF requests by access seekers were queued by Telstra, its own MDF requests were dealt with immediately.  On 13 March 2007, Mr Mawer approved an MDF allocation to Telstra of 32 block positions.

78                  Agile’s PSR was not finally assessed until 31 August 2007.  On 4 September 2007, Mr Mawer rejected the PSR.  Mr Mawer gave evidence that he did not recall the steps he took in dealing with the request.  He agreed, though, that at that time the line side of the Bulwer MDF had a lot of vacant block positions.  He also agreed that it was unlikely that he conducted a site visit to the exchange.  On 18 October 2007, he was asked by Mr Eggleston to specifically confirm that there was no space on the line side.  Mr Mawer believed that he was given directions by Fundamental Planning that line side blocks were not available.  I accept that evidence, although no one from Fundamental Planning gave evidence in relation to Bulwer. 

79                  On 5 September 2007, Telstra decided to classify the Bulwer exchange as MDF capped.  All outstanding PSRs were then rejected.  A further PSR lodged by TPG on 5 November 2007 was also rejected.  From 1 September 2007, Telstra Wholesale included Bulwer in the Capped Sites Notices.

80                  From on or about 1 September 2007 to about 11 September 2007, the Cadlink drawings showed that there were approximately 131 block positions on the MDF at the Bulwer exchange that were not in use by Telstra or service providers and approximately 39 further block positions on the MDF that had been reserved by Telstra for various future uses.  From on or about 11 September 2007 to late January 2008, the Cadlink drawings showed that there were approximately 99 block positions on the MDF at the Bulwer exchange that were not in use by Telstra or service providers, and approximately 74 further block positions on the MDF at the Bulwer exchange that had been reserved by Telstra for various future uses.  There is no evidence that suggests that these Cadlink drawings were inaccurate in a material way.

81                  On 9 November 2007, Chime resubmitted its further revised PSR to Telstra for approval and attached photographs of line side block positions on the Bulwer MDF that were vacant and the line side blocks on which the “PIER BWER 02” junction cable terminated.  The “PIER BWER 02” junction cable was a cable that originally connected the MDFs in the Pier and Bulwer exchanges and occupied 4 verticals (48 block positions) on the MDFs at each of the Bulwer and Pier exchanges.  Telstra has adduced evidence that the “PIER BWER 02” junction cable was in use as a CAN cable at that time, but that was not known to Mr Shaw who dealt with Chime’s request.  Most junction cables were disused by mid 2007.  Mr Shaw said that he was unaware at that time of any plan or proposal to reuse the “PIER BWER 02” junction cable.  Mr Mawer gave evidence that if a junction cable was no longer in use, there was no reason why an access seeker should not be permitted to recover the termination blocks on which it terminated.

82                  Mr Shaw and Mr Moiler decided that Chime should only be permitted to use 20 of the MDF block positions on which the “PIER BWER 02” junction cable terminated if Chime either paid for or undertook (at Chime’s expense) all of the work to remove the cable from the MDFs at both the Pier and Bulwer exchanges and also removed the cable between the two exchanges (having a length of approximately 2 kilometres).  Telstra and Chime reached an impasse on that requirement.  Mr Moiler did not give evidence.  Mr Mawer described the requirement as unreasonable.  Mr Shaw said that he did not consider any other option for satisfying Chime’s request and did not look to see if there were any other redundant blocks that could be used, even though that would have been a lower cost option for Chime.  He agreed that requiring Chime to remove the cable from both MDFs and the conduit had many valuable benefits for Telstra, freeing up substantial MDF space at both Bulwer and Pier and in the conduit, which Telstra would achieve for free at Chime’s expense.  Mr Shaw accepted that he had no incentive to look for less expensive options to satisfy Chime’s request.  Whilst Mr Shaw agreed to or accepted these various matters in Court, I do not consider that he consciously considered these matters at the time of considering access.

83                  In or about late January 2008, Mr Mawer conducted an audit of the block space on the MDF at the Bulwer exchange.  The audit revealed that the MDF contained approximately 247 block positions that were available, or that could have been made available, for use by Telstra or access seekers. 

84                  On 29 January 2008, Chime escalated its request to Luc Hermans, the General Manager of Wholesale Delivery & Operations.  This probably occurred at the request of Mr Semmens.  In any event, once this occurred, consideration of the request occurred at various levels within Telstra.  This demonstrated a willingness to duly consider the request, admittedly after Chime was putting pressure on Telstra.  However, as with the other exchanges, there is no evidence of a direction being given to refuse access, or even an attitude of making access difficult.  There was a lack of reliable information passing between relevant staff at Telstra, and failure of communication and decision-making at the appropriate level.  On 31 January 2008, Telstra advised Chime that there were now enough MDF block positions available at the Bulwer exchange to satisfy Chime’s request.  The approval required Chime to remove the junction cable “BWER MAYM 02” (being a junction cable between the Bulwer and Maylands exchanges) from the MDF but did not require Chime to remove the junction cable from the conduits between the Bulwer and Maylands exchanges.

85                  At that time, Mr Eggleston became aware of the extent of the capacity available on the Bulwer exchange.  Despite that, he does not recall taking any step to uncap the exchange and there is no written record of him having done so.

86                  Agile and TPG applied for access on 14 April 2008, three days after Telstra uncapped the exchange.  Chime applied on 26 March 2008 and was approved the next day.  Agile was approved 5 May 2008 and Telstra allocated space to TPG on 7 May 2008.  Subsequently, Amcom, Chime, Optus, PowerTel and TPG have all found space in the exchange to install equipment.  Amcom, PowerTel and TPG all had completed installing equipment within a few months of the uncapping, by September and October 2008.

Carlton Exchange

87                  Chime submitted a DSR to Telstra on 11 September 2007 requesting the installation of two external interconnect cables and 10 block positions on the MDF at the Carlton exchange.  Igor Chrystiuk was the relevant TAC for this request, but he did not give evidence.  Wayne Smith was the MDF Manager.  There was some delay in his response to the request, but on 4 October 2007 Mr Smith refused the request on the basis that there was no room on the MDF.  On 9 October 2007, Telstra advised Chime that its DSR was rejected because there was no MDF space available for use but that an audit would be carried out in the next month to see if any existing cables could be removed.

88                  On 25 October 2007, Chime notified Telstra that it had recently been onsite and had identified a number of line side block positions on the MDF not currently in use, including at least 4 full verticals occupied by redundant cables, and sent supporting photographs to Telstra.

89                  Mr Smith dealt with Chime’s renewed request.  In his affidavit, he said that he formed the view that not all of the verticals and blocks referred to by Chime were available and that there was insufficient space on the MDF to meet Chime’s request.  Mr Smith then considered whether other options were available, such as compression or rationalisation.  He discussed this with Victorian planner, Jeff Theobald.  Mr Theobald agreed that compression was the best option.  As a result of those discussions, on 12 November 2007, Telstra advised Chime that the only option to make capacity available was to compress cable 9 on verticals 6 and 7 onto vertical 38 so that Chime could use vertical 75 and that the cost to compress would have to be borne by Chime.  On 3 December 2007, Chime advised Telstra that it accepted that option and agreed to bear the costs associated with the compression of the cable.

90                  Agile also submitted an EIC request on 28 November 2007 seeking the installation of 2 EICs and up to 18 block positions on the MDF at the Carlton exchange.  Telstra rejected that request on 12 December 2007 on the ground that there was no spare capacity on the MDF.  Wayne Halliday, a planner in the Fundamental Planning group, was involved in that rejection.  Mr Halliday did not give evidence.

91                  On 17 December 2007, Mr Halliday sent an email to Mr Semmens stating that Chime’s request had been denied by the relevant area planner and asked Mr Semmens to advise Chime that the request was refused.  Mr Semmens replied to Mr Halliday stating that “Telstra should not be advising carriers to compress MDF frames”.  On 19 December 2007, Mr Semmens advised Chime that Telstra would not compress the MDF at the Carlton exchange or allow a carrier to do such a compression.

92                  Mr Semmens agreed in cross-examination that Telstra had policies which made it practically impossible for access seekers to undertake compressions themselves and that in the real world the compression alternative was not available to access seekers at any time during the relevant period.  Access seekers were not allowed to engage Telstra to do compression work on their behalf and they were not allowed to do it themselves either.  He said that carriers might however be the beneficiaries of compressions that Telstra was undertaking for its own benefit (but only if they knew of them).  However, Mr Semmens was aware of risks in undertaking compressions, including mistakes by wholesale customer contractors. 

93                  I do not consider that the evidence as to compressions shows a deliberate discriminatory approach to access seekers, although the views taken by Telstra personnel as to the risks, the expense and potential disruption did have a discriminatory effect.  Again, the Telstra personnel seemed to be undertaking the task of considering access, but unaware of their full obligations and were left with no direction or guidance.  In this respect, with regard to compression, the employees were not following Telstra’s written policies.

94                  From about 2 January 2008, Telstra included the Carlton exchange in the Capped Sites Notices. 

95                  On 24 January 2008, following the ACCC’s enquiries, Mr Halliday was asked to review the status of the Victorian sites on the Capped Sites Notices and he forwarded the request to various people including Jeff Theobald.  Mr Smith said that Mr Theobald asked him to investigate the options for making more space available on the Carlton MDF in about February 2008.  He visited Carlton and found approximately 2 line side verticals that held redundant junction cables (blocks on line side verticals 20, 21 and 22) and informed Mr Theobald.  Mr Theobald did not give evidence.

96                  On 26 February 2008, Mr Theobald produced a Strategic Capacity Management Plan for the Carlton site and sent it to Mr Halliday.  The Plan did not mention the redundant junction cables identified by Mr Smith in his review.  The Plan noted that “since September 2007 trends in ADSL growth have steadily declined as competitors take away customers from ULL to their own equipment in our building”.  The Plan recommended that equipment side vertical 59 be reserved for additional TEBA requests and that once that vertical was filled, verticals 74 and 75 be made available for TEBA.

97                  Telstra did not decide to cease classifying the Carlton exchange as MDF capped until on or about 9 April 2008.

98                  Chime and Agile applied for access to the exchange the same day that Telstra removed the exchange from its list of capped sites.  TPG applied three days later.  Chime’s PSR was approved on 22 April 2008 and it completed installing its equipment by November 2008.  Agile and TPG completed their installation in 2009.

Northcote Exchange

99                  As far as this exchange was concerned, the decision to cap the MDF at Northcote and the failure to uncap it when an audit showed a large amount of spare capacity reveal Telstra’s failure to implement processes to ensure it complied with its access obligations and that relevant employees understood those obligations.

100               Between May 2007 and September 2007, the following access seekers submitted PSRs to Telstra seeking TEBA access:

101               On 5 June 2007, Chime was told by Telstra Wholesale that its PSR was on hold because the TAC was unable to get an MDF allocation.

102               Mr Smith assessed Chime’s PSR.  He had been in the role for about two months.  Although the Cadlink drawings at the time revealed a large amount of vacant block positions particularly on the line side, Mr Smith said that he did not consider using scattered equipment side blocks or line side blocks for Chime’s request.  Although Mr Smith exhibited to his affidavit Telstra’s MDF capacity management documents, in cross examination he said that he was unaware of their existence during the time when he was an MDF manager between April 07 and April 08.  The documents were only brought to his attention when he was preparing to give his evidence.

103               At 2.07pm on 12 June 2007, Igor Chystiuk sent Mr Smith an email attaching a marked up Cadlink drawing of the Northcote exchange showing blocks that were vacant and blocks that were redundant and could be removed.  Mr Smith said in cross examination that he did not recall that email.  Despite that email, at 4.06pm that day Mr Smith sent an email to Wayne Halliday requesting that the Northcote site be capped to TEBA requests and stating that the MDF required an audit.  Within 12 minutes, Mr Halliday had sent an email to Mr Semmens capping the exchange.  In his affidavit, Mr Smith said that he understood that capping was a temporary measure to be used in cases of very congested MDFs while a solution for creating space was found.  In cross-examination, Mr Smith accepted that he had no idea how long the audit would take (although he thought that it would only take a couple of weeks) and nor did he know what effect the capping would have on access seekers.  He had no doubt, though, that there would be some space made available at the Northcote exchange after the audit. 

