FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Singtel Optus Pty Ltd [2010] FCA 1177

REASONS FOR JUDGMENT

I - Introduction

1                     The respondent (Optus) is a large telecommunications firm which provides, inter alia, broadband internet services.  In Australia it is usual for broadband internet services, like mobile telephone services, to be sold by reference to what are generally called “plans”.  This case concerns one family of Optus’ broadband plans known as the “Think Bigger Plans” and the manner in which they have been marketed to the broadband consuming public.  The applicant (“the Commission”) ultimately seeks corrective advertising orders and authority establishes that such orders become more difficult to obtain the longer the time between the original advertising campaign and the time that the order is sought.  This case was heard on Wednesday 27 October 2010 and I have endeavoured to decide it as fast as possible so as not to prejudice the Commission’s entitlement to any such order.  These reasons are therefore somewhat more briefly expressed than they might otherwise have been.

2                     The Think Bigger Plans were launched on Anzac Day this year.  To understand the issues which arise it is necessary to know that Optus is able to deliver its broadband services in two ways which are physically distinct.  The first is over Telstra’s copper wire network which is also known as the unconditioned local loop network.  Telstra is obliged by Part XIC of the Trade Practices Act 1974 (Cth)to provide to other telecommunications providers, such as Optus, certain access services in respect of its loops so that other carriage service providers can use them to provide their own telecommunication services to consumers.  Using Telstra’s access services, Optus is able to provide its Think Bigger Plans to anyone who is connected to Telstra’s copper wire network. 

3                     However, Optus also owns its own network which is called the hybrid fibre coaxial cable network (HFC).  This network is a high speed data network and has sufficient bandwidth to deliver cable television: Bayside City Council v Telstra Corporation Ltd (2004) 216 CLR 595 at 615 [3].  Unlike Telstra’s local loop, Optus’ HFC network does not have universal coverage.  From their inception the Think Bigger Plans were available over both networks.  However, about three months ago on 2 August 2010 Optus took advantage of the much higher speeds at which its HFC network can operate to offer an augmented version of the Think Bigger Plans which was called the “Premium Speed Pack”.  Because the coverage of the HFC network is limited to certain, mostly metropolitan, parts of the country not every consumer can have access to this service. 

4                     The Commission is not content with the way in which either the Think Bigger Plans generally or the Premium Speed Pack in particular has been marketed by Optus to the broadband consuming public.  The Commission argues that the advertisements are misleading.  It is necessary then to say something of the advertisements themselves.  Optus’ practice is to promote its products and services using exotic animals such elephants, lions and giraffes.  In the case of the Think Bigger Plans the principal animals are a moose with preternaturally large antlers and an ostrich.  The promotion of the Premium Speed Pack, concerned as it was with notions of rapidity, proceeded under the banner “Supersonic Broadband” and was accompanied by a leitmotif of two deer.  The first deer symbolically represented the speeds available at ordinary broadband speeds whilst the second deer stood for the speeds available using “Supersonic Broadband”.  The second deer, as might naturally be expected, gradually accelerates during the promotion before eventually taking flight – legs retracted – shortly thereafter reaching the speed of sound, passing thereupon through a shock cone which appears unexpectedly around its snout before finally disappearing out of sight leaving behind it not only an impression of great velocity but also the first standard broadband deer panting and exhausted. 

5                     Both of these campaigns were conducted in several different kinds of media but not every advertisement has been the subject of complaint by the Commission.  In the case of the Supersonic Broadband promotions only the on-line advertisements have been targeted.  In the case of the Think Bigger advertisements, however, the Commission takes aim not only at a series of television commercials but also at certain print advertisements, flyers, on-line advertisements and a billboard promotion.  Each form of medium, of course, presents its own subtleties in terms of gauging whether an advertisement is misleading or not.  Less attention is generally paid by the public to a billboard commercial than to a television commercial and that kind of commercial, in turn, generally receives less attention from consumers than do some on-line commercials.  These general observations have some truth, however, only because people do not stare at computer screens in quite the same way in which they stare at television screens and also because most people do not stare at billboards at all.  Generalisations in this field are, however, difficult to justify because the nature of any particular advertisement is such a significant variable in the calculus of deception.  Some television commercials are quite transfixing and, by the same token, many on-line advertisements are tedious and are readily ended with a simple click.  The central principle is that each advertisement must be considered in the context of the medium in which it is expressed taking full cognisance of the different consumer experiences arising with different media.  Much beyond that it is difficult to go.

