Australian Competition and Consumer Commission v Singtel Optus Pty Limited [2011] FCA 87 (11 February 2011)

Last Updated: 14 February 2011

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Singtel Optus Pty Limited [2011] FCA 87

Citation:	Australian Competition and Consumer Commission v Singtel Optus Pty Limited [2011] FCA 87
Parties:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v SINGTEL OPTUS PTY LIMITED
File number:	VID 434 of 2010
Judge:	NORTH J
Date of judgment:	11 February 2011
Catchwords:	TRADE PRACTICES – misleading and deceptive conduct – advertising – remedies – whether granting of injunction appropriate where advertising campaign has ceased – whether the public interest required an early application for interlocutory relief
Legislation:	Trade Practices Act 1974 (Cth), s 52
Cases cited:	Australian Competition and Consumer Commission v Boost Tel Pty Ltd [2010] FCA 701 cited Australian Competition and Consumer Commission v Singtel Optus Pty Ltd [2010] FCA 1177 cited George Weston Foods Limited v Goodman Fielder Limited [2000] FCA 1632; [2000] 49 IPR 553 cited Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCA 289 cited

Date of hearing:	5 and 26 October 2010
Date of last submissions:	12 November 2010
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	65
Counsel for the Applicant:	Mr C Golvan SC with Ms F Forsyth
Solicitor for the Applicant:	Corrs Chambers Westgarth
Counsel for the Respondent:	Mr N O'Bryan SC with Mr J Moore
Solicitor for the Respondent:	Minter Ellison

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 434 of 2010

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant

AND:	SINGTEL OPTUS PTY LIMITED Respondent

JUDGE:	NORTH J
DATE OF ORDER:	11 FEBRUARY 2011
WHERE MADE:	MELBOURNE

THE COURT DECLARES THAT:

1. In the advertisements being annexures 1 – 4 to the reasons for judgment the respondent has engaged in misleading and deceptive conduct in breach of section 52 of the Trade Practices Act 1974 (Cth) by representing in connection with a plan comprising or including the offer of a broadband internet service that the offer includes “Unlimited Broadband” when the plan contains a limitation or restriction imposed by the respondent that the speed of the broadband internet service provided to consumers will be reduced to 256 kilobits per second after consumers reach a specified data allowance, without sufficiently and prominently stating:
   1. that such a reduction will be applied; and
   2. that some multimedia uses will be either unworkable or significantly impaired at the reduced speed – including, downloading video content will take between 30 to 70 times longer and video streaming and video calls will not be available or be substantially interrupted or not work at all.

AND THE COURT ORDERS THAT:

2. The application is otherwise dismissed.

3. Each party bear their own costs of the application.

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.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 434 of 2010

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant

AND:	SINGTEL OPTUS PTY LIMITED Respondent

JUDGE:	NORTH J
DATE:	11 FEBRUARY 2011
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

INTRODUCTION

1. The applicant, Australian Competition and Consumer Commission (ACCC), applies to the Court for declarations and injunctions against the respondent, Singtel Optus Pty Limited, in respect of alleged contraventions of s 52 of the Trade Practices Act 1974 (Cth) arising from four advertisements for the provision of broadband services. The advertisements each describe the service as “unlimited”. The applicant contends that it is misleading and deceptive, and hence in contravention of s 52 of the Act, to describe the service as unlimited where, after a stipulated usage the speed of the service is reduced or dethrottled to 256 kilobits per second (kbps).

THE ADVERTISEMENTS

2. There are four advertisements in issue. The first two advertisements were part of one advertising campaign. The second two advertisements were part of another advertising campaign.

