A merger between SBS and the ABC could save the broadcasters more than $100 million a year and provide the government with another 7 megahertz of broadcast spectrum to auction off to a telecommunications industry hungry for it.

Mark Scott floated the idea of putting the ABC and SBS on the same spectrum slot at his National Press Club address today:

“Currently the ABC and SBS can together run about eight TV services. Pending compression technology around transmission and restacking, the spectrum could allow even more channels to be delivered.

“But how many is the right amount? What services will be better delivered by broadband in years to come? What is core to a public broadcasting offering? Better use of the broadcast spectrum could again free up much more money for digital investment, without demanding more from the taxpayer.”

Using current technologies, there isn’t room to air all the ABC and SBS channels on the spectrum currently solely reserved for the ABC. But both broadcasters could air some channels online. Crikey understands the ABC is keen to stream youth-focused channels like ABC2 and ABC Kids online, freeing up the space they use on the broadcast spectrum. It’s a line of thinking with a precedent — the BBC’s youth-focussed BBC3 channel went online-only this month, saving the corporation 30 million pounds a year it says it intends to reinvest into drama.

Currently there are six television multiplexes (an industry term referring to the chunk of spectrum that is enough for a TV station), each comprised of 7 megahertz, allocated to Australia’s broadcasters — three to the commercial networks, one that’s largely free and used to house community television, and the two multiplexes allocated to the public broadcasters. These used to provide enough space to air one channel each, but with digital compression, broadcasters can now air multiple channels, one in high definition, on each multiplex.

If SBS and the ABC could fit in one multiplex, that would leave a revenue-hungry government with an enticing, scarce resource to sell. Both TV broadcasters and telcos share the same spectrum band, and telcos pay much more for it.

When the former Labor government shut off analog television channels and restacked the spectrum band to make way for mobile networks, the government auctioned off 60 megahertz of spectrum in the TV band along with 140 megahertz in a less valuable band, and secured $2 billion from bidders TPG, Optus and Telstra for a 15-year spectrum lease.

Sharing spectrum could also provide big savings for the public broadcasters. SBS and the ABC together pay more than $300 million, and SBS around $100 million, to monopoly provider Broadcast Australia to beam their content to Australian homes. If the ABC and SBS aired far fewer channels on the one multiplex, this money could be poured back into their budgets, or recouped by the government.

SBS’ spectrum is valuable to the government. One SBS insider yesterday described the contentious discussion of merging the broadcasters as all “coming down to this war over spectrum”. But SBS’ slot, while valuable, is a bit clunky to easily sell in the short term. Spectrum leases to telecommunications companies go in slots of 5 megahertz, not 7. But demand for spectrum is rising.

Growth in mobile traffic is ever increasing, and there is already more than one mobile device in use per person in Australia. Network vendor Cisco predicts mobile traffic globally will grow from around 5 billion gigabytes per month in 2015 up to almost 30 billion by 2020. When Telstra this month allowed users to use as much mobile data as they wanted in a day as compensation for a network outage, Telstra’s 16 million subscribers used 1841 terabytes in 24 hours.

But that came at a cost, with users reporting congestion issues on what is otherwise considered a world-leading 4G network. To keep up with that demand, Telstra has already announced it plans to test what it has called 5G (these terms are not official yet, and tend to be marketing more than anything else) during the Commonwealth Games in 2018. To guarantee download speeds and consistent coverage, it is likely to use a significant amount of spectrum across a number of different bands — and SBS’ could be looking pretty good.

But there is still 30MHz of unsold spectrum in the TV broadcast band the government has not yet decided what to do with. Had Vodafone, which was in the depths of its “Vodafail” network crisis during the digital dividend auction process, participated in the auction, it would have sold, but now the government needs to decide whether it is worth selling outside the auction process and risk raising the ire of Telstra and Optus, which paid significant premiums on the spectrum. At the time of the auction then-opposition communications spokesman Malcolm Turnbull accused the government of bungling the sale by setting the reserve price too high, but two years on, he hasn’t done anything about the remaining spectrum.

A curious third player is TPG. The company has bought up significant amounts of spectrum it is not using yet, and there continue to be rumours of the company potentially buying Vodafone Australia from its global parent company. TPG could also have a keen interest in acquiring any additional spectrum offered.

Crikey understands that the government has not yet formally engaged with the three major network operators on the sale of any spectrum. But the government has recently made moves to free up spectrum from television stations. For example, in 2014 plans were announced to push community television off the sixth television multiplex. Turnbull said the spectrum would go towards testing new compression technologies, but the 7 megahertz could presumably at some stage be sold. Adding the 30 megahertz of unsold spectrum from the last auction and the 14 megahertz occupied by both SBS and community television, the government would have almost 50 megahertz free overall. That spectrum is likely to get more valuable as time goes on.

Save our SBS president Steve Aujard yesterday said talk of reallocating spectrum was “code for the auctioning off — or licensing out to private industry for data purposes — the public air waves that SBS uses to broadcast its programs”.

Aujard says “discussions have occurred within government along these lines”.

Peter Fray

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