104               On the same day, Telstra advised Chime that its PSR was rejected as the exchange was MDF capped.  The other PSRs from TPG, PowerTel and Agile were rejected as soon as they were submitted.  From about 1 September 2007, Telstra included Northcote in the Capped Site Notices.

105               Despite having been requested in June 2007, the audit of the MDF at Northcote was not completed until 19 October 2007, for reasons that have not been explained by any Telstra witness.  The audit revealed that a very large number of block positions on the MDF were available, or could have been made available, for use:

(a)        on the equipment side, up to 7 full verticals could have been recovered with rationalisation, compression and relocation work;

(b)       on the line side, there were 14 fully vacant verticals, 8 others with some vacant block positions and 15 verticals containing decommissioned trunk cables.

106               In cross-examination, Mr Smith agreed that the audit showed there was a great deal of spare capacity at Northcote but he did nothing further about uncapping Northcote at that stage because he considered that he was no longer the person responsible to make that decision.

107               Despite the conclusions expressed in the October 2007 audit of the Northcote exchange, Telstra did not cease classifying the Northcote exchange as MDF capped until 9 April 2008.

108               On 11 December 2007, Charlie Ball, an area planner, forwarded the audit to various people including Jeff Theobald, Wayne Halliday and Bogdan Folcik.  Mr Folcik replied on 16 January 2008 stating that “Given the availability of verticals, albeit on the line side, I would suggest we do nothing – especially since house-keeping money is so hard to come by”.  No-one gave evidence to explain why the audit did not lead to Northcote being uncapped.  Mr Semmens gave evidence that he was not even aware of the fact that an audit of Northcote had been undertaken in 2007.

109               Chime applied for access on the same day the exchange was uncapped.  It was approved 12 days later, on 23 April 2008.  TPG applied on 14 April 2008 and Agile applied the next day.  Chime completed installing its equipment by 10 November 2008 and Agile completed installing its equipment by 16 July 2009.

Paddington (Qld) Exchange

110               I say at the outset in respect of the Paddington (Qld) exchange that there is no evidence of any deliberate anti-competitive conduct.  In respect of the rejection of the Optus request, there was in my view a conscientious consideration of the PSR, although limited to Mr Ansell’s understanding of the practices at the time.

111               All the evidence, including evidence of a site visit prior to rejection of the request to confirm the lack of space on the equipment side, and the liaison between Mr Ansell and another TAC, Mr Johnson, upon who Mr Ansell relied, leads to the conclusion that the rejection of Optus was because of process failure.  There is no suggestion of rejecting a request for an improper purpose.

112               Optus submitted a PSR to Telstra for access at the Paddington exchange at the end of June 2006.  On 12 July 2006, Telstra decided to classify the Paddington exchange as MDF capped and, on the same day, Telstra advised Optus that its PSR was rejected because there was no MDF space available.

113               Mr Ansell was the TAC for Queensland and took the lead role in making this decision that the Optus PSR be rejected.  He consulted with others such as David Nightingale, a Facilities Access Planner for Queensland, but it appears Mr Nightingale acted on Mr Ansell’s recommendations.  Mr Nightingale did not give evidence.

114               At the time the Optus PSR was rejected, there was substantial spare capacity on the MDF, particularly on the line side.  The Cadlink drawings showed 218 vacant block positions – 43 on the equipment side and 175 on the line side.

115               Mr Ansell’s explanation of his rejection of Optus request was objectively unsatisfactory, but I consider his evidence to be truthful.  It shows, as with the other exchanges a lack of co-ordination, proper direction and sufficient knowledge of access obligations.  It does not show a deliberate attempt to prevent access to Optus, nor does it show Optus was discriminated against. 

116               Mr Ansell received no training when he was appointed as a TAC, although he was aware generally of the obligation to provide access and option for creating space on the MDF.  Although he said in his affidavit that space on the MDF was “fairly tight”, Mr Ansell agreed in cross examination that it was wrong to describe the line side as fairly tight.  He said in his affidavit that he had a practice of not allocating line side space to access seekers.  This was consistent with his role, although he said that he had heard that facilities access planners could allow the line side to be used if there was insufficient space on the equipment side.  Mr Ansell also said in his affidavit that he considered that TACs had no role in, or authority to implement any of the options to create additional MDF space in accordance with Telstra’s written policies on MDF capacity management and that that was the role of Telstra’s planners.  No evidence was given by Mr Nightingale to explain why he did not allocate line side space to Optus.

117               TPG submitted a PSR seeking 10 block positions on 27 July 2006.  Mr Ansell suggested to Nightingale that Telstra could offer TPG a line side allocation on the MDF.  Nightingale agreed to that suggestion.  Whilst this was in contrast to the treatment of Optus, as I have said, I do not conclude that there was any positive discrimination shown against Optus.

118               In his affidavit, Mr Ansell said “there was no Telstra process for revisiting PSRs that had been rejected, and so the approval of TPG’s 9007F02 PSR did not cause me to revisit Optus’ 9029F05 PSR that had been rejected on 12 July” (ie two weeks earlier).  In cross-examination, Mr Ansell said that he positively adverted to the possibility of offering Optus the same opportunity that he had offered TPG, but because there was no Telstra process which would permit him to do so, he did not.  Again, this demonstrates a lack of instruction to employees, and lack of proper process, rather than the implementation of a deliberate policy to make access difficult. 

119               PowerTel submitted a PSR on 29 September 2006 seeking 10 block positions.  Mr Ansell did not remember assessing the PSR but believes he formed a view that it could be accommodated on the line side.  Telstra decided to approve PowerTel’s PSR on or about 9 October 2006 and allocated 10 line side block positions.

120               On 15 February 2007, Optus submitted a further PSR seeking 13 block positions.  Mr Ansell was involved again in the assessment.  He recommended the rejection of this PSR on 21 February 2007 because there was “insufficient MDF space” and he recommended that Paddington should be capped because it had “extremely little MDF space”.  This is what occurred.

121               At that time, the Cadlink drawings at Paddington showed that there were 177 vacant block positions – 44 on the equipment side and 133 on the line side.  Mr Ansell said in his affidavit that he did not consider that the equipment side had sufficient space to accommodate Optus’ PSR but he gave no reason why the line side could not have been used.  In cross-examination, Mr Ansell said that he believed that consideration was given to allowing Optus to use block positions on the line side, but he could give no explanation to why it was not done in circumstances in which there were many block positions vacant and available for use.

122               Telstra included Paddington in the Capped Sites Notice from about 1 September 2007.  However, the Capped Sites Notice dated 1 November did not include the exchange.  It was reinserted into the Capped Sites Notice from about 4 December 2007.

123               Mr Ansell received a request from Telstra Wholesale on 16 October 2007 asking him to confirm whether Paddington was capped.  He responded by email on the same day stating that Paddington was capped due to “very, very, few MDF block spaces remaining, therefore they are reserved for Telstra”.  When asked about the accuracy of his response in that email in cross-examination, he said it was “myself and maybe the other TACs taking a liberty”.

124               I accept Mr Ansell’s evidence.  Again, the evidence demonstrates that Telstra failed to implement proper instructions or policies to its employees. 

125               Agile and Chime applied for access the day the exchange was uncapped.  Optus applied on 23 April 2008.  All three carriers had their PSRs approved on 8 May 2008.  Chime completed installation of its equipment in November 2008.  Optus have subsequently completed three installations in the exchange.

Port Melbourne Exchange

126               TPG submitted a PSR on 23 December 2005 seeking the installation of 6 interconnect cables and 6 block positions on the MDF.  Geoffrey Wicking assessed that PSR.  He assisted Sharon Webster, a Victorian TAC (who did not give evidence).  In his affidavit, Mr Wicking said he conducted a site visit but could not identify suitable blocks on the equipment side of the MDF.  He did not consider the line side.  On 10 January 2006 he sent an email to Wayne Halliday, an area planner, stating that the MDF was full and that he did not know if an extension was possible.  On 20 January 2006, Mr Halliday responded stating the MDF was at capacity and rejecting TPG’s PSR.  Mr Wicking sent an email to Telstra Wholesale saying that the MDF was at capacity.

127               In about July 2006, Port Melbourne was listed on the Capped Sites Notices.

128               On 31 August 2006, Telstra rejected a PSR from Agile on the basis that there was no MDF space available for use and the MDF could not be extended.  In September 2006, Agile investigated the availability of space on the MDF at the Port Melbourne exchange through its contractor Visionstream.  As a result of that investigation, on 25 September 2006, Agile requested Telstra to re-assess its PSR in respect of the Port Melbourne exchange.  On 19 October 2006, Telstra advised Agile that its PSR in respect of the Port Melbourne exchange had been re-assessed and approved.  On the same day, Agile asked whether it was possible to increase the allocation of block positions to 9, and Telstra approved that increase.

129               No explanation was provided by Telstra witnesses as to why TPG’s PSR was rejected while Agile’s was accepted.  Port Melbourne remained on the Capped Sites Notice even after Agile’s PSR was approved.

130               In or around November 2006, George Avramopoulos conducted a review of the capacity of the MDF at the Port Melbourne exchange, the results of which are contained in a document titled “MDF Capacity Plan” dated 20 November 2006.  Mr Avramopoulos understood that the review was to ensure that Telstra’s broadband requirements could be met.  He was not aware that Port Melbourne was capped.  Although the Plan stated that there were no spare equipment side verticals, Mr Avramopoulos agreed that there would have been scattered blocks that were spare.  Mr Avramopoulos did not check to see if there were redundant blocks.

131               Following preparation of the MDF Capacity Plan, in December 2006, Mr Avramopoulos prepared a project brief for Advanced Services to rationalise the equipment side of the Port Melbourne MDF in order to create additional MDF space for Telstra’s future broadband needs.  The rationalisation was performed in the first half of 2007.  Following the rationalisation, at least 104 block positions on the equipment side of the MDF were freed up.  The Cadlink drawings were updated on 21 June and 20 July 2007 to show this.

132               On 5 February 2007, Telstra rejected a PSR from Chime.

133               On 26 July 2007, PowerTel submitted a PSR seeking the installation of 10 interconnect cables to be installed and 10 block positions on the MDF.  On 26 July 2007, Telstra advised PowerTel that its PSR had been rejected on the basis that there was no space available on the MDF.  No explanation was provided by Telstra witnesses as to why PowerTel’s PSR was rejected even though a large number of block positions on the MDF had at that time been freed up.

134               On 21 January 2008, TPG submitted a PSR seeking the installation of 10 interconnect cables and 10 block positions on the MDF.  Mr Wicking sent an email to Telstra Wholesale asking whether Port Melbourne was capped.  Mr Deguara told him that it was.  Mr Wicking then rejected the PSR.

135               Chime and TPG applied for access on the same day the exchange was uncapped; Optus applied three days later.  Telstra approved the Chime and TPG PSRs just 11 days after the uncapping.  All three carriers completed their installations by late August 2008.

South Perth Exchange

136               As was noted above, in WA Mr Mawer, the MDF Manager, was responsible for MDF allocations.

137               The events at South Perth illustrate Telstra’s failure to implement consistent policies with regard to MDF capacity management or to train or supervise its staff in respect of those policies.  The events also indicate that Telstra staff did not properly consider information provided by Chime, nor properly respond to such information.

138               In late October 2005, a PSR submitted by Amcom was queued, and Amcom was advised that it would need to perform an MDF compression to obtain space.  In March 2006, Amcom sought permission from Mr Eggleston to extend the MDF by 3 verticals instead of performing a compression.  Mr Eggleston confirmed that an MDF extension would be a less costly option than a compression.  Over the ensuing few months, Amcom was informed that it was not permitted to perform an expansion and, while it was theoretically permitted to perform a compression, no contractors had been authorised by Telstra to perform a compression for access seekers (they were only authorised to perform compressions for Telstra).  Ultimately, on 3 July 2006, Telstra informed Amcom that it would allocate it 2 block positions on the line side of the MDF (and not the 6 block positions Amcom had been seeking).