The first advertisement

3. The first advertisement was a print advertisement. It was a double sided colour insert placed in the Herald Sun newspaper in Melbourne on 13 April 2010. The advertising in this form ended on 24 April 2010 and is not continuing.
4. A copy of the first advertisement is annexure 1 to these reasons for judgment. There is a repeated reference in the advertisement to “unlimited broadband”. Those words appear at the top of the front page in large blue letters on a yellow background. Then, about half way down the front page are a series of four blue circles in descending size order also on a yellow background across the page. The first and largest balloon on the left hand side has the words “unlimited broadband” printed within it in letters larger than in the other three circles. On the reverse side of the advertisement the words “unlimited broadband” appear about one third of the way down the page in black print of medium size on a yellow background. Then, starting about halfway down the page is a list of the features of the service offered. The first feature described is “unlimited broadband”. The words are in blue on a yellow background and the word “unlimited” is in bold print.
5. Against each of the above four references to “unlimited broadband” is a symbol. The symbol is explained on the reverse side of the advertisement in smaller black print on a white background with the words “Unthrottled up to 30GB per month, then speed limited to 256kbps”. The last line on the reverse side of the advertisement states in very small print “For full terms and conditions visit www.optus.com.au/fusion”.

The second advertisement

6. The second advertisement was a television advertisement screened in Melbourne, Sydney, Brisbane, Adelaide and Perth in April, May, June, and July 2010. There are three references to “unlimited broadband” on the soundtrack. A transcript of the soundtrack is annexure 2 to these reasons for judgment. Each audio reference to “unlimited broadband” is accompanied by vision showing the words “unlimited broadband” filling most of the screen in large blue letters on a yellow background. That vision also appears during the soundtrack at lines 5 and 6 of the transcript. Then, during a few seconds of the soundtrack at line 3 of the transcript there appears on the screen the words “speed limited to 256kbps after 30GB”. This is in small printing of black letters predominately on a yellow background. The vision is similar in get up to the printed first advertisement.
7. The whole of this advertisement is short and the pace very fast. The soundtrack is spoken rapidly. The overwhelming message is in the unlimited nature of the offer. The dethrottling condition is presented in such small printing and for such a short time with no soundtrack to the same effect that the dethrottling condition is not noticeable on an ordinary viewing.

The third advertisement

8. This was also a print advertisement and formed part of the second advertising campaign. Again, it was a double sided insert for distribution in newspapers. It was used in Melbourne, Sydney, Brisbane, Perth and Adelaide in April, May, June, and July 2010. A copy of the third advertisement is annexure 3 to these reasons for judgment.
9. Again, there is repeated reference to “unlimited broadband” in the advertisement. On the front page the word unlimited is at the top of the page in large print. The printing is blue on a white background enclosed in a box bounded by yellow lines. It is the focus of the front page. Immediately beneath the word “unlimited” in large print is the word “broadband” in smaller print. Then across the middle of the page is a procession of elephants and zebra joined tail to trunk or nose. Beneath this procession are the words “connect without limits”.
10. On the reverse side of the advertisement, on the left hand side, is a heading in medium sized print in blue on a white background stating “Now you can connect without limits”. The first of the four dot points under this heading states in medium size black printing on a white background “Unlimited broadband with no excess charges”. On the right hand side of the top half of the reverse side of the advertisement is a smaller version of the top of the front page just described with the words “unlimited” in large letters followed by the word “broadband”. Across the middle of the page is a continuation of the procession of jungle animals connected to each other. Then, in the yellow colour area denoting the grassland over which the animals are walking, and on the right hand side of the page, in smallish black letters are the words which refer to the symbol found on each of the references to “unlimited broadband” as follows “15GB Super-fast then broadband speed of 256kbps”.
11. And again, the last line on the reverse side in very small print directs readers to the website of the respondent for the full terms and conditions of the offer.

The fourth advertisement

12. This was a television advertisement. The soundtrack transcript is set out in annexure 4 to these reasons for judgment. The soundtrack is spoken by a woman perhaps in her mid 40’s with a young family. The setting is in her home with the children working away on computers. There is an urgency in her speech. There is repetition and an insistent tone about the unlimited nature of the offer. Unlimited is the dominant theme and message of the advertisement.
13. At a number of points in the advertisement, the yellow box with blue writing seen in the other advertisements appears on the screen. It occupies the left half of the screen as the woman is pictured speaking the soundtrack on the right hand side of the screen. At line 16 of the transcript the yellow box appears containing the words “download larger files”, at line 18 of the transcript the yellow box appears with the words “no excess browsing charges”. Then, at line 19 of the transcript the yellow box appears with the words “unlimited broadband” and at line 29 of the transcript the same words appear with a large tick beside them.
14. Whilst the soundtrack proceeds from line 11 to line 18 the words “15GB Super-fast then broadband speed of 256kbps” appear on the screen. They are so small as to be almost unreadable. Further, the text is lightly coloured on a generally light background and is thus indistinct.

