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The Impact of Broadband Speed and Price on Small Business
WASHINGTON, DC— The availability, speed and price of broadband services vary significantly between metro area and rural businesses, according to a study released today by the SBA Office of Advocacy. The study, entitled The Impact of Broadband Speed and Price on Small Business, found that when prices are held constant, rural small businesses get less service compared with metro small businesses. When services are held constant, rural small businesses pay higher prices than metro small businesses. The Office of Advocacy was directed to conduct this study by Congress under the Broadband Data Improvement Act, Public Law 110-385 Section 105. The study surveyed small businesses to evaluate their options to broadband services.
“All small businesses must have access to fast and affordable broadband if they’re going to succeed in the global economy,” said Winslow Sargeant, Chief Counsel for Advocacy. “Today’s study shows that a lack of competition in broadband providers is having a negative impact on rural small businesses.”
The study finds that small businesses want both competition and choice in the broadband service market. They see competition as key to innovation, customer service, and lower prices. The survey data demonstrate that, in most cases, the small business Internet market does not provide this competition or choice to small businesses from or price perspective.
“Increasing access to affordable broadband Internet service will allow rural small businesses to tap into a market that was previously out of their reach,” said Senator Mary Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship. “This study is an important first step in collecting data on what types of advanced telecommunications services are available to small businesses across the United States. We must continue implementing key provisions of the National Broadband Plan to ensure that small businesses, as well as small telecommunications providers, can remain competitive in our expanding global economy.”
The report also examined local service and pricing. A case study comparing the prices paid by small businesses and residential Internet consumers in Minnesota and Tennessee found that small business Internet customers pay two to three times more than what residential Internet customers pay for equivalent speeds, irrespective of the community under analysis.
“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 Senator John 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. Quality broadband at competitive prices is a necessity, not a luxury, which is why we must implement the National Broadband Plan as quickly as possible to help our small businesses.”