139               Unknown to Amcom, Telstra had been performing its own compression of the MDF during 2006 while refusing to allow Amcom to perform a compression.  Amcom only became aware of this through a site visit.  Telstra’s compression freed up 12 verticals on the line side.  On 7 July 2006, Amcom asked if it could use 10 block positions and Telstra approved the request.  Mr Eggleston said that he could not recall anyone telling him (in that period) that Telstra was performing the compression.

140               Like Bulwer, there was a lengthy queue for access at South Perth after an Optus PSR had been approved.  Between July 2006 and July 2007, the following access seekers submitted the following PSRs to Telstra:

141               In response to each of the PSRs referred to in the table, Telstra placed the PSRs in the TEBA queue for access.  Like Bulwer, Telstra initially told Chime that the queue would progress after Optus had completed its D&CP because a power and air-conditioning audit was required.  However, this did not occur.  The Optus D&CP was approved by Telstra on 20 December 2007 and its JCI was completed on 18 April 2007.  Even after JCI completion, Telstra maintained the TEBA queue.  Mr Eggleston could not provide an explanation why that occurred, although he thought that Telstra needed to wait until Optus had completed its DSLAM build.

142               The queue did not progress until 22 August 2007, when Telstra Wholesale resubmitted Chime’s PSR to Mr Eggleston.  Mr Mawer rejected the PSR.  He gave evidence that he could not recall the steps he took, although he believed that someone from Fundamental Planning may have given him directions about MDF allocations.  The Court did not hear evidence from any Fundamental Planner regarding South Perth.

143               Mr Eggleston gave evidence that it was his responsibility to update the Cadlink drawings for TEBA allocations and he performed that task diligently.  There is no reason to believe that the Cadlink drawings for South Perth were other than materially accurate (save for an error regarding equipment side verticals 21, 22 and 25).  Between about 28 August 2007 and 10 October 2007, the Cadlink drawings showed that there were approximately 185 block positions that were not in use by Telstra or service providers and  approximately 86 further block positions that had been reserved by Telstra for various future uses.  From on or about 10 October 2007 to 11 April 2008, Telstra’s Cadlink drawings showed that there were approximately 241 block positions on the MDF at the South Perth exchange that were not in use by Telstra or service providers and  approximately 14 further block positions that had been reserved by Telstra for various future uses.  In February 2008, Mr Mawer conducted an audit of the MDF at the South Perth exchange.  The audit confirmed that the Cadlink drawing was materially accurate, although it corrected the error concerning equipment side verticals 21 and 22 (they were vacant), highlighted a number of redundant junction cables and removed various line side reservations that had been made by Telstra.

144               On or about 28 August 2007, Telstra decided to classify the South Perth exchange as MDF capped.  It then rejected all outstanding PSRs.  From about 1 September 2007 it placed Sth Perth on the Capped Sites Notices. 

145               On or about 31 August 2007, Gary Chappell of Chime visited the South Perth exchange and observed that there were vacant block positions on both the equipment and line sides of the MDF and took photographs of some of the vacant block positions on the equipment side.  The photographs identified two of the vacant verticals as numbers 21 and 22.  As noted above, the Cadlink drawing as at that date erroneously showed that verticals 21 and 22 were in use.  The error was corrected in the Cadlink drawing dated February 2008.  In respect of the other verticals that were photographed by Mr Chappell, the Cadlink drawing as at August 2007 indicated that verticals 30 to 33 were vacant but reserved.  It seems likely that they were the other verticals photographed by Mr Chappell.  On 5 September 2007, Gary Chappell of Chime sent an email to Mr Semmens at Telstra attaching the photographs.  Mr Semmens sent the photos to Mr Eggleston.  Mr Eggleston could not recall whether he sent the photos to Mr Mawer, and there is no email that indicates that he did.  Mr Eggleston told Mr Semmens that there was no space, without making any other enquiries.

146               On 27 September 2007, Mr Chappell sent an email to Mr Semmens advising that he had visited the South Perth exchange and attached the photographs taken during his visit.  The photographs were of verticals 2 to 4 (on which were terminated unused Junction Cables 31, 34 and 131) and vertical 31 and surrounding verticals.  On 10 October 2007, Telstra advised Chime that its PSR in respect of the South Perth exchange was ‘conditionally approved’ and allocated 15 MDF block positions to Chime (being line side vertical 2 blocks 1 to 12 and vertical 3 blocks 1 to 3). 

147               Despite approving Chime’s PSR, there is no evidence that Mr Eggleston, or anyone else, took any steps to review the capping of the exchange.

148               Following the MDF audit conducted by Mr Mawer in February 2008, Mr Eggleston sent an email to Mr Semmens’ group advising that the South Perth exchange was uncapped.  Within 20 minutes, Mr Ciaglia responded stating that the only person who could uncap an exchange was the team leader of the area planner for the site and that Mr Eggleston should “park” the South Perth exchange.  Accordingly the South Perth exchange remained capped until April 2008.

149               Both Chime and Primus submitted PSRs on the same day that Telstra uncapped the exchange.  Primus was approved on 22 April 2008 and finished installing equipment within 45 days of the uncapping.  Chime was approved 23 April 2008 and completed its installation in August 2008.

St Peters Exchange

150               Throughout the period 2006-2008, the St Peters exchange had substantial vacant block positions on the MDF.  In early 2006 there were almost 12 unused verticals on the equipment side.  By January 2007, the position had not changed much, with about 9 vacant verticals.  (These can be seen from the Cadlink drawings which the SA TAC, Mr Lines, described as very accurate).

151               Adam Internet submitted a PSR on 19 January 2007 requesting 18 block positions on the MDF.  Mr Lines forwarded the request to the MDF Manager, Mr Pennington, who rejected the request on the basis that Telstra had reserved 9 vacant equipment side verticals for ISAM growth.

152               Whether or not the reservation of 9 verticals for ISAM growth was reasonable or not, does not matter.  I accept that that was the basis of the view Mr Pennington actually held, namely that 9 verticals were needed for ISAM grouth.

153               Mr Pennington gave evidence that he had no role in capacity planning and no role in capacity management of MDFs.

154               On 5 February 2007, Sam Silvester of Adam Internet sent an email to Telstra stating his belief that there was sufficient space on the MDF at the St Peters exchange for 12 blocks positions to be allocated to Adam Internet (Adam Internet had originally requested 18 block positions).  Mr Pennington approved that request.

155               The next day, Mr Lines asked Mr Pennington whether vertical 8 was reserved by Telstra.  Mr Pennington in turn asked Mr Mabarrack, who responded that the MDF Capacity Plan for St Peters had been changed to indicate that spare equipment side blocks should be used for ISAM and TEBA if required.  Mr Pennington said in his affidavit that he understood that Mr Lines’ question was general and unrelated to Adam Internet’s request, although in cross-examination he accepted that the email referred to Adam Internet.  In my view, this seems likely in view of the terms of the email.

156               Subsequently, on 31 May 2007, Telstra rejected a PSR from Primus on the basis that there was no MDF space available.  This decision was made by Mr Pennington.  Mr Pennington did not recall that decision, but said that he must have forgotten about or overlooked Mr Mabarrack’s earlier advice to him that spare verticals could be used for TEBA.  On the same day, Telstra decided to classify the St Peters exchange as MDF capped.  From about 1 September 2007, Telstra included St Peters in the Capped Sites Notices. 

157               On 5 October 2007, Telstra approved an allocation of 3 line side block positions to Agile, less than the 8 positions Agile had requested in its PSR.

158               On or about 24 October 2007, Telstra conducted a review of the block space on the MDF at the St Peters exchange.  The results of the review are recorded in an email from John Lane to Paul Hicks dated 24 October 2007 and in a spreadsheet attached to that email.  The review concluded that at that time there were available block positions on the MDF and that Telstra could remove the St Peters exchange from the list of sites that were MDF capped.  However, St Peters was not uncapped until 11 April 2008.

159               Adam Internet, Agile, Optus, TPG and Primus all applied for access on the 14 April 2008.  Telstra approved the Primus PSR on 22 April, the TPG PSR on 12 June and the Agile PSR on 7 November.  Agile and TPG completed installation of their equipment in July 2008.

DELEGATION, TRAINING AND SUPERVISION

160               It will be apparent from the above evidence relating to each of the contraventions, that during the 2006 to 2008 period, responsibility for decisions in respect of Telstra’s exchange access obligations was not well understood within Telstra.  Further, there was no training of persons who made access decisions in respect of Telstra’s access obligations and there was no proper supervision of persons who made decisions to refuse access and cap exchanges.

161               I would not expect each member of the Telstra staff responsible for considering access requests to be fully conversant with the Telecommunications Act, but I would expect them to understood Telstra’s legal obligations in respect of access. 

162               A number of conclusions can be made.  First, many persons were given the task of co-ordinating TEBA requests, but decision makers in respect of the provision of access were not within the same management hierarchy as those ultimately responsible for responding to access requests (Telstra Wholesale).  Secondly, Telstra failed to train adequately any of the employees who were involved in responding to access requests in respect of Telstra’s legal obligations.  Thirdly, Telstra failed to set up a system of supervision over those employees in the exercise of their functions. 

TELSTRA’S ALLEGED ANTAGONISM TO ITS ACCESS OBLIGATIONS

163               The ACCC submitted that I should take into account Telstra’s antagonism towards its access obligations.  Throughout the period from 2006 to 2008, Telstra did make some public statements concerning the access regime.

164               When announcing the company’s full year results on 10 August 2006, Telstra’s Chief Executive Officer, Sol Trujillo said in respect of Telstra’s negotiations with the ACCC concerning the building of fibre to the node (FTTN) broadband network:

We sought an outcome that would assure our shareholders that their investment in the network would not be used to subsidise network access by Telstra’s competitors.  The negotiations have not produced this outcome.

The ACCC was unwilling to recognise the actual costs that Telstra incurs in providing its services and, especially, the costs incurred in providing services to rural, regional, and remote Australia.  Until Telstra’s actual costs are recognised and the ACCC’s regulatory practices change, Telstra will not invest in a FTTN network.

165               In Telstra’s Analyst Briefing held on 6 October 2006 (which was publicly released to the ASX), Telstra Bigpond’s Group Managing Director, Justin Milne described the ACCC’s decision on the price of access to the ULL as an ‘unreasonable regulatory outcome’.

166               In the course of 2007, Telstra commenced a proceeding in the High Court of Australia alleging that the telecommunications access regime in Pt XIC of the TPA contravened s 51(xxxi) of the Constitution (effecting an acquisition of Telstra’s property in its Local Loops other than on just terms).  When the High Court ruled against Telstra, Telstra issued a public media release stating:

Australians lost an opportunity to enjoy more broadband investment when the High Court today upheld a regulatory regime that rewards Telstra’s competitors who ride on Telstra’s network rather than invest in Australia.

…

Today’s decision shows how the law is being used by a rogue government agency, the ACCC, to arbitrarily redistribute the investments of more than one million Australians.

“In some cases this redistribution of wealth means the savings of Australian investors have been handed over to highly-profitable foreign corporations that have no right to be subsidised, least of all by Australian investors”, Dr Burgess Group Managing Director, Public Policy and Communication said.

167               At an annual investor briefing in November 2007, Mr Trujillo described the telecommunications access regime as “the world’s most punitive and intrusive regulatory environment which has produced the developed world’s lowest wholesale prices, highest input costs and declining investment from other companies.”

168               In June 2008, Telstra’s Chief Financial Officer, John Stanhope, described the telecommunications access regime as:

an adverse regulatory regime that discourages investment, uses arbitrary cost estimates defying common sense, increases costs, and causes uncertainty that undermines rational planning and resource allocation.