THE FUNCTIONALITY OF A 256KBPS BROADBAND SERVICE

15. Both of the advertising campaigns in question involved the reduction or dethrottling of the speed of download to 256kbps after a certain volume of data was downloaded in each month (30GB in relation to the first advertising campaign, and 15GB in relation to the second advertising campaign).
16. The speed of download of data in a broadband service is measured by the number of pieces of information called bits which are transmitted each second. A speed of one kilobit per second is achieved when 1000 bits are transmitted each second. A speed of one megabit per second is achieved when 1,000,000 bits are transmitted each second.
17. On its website, to which reference is made in the first and third advertisements, the respondent explains that its broadband service operates at a maximum speed of 20 megabits per second. Further, 50 percent of its customers on the direct broadband network receive speeds of 8 to 20 megabits per second. Actual speeds might vary and might be slower. Many factors affect speed such as the distance of the customer from the telephone exchange, the condition of the customer’s phone line, the hardware and software used by the customer, the source of the download, and the general level of internet traffic.
18. Part of the applicant’s case was that the reduction in functionality from “super-fast” to 256kbps made it misleading and deceptive to describe the broadband plan offered as “unlimited”.
19. Expert evidence was relied upon by both parties to establish the functionality of a broadband service operating at 256kbps. Dr John Ellershaw swore an affidavit filed on behalf of the applicant and Alan Hinds swore an affidavit filed on behalf of the respondent. In the result there was no significant disagreement between the experts on the relevant issues and neither was cross examined. Both were well qualified to give the evidence and their qualifications were not questioned.
20. Dr Ellershaw is an independent consultant who between 1987 and 2000 worked in senior positions in Telstra Limited. In the last five years he has been the Executive Director of the Centre for Ultra Broadband Information Services at the University of Melbourne. The Centre is a telecommunications research group working in the area of telecommunication networks and broadband issues.
21. Dr Ellershaw was asked by the solicitors for the applicant to address a range of popular internet usages in his report, namely, the use of You Tube, Facebook, video calling using Skype, television and music downloads, and ABC iView.
22. In relation to You Tube, he said that videos would replay as intended in an uninterrupted fashion at a download speed of 8mbps or above. At 256kbps a You Tube video would experience interruptions, stopping and starting regularly (except possibly at the lowest screen resolution) resulting in a lower quality viewing experience.
23. As to Facebook, Dr Ellershaw said that it performs as designed at 8mbps and above. At 256kbps, text exchanges in Facebook work as designed but standard sized photos take a few seconds to download instead of downloading in a fraction of a second.
24. In relation to video calling using Skype, Dr Ellershaw said that it would operate as intended in an uninterrupted fashion at a download speed of 8mbps or above. At a maximum speed of 256kbps Skype video calls might suffer jumpy motion with possible interruption to the sound. High quality Skype video calls might not work at all.
25. Dr Ellershaw said that an average length movie of 1.64GB would download in 27 minutes where the service operated at 8mbps, in 11 minutes where the service operated at 20mbps, and in 14 hours where the service operated at 256kbps. Further, high quality movies might take three times as long to download. A 50 minute recorded television show would take about 4 minutes to download at 8mbps and 100 seconds at 20mbps. At 256kbps a 50 minute television show would take over 2 hours to download.
26. In relation to music download, Dr Ellershaw said that individual songs would download in under a second at a speed of 8mbps or above. At 256kbps individual songs would take 20 or more seconds to download.
27. In relation to ABC iView, Dr Ellershaw said that recorded television shows would replay as intended in an uninterrupted fashion at a download speed of 8mbps or above. ABC iView would not work at 256kbps. Replays would pause regularly for significant periods resulting in a low quality viewing experience.
28. The respondent relied on the affidavit of Mr Hinds. Mr Hinds has been employed by the respondent since 1993 in a variety of technology and technical roles in the internet and data service areas. He has been Manager, IP and Data Services, Architecture Team for five years.
29. Mr Hinds produced a table of possible activities which can be undertaken on the internet. He then assessed the functionality of each of those activities when the broadband service was operating at 256kbps. The first category comprised uses where that speed would have little, if any discernible effect. In the second category were uses where that speed would allow use but at a “noticeably slower” speed. In the third category were uses where that speed would for all practical purposes not provide sufficient functionality to allow the relevant use, or only allow that use with a prolonged wait.
30. The first category contained 23 uses including such things as paying bills online, viewing online bank statements, checking bank account balances, purchasing groceries online, or using online dating services.
31. The second category contained 43 uses including accessing email, general browsing, conducting banking transactions online, accessing weather or maps, accessing real estate information, searching for jobs online, and accessing new or used car information.
32. The final category contained 10 uses including, downloading large software applications, playing complex games online, accessing streamed video news, making telephone calls via the internet such as by using Skype, accessing streamed video on You Tube, accessing streamed video sport, downloading television programs, downloading feature length movies, using streamed television such as ABC iView, and uploading video.
33. Not much significance should be placed on the raw numbers of uses which Mr Hinds allocates to categories one and two. There appears some inconsistency in Mr Hinds’ categories, with the inclusion of uses in the first and second categories which could properly be described as general browsing, a use already included in the second category. Then online banking transactions are within the second category, even though some online banking activities, such as checking bank account balances and paying bills online are separately included in the first category. Further, there seems to be some duplication within the categories. For instance, online banking activities are split into separate activities namely, checking bank account balances, paying bills online and viewing online bank statements. Even allowing for the limitations in Mr Hinds’ evidence, it provides a wider context for the consideration of the functionality of a broadband service offered at 256kbps by showing that there are functions which will operate satisfactorily at that speed, and functions which will be usable but noticeably slower.
34. Importantly however, both Dr Ellershaw and Mr Hinds agree that a service provided at the speed of 256kbps is practically unusable for downloading feature length movies, downloading television programs, streaming video such as You Tube, streaming television such as ABC iView and making video telephone calls using internet services such as Skype. In addition, Mr Hinds says that a broadband service at that speed is practically unusable for downloading large software applications and for playing complex games.
35. In accordance with this evidence I find that a broadband service supplied at the speed of 256kbps is practically unusable for downloading feature length movies, downloading television programs, streaming video such as You Tube, streaming television such as ABC iView and making video telephone calls using services such as Skype. In addition, I accept Mr Hinds’ evidence that a broadband service at that speed is practically unusable for downloading large software applications and for playing complex games.
36. There was no research tendered in evidence which showed the extent of the usage of these functions by customers who purchased broadband services from the respondent. However, Dr Ellershaw’s report accepts that these are popular uses, and Mr Hinds took no issue with that description. Additionally, the fourth advertisement expressly refers to using the broadband service to keep in touch, to download larger files, and to download movies. From this I infer that these uses are popular uses. Further, general knowledge of the community confirms that these uses are widely adopted ways of using a broadband service.

