Court finds Optus misled consumers on network coverage

If you heard the following sentence in an advertisement, what would you think it means?

“When it comes to the percentage of Australians the Optus mobile network reaches, there isn’t much difference between us and Telstra. In fact, it’s less than 1%.”

What about if, as the voiceover was playing, the advertisement moved through images that showed a map of Australia, shown below?

(Images sourced from the judgment in this matter in Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35 at [10])

The meaning of this advertisement was precisely the question recently considered by the Supreme Court of Victoria in Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35. In that case, Telstra claimed that Optus’ advertisement was misleading and deceptive under the Australian Consumer Law, on the basis that it misrepresented the geographical coverage of Optus’ mobile network and the comparative coverage of the two networks. According to Optus, the advertisement was directed

towards the population coverage of the two networks, not

their geographical coverage.

The Supreme Court of Victoria agreed with Telstra and found that Optus’ advertising campaign misled consumers on the extent of its network coverage. KWM acted for Telstra in this proceeding.

Background

From 29 January 2014 Optus broadcast and published the advertisement which, in part, concerned the coverage of Telstra’s mobile network and Optus’ mobile network. The advertisement was broadcast on Optus’ website and free-to-air television and consisted of a voiceover combined with visual content, including the voiceover and images shown above.

Telstra commenced proceedings on 7 February 2014 alleging that Optus’ advertisement contravened sections 18(1), 29(1)(b) and 29(1)(g) of the Australian Consumer Law. Specifically, Telstra claimed that the advertisement contained the following false or misleading representations:

• The Optus mobile network and the Telstra mobile network cover 98.5% and 99.3% of the Australian land mass respectively;
• The geographical coverage of the Telstra mobile network is less than 1% greater than the geographical coverage of the Optus mobile network; and
• The difference between the coverage of the Telstra mobile network and that of the Optus mobile network is minimal and insignificant. “Coverage” here refers to both population coverage and geographical coverage.

As stated above, Optus argued that it did not make these representations: It said that the advertisement was directed towards the population coverage of the two networks and not their geographical coverage.

Well what are the facts about the respective coverage of the networks? In terms of population coverage, Telstra reaches approximately 99.3% of Australians whilst Optus reaches approximately 98.5% of Australians. However, the two networks differ significantly in geographic coverage. Telstra’s network covers 2.356 million square kilometres of the Australian land mass (approximately 28% of Australia), whereas Optus claimed on its website on 21 November that it covers about 970,000 square kilometres (ie only approximately 41% of Telstra’s).

The Decision

Applying the principles from the recent High Court decision in ACCC v TPG (see our post here), the Court found that the advertisement conveyed a dominant message in relation to a topic, namely geographic coverage. Elliott J noted that the percentage figures appeared within the boundaries of mainland Australia. Therefore the dominant message was that the figures of 98.5% and 99.3% had “a relationship with coverage concerning the width and breath of Australia”.

Elliott J found that the reference to “Australians” as opposed to “Australia” in the voiceover (which Optus argued indicated a reference to population coverage), did not cure the misleading message as consumers were unlikely to pick up on the subtle distinction when viewing a television advertisement. Elliott J also noted that there was nothing in the advertisement that referred to the true position in relation to geographic coverage. There was no reason to use a map of Australia when conveying a message about population.

The first and second representations were therefore misleading and deceptive: the figures of 99.3% in relation to Telstra and 98.5% in relation to Optus bore no resemblance to the actual geographic coverage of the respective networks.

It also followed that the third representation as to the comparative coverage was also misleading and deceptive since the difference in geographic coverage between the two networks is far greater than 1%. In fact, the Court noted Telstra’s mobile network covers an area nearly two and a half times greater in land mass than the mobile network of Optus.

Elliott J was unconvinced by some further submissions made by Optus. These were that the reasonable person would know that the figures 99.3% and 98.5% could not possibly relate to geographic coverage, as the reasonable person knows that the coverage in Australia does not reach anywhere near such figures. Elliott J was also unconvinced by the argument that, given previous advertisements, consumers had been “conditioned” to understand figures and maps of Australia to be linked to population coverage rather than geographical coverage.

Lessons for advertisers?

The key lesson here for advertisers is that you should always be careful when making representations in advertisements, in particular comparative representations. The advertisement should always be considered as a whole, including both words and images, to ensure that the dominant message that is conveyed is not misleading or deceptive.