The Impact of Broadband Speed and Price on Small Business

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 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. 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. 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.