THE APPLICANT’S CONTENTIONS

37. The applicant contended that it is misleading to describe as unlimited a broadband service which is dethrottled to 256kbps after the user reaches a designated data allowance. This is because unlimited means without restriction. Dethrottling to 256kbps is a restriction on the broadband service because the reduction in speed significantly affects the functionality of the service. The service is not practically usable for some popular activities such as downloading full length movies or making video calls on Skype. At the commencement of the hearing the applicant sought the following form of injunction:

An injunction restraining Optus, whether by itself, its directors, servants or agents or otherwise, in trade or commerce, for a period of three years from the date of the order of the Court, from making or publishing or causing to be made or published in connection with the advertising of a broadband ... plan any statement to the effect that the broadband ... plan offers unlimited broadband internet services when in respect of those broadband internet services there are limitations or restrictions on the download speed of the broadband internet services imposed by Optus.

38. In the course of the hearing the applicant applied to amend the form of injunction claimed in the application to read:

An injunction restraining Optus, whether by itself, its directors, servants or agents or otherwise, in trade or commerce, for a period of three years from the date of the order of the Court, from representing in connection with any plan comprising or including the offer of a broadband internet service that the offer includes “Unlimited broadband” when the plan contains a limitation or restriction imposed by Optus that the speed of the broadband internet service provided to consumers will be reduced to 256 kilobits per second after consumers reach a specified data allowance, such reduction being a significant constraint on the broadband service being offered.

