Chapter 12 Summing up the years

Alan Smith’s Chronology of Events: Telstra Dispute and the COT Cases Arbitration

A Factual and Structured Account for Legal Professionals, Telecom Regulators, and Claimants

Introduction

This section provides a comprehensive chronology of events regarding Alan Smith’s dispute with Telstra, focusing on telecommunications service faults, the subsequent arbitration process, and the involvement of the Casualties of Telstra (COT) group. The chronology draws exclusively on documented extracts and correspondence, detailing the progression from initial complaints through to settlement, regulatory findings, and arbitration. The purpose is to present an objective, detailed, and factual record for reference by legal professionals, regulators, and affected claimants.

Early Service Issues (1992–1993)

Initial Complaints and Telstra Correspondence

On 1 September 1992, Rosanne Pittard, Telstra’s General Manager, wrote to Alan Smith, indicating further investigation into ongoing service issues despite prior assurances of network standards. Subsequently, on 18 September 1992, Bob Beard, Telstra’s Service Manager, issued a letter guaranteeing service quality, though acknowledging the impossibility of eliminating all faults. However, Telstra Freedom of Information (FOI) documents revealed persistent problems such as false Recorded Voice Announcement (RVA) messages, which had affected Alan’s service since at least March 1992 and had not been rectified until October 1992. These findings conflicted with local technician reports, contributing to significant business losses and undermining the seriousness of Alan’s complaints in later arbitration proceedings.

FOI Findings and Technical Faults

FOI documents confirmed ongoing RVA faults, incorrect call charging, and technical discrepancies between Telstra’s internal records and public assurances. Notably, the RVA MELU fault was shown to persist well beyond the period claimed by Telstra’s representatives. These technical issues were corroborated by independent complaints from customers and community organisations who experienced difficulties contacting Alan’s business due to misleading network messages.

Settlement and Mediation Processes

11 December 1992 Settlement

During the 11 December 1992 settlement process, Alan submitted extensive evidence of service faults, including letters from affected clients and organisations. The settlement was complicated by revelations of network congestion and ambiguous tone signals, which further impeded customer access to Alan’s business. Internal Telstra documents acknowledged multi-year poor network performance, raising doubts about the validity of prior service guarantees and highlighting managerial failures in addressing persistent faults.

Formation of COT Cases and Political Involvement

Emergence of the COT Group

In 1993, Alan Smith joined with other small-business operators to form the group Casualties of Telstra (COT), unified by shared experiences of unresolved service faults. Political support was garnered from figures such as Senator Richard Alston, Senator Ron Boswell, and local Member David Hawker, who advocated for regulatory intervention and public scrutiny. Despite ongoing lobbying efforts, the technical issues at Alan’s business remained unresolved, affecting both Alan and subsequent owners.

Regulatory Engagement and Evidence Submission

Alan continued to engage with the Australian Telecommunications Authority (AUSTEL), providing detailed logs of short-duration calls, incorrect charging, and ongoing faults. Both AUSTEL and the Commonwealth Ombudsman became involved, recognising the seriousness of the complaints and requesting further documentation for investigation.

Briefcase Saga: Discovery of Internal Telstra Documents

Revelation of Prolonged Faults

In June 1993, a briefcase inadvertently left by Telstra technicians at Alan’s premises contained internal files documenting lengthy, unresolved network faults and misleading representations during settlement negotiations. These documents substantiated Alan’s claims of extended service disruptions and revealed Telstra’s awareness of ongoing problems, which were not disclosed during settlement. The briefcase evidence highlighted lost business opportunities due to unaddressed faults and supported claims of misleading conduct by Telstra.

Impact on Business and Regulatory Response

Internal Telstra communications admitted to the negative impact of service faults on Alan’s revenue base, with technical memos confirming the prevalence and severity of RVA issues and lock-up faults in the network. Regulatory correspondence from AUSTEL raised concerns about the objectivity and adequacy of Telstra’s advice to claimants, suggesting that Alan and others had been misled in the context of settlement negotiations.

Telstra’s Media and Regulatory Influence

Attempts to Suppress Media Coverage

Telstra’s internal communications reveal strategic efforts to influence media reporting on COT Cases, including the suppression of television news stories. Senior Telstra executives, some of whom held positions on the Telecommunications Industry Ombudsman (TIO) board, were involved in managing public relations and deflecting regulatory scrutiny regarding the extent of network faults.

Regulatory Correspondence and Arbitration Influence

Telstra’s correspondence with regulatory bodies and the TIO demonstrates attempts to control the flow of information, vetting which documents would reach the arbitration process. This included secret agreements on document disclosure and the withholding of sensitive technical data, which had implications for the fairness and transparency of the arbitration proceedings.

