Report: Small Businesses Lack Broadband Choice, Competition

WASHINGTON, November 16, 2010 – Small businesses want choice and competition in the broadband service market, according to a new government report, but unfortunately they aren’t getting either.

A report from the Small Business Administration’s Office of Advocacy also found that there are statistically significant differences between metro and rural areas in terms of broadband speed, availability and price.

About one-third of small businesses surveyed for the report indicated a need for broadband service requiring greater capacity networks than currently exist.

Sens. Olympia Snowe, R-Maine, and John Kerry, D-Mass., requested the report in 2008. Snowe sits on the Small Business and Entrepreneurship Committee and Kerry was the panel's chairman at the time he requested the report.

“I have heard from numerous small business owners from across Maine who depend on a fast and reliable broadband connection as a matter of basic business survival, but who regrettably are struggling for increased access and speed because rural areas still lack adequate broadband service,” said Snowe. “Maine is a prime example of a state where increased broadband utilization can have a dramatic impact on businesses’ ability to grow and expand by selling goods to new markets, both domestic and foreign."

The report authors recommend that the Federal Communications Commission “stay the course” on its National Broadband Plan. But there should be encouragement of small business broadband providers by supporting “unfettered access” to existing network infrastructure. They also suggested that small businesses might benefit from the creation of federal broadband incentive programs.

The report also found that metro small businesses pay an average $115 for internet service while those in rural areas pay $93. However, rural firms pay higher for the same bandwidth enjoyed by metro areas.

Additionally, DSL is the dominant small business internet connection type except for in the Northeast, where half of survey respondents have cable modem connections.

“Today’s study confirms that small businesses across Massachusetts are effectively utilizing the internet to create jobs, expand their market, and grow this economy,” said Kerry. “But it also reiterates what we’ve long known – that businesses in Western Massachusetts and other parts of the state are at a distinct disadvantage compared to businesses in big cities because fewer providers are offering less bandwidth at higher prices.”