The respondent opposed the application to amend the form of injunction being sought by the applicant.

39. The applicant further argued that the misleading effect of the advertisements was not corrected by the disclaimers which indicated that the speed of the service was dethrottled after a specific data allowance had been reached. Three reasons where given. First, the disclaimers were hidden or disguised in the advertisements. Second, the dominance of the message that the service was unlimited overwhelmed the disclaimer and caused the reader or viewer to accept that the speed of the service was unlimited. Third, even if the reasonable reader or viewer appreciated that the speed of the service was to be reduced, that person would not understand from the advertisements that the reduction in speed would render certain popular functions practically unusable.
40. At a more general level the applicant argued that it is not possible to correct the misleading effect of the use of the word unlimited where the broadband service is dethrottled to 256kbps because any qualification relating to speed is irreconcilable with the description “unlimited”. There is a fundamental contradiction between the dominant theme and the qualification. There is a logical inconsistency between the description of the service as unlimited and the fact that it is subject to limitations. The applicant relied on Australian Competition and Consumer Commission v Boost Tel Pty Ltd [2010] FCA 701 at [80] in which Siopis J held that a disclaimer was “seriously undermining the substance and integrity of the primary message”, with the disparity between the headline message and the fine print “too great for it to be adequately reflected by the style of presentation” of the advertisement.
41. In the course of argument the Court invited the parties to propose a form of injunction which would be appropriate if the Court came to the view that the description “unlimited” could be used if accompanied by a suitable qualification which advised the consumer not only of the reduction in speed, but of the effect on the functionality of such a reduction. The applicant responded to the invitation with the following proposed form of injunction:

An injunction restraining Optus, whether by itself, its directors, servants or agents or otherwise, in trade or commerce, for a period of 3 years from the date of the order of the Court, from representing in connection with any plan comprising or including the offer of a broadband internet service that the offer includes “Unlimited Broadband” when the plan contains a limitation or restriction imposed by Optus that the speed of the broadband internet service provided to consumers will be reduced to 256 kilobits per second after consumers reach a specified data allowance, without sufficiently and prominently stating:
(a) that such a reduction will be applied; and
(b) that some multimedia uses will be either unworkable or significantly impaired at the reduced speed – including, downloading video content will take between 30 to 70 times longer and video streaming and video calls will not be available or be substantially interrupted or not work at all.

42. The applicant emphasised that this formulation is a fall back position. It maintained its primary position that no qualification could correct the misleading effect of describing as unlimited a broadband service which is dethrottled to 256kbps after a specified data allowance is reached.

THE RESPONDENT’S CONTENTIONS

43. The respondent contended that the use of unlimited to describe a broadband service which was dethrottled to 256kbps after a specified data allowance is reached is not misleading or deceptive because the ordinary consumer of broadband services would regard unlimited as referable to the volume of download not to the speed of the download. All speeds are limited by the laws of nature. There is no such thing as an unlimited speed and this would be generally understood by the ordinary reasonable reader or viewer of the advertisements.
44. Further, the respondent argued that the ordinary reasonable consumer of broadband services would know that broadband services offered as unlimited often included a dethrottling after a certain download limit was reached. The respondent produced evidence of some advertisements for such services offered by its competitors to demonstrate that it was not unusual in the marketplace for broadband plans with such a feature to be advertised as unlimited.
45. The respondent relied on a recent judgment of Perram J in Australian Competition and Consumer Commission v Singtel Optus Pty Ltd [2010] FCA 1177 (ACCC v Singtel Optus) between the same parties over another broadband advertisement. The plans in question ranged from 120 – 170GB in which the speed was dethrottled to 64kbps after certain download limits were reached. His Honour held that the advertisements involved sufficiently disclosed that the speed was reduced. He said at [28] and [29]:
    28. 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 consumer understands that broadband plans have usage limits and that when those limits are exceeded it is likely to result in considerable inconvenience ...
        
    29. 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.
        
