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The Impact of Broadband Speed and Price on Small Business

"Today’s study shows that a lack of competition in
broadband providers is having a negative impact on rural small businesses."

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."

The complete study is available at
http://www.sba.gov/advo/research/rs373tot.pdf.

A research summary is available at
http://www.sba.gov/advo/research/rs373.pdf.

The Office of Advocacy of the U.S. Small Business Administration (SBA) is an
independent voice for small business within the federal government. The
presidentially appointed Chief Counsel for Advocacy advances the views,
concerns, and interests of small business before Congress, the White House,
federal agencies, federal courts, and state policymakers. For more
information, visit http://www.sba.gov/advo, or call (202) 205-6533.

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