The Save TVNZ 7 campaign moves into top gear this week – New Zealand loses another public service channel - and Freeview has a rough road ahead.

New Zealand viewers have just lost access to another public service television broadcaster – and most of us didn’t know we had it. It’s SBS, the public service broadcaster established to meet the needs of Australia’s ethnic minorities – a very supercharged model for our own late, lamented Stratos channel.

Freeview satellite service viewers could tune into SBS with a very minor modification to their rooftop dish, because the Australian channel was using the same satellite that serves New Zealand to reach its viewers in Tasmania.

SBS delivers a solid range of international and Australian news, current affairs, and documentary programmes, European films and drama, and top-flight sports events such as Giro d'Italia cycling, the World Superbike Championships and the UEFA Champions League soccer final.

Over at www.extra-channels.com  , blogger Matty T came up with a bright suggestion: why not negotiate a formal swop deal between the Maori Television Service and SBS? That would enrich the public service broadcasting outputs of both countries.

Unfortunately, the opportunity vanished, almost as quickly as it was identified. The Optus D1 satellite is no longer delivering SBS to New Zealand. There’s some speculation that a Kiwi broadcaster could have nobbled the SBS fruit fly, but SBS was scheduled to switch its Tasmanian transmission to another satellite early next year anyway. That’s thanks to their government’s investment in Viewer Access Satellite Transmission and a new boost to the SBS budget which was already bigger than our Government’s total spend on public broadcasting services. Their gain – our loss.

SBS would certainly have enriched the programme offering from Freeview. Family-friendly, non-commercial TVNZ 6 is gone, Stratos is gone, TVNZ 7 is scheduled to go at the end of next month, to be replaced by TV One + 1, which is about half a step up the interest scale from TVNZ’s other bright option – the non-stop Shopping Channel which has found its home on the SKY Television menu.

Freeview has gained two new channels – Choice (another life-style offering) and Freeview’s third China-focused channel. However, both new channels are only available to the minority of households equipped for Freeview HD digital terrestrial reception, not to the majority who’ve opted for the Freeview satellite service.

Right now, SKY has Freeview nailed in terms of the diversity of choice offered to viewers. Only 11 of the 23 channels carried by Freeview are available on both its satellite and terrestrial services. All 11 are carried by SKY and two of the 11 are the same channel, running an hour later (ONE+1 and TV3+1). Nine Freeview channels are only available to its terrestrial service users - eight of them are only available in particular parts of New Zealand, while the other (Trackside) is also available on SKY. Three are only available on Freeview’s satellite service, and all three [Cue, Shine and Te Reo)are also carried by SKY.

Freeview lacks a strong and distinctive core to its offering to capture and hold a lead over its pay-to-view rival SKY Television. That’s something that an exclusive public service channel could have provided.

SKY has already pulled about half the television-owning households of New Zealand into its subscription base and 20% of the homes converted to Freeview also have access to the Sky. Effectively, we have reached the point where pay-to-view broadcast television could become the dominant form of media in the country. If that happens, one of the principle foundations of public broadcasting service – broadest, possible accessibility – will be destroyed.

Commercial TV broadcasters are not incentivized to grow the Freeview audience. There is already too much competition for the free-to-air broadcast advertising dollar. The new growth opportunity is in monetizing the supply of programme content to viewers. They can’t do that on Freeview, but they can on SKY, as TVNZ Is showing.

SKY is already the profit leader of the television media. It’s keeping  its pedal to the metal in its quest for more subscribers. In two months’ time it will add up to eight special Olympics channels to its offering. Around the same time, it will launch its new, low cost pay-to-view service Igloo – with or without its new best friend, TVNZ. It is creeping up its subscription price to ensure there will be a margin when low-rent viewers switch to its lower price Igloo service.

Meantime, there are some serious questions that need to be answered in next week’s budget about the long-term sustainability of the Freeview system. Freeview is a collective operated by a group of free-to-air television broadcasters who spend most of their time competing vigorously for advertising revenue.

Freeview’s  birth in 2007 was assisted with a hefty dollop of government assistance – a five-year holiday on spectrum access fees for free-to-air digital television broadcasters and a five year operating subsidy of $5 million a year for the Freeview organisation. The five years are up.

The Freeview operating subsidy was quietly extended for another two years in last year’s budget, but there has been an ominous silence on the arrangements for spectrum fees. It will take superb sales job to make another sweetheart deal for commercial broadcasters over spectrum fees palatable to the public after the fuss caused by the time-payment concessions granted to MediaWorks in 2010. Maybe that’s why Mediaworks is talking about early repayment of its $43 million radio licence fee loan.

Public discontent with the increased commercialization of TVNZ s and free-to-air TV in general is evident in the sudden growth of support for the Save TVNZ 7 campaign. Organisers report that they now have close to 20,000 signatories to their protest petition. This week, they initiate a series of public meetings in six cities around the country. For venue details, check the campaign website - http://issues.co.nz/savetvnz7

Policy-makers need to think hard about the current vulnerability of Freeview, because its failure to gain and hold a lead in the contest for viewers after the digital switch will create a dangerous division between those able to afford access to a diverse range of broadcast media and those who cannot. A growing information gap on top of a serious income gap could be a step too far for New Zealanders.