46. Then the respondent contended that if such a reader or viewer took the reference to unlimited to refer to the speed of the broadband service, then any misleading effect could be countered by a qualification which explained that the speed was reduced when a certain data allowance is reached. The respondent relied on George Weston Foods Limited v Goodman Fielder Limited [2000] FCA 1632; [2000] 49 IPR 553 as an example of a qualification operating to neutralise an otherwise misleading advertisement.
47. The respondent submitted that the vice in the present case was not the use of the description “unlimited” as the applicant contends. That description was qualified by the reference to the fact that the speed of the service was reduced after a specified data allowance was reached.
48. The respondent, however, accepted that the qualification, namely the reduction in speed, was not sufficiently prominently stated in the advertisements. If the advertisements were misleading, this was the factor which rendered the advertisements misleading. A form of injunction which would prevent conduct which was misleading in that way would be:

An injunction restraining Optus, whether by itself, its directors, servants or agents or otherwise, in trade or commerce, for a period of three years from the date of the order of the Court, from representing in connection with any plan comprising or including the offer of a broadband internet service that the offer includes “Unlimited broadband” when the plan contains a limitation or restriction imposed by Optus that the speed of the broadband internet service provided to consumers will be reduced to 256 kilobits per second after consumers reach a specified data allowance, without sufficiently prominently stating that such a reduction will be applied.

49. The respondent criticised the form of the injunction initially sought by the applicant, and also the form of the injunction sought by the applicant in the application for amendment. It contended that the former should not be granted because it would restrain the respondent from advertising a broadband service as unlimited even where the speed restriction was minimal. In that form of injunction there was no reference to the reduction in speed to 256kbps. The respondent also contended that the form of the proposed amended injunction was objectionable because the function of the added words “such reduction being a significant restraint on the broadband service being offered” is obscure and impossible to understand. Consequently, it would be impossible for the respondent to know if it had complied with the injunction. In such circumstances, it was submitted, the Court would not grant an injunction in that form.
50. In response to the Court’s invitation to supply a formulation for an injunction which would address both the reduction in speed of the broadband service provided and the effects of the reduction in speed, the respondent proposed the following:

An injunction restraining Optus, whether by itself, its directors, servants or agents or otherwise, in trade or commerce, for a period of three years from the date of the order of the Court, from representing in connection with any plan comprising or including the offer of a broadband internet service that the offer includes “Unlimited broadband” when the plan contains a limitation or restriction imposed by Optus that the speed of the broadband internet service provided to consumers will be reduced to 256 kilobits per second after consumers reach a specified data allowance, without sufficiently prominently stating that such a reduction will be applied and that some multimedia uses may not be possible at the reduced speed.

51. As did the applicant, the respondent maintained its primary and alternative arguments and responded with this formulation only because the Court sought its assistance.