169               I will return to this alleged antagonism later and its relevance to the assessment of penalty.  However, I say now that Telstra’s public statements highlight that there was a strong difference of opinion between Telstra and the ACCC regarding the extent of regulation and the focus of the ACCC.  I do not rely upon the public statements to support a suggestion that Telstra was unco-operative or had a deliberate policy of non-compliance, either generally or in relation to exchange access in particular.  I do, however, consider these statements and others are relevant to the question of remorse, to which I will return.  These statements may explain why policies were not properly implemented within Telstra.  I make no finding in that regard.  However, the fact is that the policies in place relating to access were not implemented on a number of varied occasions and in a variety of ways.  Telstra had the ability to properly implement its policies so it would comply with its statutory obligations, but did not do so.  At the very least, Telstra did not turn its corporate mind to the essential aspect of implementation.

TELSTRA’S RESPONSIVENESS IN CORRECTING ITS CONTRAVENTIONS AND CO-OPERATION

170               In October 2007, the ACCC began investigating Telstra’s exchange capping conduct.  On 11 October 2007, the ACCC wrote to Telstra seeking information concerning Telstra’s decision to cap access to exchanges and Telstra’s treatment of access seekers’ requirements in comparison to Telstra’s own requirements.  In response to the ACCC’s letter, Telstra provided a briefing to the ACCC on 18 October 2007 and on 11 January 2008, the ACCC sought further information from Telstra in relation to exchange capacity issues.

171               In their affidavits, neither Mr Lipton nor Mr Semmens volunteered evidence about the steps taken by Telstra to correct its exchange capping between October 2007 and February 2008.  In cross-examination, Mr Lipton said that he initiated a review of the capped sites in October 2007.  In the period October 2007 to the uncapping of the exchanges on 11 April 2008, Mr Lipton failed to take any steps to remove the Capped Sites Notices from the Telstra Wholesale website or ensure that TEBA requests were properly assessed rather than being rejected on the basis of the capping of exchanges.  Mr Lipton did not provide an adequate explanation for this delay. 

172               The main criticism of the ACCC was as to the timing of the ultimate change to the cap sites list and in particular the fact that exchanges could have been removed from the cap sites list on some date earlier than the 9 April 2008.

173               Telstra submitted that there were good reasons for conducting a comprehensive and systematic review of the capped sites list, rather than, as the ACCC would have it, taking a premature and piecemeal approach.  Evaluations concerning the amount of space on the MDFs at particular exchanges are not always straightforward.  In the course of the review that was conducted between October 2007 and April 2008, the number of exchanges that were flagged for uncapping changed charged several times.  Some exchanges which were thought at one stage to be able to be uncapped turned out, on further review, to be at capacity.

174               Whilst from a management point of view, I can understand the issues confronting Telstra, I do not accept that Telstra did act as quickly as it should have particularly in respect of removing the Capped Sites Notices.  Mr Lipton could give no explanation for this not occurring in a timely manner. 

175               However, there are many aspects in favour of Telstra as to its response after 11 October 2007. 

176               For instance, Telstra’s co-operation included the following:

(a)        within a week of the ACCC’s first query to Telstra regarding exchange capping on 11 October 2007, Telstra provided the ACCC with a voluntary briefing regarding its capping practices;

(b)       when the ACCC subsequently requested further information on 11 January 2008, Telstra provided a response within a fortnight;

(c)        Telstra voluntarily commenced a detailed review of its exchange capping practices which led to the unilateral uncapping of exchanges;

(d)       when proceedings were commenced, Telstra initiated discussions with the ACCC with a view to resolving the proceedings efficiently and expeditiously;

(e)        Telstra entered into negotiations with the ACCC resulting in agreement being reached on an agreed statement of facts and an agreed technical overview; and

(f)        Telstra made extensive admissions in relation to material facts and liability in its defence, including admitting each of the contraventions that is the subject of the present hearing.

177               Undoubtedly, there has been a substantial contested hearing as to penalty.  Telstra was entitled to contest the matters raised in support of the ACCC’s submissions.  Significantly, the issue of the impact on the access seekers was contested, and contested in favour of Telstra.  I do not accept that any unreasonable or inappropriate conduct of Telstra has been responsible for the length or extent of the contested hearing. 

178               Therefore, in relation to co-operation shown by Telstra, (in which I include putting into place corrective measures), I proceed on this basis:

(a)        Telstra’s co-operation, has been ongoing and voluntary;

(b)       Telstra assisted in saving the time and resources of the Court and the ACCC; and

(c)        its degree of co-operation should be regarded as deserving more than a minimal discount.

179               As to corrective measures, Telstra has put in place corrective actions in an attempt to ensure that there is no recurrence of the conduct that led to the contraventions in issue in these proceedings, comprising:

(a)        The establishment, on 25 February 2008, of a ‘TEBA Governance Committee’ which meets on a monthly basis.  The Charter of the TEBA Governance Committee requires it, among other things, to review any proposed change to the capped sites list.

(b)       A nationwide review of exchange capping policies and practices, conducted between October 2007 and 9 April 2008.  The review included a thorough audit of every capped exchange, and resulted in the removal of 50 of the 79 sites then on the capped sites list.  All seven of the exchanges which are relevant in these proceedings were removed from the capped sites list.

(c)        The development in April 2008, in conjunction with the establishment of the TEBA Governance Committee, of an internal governance process in relation to the management of TEBA capacity. 

(d)       The introduction, on 29 February 2009, of improved TEBA Allocation Guidelines.  The Guidelines mandate a series of steps that must be taken to find or create space to accommodate requests by access seekers.  Those steps include the allocation of the next available block positions; where there is no available space, the production of MDF Capacity Plans; (where appropriate) allowance for extensions to MDFs or the release of space on the line side; and mandatory site visits where exchange plans show insufficient space within an exchange to accommodate a request.

(e)        The introduction of mandatory monthly desktop audits, and quarterly on-site audits, of every capped exchange.

(f)        Ongoing reviews by the TEBA Governance Committee of the status of all capped exchanges and every proposed rejection of a request for exchange access.

(g)        Since January 2009, monthly teleconferences to which all Telstra Area Planners and TACs are invited, at which issues in relation to TEBA are discussed, with a view to ensuring consistency of decision-making and equality of treatment of access seekers.

(h)        Monthly Building Forum teleconferences for Telstra personnel across Australia who are involved with matters relating to exchange planning, the first part of which is devoted each month to TEBA related matters.

(i)         The voluntary taking of other steps to review, create and update other internal TEBA policy documents in order to respond to potential compliance issues, including:

                 (i)                   the development of a new TEBA Queuing Policy, which became effective from February 2008;

                (ii)                   the updating of Telstra’s Facilities Access: TEBA Telecommunications Equipment Building Access – Management and Provisioning procedures to align them with the process changes; and

              (iii)                   the updating of Telstra’s TAC Induction Process document to make it clear that it is mandatory for all TACs to develop an understanding of their responsibilities as well as TEBA policies, processes, and guidelines.

(j)        The provision of a detailed national briefing to Telstra planners on the TEBA Allocation Guidelines and the new TEBA Governance Process on 28 August 2008.

(k)       The development (over the period from August 2008 to March 2009) and subsequent implementation of an online training module to address and reinforce compliance with TEBA processes and obligations, including the allocation of MDF capacity and the new TEBA governance arrangements relating to capping.  The TEBA Obligations training course was introduced on 25 March 2009 and all relevant staff from the Fundamental Planning business unit have now completed the course.

(l)         The provision in March and April 2010 of a TEBA compliance refresher training course for Telstra employees dealing with TEBA issues, including MDF allocations.

(m)       Provision of TEBA documentation to the ACCC in compliance with the Access to Telstra Exchange Facilities Record Keeping and Reporting Rules 2008 (‘TEBA RKR’) made by the ACCC under s 151BU of the TPA on 11 July 2008.

180               Courts do not always identify the specific discount given for co-operation.  However, as Telstra submitted, from the instances in which a specific discount has been identified discounts for cooperation are generally between 20% and 50%.  Telstra submitted that its co-operation in the present matter warrants a discount at the high end of that range.  The main factor that speaks against this is that the co-operation in some respects could have been more timely.  The failure to act promptly did involve a continued period when access was not available. 

TELSTRA’S DENIAL OF WRONGDOING AND RESPONSE TO THE PROCEEDINGS

181               On 25 January 2008, Telstra responded to the ACCC and asserted that:

Telstra does not believe there is any basis to conclude that there has been any failure on its part to comply with … its obligations under Parts XIB or XIC of the Trade Practices Act.

182               In a press release dated 19 March 2009, Telstra’s Group Managing Director of Public Policy and Communications, David Quilty, described the proceeding as “a transparent attempt to pave the way for further legislative shackles on Telstra” and “a complete waste of court time and TACs payer money”.  Mr Quilty also stated that “the ACCC has consistently campaigned for greater powers to meddle in the telecommunications industry” and “taking court action a year after this issue was resolved is a clear demonstration of what is wrong with the current regime and the way it is administered.”

183               Similarly, on 31 March 2009, Telstra’s Group Managing Director of Telstra Wholesale, Kate McKenzie, gave a speech in which she asked the rhetorical question, in respect of this proceeding, “why the heck then is the regulator in this country focussed on a non-problem?  A very unimportant issue” and described this proceeding as a focus on “unimportant” issues.

184               I regard these statements (along with other circumstances referred to later) as relevant to determining whether Telstra has shown any remorse, as distinct from its acceptance of responsibility by the admission of liability.

LOSS OR DAMAGE CAUSED BY THE CONTRAVENTIONS

185               The penalty factors in s 570 of the Telecommunications Act include the nature and extent of any loss or damage suffered as a result of the contraventions.  As is regularly the case where anti-competitive conduct has resulted in denial or delay of entry to a market, it is not easy to quantify the exact amount of loss or damage in these circumstances.  Part of the difficulty in quantifying the loss is that there are significant qualitative aspects, such as how the conduct affects the quality of the access seekers’ overall competitive offering. 

186               The Court is not required to, and the ACCC did not invite the Court to make findings of specific loss and damage suffered by persons adversely affected by the admitted contraventions.

187               Nevertheless, the inability of the ACCC to quantify the damage is a consideration to be given some weight.  However, one can place reliance upon the economic felicities underlying the TPA and Telecommunications Act which prima facie suggest that the actions undertaken here which gave rise to the admitted contraventions did lead to harm being caused to consumers and end users:  see eg Trade Practices Commission v Malleys Ltd (1979) ATPR 40-118 at page 18, 292. 

188               The Court heard evidence from five access seekers who were affected by the admitted contraventions.

189               Many of the affidavits filed on behalf of the ACCC to show the loss and damage suffered by access seekers contained very significant amounts of inadmissible evidence.  Then in closing submissions, the ACCC accepted that the criticisms made by Telstra in respect of the remaining evidence were warranted.  Apart from the difficulty of proof and the extent of inadmissible evidence, there were a number of other matters that the evidence failed to deal with.  It failed to take into account redeployed capital expenditure, because all the access seekers were engaged in a process of rapidly expanding their on-net presences at Telstra exchanges.  At the same time, the access seekers had limited capital expenditure budgets, and in the event of a delay or problems with installing equipment at a particular exchange, the capital was inevitably deployed to another exchange.  Further, none of the access seekers made any attempt in their evidence to account for the offsetting benefits to be obtained after redeploying capital following rejected access requests.  There was also a failure to take into account the ability to service customers in other ways.  All of the access seekers had of their disposal the ability to service customers of exchanges to which they were denied access by supplying alternative services.  By otherwise servicing customers the access seekers would have been able to mitigate substantially or perhaps entirely the impact of a delay in obtaining access.  There was also a failure to take capital expenditure and other costs into account.  In many instances, assertions were made that were simply untenable, which some of the witnesses conceded under cross-examination themselves.  Therefore, as accepted by ACCC in final submissions, the Court is left with insufficient evidence to conclude on the balance of probabilities that any loss or damage was sustained by any of the access seekers. 

190               However, I am not prepared to accept that the contraventions have had no impact on competition.  At one level the contravening conduct had the effect of depriving nine access seekers for a period of time of being able to install capacity or additional capacity at seven exchanges.  It may well be that on the material provided to the Court there is no discernable impact on competition.  However, the whole purpose of the legislation is to protect consumers or the ended users of telecommunication services and general and specific deterrence is needed for this protection.