6                     In this case, however, I do not think that the kind of subtleties raised by those issues need be dwelled on for long.  The core of the Commission’s complaint ranges across all of the advertisements in all of the relevant media but is the same.  To grasp that core it is useful to see the flyer issued for one of the Think Bigger Plans.  The flyer was in colour and double-sided.  For the purpose of understanding the core issues the flyer is reasonably representative.  The front side appears on the first page of annexure A to these reasons.

7                     The small text at the bottom of the page invites the assiduous reader over to the reverse side which is displayed on the second page of annexure A.

8                     It is then useful to turn to the Commission’s complaints.

II – The nature of the case

9                     The structure of the Commission’s case is essentially threefold.  First, its says that some consumers would be likely to be misled by the flyer into thinking that for $59.99 they would receive 150GB of broadband made up of 75GB of peak usage and 75GB of off-peak usage.  However, that is not the way in which the plan in fact worked.  The actual operation of the plan was as follows:

(a)        if a consumer used all of their 75GB peak usage allowance then the service would be throttled back to 64kbps both for the peak usage and, more importantly, for the off-peak usage.  After the peak allowance was depleted the consumer would not get the benefit of any of the remaining off-peak entitlement to 75GB at broadband speeds. 

(b)        by contrast, if the consumer exceeded his 75GB off-peak allowance the speed would not be throttled back (unlike that which occurred when the peak allowance was exceeded).  Instead, further use would continue at broadband speeds but would be deducted from the peak usage allowance.  Once that allowance was reached further use would be throttled back to 64kbps.

10                  The Commission says that without sufficient attention being drawn to those features the advertisement was apt to suggest to consumers something which was quite wrong, namely, that they would received 150GB of usage for $59.99.  The Commission accepted that the words at the foot of the front page “Speed limited once peak data exceeded” did disclose the plan’s actual operation as did the extremely fine print over the page.  However, the Commission says that in the context of the size of the words “$59.99=150GB” and also of the expression “BROADBAND (75GB peak + 75GB off-peak)” together with words “Think bigger” and the moose’s prodigious antlers, the message that a consumer would not necessarily get 150GB at all was lost in the din. 

11                  The Commission’s second complaint is that the advertisement is misleading because it does not adequately disclose that the speed would be throttled back to 64kbps once the threshold was reached.  The only references to the topic of speed in the advertisement are at the foot of the first page (“Speed limited once peak data exceeded”) and in the extremely fine print on the back page (“…access will be speed limited to 64kbps….”).  The Commission’s third complaint is that the advertisement did not indicate anywhere that the speed limitation was to a speed which was not a broadband speed.  There was no clear definition before me of what a broadband speed was but Optus accepted for the purposes of the hearing that 64kbps was not such a speed.

12                  Optus rejected each of these propositions.  The plan sold was packaged into two components – the peak and the off-peak.  Any person observing that was put on inquiry about what the limitations which underpinned that structure were; the answer to that inquiry was provided in the words “Speed limited once peak data exceeded”.  Those words were not ambiguous and amply revealed the true nature of the plan.  Further, the commercial had to be viewed in the context in which it appeared and this included the further information a consumer would be confronted with if they decided to purchase, or inquire further about, any of the plans.  Optus sought to rely upon, and over the Commission’s objection I admitted provisionally pursuant to s 57 of the Evidence Act 1995 (Cth), material which was bent to the end of demonstrating that if a consumer decided to proceed to purchase a plan they would inevitably be brought face to face with statements that made quite clear what the true position was.  Any capacity in the advertisements to mislead or deceive was thereby expunged.  Quite apart from that, however, Optus submitted that account had to be taken of the fact that the product being purchased was not an impulse purchase item, like a chocolate bar or can of deodorant, but to the contrary was likely to have been the subject of substantial consideration by consumers prior to the moment of sale.  The substantial cost of the plans overall was pointed to as underscoring that point.  Building on this theme, Optus sought to elicit evidence – again, over the Commission’s objection, provisionally admitted – which suggested that purchasers of broadband services had regard to information from a range of sources and were unlikely to rely upon anything as simple as an advertisement.