Legal Professional Privilege and Document Withholding

Use of External Lawyers and FOI Strategies

From September 1993, Telstra instructed Alan to register ongoing complaints through their external lawyers, invoking Legal Professional Privilege (LPP) to shield technical documents from disclosure. Internal strategy documents outlined plans to classify correspondence and technical reports as privileged, thereby limiting claimants’ access to evidence necessary for substantiating their claims. Expert legal opinion later questioned the legitimacy of these privilege claims, suggesting potential abuse of process.

Implications for Claimants and Arbitration

The use of LPP and selective document release created significant obstacles for claimants. Technical witness statements provided in defence of Telstra often contradicted other evidence, and the process for document discovery was fraught with delays, omissions, and incomplete disclosures. These practices undermined claimants’ ability to present comprehensive submissions and challenge Telstra’s assertions during arbitration.

Coopers & Lybrand Audit and Arbitration Process

Audit Findings and Manipulation of Reports

In late 1993, Telstra commissioned Coopers & Lybrand to audit its fault handling procedures, particularly concerning COT Cases. Despite concerns raised by government officials about the independence of the audit, Telstra retained control over the process, including the selection and payment of auditors. Draft audit findings indicated evidence of aggressive legal tactics and inappropriate handling of settlements, but references to misleading and deceptive conduct were removed from the final report. This sanitisation of findings was accompanied by internal threats to the auditors regarding future business with Telstra.

Arbitration Process Details and Report Flaws

The arbitration process was marked by the acceptance of flawed audit and technical reports as evidence. Manipulation of document content and selective disclosure contributed to outcomes that favoured Telstra, while claimants were denied access to critical data. The independence and credibility of the arbitration process were compromised by undisclosed relationships, conflicts of interest, and inconsistent application of procedural safeguards.

Bell Canada International Tests

Technical Assessments and Deficiencies

Bell Canada International (BCI) was engaged to conduct technical assessments of the exchanges servicing COT businesses, including Cape Bridgewater. However, regulatory correspondence later revealed that the BCI report failed to meet expectations, with deficiencies in the scope and execution of tests. The actual line between Alan’s business and the exchange was not tested, and regulatory findings were not disclosed to the arbitrator or claimants, further disadvantaging their position in arbitration.

Regulatory Responses and Document Control

Internal agreements between Telstra, the TIO, and AUSTEL established protocols for document release, allowing for selective vetting of evidence before it reached the arbitration process. These arrangements ensured that potentially adverse findings and technical data were withheld from claimants and arbitrators, raising serious questions about procedural fairness and transparency.

Fast Track Settlement Proposal and Arbitration Agreement

Transition from Settlement to Arbitration

Following regulatory investigations and mounting evidence of ongoing faults, Telstra and the Regulator agreed to a Fast Track Settlement Proposal (FTSP) for the four main COT Cases, designed to facilitate commercial assessment and prompt resolution. Claimants signed the FTSP agreements in November 1993, relying on verbal assurances of fairness and access to discovery documents. However, the process soon transitioned to a legalistic arbitration procedure, with changes to agreement terms and confidentiality clauses implemented without claimant input. Liability caps for resource units were removed for the initial cases and reinstated for subsequent claimants, resulting in unequal treatment and further procedural challenges.

Changes in Agreement Terms and Arbitration Conduct

Secret meetings and unilateral amendments to the arbitration agreement excluded claimants from meaningful participation in the process. The arbitrator’s lack of control over document discovery and the administration of the process led to delays, incomplete investigation of ongoing faults, and the acceptance of technical reports that omitted unresolved issues. The arbitration was conducted outside the ambit of the agreed Commercial Arbitration Act, undermining the enforceability of confidentiality clauses and procedural safeguards.

Ongoing Issues and Evidence

Continued Faults and Interception Allegations

Despite the arbitration proceedings, Alan continued to experience service faults, including short-duration calls, lock-up problems, and lost faxes. Evidence of unauthorised interception of telephone and fax communications emerged, with Australian Federal Police investigations confirming live monitoring of Alan’s calls. Regulatory bodies withheld findings regarding these privacy breaches, and technical consultants failed to address ongoing billing and network issues in their reports.

Technical Report Discrepancies and Document Loss

Multiple versions of technical evaluation reports were produced, with discrepancies in the number of documents reviewed and the scope of issues addressed. Key claim documents and supporting evidence were omitted from final reports, and requests for additional time to investigate billing discrepancies were denied. The forensic assessment of arbitration documentation revealed manipulation, incomplete assessments, and the withholding of critical evidence from both claimants and the arbitrator.

Conclusion

The chronology of Alan Smith’s dispute with Telstra and the subsequent COT Cases arbitration illustrates a complex interplay of technical failures, regulatory shortcomings, and procedural irregularities. Persistent service faults, incomplete document disclosure, and the use of legal privilege to withhold evidence undermined the integrity of the arbitration process. Regulatory findings and audit reports were sanitised or withheld, while claimants faced unequal treatment and procedural obstacles. The cumulative impact of these challenges resulted in significant disadvantage to claimants and raised enduring questions about the fairness and transparency of telecommunications dispute resolution in Australia.