THE POSITION OF ACCC

Penalty

191               The ACCC submitted that it is appropriate for the Court to impose a total penalty of $34 million on Telstra.  The ACCC has derived that amount by:

(a)        attributing a separate penalty to each contravention having regard to the circumstances of each contravention (including the duration of the conduct, whether multiple contraventions arose from one course of conduct and, if so, the number of access seekers affected by the course of conduct and other mitigating or aggravating circumstances affecting the conduct); and

(b)       discounting the total penalty by 15% on account of the admissions of contravention that have been made by Telstra in the proceeding.

192               Schedule A to these reasons sets out the final position of the ACCC in relation to each contravention.  However, I note that the penalty proposed for conduct involving the TPG PSR at Port Melbourne was nominated when a longer “contravention” period was in contemplation than that finally accepted by the ACCC.

193               The ACCC submitted that the totality principle requires the Court to reflect upon the total penalty to be imposed for separate contraventions to ensure that the aggregate is just and appropriate.  It was submitted that in a case involving contraventions of a very important obligation, each of which carries a maximum penalty of $10 million, a total penalty of $34 million is consistent with the totality principle.  The total penalty sought by the ACCC was less than 13% of the total maximum penalty that may be imposed by the Court for the admitted contraventions.

Declaratory Relief

194               The ACCC submitted that it is appropriate to make declarations in this case, and that the declaratory relief sought would serve the public interest in a number of ways:

(a)        to define and publicise the type of conduct that constitutes a contravention of the relevant provisions of the Telecommunications Act and the TPA, serving the purpose of deterrence of contravention of the Telecommunications Act and the TPA;

(b)       to mark the Court's disapproval of the particular conduct engaged in by the respondent in contravention of the Telecommunications Act and the TPA; and

(c)        to set out clearly the foundation for the pecuniary penalty and injunctive relief.

Injunctive Relief

195               The injunctive relief sought by the ACCC is of two kinds.  First, the ACCC seeks an injunction restraining Telstra from refusing a request for interconnection with the MDF at an exchange until Telstra takes certain actions designed to ensure that the refusal is justified within the legislative framework.  The ACCC recognises that Telstra may lawfully refuse a request for interconnection if it truly has no capacity available to provide interconnection and capacity cannot be made available (for example, by undertaking a rationalisation, compression or extension of the MDF). 

196               Secondly, the ACCC seeks an injunction enjoining Telstra from publicly stating that there is no capacity on the MDF of an exchange available for service providers when that is not the case.  This injunction seeks to prevent a repetition of the misleading exchange “capping” conduct admitted by Telstra.  It was submitted that in deciding whether to grant injunctive relief of this kind, a relevant factor is whether the existing sanctions for the conduct to be the subject of the injunction, as found in the TPA, require to be supplemented by the availability of the range of sanctions applicable to contempt of court.  Relevant factors include the period during which and number of occasions on which contraventions occurred, the likelihood of repeated conduct and the potential for damage from repeated conduct. 

197               The ACCC submitted that injunctive relief is required in the circumstances of this case because:

(a)        Telstra's conduct continued for a considerable period of time;

(b)       the conduct only ceased because of the ACCC's intervention;

(c)        even when Telstra discovered that many of the exchanges on its Capped Sites Notices had spare capacity, it moved very slowly to remove those sites from its Capped Sites Notices; and

(d)       Telstra continued to publish Capped Sites Notices.

198               The injunctive relief sought is limited to a period of three years.

POSITION OF TELSTRA

Penalty

199               Telstra submitted that the applicable penalty for the admitted contraventions should be calculated as a portion of the maximum penalty for a single contravention, namely $10 million.  When all of the mitigating circumstances, including the discount for co-operation and early admissions of liability are taken into account, Telstra submitted that the appropriate penalty is in the order of $3–5 million.

Declaratory and Injunctive Relief

200               Telstra submitted that there is no justification for the grants of declaration or the imposition of injunctive relief, as sought by the ACCC.  It was submitted that the ACCC did not suggest that further contraventions were threatened or likely.  It was said that the corrective actions taken by Telstra have been effective and there was no reason to think that there would be further contraventions in the future.  Even if there were further contraventions in the future, the legislation prescribes the applicable penalty.  It was submitted by Telstra that it would be inappropriate, in the event of a further contravention, for the Court to become involved in the kind of analysis that would be necessary in order to demonstrate a breach of injunctions of the kind sought by the ACCC.  Telstra submitted that enforcement of access obligations is a matter best left for the legislative formulation alone, and not superimposed injunctive obligations.

CONSIDERATION

201               Section 570 of the Telecommunications Act (in so far as it applies to a contravention of s 68(l) of the Telecommunications Act) is substantially the same as s 76 of the TPA. 

202               Given the similarities between s 76 of the TPA and s 570 of the Telecommunications Act, the approach to the assessment of penalties under the Telecommunications Act will be informed by the approach of the Courts in considering an appropriate penalty under the TPA. 

203               The primary object of pecuniary penalties is deterrence.  In Trade Practices Commission v CSR Limited (1991) ATPR 41-076, French J stated:

The principal, and I think probably the only, object of the penalties imposed by s76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.

204               There are aspects of general deterrence and specific deterrence to consider.  In relation to Telstra, even though it may be that there is no indication it will contravene a provision of the TPA in the proximate future, a penalty must be imposed which will act as a reminder to Telstra and the community of the consequences of the admitted contraventions: see Australian Competition and Consumer Commission v Rural Press (2001) ATPR 41-833 at [15].  I regard this as the most significant factor in determining the penalties in this proceeding.

205               In addition to the specific factors referred to in s 76 (minored in s 570 of the Telecommunications Act), in CSR Ltd (1991) ATPR 41-076 French J identified the following additional factors as relevant to the assessment of penalty in a case of this nature:

(a)        the size of the contravening company;

(b)       the degree of power it has, as evidenced by its market share and ease of entry into the market;

(c)        the deliberateness of the contravention and the period over which it extended;

(d)       whether the contravention arose out of the conduct of senior management or at a lower level;

(e)        whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; and

(f)        whether the company has shown a disposition to cooperate with the authorities responsible for enforcement of the Act in relation to the contravention.

206               The so-called 'French factors' were approved by the Full Court in NW Frozen Foods v Australian Competition and Consumer Commission (ACCC) (1996) 71 FCR 285. 

207               In NW Frozen Foods, the court noted that steps taken by a corporation to secure future compliance with the law should be taken into account in the assessment of penalty, but concluded at [18]:

The court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay, and detection lead merely to a compliance program for the future.

208               In respect of the size of the contravening company, Goldberg J in Australian Competition and Consumer Commission (ACCC) v Australian Safeway Stores Pty Ltd & Ors (1997) 75 FCR 238 said at [35]-[36]:

I accept that the penalties must be proportionate to the contraventions but in my view corporations the size of GWF have a responsibility to the public at large to ensure that its commercial activities do not contravene Part IV of the Act. When a corporation's commercial activities substantially permeate the commercial and consumer life of the public it is appropriate, in my view, to take that fact into account in determining an appropriate level of penalty for contravention.

209               In a similar vein, in Rural Press (2001) ATPR 41-833, Mansfield J said at [56]:

The size of a contravener is clearly significant in the assessment of penalty, the imposition of a higher penalty will ordinarily apply where a large corporation is involved, to achieve a deterrent effect on that specific individual (see for example Weston Foods; The CC (No 9) Case at 40,827; Safeway Stores at 43,816; ICI at 118; and CSR at 52,155). 

210               A contravener’s position of influence and importance in the telecommunications industry is a factor to take account of in imposing a penalty: see Trade Practices Commission v Prestige Motors Pty Ltd (1994) ATPR 4-359, per Lee J; Australian Competition and Consumer Commission (ACCC) v CC (NSW) Pty Ltd (No 9) (2000) ATPR 41-756, per Lindgren J and Rural Press (2001) ATPR 41-833 at [10] per Mansfield J.  I regard this as a very significant factor in determining the appropriate penalty in these proceeding.

211               By application of the parity principle, assessments of penalty in analogous cases may provide guidance to the Court to ensure that there is parity of treatment of similar circumstances.  Equality before the law is important.  However, as Hill J observed in Australian Competition and Consumer Commission (ACCC) v Universal Music Australia Pty Ltd (No 2) (2002) 201 ALR 618, while pecuniary penalties imposed in one case provide a guide, that guide will seldom, if ever, be able to be used mechanically.  

212               It is also to be remembered, as noted by Burchett and Kiefel JJ in NW Frozen Foods Pty Ltd (1996) 71 FCR 285 at 295, that:

There should not be such an inequality as would suggest that the treatment meted out has not been even-handed… However, things are rarely equal where contraventions of the Trade Practices Act are concerned.  In the present case, differing circumstances, size, market power and responsibility for the contraventions, as well as other factors, complicate any attempt to compare the penalties imposed on the appellant with those imposed on the other corporations.

213               Their honours relevantly added;

Another form of comparison is not appropriate.  The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed.  Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case.

214               There has only been one case to date under s 570 of the Telecommunications Act which is of very limited value in the context of this proceeding.  In Australian Communications and Media Authority v WE.NET.AU Pty Ltd [2008] FCA 1530, a penalty of $6,000 was imposed in respect of a number of contraventions of the service provider.  The conduct related to billing terms by a small Internet Service Provider and the imposition of a fee in the event of a billing dispute.  The penalty ordered by the Court reflected an agreed penalty between the respondent and ACMA following a Court ordered mediation of the issue.  The Court also took account of the parlous financial circumstances of the respondent in accepting the agreed penalty figure.

215               It is apparent that there are many difficulties in simply referring to penalties previously imposed for contraventions of legislation in widely differing circumstances or in circumstances where some of the factors are similar but others dissimilar to those of the present proceeding.  In each case, the Court must take into account the deterrent effect of the penalty and the fact that the penalties ‘should reflect the will of Parliament that the commercial standards laid down in the Act must be observed but not be so high as to be oppressive’: see Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896.

216               However, Telstra submitted that out of the total of about 96 corporate penalty cases under Pt IV of the TPA (since 1996), there have only been three instances in which the penalty imposed exceeded the maximum penalty for one contravention, even though each of the cases involved multiple contraventions.  Telstra submitted these three cases are instructive, because they show that a penalty above the maximum for a single contravention, even in cases involving a large number of contraventions, will only be warranted in circumstances where the conduct has been contumelious, conducted in secret, and at the direction of and with the involvement of senior management.  None of those features are present in the contravening conduct in this case.

217               Telstra submitted that each of the three cases in which a penalty exceeding the penalty for a single contravention was imposed involved:

(a)        cartel conduct with deliberate contraventions of the TPA;

(b)        conduct that was covert and extended over a number of years;

(c)        active participation on the part of senior management; and

(d)        delayed or no co-operation with the ACCC.

218               Telstra submitted that the other cases under s 46 and s 47 of the TPA that are relied upon by the ACCC in its submissions and which attracted significant penalties for corporations, such as Australian Competition and Consumer Commission (ACCC) v Safeway Stores Pty Ltd (No 4) (2006) ATPR 42-101($8.9 million), Universal Music Australia v Australian Competition and Consumer Commission (ACCC) (2003) 131 FCR 529 ($1 million), and Australian Competition and Consumer Commission (ACCC) v Fila Sport Oceania Pty Ltd (2004) ATPR 41-983 ($3 million), can also be distinguished from the present case.  In those three cases there were significant aggravating features not present in the proceeding presently before the Court:

(a)        all three cases involved senior management (or, in the case of Safeway Stores Pty Ltd (No 4) (2006) ATPR 42-101, an ‘important person’) from the relevant companies;

(b)       all three cases involved conduct that was deliberate; and

(c)        all three cases involved conduct by the parties that was directed towards detrimentally affecting competition, and in Safeway Stores Pty Ltd (No 4) (2006) ATPR 42-101, seeking to obtain a commercial advantage from the conduct.