13                  On the different question of whether it was misleading not perhaps more fulsomely to reveal the throttling speed of 64kbps or the fact that that speed was not a broadband speed, Optus submitted that consumers of broadband services should be taken to know the way broadband plan structures worked, that one well-known feature of such structures was a substantial speed limit once the allowances were exceeded and that the 64kbps limit was, in any event, disclosed in the advertisement in smaller print.  That was to be seen as adequate notification because there were practical limits on how much information could be conveyed in an advertisement, that practical limitation made necessary prioritising decisions about which information about the plan terms was to be given how much prominence and that process of prioritisation could legitimately take into account the understanding that consumers had of throttling speeds.  As to the suggestion that the message might leave lingering in the chambers of the consumer’s mind the possibility that the retarded speed might still be a broadband speed, Optus contended that this was simply not how consumers understood broadband plans to work.

III – Some preliminary questions of evidence

14                  There were components of Optus’ evidence which were subject to objection and which I admitted provisionally pursuant to s 57 of the Evidence Act 1995.  These were three: evidence about explanatory statements made at, or near, the point of sale; evidence of internet traffic across the pertinent parts of Optus’ website; and, some market research evidence whose ultimate purpose was to show that consumers relied on many sources of information in making broadband purchasing decisions and not just advertisements.  For reasons which follow all of that evidence should be received fully into evidence and its provisional status vacated.

Explanatory statements at or around the point of sale

15                  Optus relied on a significant volume of material to demonstrate that once consumers were drawn into the sale process they would be confronted by statements which adequately exposed the true position.  By way of example, evidence was provisionally admitted that showed the scripts which call centre staff were required to read to consumers intent on purchasing plans which scripts included what were said to be exculpatory statements.  Evidence of that kind was submitted to be relevant in two distinct ways.  First, it formed an inseverable part of the context in which both advertising campaigns occurred and, as part of the context, had to be taken into account in any assessment of those advertisements’ capacity to mislead.  Secondly, even if that were not so and the advertisements were to be assessed for their deceptive capacity shorn of any consideration of what the sales process might thereafter impart to the consumer, that material was relevant to the question of what relief the Court might ultimately grant. 

16                  The Commission’s position was that the evidence was inadmissible and reliance was placed on Singtel Optus v Telstra [2004] FCA 859 at [42] per Jacobson J (“The fact that the full terms may be explained when a reader or viewer contacts the publisher of the advertisement is not relevant to the question of whether the advertisement is misleading”).  His Honour relied upon a statement by Northrop J in St Lukes Health Insurance v Medical Benefits Fund of Australia Ltd (1995) 17 ATPR 41-428 at page 40,823 (“The misleading or deceptive conduct occurs at the time of the publication of the television advertisement or of the publication of the newspaper advertisements”).  That principle was itself applied, as Jacobson J  noted,  by Stone J in Medical Benefits Fund of Australia Ltd v Cassidy (2003) 205 ALR 402 at 417 [43] (“Nor is it to the point that the misleading or deceptive impression may or will be corrected before or after any contract is made.  Whether a representation is misleading or deceptive (or likely to be so) depends on the circumstances in which it is made and not on what might happen in the future”: citing St Lukes Heath Insurance).

17                  Optus sought to reduce the rub of these statements in two ways.  First, reliance was placed on some remarks which fell from Tamberlin J in Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 where, having observed that the advertisement in question (which concerned free calls on a mobile plan) had to be viewed in “its entire context” said that that context included the “surrounding circumstances, documents, conversations and sequences of events, in which the advertisement is broadcast up to the point of sale”: 64 FCR at 338 (my emphasis).  This was supported, so it was said, by the Full Court’s decision in Knight v Beyond Properties Pty Ltd (2007) 242 ALR 586 at 598-599 [58] (“Put another way, if the conduct only produces the effect of misleading a person for a transient period and to an insubstantial extent, as it did in this case, then this indicates that the conduct is not likely to be misleading or deceptive in any commercially significant sense”).

18                  The Commission, on the other hand sought to put in context Tamberlin J’s description in Optus Communications of the entire context as including events leading “up to the point of sale” by drawing attention to the manner in which his Honour then dealt with that evidence (“I am not persuaded that any or all of the post-broadcast steps leading to signing of the contract would dispel the impression generated by the misleading message in the television broadcast in all or most cases”: 64 FCR at 340).  This was because, in part, even if corrected, the viewer was only present at the point of sale because of the misleading nature of the advertisement having been “enticed into the marketing web by the advertisement”.  His Honour placed reliance upon some useful remarks by Beaumont J in Tec & Thomas (Australia) Pty Ltd v Matsumiya Computers Co Pty Ltd (1984) 1 FCR 28 at 38 who observed that in such situations the misleading conduct may not induce the sale but “what is relevantly induced is the dealing or the negotiations”.

