March 3, 2014

Telstra takes stand against Queensland telco charges

The rent that Queensland’s Department of Environment and Resource Management (DERM) now charges telecommunications carriers for land used for communications sites is significantly higher than rent charged to other Crown land users on comparable sites.

The Bligh government introduced the Land Regulation 2009 (Qld) (the Land Regulation), which commenced on 1 July 2010, prescribing higher prices for commercial carriers that lease Crown land for “transmission of telephonic television, radio or other electronic communication services”.

Telstra is the holder of about 488 leases over state land in Queensland for its fixed and mobile networks, and the new rates apply as the leases are renewed.

Telstra Corporation Ltd v State of Queensland [2013] FCA 1296

Telstra’s initial discussions with DERM regarding the method used to calculate rent on communications sites failed, and Telstra filed a claim against the State of Queensland in the Federal Court, which alleges that the Queensland laws discriminate against commercial carriers.

Telstra has for some time refused to pay rent at the rates prescribed under the Land Regulation, instead paying rent at a lower rate. The State’s cross claim is that it is owed rent and penalty interest by Telstra to the tune of more than $12.5 million.

In December 2013, Queensland made an interlocutory application to the Court seeking orders that Telstra continues to pay the current land access rates whilst the case continues to run. The Court rejected the State’s application, ruling that it could not keep collecting the increased rents while the validity of the legislation is being determined.

The outcome was that the interlocutory application filed by Queensland was dismissed, and Queensland was ordered to pay Telstra’s costs of the application.

Commonwealth Law v State Law

The Australian Constitution, (and in particular section 109) states that when a state law is inconsistent with a law of the Commonwealth, the Commonwealth law shall prevail, and the state act shall be invalid to the extent of the inconsistency.

The Telecommunications Act 1997 (Cth) (the Commonwealth Act) provides that where state law discriminates against carriers, that law has no effect to the extent to which it discriminates.

In the proceedings, Telstra pleads that the Land Regulation discriminates against it and other carriers because they are required to pay more rent than if they were not carriers. Telstra asserts that the provisions in the Land Regulation have no effect and are (and have been at all relevant times) invalid by operation of the provisions in the Commonwealth Act.

Telcos are challenging land access rents in multiple states, and it will be interesting to see whether the outcomes in these cases are consistent across the different jurisdictions.