219               Telstra submitted that the Court should adopt the widely utilised practice of imposing a single penalty for all of the contraventions.  This was said to be consistent with the overwhelming majority of cases under Pt IV of the TPA involving penalties for multiple instances of the same or similar conduct. 

220               Telstra submitted that the conduct giving rise to the contraventions in these proceedings was not independent and unrelated.  The contraventions of the TPA and Telecommunications Act were submitted to all flow from the same underlying issue, namely failures of process.

221               It was submitted by Telstra that this approach towards the imposition of penalty has been applied in a number of key cases, including:

(a)        Trade Practices Commission v Allied Mills Industries Pty Ltd and Others (No 4) (1981) 37 ALR 256, where Sheppard J followed the approach of Kitto J in L Vogel and Son Pty Ltd v Anderson (1968) 120 CLR 157 (at 164-5)and did not award penalties in respect of each breach in question, but in respect of the whole of the conduct involved on the basis that all the breaches flowed form the same conduct; 

(b)       Rural Press Ltd (2001) ATPR 41-833, where the Court imposed a single penalty after recognising the relevant contraventions were ‘part and parcel’ of what was essentially the same conduct;  and

(c)        Australian Competition and Consumer Commission (ACCC) v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169, where the Court imposed a single penalty against each of Schneider Electric, Wilson Transformer Company and Tyree Transformers (being the parties to the cartel) notwithstanding there were multiple contraventions by each party.

222               Telstra submitted that where there is a multiplicity of contraventions before the Court, it would be wrong for the Court to calculate the applicable penalty by way of contravention-based arithmetic, referring to Mill v The Queen (1988) 166 CLR 59.  It was submitted that the contraventions and, more specifically, any underlying contravening conduct, must be viewed by the Court as a whole.

223               Telstra submitted that the ACCC in its closing submissions ignored these principles.  It was submitted that the ACCC referred very briefly to the totality principle, contending that a penalty of $34 million would be consistent with that principle, because $34 million is 13% of a total theoretical penalty.  It was submitted that there was no foundation in the authorities for an approach of the kind adopted by the ACCC. 

224               First and foremost, I am of the view that s 570(5) of the Telecommunications Act has no direct application in this proceeding.

225               This is not a proceeding in respect of the ‘same conduct’ having occurred for the purposes of s 570(5) of the Telecommunications Act, other than to the extent the very same conduct involving a failure to comply with s 152AR(5)(c) of the TPA is also alleged to be a failure to comply with cl 17 of Sch 1 of the Telecommunications Act.  If s 570(5) was otherwise applicable there may be some statutory basis for a ‘global’ penalty in respect of the 27 contraventions.  Otherwise, s 570(1) of the Telecommunications Act indicates that the Court should make an order in respect of each contravention of s 68(1) of the Telecommunications Act.  It is to be recalled that s 570(1) is the applicable provision here because the admitted contraventions arise in relation to s 68(1) of the Telecommunications Act.

226               That this proceeding is not in respect of the ‘same conduct’ in relation to the 27 contraventions for the purposes of s 570(5) is apparent from the various descriptions of the admitted contravening conduct – involving different access seekers, different Telstra staff, different considerations undertaken to deny access, different locations, different times and difference consequences.  I do not consider that even if Telstra established that the contraventions all arose from one cause (namely ‘failure of process’), this would mean the contraventions were to be treated globally. 

227               Therefore, the authorities that proceed to consider global penalties upon this statutory basis may be distinguished and are inapplicable.

228               However, the Court must have regard to the totality principle to ensure that the penalties imposed are just and appropriate (see Mill (1988) 166 CLR 59 at 62 to 63; Trade Practices Commission v Allied Mills Industries Pty Ltd and Others (No 4) (1981) ATPR 40-241 at 43, 182; Trade Practices Commission v TNT Australia Pty Limited (1995) ATPR 41-375 at 40, 167 and ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169).

229               Application of the totality principle requires the Court to review the entirety of the conduct and to determine whether the proposed penalty is appropriate ‘as a whole’.  The purpose of the exercise is to ascertain whether the proposed penalty is just and appropriate for the entirety of the contravening conduct, looking at the degree of misconduct involved. 

230               The rationale underlying the totality principle is to ensure that the proposed penalty is not out of proportion with the conduct giving rise to the contraventions when viewed collectively, and to ensure the penalty is accordingly just and appropriate from the perspective of that collective assessment. 

231               In looking at the contraventions in this proceeding, it is useful to refer to the Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd (1980) ATPR 40-161 at [42,277] where Lockhart J talked in terms of the ‘same episode’ when considering an appropriate penalty:

Guidance is given in the field of sentencing for criminal offences by the well-known principle that where several offences are heard together and arise out of the same transaction it is a sound working rule that the sentences imposed for those offences should be made concurrent; it is inappropriate to sentence consecutively when the offences were all really involved in the same episode: see R. v. Duff a decision of the full court of this court, judgment delivered 6 December 1979; R. v. Walsh (1965) 109 Sol. J. Pt. 1 150; R. v. Melville (1956) 73 W.N. (N.S.W.) 579; R. v. Hussain Crim. L.R. 712; R. v. Hally (1965) 58 Q.R. 582 and Re: P.J. Kastercum (1972) 56 Cr. App. R. 298.

232               Justice Lockhart considered at [42,277] that the contraventions arose out of:

the one course of conduct in that it was directed to Woolworths and reflected the adherence by the respondent to a policy of engaging in resale price maintenance in relation to Woolworths. 

233               He then said at [42,277]:

I accept that the contraventions arose out of the one course or pattern of conduct.  Although it is necessary to look at each contravention separately, nevertheless consideration must be given to the facts common to each contravention. 

234               In this way, Lockhart J regarded the seven contraventions as falling into three categories relating to the conversations giving rise to the contraventions, although from ‘one course or pattern’.  From there, consideration was given to the facts common to each contravention.  However, Lockhart J did not treat the case as involving only one contravention even though arising from ‘one course or pattern’, namely the adherence to a policy of engaging in resale price maintenance in relation to Woolworths. 

235               In the final analysis, in applying the totality principle, the question is one of discretion in coming to the correct, adequate and appropriate penalties.  In discussing the totality principle, the majority of the Full Court in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 said at [41] to [42]:

As noted above (see [15]), the principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, the Court must ensure that the offender is not punished twice for the same conduct.  In other words, where two offences arise as a result of the same or related conduct that is not a disentitling factor to the application of the single course of conduct principle but a reason why a Court may have regard to that principle, as one of the applicable sentencing principles, to guide it in the exercise of the sentencing discretion:  Johnson v The Queen (2004) 205 ALR 346 at [3] – [4] and [34] and Attorney-General v Tichy (1982) 30 SASR 84 at 92 – 93.  It is a tool of analysis (Tichy 30 SASR 84 at 93) which a Court is not compelled to utilise:  Royer v Western Australia [2009] WASCA 139 at [21]-[34] and [153]-[156].

A Court is not compelled to utilise the principle because, as Owen JA said in Royer [2009] WASCA 139 at [28],“[d]iscretionary judgments require the weighing of elements, not the formulation of adjustable rules or benchmarks”.  The exercise of the sentencing discretion does not fall to be exercised in a vacuum.  It is a matter of judgment to be exercised according to the facts of each case and having regard to conflicting sentencing objectives:  see McHugh J in AB v The Queen (1999) 198 CLR 111 at [14].  For the same reasons, and contrary to the appellants’ submissions, even if offences are properly characterised as arising from the one transaction or a single course of conduct, a judge is not obliged to apply concurrent terms if the resulting effective term fails to reflect the degree of criminality involved.  Or, in the case of fines, a judge is not obliged to start from the premise that if there is a single course of conduct, the maximum fine is, in the present case, $110,000 for the CFMEU and $22,000 in the case of Mr Mates.

236               I have considered the various common aspects of ‘process failure’ in arriving at the appropriate range of individual penalty.  As I have said, I do not accept that Telstra has only committed in a sense ‘one wrong’ of failing to have a process in place to prevent all the contraventions occurring.  The conduct of Telstra to be penalised under the Telecommunications Act goes well beyond the one act Telstra submits needs to be penalised.

237               I should indicate that it is not necessarily an answer to a contravention or even necessarily a mitigating factor, that ‘process failure’ occurred.  After all, there is an obligation to ensure that such process failure does not occur through the implementation of appropriate policies: see Northrop Jin Ducret v Nissan Motor Car Co (Australia) Pty Ltd (1979) ATPR 40-111 at 18, 153 and Bennet J in Australian Competition and Consumer Commission v Chubb Security Australia Pty Limited (2004) ATPR 42-041 at [86]. 

238               This is not to say the Court should not consider the reason for the contraventions, and examine the cause of the failure to comply with the relevant legislation.  In Australian Competition and Consumer Commission (ACCC) v Allans Music Group Pty Ltd [2002] FCA 1552, Tamberlin J imposed a fine of $80,000 for nine contraventions of s 53(e) of the TPA.  The maximum applicable penalty was $200,000, as it was agreed that the nine contraventions were to be grouped by reason of s 79(2) of the TPA.  The effect of the conduct of the defendant in advertising false discounts on goods in a catalogue was to mislead or be likely to mislead members of the public.  The scale of the advertising was broad.  There was no evidence of actual damage.  The representations were said to have arisen from inadequate procedures.  However, not accepting that mere oversight was involved, Tamberlin J did not view the existence of inadequate procedures an excuse, and said at [23]:

… the failure to have any satisfactory process in place to ensure compliance with the Act is an important consideration when examining the conduct of the defendant.

239               However, an extensive compliance program was subsequently established, the defendant had co-operated with the ACCC and pleaded guilty and, as ‘an important consideration’, there were no prior convictions.  There were no complaints by customers and the defendant proposed to offer to each of the affected customers a gift voucher.  Nevertheless, even in those circumstances, his Honour imposed a penalty which was 40% of the maximum. 

240               I now turn to other aspects relied upon by Telstra as mitigating factors.

241               Telstra’s co-operation, admission of contraventions, and voluntary taking of corrective measures are also relevant factors in the assessment of penalty.  A discount is justified if the admissions are properly to be seen as a willingness to facilitate the course of justice.  In addition, remorse and an acceptance of responsibility merit consideration.  

242               In relation to a plea of guilty the majority judgment in Cameron v The Queen (2002) 209 CLR 339 explained at [11] to [14] the rationale for providing a discounted sentence for a plea of guilty in criminal proceedings.  The majority said:

11.       It is well established that the fact that an accused person has pleaded guilty is a matter properly to be taken into account in mitigation of his or her sentence.  In Siganto v The Queen it was said:

“a plea of guilty is ordinarily a matter to be taken into account in mitigation; first, because it is usually evidence of some remorse on the part of the offender, and second, on the pragmatic ground that the community is spared the expense of a contested trial.  The extent of the mitigation may vary depending on the circumstances of the case.”

It should at once be noted that remorse is not necessarily the only subjective matter revealed by a plea of guilty.  The plea may also indicate acceptance of responsibility and a willingness to facilitate the course of justice.

12.       Although a plea of guilty may be taken into account in mitigation, a convicted person may not be penalised for having insisted on his or her right to trial.  The distinction between allowing a reduction for a plea of guilty and not penalising a convicted person for not pleading guilty is not without its subtleties, but it is, nonetheless, a real distinction, albeit one the rationale for which may need some refinement in expression if the distinction is to be seen as non-discriminatory.

13.       It is difficult to see that a person who has exercised his or her right to trial is not being discriminated against by reason of his or her exercising that right if, in otherwise comparable circumstances, another's plea of guilty results in a reduction of the sentence that would otherwise have been imposed on the pragmatic and objective ground that the plea has saved the community the expense of a trial.  However, the same is not true if the plea is seen, subjectively, as the willingness of the offender to facilitate the course of justice.