19                  The Commission’s objection is a relevance objection which perforce engages s 55(1) of the Evidence Act 1995.  Evidence will be relevant and hence admissible if it is “evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding”.  Here the proposed evidence, if accepted, would establish that Optus adequately informed consumers of the various limitations on the plans at the point of sale.  I have no doubt that the context in which the representations are made is relevant to the question of whether they are misleading and that events outside that context are not relevant.  The critical question in each case is where does context end and irrelevant post-conduct correction begin.  That question does not have a hard and fast answer.  Contrary to the submissions of the Commission I do not read any of the statements in Singtel Optus v Telstra, St Lukes Health Insurance v Medical Benefits Fund of Australia Ltd or Medical Benefits Fund of Australia Ltd v Cassidy  as saying anything about relevance as an admissibility issue under s 55.  Consistently with that view is the observation that it is plain that Tamberlin J did receive this very kind of material in Optus Communications which fits comfortably with the fact that he had earlier stated it to be part of the conceivably relevant universe of materials.  The later statements relied upon by the Commission are his Honour’s rejection, as a matter of fact, of the capacity of those materials to operate in the manner suggested by Optus, not a rejection of their relevance for the purposes of the law of evidence.  There may be cases – I do not think the present is one – where it is possible to erect a clear line dividing context from post-representation conduct and to rule inadmissible the latter.  However, such cases are likely to be rare.  In the present case, the Commission has not established at the level required by s 55 that the material relied upon by Optus could not “rationally affect…the assessment of the probability of the existence of” the fact that the conduct was or was not misleading.  The sales channel material may therefore remain in evidence and, as a matter of formality, I discharge its status as having been admitted provisionally.

Internet traffic information

20                  Evidence was elicited which showed that there were significant volumes of internet traffic across those pages of Optus’ website which contained statements which were said to reduce the capacity of the advertisements to mislead.  The Commission objected on the basis that the information did not reveal how long users were on the pages or what they looked at whilst they were there.  Those observations no doubt have some impact on the weight the information is to be given but I do not think it can be said it could have no rational effect on the outcome of the issue of whether the advertisements were misleading.  For example, if the traffic evidence was that no-one visited the pages with the disclaimers that would provide ready material from which the inference might be drawn that the disclaimers were not looked at.  It must, in those circumstances, surely be relevant to know that the pages were visited even if that does necessarily allow one to say the disclaimers were viewed.  Even that last objection retreats somewhat if one considers the implications of 100,000 people visiting a page with a disclaimer.  It is not difficult to see that that could provide material from which an inference could be drawn that some people viewed the disclaimer even if not everyone did.  The material should be received.

Market research evidence

21                  Optus commissioned market research evidence prior to the commencement of these proceedings which it sought to place into evidence to demonstrate two propositions.  The first was that most consumers feel that they spend a lot of time researching their purchasing decisions and that a significant majority of purchasing decisions take consumers a week or more to make.  The second was that when researching their purchases consumers have regard to a wide range of different sources of information and are highly unlikely to decide to acquire broadband internet services solely on the basis of television or print advertising.  In particular, the main means by which information is obtained by consumers is by means of on-line research, speaking to retail staff and telephone calls to service provider staff.

22                  Lurking beneath this evidence is the proposition, not expressly articulated in argument, that consumers do not rely upon advertisements and cannot, in those circumstances, be misled by them.  That proposition sits uncomfortably with the size of the advertising campaigns in question which is clearly substantial and inconsistent with an exercise conducted sheerly for the merriment of its designers.  In truth, as the passages cited above show it is a mistake to gauge the effect of advertising by what happens merely at the point of sale.  Advertising provokes a whole congeries of effects not the least of which is getting the consumer to think about making a purchase and promoting brand awareness.  It would be idle indeed to gauge the effectiveness of an advertising campaign that increased consumer visits to a shop (or a website) by 40% merely by reference to what happened at the point of sale because that 40% (whether they made a purchase or not) may well not have visited a competitor as a result of the impugned advertisement.  Even without sales this may well be a detriment to competitor and consumer alike.  So too, an advertising campaign may raise awareness of a brand without directly resulting at any particular time with a specifiable purchase but which over time may have the most profound and positive economic consequences for the firm involved and corresponding negative consequences for competitors.  In this case, consumers may not ultimately be misled at the moment they buy a Think Bigger Plan from Optus but they have been, if the Commission’s allegations be made good, misleadingly enticed to Optus and may have missed out on treating with some other competitor.

