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Court dismisses Vodafone domestic roaming case

Vodafone's attempt to have the ACCC's draft decision-making process on wholesale mobile domestic roaming ruled to be flawed has been dismissed by the Australian Federal Court.

Written by Corinne Reichert, Contributor Dec. 20, 2017 at 2:44 p.m. PT

The Australian Federal Court has dismissed Vodafone Australia's case arguing that the Australian Competition and Consumer Commission (ACCC) draft decision-making process on wholesale mobile domestic roaming was flawed.

The judgment, handed down by Justice Griffiths on Thursday morning, noted that the parties are to come to an agreement on costs within 28 days.

"The central flaw in Vodafone's primary case is that it obscures the important fact that a public inquiry under Pt 25 of the Telecommunications Act is distinct from, albeit related to, the making of a declaration under s 152AL of the CC Act," Griffiths J said.

"Merely because it is essential that a declaration have a high and precise degree of specificity does not mean that the same specificity is required throughout the entire course of a Pt 25 public inquiry. Indeed, such a construction sits uncomfortably with the dynamic and iterative qualities of such an inquiry."

Griffiths J added that he accepted "the respondent's submissions that adoption of Vodafone's primary case could lead to irrational, impractical and unintended outcomes which suggest that its construction should not be accepted".

He additionally rejected Vodafone's alternative case that specificity should be provided by the time the ACCC invites public submissions.

ACCC Chair Rod Sims pointed out that the regulator's inquiry process is by nature "broad and flexible".

"It enables the ACCC to approach problems with an open mind and provides ample opportunity for all relevant viewpoints to be shared and given a considered hearing," Sims said.

"It is important that the ACCC is able to thoroughly consider issues and views during the public inquiry process, especially where the ACCC is deciding whether or not to regulate a service.

"The decision by the court in dismissing Vodafone's judicial review application validates the appropriateness of the ACCC's approach to conducting public inquiries of this nature."

While Vodafone said it respects the decision, it added that it is reviewing the judgment "in detail" and considering its options.

"Our initial reaction is one of concern about the potential implications for the clarity and robustness required of the ACCC when making important decisions which affect millions of Australians," Vodafone Australia chief strategy officer Dan Lloyd added.

"Our domestic roaming campaign and subsequent legal action have always been about the best interests of regional Australia.

"We will continue to put forward constructive suggestions and pursue regulatory solutions to boost coverage and competition in regional Australia."

Vodafone had launched judicial review proceedings in June against the ACCC, saying its inquiry process was "flawed" as it did not properly define eligible services, leaving the matter too "vague".

"We do not believe the process has been carried out properly, because a specific domestic roaming service has not been defined by the ACCC. The process is failing consumers because it is too vague," Vodafone said.

"The decision on domestic roaming is too important to regional Australia for the inquiry to continue in a flawed way."

During the hearing in September, Vodafone counsel Noel Hutley SC argued that the ACCC had "failed to conduct the inquiry lawfully", and that by publishing its draft decision and threatening to publish its final decision, it is failing to act in accordance with the law.

Vodafone's arguments hinged on the allegation that the ACCC did not follow the correct legal process set out under Part 25 of the Telecommunications Act and Section 152AL(3) of the Competition and Consumer Act by not properly describing the service it was proposing to declare, and therefore not allowing Vodafone to make a meaningful submission.

According to Vodafone, a service description for a domestic mobile roaming service should define the geographical and technological scope, including whether it is 3G, 4G, data, or voice only. Defining the service prior to conducting the inquiry is "fundamental to the process", Vodafone said.

"There must be the identification of a specified eligible service ... before [the inquiry] commences," Hutley argued.

The ACCC -- along with Telstra and Optus, which joined proceedings as the second respondent and an intervener, respectively, as they said they would be affected by the decision -- argued that the law says nothing about a definition needing to be set at the beginning of the inquiry process.

A definition "can be developed" during the inquiry instead, counsel for Telstra Alan Archibald QC said, adding that the regulator would be "depriving the public" of the benefits of a public inquiry if exact specifications were demanded at the beginning of the process.

"Vodafone fails to establish any foundation for its contention of unlawfulness," Archibald argued.

The QC also refuted Vodafone's claim of being denied natural justice, saying that while Vodafone could not directly address the ACCC's specification, because it wasn't provided until the draft declaration was made, it did address its own preferred meaning of eligible service "at length" and made "comprehensive submissions" on all aspects of the inquiry.

"They did not suffer from lack of a target," Archibald argued.

"They without impairment provided their version of the appropriate declaration."

Hutley called the argument that specificity can be developed during the inquiry "absurd", pointing out that the aim of the exercise is to allow all interested parties to address the matter fully.

"We're asking for interested parties to be given a chance to make submissions on that which is being declared," Hutley said. "You can't move that goalpost without in effect starting again."

Vodafone had been seeking the ACCC's draft decision to be either quashed by writ or treated as non-existent by court order. The court could also find that the regulator is not conducting a declaration inquiry, meaning the ACCC would have to start the process again.

Despite this, the ACCC in October published its final decision not to declare wholesale mobile domestic roaming.

"The ACCC's inquiry found that declaration would likely not lead to lower prices or better coverage or quality of services for regional Australians," ACCC Chair Rod Sims said when announcing the decision.

"Declaration could actually harm the interests of consumers by undermining the incentives of mobile operators to make investments to compete with each other in regional areas.

"While geographic coverage is important to many consumers, it is not the only factor people consider when choosing their provider. Many Australians actually prefer Telstra in areas where there is competing coverage due to the quality of the network."

The Domestic mobile roaming declaration inquiry: Final report [PDF] stated that a declaration of wholesale mobile domestic roaming, which would allow Vodafone to piggyback off Telstra's mobile infrastructure instead of building out its own, "would not promote competition in the retail mobile services market to a significant extent".

According to the ACCC, the "superior network coverage" of Telstra and Optus is as a result of the competitive nature of the market, and a declaration would reduce this competition. A declaration could also result in telcos moving away from uniform national pricing and charging more in regional areas, the ACCC said.

Despite this, the ACCC added that it had "identified a range of regulatory and policy measures that could improve inadequate mobile phone coverage and poor quality of service in regional Australia", and published a measures paper on this.

Sims added that the ACCC will commence a review into the Facilities Access Code for identifying barriers to collocation and deployment of infrastructure, and will improve the mobile networks information it collects under this code.

Telstra, Optus, and Vodafone have relentlessly debated the matter since the ACCC first announced its mobile domestic roaming inquiry in 2016, with the former two saying that a declaration would remove their incentive to build out mobile infrastructure in regional areas.

Updated at 5.12pm AEDT, December 21: Added comments about judgment from Vodafone; details of judgment; and comments from ACCC

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Court dismisses Vodafone domestic roaming case

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