BBC THREE going online only doesn't save money

Move a TV channel online? That'll cost you.

By James Cridland
Posted 11 December 2014, 1.42pm gmt

So, BBC THREE is to come off broadcast television, and will exist only online on the BBC iPlayer. This step – alone – is being touted by the press as how the BBC will save money.

But how does “online-only” save the BBC any money? I’m curious.

The BBC owns its own transponders for satellite (Sky and Freesat). The loss of two channels (BBC THREE and BBC THREE HD) isn’t enough to remove, as far as I can see, any of the BBC’s transponders. (In any case, the BBC needs them during the day for the childrens’ channels). Unless I’m wrong, the BBC will still have to pay just as much money for satellite transmission as it did in the past.

In terms of carriage fees for satellite, BSkyB dropped the platform contribution charge earlier this year, which has saved the BBC £3m a year. The BBC still gets charged by Sky and Freesat for the EPG listing – and the removal of BBC THREE will save the BBC £150,000 of Freesat charges, and perhaps the same figure again for Sky (who charge the BBC £1.4m in total for EPG listings); though this will have been part of a contract, so savings are unlikely to be realised immediately.

The BBC also owns its own multiplexes for terrestrial broadcasting (Freeview and Youview). Removal of BBC THREE’s two services (SD and HD) won’t mean the BBC can switch one of those off, either. So, once more, there are no savings for the BBC from removing these channels from DTT. Freeview may charge an EPG listings fee as well (I’m unclear quite how the system works); but it’s unlikely to be anything more than what Sky might be charging.

So, putting BBC THREE as an online-only channel would only really see savings of £450,000 from transmission. There may be additional savings from removal of these services from Virgin Media, I guess.

It would appear that, if the programming budget remains the same, the savings for the BBC of making a channel a purely online-only thing is around half a million pounds a year.

However… the internet is not free. Bandwidth costs money. Akamai is one of the two companies that the BBC uses to stream, and this 2012 article from Dan Rayburn, a well-respected streaming media specialist, says that the typical cost that Akamai have charged recently to large customers is 3p (5c) per gigabyte. Let’s assume that the BBC have a deal that’s 50% lower than even that. And let’s also assume that BBC iPlayer uses half a gigabyte per hour to stream – which was the case in early 2011 though they’ve since introduced HD on the service.

BARB reports that the “average weekly viewing per person” for BBC THREE was 24 minutes in January. Roughly, that’s two hours a month, or one gigabyte per person. BARB’s monthly reach for all TV was 57m people (Oct-Dec 2013). So, that’s 57 million GB per month in bandwidth costs.

So, if BBC THREE moves completely online, but retains its viewing figures, that’ll cost the BBC £1,140,000 in bandwidth per month. Or, if you like, £13.7m a year.

Now: I’m the first to announce that I know nothing about television – a product I used to call the “moron-box” in BBC meetings. I know little about the BBC’s peering arrangements these days. But if the savings are supposed to be made simply by “moving a television channel online”, as the current story would lead you to believe, then – even if these figures are out by a factor of over 75% – it’s not the saving you think it might be.

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James Cridland — James runs, and is a radio futurologist: a consultant, writer and public speaker who concentrates on the effect that new platforms and technology are having on the radio business. He also publishes a free daily newsletter about podcasting, Podnews, and a weekly radio trends newsletter.