23                  However, at the level of relevance I do not accept the Commission’s objection.  One may be sceptical of the ability of such evidence ultimately to show that misleading conduct is not misleading because of what consumers do but I do not think one can foreclose at an evidentiary level the use of such material.  There may be cases where consumer behaviour or perception does dispel the otherwise misleading nature of a representation – for example, there may be some companies which are so notoriously dishonest that no-one believes anything they say.  Useful comparison may be made in such cases to the defence in defamation that a plaintiff had such a bad pre-existing reputation that no-one would have thought the worse of him after the defamatory publication: Chappell v Mirror Newspapers Ltd [1984] Aust Tort Reports 80-691.  So too, there may be some claims which are so obviously absurd or outrageous that no reasonable person would be expected to believe them.  This is not one of those cases, however.  For those reasons, the evidence will be admitted.

IV – Are the advertisements misleading

24                  As I have said the Commission makes three complaints: the advertisements fail sufficiently to inform consumers that their usage will be limited once their peak usage allowance is exceeded; they are not sufficiently informed that the speed will drop to 64kbps if the allowance is exceeded; and, they are not informed that 64kbps is not a broadband speed.  It is useful to deal with these in turn.

Sufficient disclosure that speed limited once peak usage allowance exceeded

25                  The question is ultimately a matter of impression.  My impression – using the flyer mentioned above – is that the advertisement would convey to ordinary reasonable consumers of broadband services the core message that they would be getting 150GB for $59.99 and that that quota would be divided into a peak usage allowance of 75GB and an off-peak usage allowance of 75GB.  That suggestion, in turn, would naturally incline the mind of such consumers to the proposition that there were two distinct usage allowances in play which together totalled 150GB.  The use of the expression “150GB” in very large and dominant font was likewise apt to suggest that what was involved was a total allowance rather than a theoretical maximum limit.  The effect was reinforced by the message “Think Bigger” in the coloured block which could distract the consumer’s mind from going down any avenue of ratiocination which might come to rest upon the notion that what was being obtained was smaller than 150GB.  That effect, in turn, was subtly assisted by the sheer size of the moose’s antlers.  I accept that a careful reading of the small print disclaimer at the bottom of the page, “Speed limited once peak data exceeded”, and some meditation upon the full import of that statement would lead sophisticated persons to deduce that the 150GB was not the total of two distinct usage allowances but in fact a theoretical maximum which could be obtained only by using the 75GB off-peak allowance in full before exhausting the 75GB peak allowance.  But that is not what an ordinary person reading it would have understood.  To the contrary, the reference to reaching “peak data” is much more likely to have been understood, even by people reading with some care, as being about the consequences for the peak usage and as not being concerned with off-peak usage.  Mr Finch SC, who appeared with Mr Darke and Ms Bampton for Optus, submitted that the consumer would not read the disclaimer that way because it would mean, on a moment’s reflection, that the off-peak allowance was not limited at all.  The density of the previous sentence and the sheer number of intellectual balls which need to be kept in the air to understand it strongly tell against its correctness.  Contrary to the submission, it would only be exceptionally gifted individuals who would grasp the full import of those words on first seeing them in the advertisement.  Viewed in isolation at the moment of its delivery this advertisement plainly misleads consumers into thinking that they will receive 150GB of broadband when they are getting no such thing unless they assiduously ensure that they exhaust all of their off-peak usage allowance before exhausting their peak usage allowance. 

26                  Nor, contrary to Optus’ submissions, is the misleading nature of the advertisement reduced by the statements Optus makes, or seeks to have made on its behalf, at the point of sale.  As I have explained above, when dealing with the objections to the evidence, it is an error to ask whether consumers who purchased the product were misled.  This is for practical reasons set out above – the capacity of the advertisement to induce people to begin dealing with Optus (rather than others) without necessarily closing the transaction – and also for the textual reason that s 52 simply does not contain any limitation about what it is that consumers must be misled into doing to contravene the prohibition.  Accepting in Optus’ favour that some kinds of statements were made to consumers through the sales process and website this does not undo, in this case, the plainly misleading and deceptive nature of the advertisement.  In that regard, I have found the evidence about the traffic across the website of little utility. For completeness, I reject also Optus’ contention, based on its survey evidence, that the time taken by consumers to make broadband purchasing decisions and their reliance upon on-line and other forms of research means that the advertisement should not be seen as being misleading.  This is largely for the reasons already given – it gives no weight to the initial inducement the advertisement provides to head down the path with Optus and puts at nil the negative consequences for consumers and competitors alike of that form of enticement.  Of course it is true that the purchase of a broadband plan is a substantial purchase rather than an impulse purchase although even that fact was kept in fairly small print at the bottom of the page.  But even so, this is not sufficient to overcome the very misleading nature of the principal message.