CONSIDERATION

52. The common theme in each of the four advertisements is that the broadband service offered is unlimited. Both in the print and television advertisements the unlimited nature of the service is the dominating theme. That theme is repeated and emphasised throughout. Whilst the fourth advertisement is probably the most forceful because of the insistent tone and rapid pace of the speaker and the comparative length of the advertisement, the print advertisements in annexures one and three are not far behind. They depend on the visual impression made on a reader who probably flips through the newspaper with a passing brief glance at the insert. In those print advertisements the message is conveyed by the size of the print, the prominence of the print as a result of the use of colour, and the repetition of the theme of an unlimited service.
53. In the context of these advertisements the ordinary reasonable consumer of broadband services would have no reason to read unlimited as referable only to the volume able to be accessed by the consumer. The message of the advertisements appears to encompass all attributes of the service. There is no obvious distinction made between the volume of the downloads permitted and the speed of the service. Both appear to be offered as unlimited. The advertisements suggest this because the symbol against the phrase “unlimited broadband” takes the reader to the qualification which relates to speed. Thus the respondent’s contention that the description unlimited would be taken to be a reference only to the volume of data which can be downloaded and not also a reference to the speed of download should not be accepted.
54. The evidence does not establish that, in the current marketplace for broadband services, the ordinary reasonable reader or viewer would expect that a broadband service offered as unlimited would be reduced in speed after a certain volume of data is downloaded. The evidence relied on by the respondent was of a number of random advertisements without any evidence of their coverage or significance in the overall market for broadband services. And the judgment of Perram J in ACCC v Singtel Optus does not assist the respondent. It may be accepted, as his Honour thought, that the ordinary reasonable consumer of broadband services would expect that broadband services often involve reduction in speed after a certain usage with inconvenient consequences. But if those consumers are told by the advertisements emphatically that the service provided is unlimited they are likely to be misled into thinking that the usual expectation does not apply in the particular case. Perram J was not dealing with the effect of describing the service offered as unlimited.
55. It is at this point that one of the critical disagreements between the parties arises. The applicant argues that there is an inherent contradiction between a service described as unlimited and a service dethrottled to 256kbps. The respondent argues that a service which is dethrottled to 256kbps can be described as unlimited as long as the speed reduction is sufficiently prominently stated. The ongoing controversy is that the respondent wishes to continue to use the description unlimited to describe such a service and the applicant says that it is always misleading to do so.
56. The word unlimited applied to a broadband service may be understood by an ordinary reasonable consumer to mean that there is no limit on the volume of data that may be accessed, or it may be understood to mean that the speed of the service is not reduced during a specified period. Whether an advertisement is misleading depends on the context and features of the advertisement including the colouring, the size of the lettering, the speed of speech on the soundtrack and such like.
57. It is possible for the context and features of the advertisement to make clear that a broadband service described as unlimited offers an unlimited download of data but does not apply the unlimited description to the speed of download of data. Where the service is dethrottled to 256kbps after a specified data allowance is reached, the advertisement is not misleading if it states both the fact of the reduction in speed and also the effect of the reduction on the functionality of the service in sufficiently precise terms. The first qualification is necessary to avoid the advertisement conveying the impression that the description unlimited relates both to the volume of the download and the speed of the service, and the second qualification is necessary because at 256kbps some of the popular uses of a broadband service are not functional or, in other words, are limited in a particular respect.
58. If such qualifications are provided there is no logical inconsistency between the description unlimited and the restriction on speed. The qualification makes clear that the speed is restricted at a specified point and hence is not unlimited. The advertisement in that way separates the features of volume and speed of download of data, and applies the description unlimited only to the former.
59. It is too far reaching to say, as the applicant contends, that the use of unlimited to describe a broadband service which is dethrottled to 256kbps is necessarily misleading. The respondent is correct in the general proposition that it is possible for the word unlimited to be used with an appropriate qualification “effective to neutralise an otherwise misleading or deceptive advertisement”: Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCA 289 at [37]. It follows that the primary submission made by the applicant should not be accepted. It also follows that the respondent’s alternative submission that the misleading effect of the description unlimited can be neutralised by an appropriate qualification should be accepted.
60. The qualification proposed by the applicant and set out in [41] of these reasons for judgment at the invitation of the Court provides the necessary particularity of the effect of the speed restriction. It should therefore be preferred if relief is to be granted. The form of injunction suggested by the respondent and set out in [48] of these reasons is not adequate to neutralise the effect of describing the broadband service as unlimited because it does not describe the limitation on the functionality of the service.

RELIEF

61. The reason the four advertisements are misleading is that they describe the broadband service as unlimited without qualifying that description by stating both that the speed of the service is dethrottled to 256kbps after a specified data allowance is reached and by stating the particular effects of that speed reduction on the functionality of the service. A declaration should be made which describes the way in which the advertisements contravene s 52 of the Act. This will inform the respondent and other suppliers of broadband services of some of the limits which must be observed in promoting broadband services. It will assist the applicant in fulfilling its statutory regulatory function.
62. The advertising campaigns are long over. There is little point in granting the injunction sought, even though the Court has power to grant an injunction in these circumstances: s 80(4)(a) of the Act. The respondent does not intend to use these advertisements again. The only form of injunction which would be appropriate is that formulated by the applicant at the invitation of the Court and set out in [41] of these reasons for judgment. It was produced as a fall back position rather than as the applicant’s preferred form of relief. The form of the injunction is directed to the circumstances of the present advertisements. As the context of each advertising campaign is important in determining whether an advertisement is misleading it is more appropriate to await concrete circumstances than to grant an injunction unlikely to address the full context of any future advertisements.
63. As neither party succeeded on its primary argument there should be no order for costs.

