TPG has defended its 2010 "unlimited" broadband advertising campaign against claims that it is misleading by not disclosing the full cost for the AU$29.99 per month service, by stating that consumers are aware of the separate AU$30 line-rental charge.
The Australian Competition and Consumer Commission (ACCC)against the ISP earlier this year over the advertisements that appeared on TV, on radio, in magazines, in newspapers, on billboards, and on public transport and stations.
The Federal Court initially found that all of the ads failed to adequately disclose the AU$30 per month line-rental charge on top of the AU$29.99 per month for unlimited broadband, and fined the company AU$2 million.
TPG appealed, and the Full Federal Court ruled in December 2012 that only the TV ads were misleading, because the other ads disclosed the bundling requirement and the setup charges, and stated that the ordinary consumer would have known the additional charges associated with bundles.
The ACCC appealed to the High Court, and on Friday, ACCC barrister Justin Gleeson argued that an ordinary consumer would not think that in the AU$29.99 advertisement for ADSL2+, they were also required to purchase another product for a further AU$30 per month just to use it.
"The consumer naturally knows, 'Well, there is that fine print down there. If I'm interested in this product, perhaps I'll read that or perhaps I'll pay attention to that in due course.' But what the consumer is not expected to think is, 'This person in fact is requiring me to take a second product from them for the same amount of money, doubling the price,' and if that is what the real deal is, the non-misleading way of advertising this is, 'It's AU$59.99 a month and I'm selling you ADS2+ and telephony,' and then people can say, 'If I don't want telephony', which the young people do not want, 'AU$59.99 is a lot of money to pay for internet'. People are then able to make that judgment," Gleeson said.
Gleeson said it was "almost Freudian" for TPG to ask in its advertising "why pay more?"
"Well, there is a simple answer [to] why pay more. The answer lies in the truth that they concealed: You are in fact paying AU$60, and you are paying AU$60 because you are getting another product whether you like it or not," he said.
Gleeson said that the advertising campaign had been very successful for TPG, generating revenue of AU$59 million and a profit of around AU$8 million, after spending AU$8.9 million on the campaign, and grew TPG's customer base from 9,000 to 110,000 in a year.
"It is a campaign of a massive scale over 13 months across every form of media in Australia, as was TPG's right. It was very obvious what the purpose of the campaign was; they are a player just below Telstra and Optus, they wanted, as they said, a call to action. They wanted to get customers away."
TPG barrister Norman O'Bryan said that line rental is the "inevitable consequence" of broadband services, "even if you were going so-called naked". He said it was reasonable in 2010 to assume the ordinary, reasonable consumer knows that bundling is common because the use of the telephone line is unavoidable.
"That is what ADSL is."
He said consumers understood that fixed-line rental is a completely different service to broadband ADSL.
"Once you have split the spectrum on that telephone line, there is, for practical purposes, nothing similar about the voice communications that are happening over the home telephone and all of the data communications that are happening through the high-frequency end of that spectrum," he said.
"[Consumers] know enough about the technology by 2010 to know that it requires a home telephone line to get it into the house at all. What they will seek to learn in the advertisements and what they will be told is whether the price that is being offered and the service that is being offered to them is or is not a bundled service; that is to say, am I required to take the service from TPG for my home telephone service or not, that is all."
O'Bryan pointed to advertisements out at the time from iiNet, Telstra BigPond, and SuperNerd, where the cost for the line rental was broken out from the advertised ADSL cost. O'Bryan said it pointed to consumer knowledge about line rental and bundling.
"They are all offering the highest-quality ADSL that was then available, and they are distinguishing that as a separate service, which, we would submit, it undoubtedly is as an offering," he said. "They are all saying something about bundling. Sometimes it is a home line. Sometimes, as in Telstra, you need a few things to be bundled with it to achieve that price point."
Chief Justice Robert French said that the High Court will reserve its decision.
The TPG case was one of the first to be recorded and uploaded online since the High Court recently decided to begin uploading the videos of hearings. A video of the hearing can be viewed here.