Insufficient reference to 64kbps

27                  It is necessary to observe that the relevant class of consumers is the class of members of the general public with a need or desire for broadband internet access.  The size of the plans involved range from 120GB to 170GB of broadband usage.  This is a large amount of internet access, of use only to persons who are doing a great deal of downloading or uploading of data.  Dr Ellershaw gave evidence for the Commission that the file size for a copy of the recent film “Clash of the Titans” was 1.52GB and it would follow that these plans would permit somewhere between 78 and 111 copies of that film to be download per month (i.e. between 2.6 and 3.7 copies per day).  This is not the usage of an internet ingÉnue.  I do not think that the class of heavy internet users who might purchase such plans would be under any illusion about the deleterious effects of exceeding a plan limit (although I think that most would be misled by the first matter of complaint by the Commissioner).  Almost as a matter of definition, to be buying plans of this size is to be seen as seeking to avoid those necessarily understood consequences. 

28                  However, the advertisements are not just targeted at the audience which knows what 170GB of superfast internet means.  By reason of the commercial’s friendly mien there will be those who are drawn to the plans simply by a desire to have the very largest internet plan available.  No doubt the “Think Bigger” campaign draws upon the very same well of consumer sentiment that underlies upsizing of servings in fast food restaurants and a general fascination with making everything larger or premium.  It is likely that some consumers who have no conceivable use for 170GB of superfast broadband will part with money to do so just so that they may have such an imposing data allowance.  These vulgarians are less likely to have a detailed knowledge of the intricacies of internet downloading than those who buy out of a sense of discrimination.  But be that as it may the point has surely been reached in 2010 that consumers must be taken to have a certain degree of background knowledge about basic internet usage.  The relevant class of consumer is the ordinary or reasonable consumer of broadband services: Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at [102]-[103], [105] per the Court.  In my opinion, that consumer understands that broadband plans have usage limits and that when those limits are exceeded there is likely to result considerable inconvenience.  In those circumstances, I do not regard purveyors of broadband service as being obliged to draw to consumers’ attention the full significance of that fact in the same way that I do not regard car vendors as being obliged to point out to consumers that a car will not work without petrol. 

29                  In this case the fact that the speed limitation is flagged in the body of the advertisement and footnoted to the fine print is a sufficient notification of it.  I do not consider that this is a case where the fine print may be seen as “seriously undermining the substance and integrity of the primary message” or where the fine print qualifies a message that is “portraying the highly exceptional as the norm” (Australian Competition and Consumer Commission v Boost Tel Pty Ltd [2010] FCA 701 at [80] per Siopis J).  The consumer knows that exceeding the usage limit will have speed consequences, the advertisement says as much and the correct information appears in the footnote.

Insufficient reference to the fact that 64kbps is not a broadband speed

30                  For the reasons I have just given I do not accept that the ordinary or reasonable consumer of broadband services would have any illusion about the tiresome consequences of exceeding the usage limits.  Nor do I accept that such a consumer would regard himself as still being entitled to receive broadband speed service after the usage limit was exceeded.  It is difficult to see what the limit would mean if it were otherwise. 

V – particular advertisements in particular media

The flyers

31                  The conclusions above concern the flyer for the 150GB Think Bigger Plan.  No different conclusion can be reached about the flyer for the 120GB Think Bigger Plan, which appears at annexure B to these reasons.  It is true it featured an ostrich rather than a moose with big antlers and that the words “Think Bigger” do not appear.  However, the size of the 120GB message is even larger than in the 150GB advertisement and the whole, taken as a matter of impression, conveys the same misleading suggestion.