14.       Reconciliation of the requirement that a person not be penalised for pleading not guilty with the rule that a plea of guilty may be taken into account in mitigation requires that the rationale for that rule, so far as it depends on factors other than remorse and acceptance of responsibility, be expressed in terms of willingness to facilitate the course of justice and not on the basis that the plea has saved the community the expense of a contested hearing.

243               The Full Court in Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [75] to [76] and [78] made the following observations:

75        A conventional consideration in assessing a discount in a criminal case for a plea of guilty is the stage in the proceedings at which the plea is entered.  Normally, the maximum discount for this factor, sometimes thought to be 25%, is reserved for a plea made at the first reasonable opportunity although, as was indicated in Cameron (at [23] – [24]) there is no obligation to make an early plea to a charge which wrongly particularises the substance to which the charge relates.

76        As Branson J has pointed out (see Alfred v Walter Construction Group Limited [2005] FCA 497) the rationale for providing a discount for an early plea of guilty in a criminal case does not apply neatly to a case, such as the present, where a civil penalty is sought and the case proceeds on pleadings.  Nevertheless, in our view, it should be accepted, for the same reasons as given in Cameron, that a discount should not be available simply because a respondent has spared the community the cost of a contested trial.  Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice. 

78        The primary judge found moreover, that there was no evidence of contrition or remorse.  He said: ‘Frank admissions of wrongdoing, and apologies to the employees who have been disgracefully treated, may have operated in mitigation.  None were forthcoming’.  In the circumstances of the present case, the admission of liability two weeks before the trial was not evidence of contrition or remorse or, except in the most formal of senses, an indication of acceptance of wrongdoing.  It would have been open to the primary judge, in our view, to refuse any discount for the admission of liability.  There is no basis, therefore, upon which to complain about the allowance of a ‘modest’ discount of 10%.  It was more than ample in the circumstances of this case.

244               It was further observed by Gyles, Stone and Buchanan JJ, at [74] that:

It is important to note that it is not a sufficient basis for a discount that the plea has saved the cost of a contested hearing – that would discriminate against a person who exercised a right to contest the allegations.  A discount may be justified, however, if the plea is properly to be seen as willingness to facilitate the course of justice.  Remorse and an acceptance of responsibility also merit consideration where they are shown.

245               Telstra also submitted that the contraventions must be see in ‘their proper historical and technical context’.  In this regard, I accept the following:

(a)               Telstra received a total of 5,246 TEBA requests from carriers and service providers in 2006 and 2007;

(b)               the rejections that occurred in 2006 and 2007 and that are in issue in this proceeding constituted about 0.5% of the total number of TEBA requests received in that period;

(c)               the rejected requests concerned seven TEBA-enabled exchanges, or 1.33% of the 526 TEBA-enabled exchanges in Australia in 2008;

(d)               carriers and providers, including in some instances the carriers and providers that were the subject of rejected requests, had already installed and were operating DSLAM equipment at the seven relevant exchanges at the time of the rejected requests;

(e)               each of the carriers and providers who had requests rejected continued to install and operate DSLAM equipment in other exchanges throughout the relevant period;

(f)                 the rapid increase in TEBA requests from about 2005 onwards resulted in congestion at some exchanges;

(g)               no requests were rejected at the direction, or with the knowledge or approval, of Telstra’s senior management;

(h)               since April 2008, Telstra has not rejected any TEBA requests at the seven exchanges relevant to these proceedings;

(i)                 Telstra has, since around that time, introduced a range of new policies and practices to ensure that exchanges are not included in the capped sites list unless certain procedures are followed and that requests for access to its exchanges are not rejected on the grounds of an absence of capacity on an MDF unless certain procedures are followed.  Since those changes have been introduced:

                 (i)                        all seven exchanges have been uncapped;

                (ii)                        there are currently no exchanges which are MDF capped only; and

              (iii)                        no access requests have been rejected at the seven exchanges on the grounds of an absence of MDF capacity. 

(j)                 the rejections for access were not targeted at particular carriers or service providers;

(k)               the rejected requests were not the result of Telstra using its size or exercising its market position;

(l)                 Telstra has not previously been found to have engaged in similar conduct relating to its obligations under Pt 3 of Sch 1 of the Telecommunications Act;

(m)             Telstra has not been found previously to have contravened Pts IV, XIB or XIC of the TPA;

246               I also accept that Telstra is the only carrier in the telecommunications market that is subject to facilities access requests in any significant volume.  Nevertheless, I do not consider that this fact means that general deterrence is not an important consideration, both in relation to possible future carriers, and to other members of the community subject to the requirements of the Telecommunications Act and Pts IV, XIB and XIC of the TPA. 

247               In this course of my following remarks, I refer to Schedule A.  In Schedule A, the ACCC refers to ‘Date of contravening conduct’ and ‘Date contravening conduct ceased’, which may imply each contravention involves continuing conduct.  I need not enter this debate.  What is clear is that as a result of the refusal to grant access, access was denied over the periods identified by ACCC in Schedule A.  It is this consequence that I take into account in assessing particular penalties, and not whether any contravention technically involves ‘continuing’ conduct.

248               As I have said, none of the contraventions occurred because of conduct that was deliberately anti-competitive at any level within Telstra.

249               I reject any suggestion that the contraventions occurred as a result of any implicit or express direction from the then Chief Executive of Telstra to all Telstra employees to make access to competitors difficult.  I also reject any suggestion that the conduct was undertaken in an endeavour to maintain Telstra’s revenues and profits at the highest possible level leading to the third tranche of the Telstra float in 2007.  There is in my view no evidence to properly support such suggestions, and the evidence of the Telstra employees called indicates clearly that the contraventions did not occur in concert, but as individual events involving separate employees.

250               A number of different approaches in this proceeding could be taken to imposing a penalty.  The Court could look to each contravention, consider the appropriate penalty taking into account the totality principle, and then apply any appropriate discount.  This was the approach submitted by the ACCC.  The Court could group together each exchange or each State, or focus on each period of inability to gain access, and view the contraventions included within those groups as appropriately to be treated together for the purpose of assessing the appropriate penalty.  Alternatively, the Court could treat the admitted contraventions as all following from the same cause, and with the maximum penalty being $10 million, and then consider the appropriate discount.  This is the approach submitted by Telstra.  Another approach would be to look at the capped sites and uncapped sites, and treat that as a basis for grouping the contraventions.

251               There is no scientific approach or arithmetic formula to be applied in determining the appropriate penalty.  The circumstances of each contravention need to be looked at, taking into account all the circumstances pertaining to the contravention.  I have already indicated what I regard as important and significant considerations, but the other matters I have raised are taken into account. 

252               Undoubtedly, the nature of Telstra’s contravening conduct in this proceeding had the potential to be very serious from a competition law perspective.  The purpose of the access obligations imposed by the TPA and the Telecommunications Act is to facilitate access to Telstra’s facilities so as to encourage downstream competition for the benefit of end consumers.  The failure to comply with these obligations had the potential to harm consumers.  I accept that there is no evidence that this actually occurred in this case, nor that any loss or damage was sustained by the access seekers.

253               However, it is to be recalled that in respect of access to exchange facilitates Telstra has an overwhelming position of bargaining strength.  It has control over its exchanges and the power to allow or refuse access.  Telstra also has a substantial information advantage compared to access seekers.  It is very difficult for access seekers to review or challenge Telstra’s decisions to refuse access on the basis that an exchange has no available capacity or for any other reason given to them by Telstra, although as the evidence shows, not impossible.  The contraventions in this proceeding would probably not have come to light but for the ACCC’s intervention in October 2007 and an investigation thereafter.

254               The seriousness that the contravening conduct must be considered in the context of the fact that the provision of access to bottleneck infrastructure like Telstra’s PSTN has been an integral feature of competition policy in Australia for nearly a decade.  It was clearly intended to provide considerable consumer benefits in relation to price and performance in the telecommunications sector.  The introduction of the standard access obligations, which apply only in respect of the telecommunications regime, was a response to a highly uncompetitive structure of the Australian telecommunication sector.  This sector is characterised by a high level of vertical integration and associated market power on the part of Telstra, giving it both the ability and the incentive to favour its downstream retail businesses over its wholesale customers. 

255               As the evidence indicated, once Telstra uncapped an exchange on the 11 April 2008, there were a number of applications for access which could have been accepted.  This is not to say that the access numbers increased; just that there was the ability of Telstra to accommodate these requests.  This demonstrates that significant capacity was available at the exchanges before the uncapping and that Telstra’s approval processes for PSR’s before uncapping unnecessarily kept access seekers out of exchanges for lengthy periods.

256               The statutory obligations that Telstra contravened were first imposed on Telstra in 2001.  Telstra is a very well resourced company.  Telstra had more than five years to organise its affairs so as to satisfy the obligations.  Whilst I have accepted the conduct did not occur with deliberate anti-competitiveness in mind, the conduct did not occur by accident or by inadvertence.  Telstra’s managers and employees were given the authority on behalf of the Telstra to make decisions to refuse competitors access to its facilities and to impose conditions on any offer of access.  The relevant managers and employees were not properly trained in relation to Telstra’s access obligations, or otherwise failed to comply with any training that was given to them, and Telstra had no adequate system for checking on compliance. 

257               In this regard, Telstra failed to put in place exchange access processes and procedures which would ensure that Telstra meet the required regulatory and legal obligations.  Telstra also failed to provide the necessary oversight to ensure that Telstra was fulfilling its access obligations.  This is not a case in which junior employees ignored directions from senior management.  The staff involved were not low level staff but experienced staff.  In the period from 2006 to 2008, I find that Telstra took no steps to develop a culture of compliance with its access obligations under the TPA and the Telecommunications Act. 

258               The obligations imposed by the TPA and the Telecommunications Act are strict or absolute in the sense they do not require proof of an anti-competitive purpose or effect or of any intention.  The strict nature of the obligations recognises that Telstra has very substantial market power in respect of fixed line telecommunications services (especially to residential consumers) and any refusal by Telstra to provide access to exchange facilities in a timely manner will harm competition.  The importance of these obligations is also reflected in the size of the maximum penalty for each contravention, namely $10 million.  I accept that this maximum penalty is not only directed to particular contraventions of the access obligations, and covers many possible contraventions.  However, this does not detract from the importance of the access obligations cast upon Telstra, and the significant consequences that could flow from failing to comply with the requirements of the Telecommunications Act.

259               The admitted contraventions demonstrate substantial non-compliance by Telstra with its legal obligations.  The non-compliance was within seven exchanges located in four States, although only seven out of the five hundred exchanges nationwide.  The contraventions were repeated on numerous occasions over a period of nearly two years, although this was only a very small percentage of the total activity. 

260               As the evidence indicates, the circumstances relating to each contravention involved various combinations of the following salient features:

·                    there were rejections notwithstanding large numbers of vacant line side blocks available;

·                    decisions were made to cap with little or no checking;

·                    there were failures to give access over lengthy periods;

·                    there were failures to uncap or provide access when an audit identified space available;

·                    there were failures to provide access notwithstanding photographic evidence available that space was available; and

·                    there were instances where Telstra was aware of significant available space but continued to cap for a lengthy period of time. 

261               The ACCC in proposing penalties for each individual offence allocated different proposed penalties depending upon the gravity of the contravening conduct which related to the continuation of the failure to provide access, and specific matters that were said to aggravate the contravening conduct.  These included placing unreasonable conditions on access that was sought, continuing to refuse access after a audits identified space available and inconsistent conduct between access users.

262               In considering the evidence of the circumstances of the contraventions, there were a number of decisions made by Telstra staff that did not seem at all explicable and that objectively seemed unreasonable.  However, looking at the evidence as to how these decisions were made, I do not detect any deliberateness to act in anti-competitive conduct on the part of any of the members of the Telstra staff.  Therefore, whilst difficult to explain, decisions were taken and demands were made on access seekers on occasions by Telstra which were unreasonable, but which were explicable by reference to various failures of process in each individual case. 