A POINT OF PROCEDURE

64. The circumstances in which the applicant brings proceedings in the public interest are often not, or not fully, known to the Court. Hence the Court is generally restrained in commenting on the way in which the applicant prosecutes applications. Nonetheless, some observations should be made in this case.
65. The advertisements were misleading. In the end, the respondent did not put up much resistance to that conclusion. The real argument revolved around the factors which rendered them misleading and, consequently, what relief was appropriate in view of the proper analysis of the nature of the contravention. It took the suggestion of the Court to prompt the applicant to make an application for interlocutory relief. The application resulted in agreed orders in relation to most of the issues raised which went beyond the four advertisements ultimately in contention. By that time the advertising campaigns were over, any harm done to consumers had already occurred. The proceeding was used by the applicant, unsuccessfully as it turned out, to seek to vindicate its view against the general use of the word unlimited in advertising certain broadband services. Whilst it is proper for the applicant to secure elucidation of the law from the Court, it should not be at the expense of assisting individual consumers who might be harmed by ongoing misleading advertising. It may have been a greater public benefit if the applicant had brought an urgent interlocutory application whilst the advertising campaigns were still underway. One need only look at the large number of reported judgments of the Court to see that misleading advertising in the telecommunications industry is an all too common phenomenon. A corporation which engages in such conduct has little to fear if the applicant initiates proceedings only after advertising campaigns are completed. But if a carefully designed and expensive advertising campaign had to be aborted during its currency as a result of an interlocutory injunctions granted by the Court, more care might be taken to ensure compliance with the provisions of the Act, and the consequent protection of the public would be achieved.
    

I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.

Associate:

Dated: 11 February 2011

Annexure 1

Annexure 2

Transcript of First Optus Unlimited Broadband and Unlimited Calls TV Advertisement

1. For a limited time only, Optus has reduced their $129 unlimited home phone and
   
2. broadband plan to only $99 per month for the first six months.
   
3. You get unlimited broadband
   
4. And unlimited standard calls within Australia
   
5. All for only $99 a month for the first six months for new Optus customers. But be
   
6. quick, this incredible offer ends April 24.
   
7. To get unlimited broadband and unlimited standard calls within Australia, call
   
8. 1800 505 005.
   

Annexure 3

Annexure 4

Transcript of Second Optus Unlimited Broadband and Unlimited Calls TV Advertisement

1 Life’s so busy. Wouldn’t it be great to have one less thing to think about.

2 Take your broadband for instance.

3 Say you were able to use it as much as you liked at no extra cost.

4 There’s nothing worse than constantly worrying about going over on your

5. broadband limit and huge excess charges on your bill.
   
6. Well guess what?
   
7. Optus listened and have just introduced unlimited.
   
8. Yeah its unlimited.
   
9. Take down this number right now, 1800 300 707.
   
10. You do not want to miss this.
    
11. You can go online and use it when you want, for as long as you want.
    
12. Researching your holidays.
    
13. Keeping in touch.
    
14. Kid’s homework.
    
15. Downloading news, music.
    
16. Even larger files like movies.
    
17. Simply use it as much as you like.
    
18. No excess charges.
19. It really is unlimited.
    
20. It’s also unlimited in that it’s accessible around the home too.
    
21. Because you get a wifi modem like this and then all the family can use it
    
22. wirelessly all at the same time.
    
23. On their PCs, laptops, even smart phones.
    
24. Even better, you get unlimited standard local notional and calls to Optus mobiles
    
25. from your home phone too.
    
26. Chat away for as long as you like.
    
27. Make a note of this number.
    
28. Call Optus and find out more.
    
29. So, with unlimited broadband usage, unlimited standard national and local phone
    
30. calls, the wifi modem, you’re probably thinking this’d be really expensive.
    
31. 180, 190 dollars?
    
32. No.
    
33. Not with this new fusion plan from Optus.
    
34. It’s only 99 dollars a month over 24 months.
    
35. Now that really is something.
    
36. Call 1800 300 707 before this great offer ends and ask about the fusion 99 dollar
    
37. plan.
    
38. That number again 1800 300 707.