The television commercials

32                  There were three television commercials: the 120GB ostrich commercial, the 120GB moose commercial and the 150GB moose commercial.  The two moose commercials are not materially different.  The advertisement opens with a moving cartoon image of a large moose with large antlers eating grass in front of lake in an Alpine setting.  A gentle and relaxing guitar tune strums in the background.  A voiceover then commences saying “Introducing the new bigger Optus broadband plan”.  The scene changes so that what then appears is a wooden sign on a stone plinth before the same lake.  The sign says is large letters which are lit up in electric neon yellow “$49.99=120GB”.  Underneath those incandescent words there appears in white letters, one fifth the size, the words “(50GB Peak + 70GB Off Peak)”.  Underneath those are the words “per month over 24 months when bundled with an eligible Optus home phone” followed in larger yellow letters by the words “Visit optus.com.au”.  The voiceover then says “Order exclusively on-line and pay just $49.99 a month for 120 gig of data with no delivery or set up fee”.  The scene momentarily then shifts back to the moose who is still chewing grass before flicking back to the sign.  This time the sign is further away and although it looks the same as it did before, the writing in white is now different.  It says “Speed limited if peak data exceeded” and under that “Min Cost = $1824.71” The voiceover then says “That’s a massive 120 gig for only $49.99 and no excess usage fees” before the advertisement flicks back to the moose (curiously in the 120GB moose version, the word “fees’ is omitted).  The voiceover then says “Optus broadband” at which time the scene cuts to the sky to see a sparrow in flight who twitters as it descends before finally alighting on the moose’s right antler.  As it does so the voiceover says “Think” and pauses.  During the pause the moose falls to its right apparently unbalanced by the weight of the sparrow.  At the same time the voiceover says “Bigger”.  The voice then gives contact details.

33                  There is no hope that a viewer watching this rustic tableau has any chance whatever of seeing the words “Speed limited if peak data exceeded”.  Only by the most astute watching of the advertisement and the frequent use of the pause button was I able to make them out at all.  Those words were not, it will be recalled, sufficient to render the written flyer other than misleading.  The situation with the moose television commercial is very much worse.  This advertisement is misleading, in my opinion, seriously so.  I will not describe the ostrich advertisement in any detail.  It suffices to say that it suffers from essentially the same two vices – the use of the expression “Speed limited if peak data exceeded” combined with its appearance on a sign which appears only after several similar looking signs and towards the end of the commercial. 

The Think Bigger print advertisement

34                  This advertisement was run in newspapers and featured the moose.  It is not materially different to the flyer featuring the moose.  The same conclusions apply.

The Think Bigger on-line advertisement

35                  The on-line version featured the moose and the same basic structure as the flyer.  On the first page the consumer comes to the words “Speed limited once peak data exceeded” which appear in font one eighth the size of the words “$49.99=120GB”.  Many pages into the site the same limitation was repeated in the fine print.  For the reasons I have already given this was not sufficient to dispel the impression that consumers would receive the entire entitlement of 120GB.

The billboard

36                  The billboard advertisement is not relevantly distinguishable from the flyer with the moose and the same conclusion applies to it.

The Supersonic broadband online advertisement

37                  The internet advertisements for the 120GB, 150GB and 170GB supersonic broadband packages raise slightly different issues.  All three are relevantly the same.  A user visiting the Optus website can select a tab headed “Broadband” which takes her through to a page on which, inter alia, a picture of a deer apparently breaking the speed barrier appears and with it the words “Supersonic Broadband” and “Up to 4 times faster”.  Interested persons are invited to click on a button marked “Find out more”.  When that button is clicked the user is taken to a new page on which appears a sophisticated animation.  The scene is a forest and darting through the forest so fast that it can barely be seen is the elusive figure of a supersonic deer.  After a few seconds the movie stops and a competition is suggested between standard broadband and supersonic broadband by the use of two sets of words which move quickly together to say “SUPERSONIC BROADBAND vs STANDARD BROADBAND”.  The scene clears and then a split screen appears with two deers racing against each other.  The deer representing the supersonic broadband gets faster and faster before finally taking flight passing through the sound barrier (with a concomitant shock wave) and disappearing from view.  The standard broadband deer keeps running for a while before stopping with a spent expression on its face. 

38                  Persons interested in acquiring the supersonic variety of broadband are then taken through to some further menu options.  There they will see the screen shot which is annexure C to these reasons.  The same point is repeated in relation to each of the plan signs.  Later in the website precise details of the plans’ operation are given in small print. 