263               This is not to say there was one cause, or one episode or one contravention.  Even the ‘process failure’ relied upon Telstra as the common cause involved many aspects.  Each process failure had a different impact as can be seen from the circumstances of each contravention.  In most cases Telstra staff did not understand their responsibilities or role within Telstra.  In some cases, there was a lack of communication between Telstra staff, or a communication of misinformation.  In other cases, there was a failure to provide access (such as to uncap a site after an audit) when information clearly indicated that space was available.  There was a general lack of training and co-ordination, and knowledge of the importance and significance of access obligations.  There was also a failure to respond to changed circumstances, so that when access was available it could be provided.  There were other failures which Telstra now accepts need to be addressed, and which Telstra has sought to address in its new procedures. 

264               As I have already indicated, I do not accept the submission of Telstra that the conduct the subject of the contraventions should be viewed as effectively one contravention, with a maximum penalty to be $10,000,000.  I have already considered s 570(5) of the Telecommunications Act, and concluded that the provision has no application to this proceeding.

265               The Telecommunications Act directs attention to the conduct or act of not providing access, not the underlying reason for refusing access.  In other words, the Telecommunications Act does not penalise for a failure to have a system in place to provide access; the obligation is to provide access in accordance with the legislative requirements.  For the reasons I have already given, failing to provide access is a significant failure in competition terms.  The failure to implement policies which could have provided access if implemented is not an excuse or mitigating factor that has significant weight.  As I have said, I do accept that the conduct of Telstra was not deliberately anti-competitive. 

266               These considerations would indicate that the penalty for each contravention should be at the lower end of the scale, which I would take to be in the range of $750,000 to $1.5 million.  I come to this range keeping in mind various facts or salient features common to each contravention.  If any one or more contravention involved deliberate anti-competitive behaviour, then depending on the circumstances, the higher range of penalty may have been appropriate.

267               In my view, the significant factor in considering and distinguishing each contravention (keeping in mind my earlier comments) is the period of time in which there has been a failure to provide access.  The other factors relied upon by Telstra in Schedule A are relevant to the overall circumstances of each contravention, but I do not consider they warrant any ‘additional’ penalty.  I say this because of the findings I have made in relation to the circumstances of each contravention, and my acceptance of the evidence of those employees called by Telstra. 

268               In considering the range I have adopted, taking into account the period in which access was not provided, I assign the following amounts:

1.                  $750,000 for where access was not provided for 3 months or less;

2.                   $1,000,000.00 for where access was not provided for 3 months to 1 year; and

3.                  $1,500,000.00 for where access was not provided for more than 1 year.

269               On this basis, the starting penalty before considering any discount by reference to each of the Seven Exchanges is as follows:

This would make a total penalty of $26,500,000 before considering any discount.

270               In considering the overall conduct, the number of refusals and the duration of failure to provide access over a period of time, this seems to me a proper penalty for the contraventions taking into account the ‘totality principle’. 

271               It is then necessary to consider the extent of any discount for co-operation, remorse, acceptance of responsibility, admission of liability, and the implementation of a compliance program.

272               I accept that Telstra should receive a discount for a large amount of co-operation, acceptance of responsibility, admission of liability and implementation of a compliance program.

273               I am not satisfied, however, that Telstra has demonstrated any remorse, nor that it appreciates the seriousness of its conduct.  Undoubtedly, Telstra does not want to contravene again, and has procedures in place to seek to avoid that occurring.  Telstra has co-operated with the ACCC and at trial.  However, Telstra’s submissions in support of penalty (treating the wrongful conduct as just a single failure of process), and Telstra’s failure to specifically express remorse through its Counsel, lead me to conclude that Telstra has no remorse further than accepting responsibility and taking corrective steps.

274               The ‘antagonism’ referred to by the ACCC, whilst I do not regard as leading to a conclusion of deliberate anti-competitive behaviour, may explain the lack of remorse and an appreciation of the seriousness of the admitted contraventions. 

275               Nevertheless, there has been a large degree of co-operation putting aside the period of delay referred to previously, and there has been an acceptance of responsibility and the implementation of a compliance program.

276               I have come to the view that a 30% discount is an appropriate discount to give to Telstra.  This would make the total penalty $18,550,000.

277               Again, it is appropriate to consider whether this penalty is the appropriate penalty to impose taking into account the ‘totality principle’.  In my view, no other factors require that penalty to be further adjusted.  I have kept in mind the submissions of Telstra as to parity.  Each case must be looked at in its own specific circumstances.  The circumstances of the cases relied upon by Telstra do not lend themselves to any easy or ready comparison.  

278               I observe that even if I approached the task by looking at each exchange, which is a possible way to group the contraventions, taking into account the number of refusals and period of access being refused, I would have reached a similar result as to penalty. 

279               The issue of costs of the proceeding has been deferred by the agreement of the parties.  The ACCC has indicated that it will seek costs of the proceeding.  Costs are a relevant matter to take into account in considering the final penalty.  Of course, the Court does not know the exact amount of costs involved, nor upon which party a costs order may fall.  I have assumed that there will be a substantial costs order in favour of ACCC, although I anticipate that Telstra will submit for a discount in view of the conduct of the trial, particularly in relation to the issue of the loss and damage sustained by the access seekers.  Apart from making the above assumption, I do not consider the final outcome as to costs will otherwise impact upon the considerations that have led me to impose the penalties I have upon Telstra.

280               I make one final observation as to penalty.  It will be apparent that I have rejected in many respects the submissions of the ACCC as to the circumstances of the contraventions.  In part this explains the reason for the overall penalty not being in the range submitted by the ACCC.  In addition, the ACCC has failed to prove any actual loss being sustained by the access seekers.  I have also given a greater discount for co-operation, acceptance of responsibility, and for voluntarily implementing a compliance program.  This arises because, whilst I accept the ACCC’s submission that the response was not timely in some respect, in many other respects Telstra acted appropriately and deserves to be rewarded.  There was, however, no true remorse shown for Telstra’s conduct, nor an appreciation of the seriousness of the admitted contraventions.

OTHER RELIEF

281               I now turn to the other relief sought by ACCC.

282               I propose to make declarations in the form sought by the ACCC.  Declaratory relief will serve the public interest in a number of ways:

(a)        to define and publicise the type of conduct that constitutes a contravention of the relevant provisions of the Telecommunications Act and the TPA, serving the purpose of deterrence of contravention of the Telecommunications Act and the TPA;

(b)       to mark the Court’s disapproval of the particular conduct engaged in by the respondent in contravention of the Telecommunications Act and the TPA; and

(c)        to set out clearly the foundation for the pecuniary penalty.

283               As to the injunctions sought, I do not propose to make any orders of the type sought by ACCC.  The injunctions are only sought for three years.  Whilst I consider that the penalty in this proceeding must be sufficient to ensure that Telstra, as well as the community, is reminded well into the future of the consequences of contravention, it is unlikely that Telstra will contravene in the proximate future.

284               Telstra has implemented a compliance program, which has not been criticised by the ACCC in this proceeding.  Telstra has co-operated with the ACCC in the way I have indicated.  I do not consider I need make an injunction in these circumstances.  The pecuniary penalties and declarations will stress the Court’s disapproval of the conduct of Telstra.

285               Therefore, it seems that the following orders are appropriate:

1.         A declaration that the Respondent contravened s 152AR(5)(c) of the Trade Practices Act 1974 (Cth) (‘TPA’), and thereby contravened a condition of its carrier licence and s 68(1) of the Telecommunications Act 1997 (Cth) (‘Telecommunications Act’), on each occasion that it rejected requests by service providers to permit interconnection of  their facilities with Telstra’s facilities at the Bulwer, Carlton, Northcote, Paddington, Port Melbourne, South Perth and St Peters exchanges for the purpose of enabling the service providers to be supplied with the Unconditioned Local Loop Service or the Line Sharing Service (each of which is an active declared service for the purposes of Pt XIC of the TPA) by Telstra at those exchanges in order that the service providers could provide carriage services being:

(a)        in respect of the Bulwer exchange, on 5 September 2007, 12 September 2007 (on three occasions), 5 November 2007 and 18 December 2007;

(b)        in respect of the Carlton exchange, on 9 October 2007 and 12 December 2007;

(c)        in respect of the Northcote exchange, on 12 June 2007, 2 August 2007, 13 August 2007 and 7 September 2007;

(d)        in respect of the Paddington exchange, on 12 July 2006, 23 February 2007 and 5 February 2008;

(e)        in respect of the Port Melbourne exchange, on 23 January 2006, 31 August 2006, 5 February 2007, 26 July 2007 and 30 January 2008;

(f)         in respect of the South Perth exchange, on 29 August 2007, and 30 August 2007 (on two occasions); and

(g)        in respect of the St Peters exchange, on 25 January 2007, 31 May 2007, 18 September 2007 and 7 February 2008.

2.         A declaration that the Respondent contravened cl 17 of Sch 1 of the Telecommunications Act, and thereby contravened a condition of its carrier licence and s 68(1) of the Telecommunications Act, on each occasion that it rejected requests by service providers to permit carriers to access Telstra’s facilities at the Bulwer, Carlton, Northcote, Paddington, Port Melbourne, South Perth and St Peters exchanges being:

(a)        in respect of the Bulwer exchange, on 5 September 2007, 12 September 2007 (on three occasions) and 18 December 2007;

(b)        in respect of the Carlton exchange, on 9 October 2007 and 12 December 2007;

(c)        in respect of the Northcote exchange, on 12 June 2007, 13 August 2007 and 7 September 2007;

(d)        in respect of the Paddington exchange, on 12 July 2006, 23 February 2007 and 5 February 2008;

(e)        in respect of the Port Melbourne exchange, on 31 August 2006, 5 February 2007 and 26 July 2007;

(f)         in respect of the South Perth exchange, on 29 August 2007 and 30 August 2007 (on two occasions); and

(g)        in respect of the St Peters exchange, on 25 January 2007, 31 May 2007 and 18 September 2007.

3.         A declaration that the Respondent engaged in conduct in trade or commerce that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the TPA by representing to service providers, on each occasion that the Respondent rejected requests by service providers to permit interconnection of their facilities with Telstra’s facilities at the Bulwer, Carlton, Northcote, Paddington, Port Melbourne, South Perth and St Peters exchanges as referred to in the first declaration herein, that there were no block positions on the Main Distribution Frame available to satisfy each of the service providers’ respective requests.

4.         A declaration that the Respondent engaged in conduct in trade or commerce that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the TPA by representing by the publication of its capped sites notices on the Telstra Wholesale website in respect of:

(a)        the Bulwer exchange for the period 1 September 2007 and 10 April 2008 (inclusive);

(b)        the Carlton exchange for the period 2 January 2008 to 10 April 2008 (inclusive);

(c)        the Northcote exchange for the period 1 September 2007 to 10 April 2008 (inclusive);

(d)        the Paddington exchange for the period 1 September 2007 to 31 October 2007 (inclusive) and 4 December 2007 to 10 April 2008 (inclusive);

(e)        the Port Melbourne exchange for the period 1 September 2007 to 10 April 2008 (inclusive);

(f)         the South Perth exchange for the period 1 September 2007 to 10 April 2008 (inclusive); and

(g)        the St Peters exchange for the period 1 September 2007 to 10 April 2008 (inclusive),

that there was no longer space on the Main Distribution Frames at those exchanges that was available for service providers.

286               In addition an order will need to be made that Telstra pay to the Commonwealth pecuniary penalties in respect of each contravention of s 68(1) of the Telecommunications Act as alleged in the Amended Statement of Claim. 

287               Each order will need to be formulated by reference to each of the 27 admitted contraventions by reference to the Amended Statement of Claim in accordance with s 570(1) of the Telecommunications Act, with each individual penalty reflecting the discount of 30%.  I refer to the order made by Lockhart J in Bata Shoe (1980) ATPR 40-161 which could serve as a guide to the formulation of the appropriate orders.

288               I will make orders facilitating the preparing of minutes of orders, requiring the parties to confer, file and serve minutes of orders reflecting these reasons, and submissions as to costs (in the event of no agreement).

Associate:

Dated:         28 July 2010

SCHEDULE A

PROPOSED PECUNIARY PENALTY FOR EACH CONTRAVENTION