Paulie,
I don't know the answer to this one. I think the answer is that it is not covered by default.
There is a blog entry that starts to cover it and would need a bit of hacking to get working - you might want to have a look. I have asked internally, but I think this might be your best guide.
http://seanda.blogspot.com/2004/10/sbs-2003-backup-hack_05.html
ttfn
David
I got confirmation from the product team this morning, SBS Backup calls for compression if it is supported by the device, so if you have a tape unit that supports compression, it happens.
The actual text they sent is below:
(c)David Overton 2006-23