39                  Again, the basic point is that the plans suggest that the consumer will receive 120GB (or whatever they have selected) in return for proffered payment.  This is qualified by the words “Premium speed for Australian hosted content speed limited to 64kbps if peak data exceeded”.  But the font of that disclaimer is about one quarter of the font in which “120GB” appears.  The reference to “50GB peak + 70GB off peak” gives rise to the impression that the purchaser will obtain those two quotas.  The disclaimer is inadequate to dispel that impression.  I have given consideration to the fact that the experience of an internet user is such that he is more likely to be paying attention to the screen than would the casual observer of a television commercial or newspaper advertisement.  However, I do not think this assists.  The disclaimer’s misleading nature emerges principally from its capacity to suggest that the limitation applies to peak usage only and not so much from its size.  Its inherently deceptive nature is unlikely to be expunged by repeated exposure to it.  Indeed, in some senses its vice is likely to be augmented by repeated viewings.  Nor do I accept that later repetition of the same point within the website could reverse the effect.

VI – relevant provisions

40                  The Commission placed its case on s 52 and is plainly entitled to succeed under that provision in relation to all of the advertisements on the basis of the failure adequately to disclose that once the peak data quota was reached no further use could be made of the off-peak allowance.  The case was also put on the basis of s 53(aa) which prohibits a corporation from falsely representing “that services are of a particular standard, quality, value or grade”.  I do not think this case is made out.  The difficulty with what Optus has done is not that it has misrepresented the standard, quality, value or grade of what it provides.  Rather, it is the more serious default in misrepresenting the quantity of what it was providing.  Customers were not being sold plans which gave them the nominated amount of broadband.  They were given plans which had that amount as the maximum usage which could be obtained and, even then, only by careful use.  What was involved was a digital cousin of the baker’s dozen.  It is to be noted that quantity is not a quality that objects possess: none of three apples has the quality of “threeness”.  The Commission also relied upon s 55A which prohibits conduct which is “liable to mislead the public as to the nature, characteristics, the suitability for their purpose or the quantity of any services”.  The term “liable to mislead” is narrower than “likely to mislead” in s 52 (Westpac Banking Corporation v Northern Metals Pty Ltd (1989) 14 IPR 499 at 502 per Northrop J.  Even so I am satisfied that it is met on the facts I have identified.  The plans in question did not have the quantity suggested for them.  They were not 120GB, 150GB or 170GB plans at all.

VII - relief

41                  The Commission sought injunctions to restrain all three types of conduct it identified.  Relief should be granted, however, only in relation Optus’ failure adequately to disclose that the speed for both peak and off-peak usage would be limited once the peak usage was reached.

42                  Optus submitted that the television commercials had ceased on 9 September 2010.  Further, as at 26 October 2010 (the day before the hearing) the disclaimer now read “Speed limited to 64kbps for peak and off peak once peak data exceeded”.  There was, therefore, no need to restrain it any further.  I do not agree.  Section 80(4)(a) of the Act expressly permits the Court to grant an injunction “whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct” of the kind in question.  The contravention here is a serious one and the public should be protected from any further repetition of it.  Optus placed before me no evidence as to why it had ceased the conduct or that it had done so having come to the view that it had infringed s 52 and thereafter desired to cease from doing so again.  That being so, I am far from convinced either that Optus’ recent cessation is anything other than opportunistic or that it signals some newly obtained underlying comprehension of the need to avoid such tricky behaviour in the future.  In those circumstances, injunctive relief is appropriate and justified by s 80(4)(a).

43                  The Commission also sought declaratory relief on the basis that it would show the Court’s disapprobation of the conduct in question and permit education of other telecommunications companies and the public as a means of vindicating and enforcing the Act.  It was also said that declarations might assist in persuading persons in the future not to engage in similar conduct.  Rares J was prepared to grant declarations (in addition to injunctions) in Australian Competition and Consumer Commission v Star Promotions Club Pty Ltd [2010] FCA 139 at [32]-[33].  In this case, I believe all of those purposes are adequately served by the granting of the injunctions I have indicated.  Declaratory relief might have been appropriate if I had not been otherwise minded to grant injunctive relief.  In circumstances where I am minded to grant that relief, however, little further utility is to be gained by granting a series of longwinded declarations.

VIII – Further conduct of the proceedings

44                  The parties are to bring in short minutes of order by Monday at 5 pm giving effect to these conclusions.  Optus should bear the costs of the hearing.  The matter is listed for directions at 9.30 am on Tuesday 2 November 2010 at which time I will resolve any debate between the parties about the form of the injunctions.  I would propose at the same time to list the matter for further hearing on the question of corrective advertising and pecuniary penalties.  I would anticipate fixing it for hearing towards the end of the next week.  The penalty hearing will be postponed to a later time unless Optus wishes to lead no evidence on it in which case it can be dealt with at the same time.

Associate:

Dated:         1 November 2010

Annexure A

Annexure B

Annexure C