The U.S. House of Representatives Small Business Committee is holding a hearing on July 18 to receive testimony on the role of the federal government in expanding broadband access to small businesses in the United States. The Committee will hear from the Federal Communications Commission (FCC), the National Telecommunications and Information Administration (NTIA), and the Rural Utilities Service (RUS) of the Department of Agriculture regarding the status of current broadband programs and the overall strategy to expand broadband capabilities to small businesses.
Broadband has the potential to transform the way small businesses operate and compete in the 21st Century, providing a number of tools to help small firms increase productivity, efficiency and overall success. Social media, teleworking, cloud data storage and global video conferencing are a few examples of opportunities provided by the internet. The FCC estimates that 97 percent of small businesses use some form of broadband applications to strengthen their operations. One of the most important tools the internet offers to businesses is the ability to access the global electronic marketplace, but a recent survey by the Office of the Chief Counsel for Advocacy at the U.S. Small Business Administration showed 48 percent of rural businesses and 37 percent of urban businesses are not satisfied with their current internet speed. As a result, private sector carriers have been aggressively building out their broadband infrastructure to provide more coverage at faster speeds. Due to the cost, this growth has tended to occur in areas of high density where costs for constructing broadband networks can be spread out over a larger customer base.
The Heart of the Matter
The issue now is how to economically provide coverage to rural and underserved areas. It is important to enact regulatory policies that do not diminish the incentive for private sector investment, because this will ultimately harm small businesses and the economy that rely on investments for the growth needed to create jobs. Federal involvement in the management and deployment of communication services dates back to the 1934 Communications Act, which established the FCC and tasked it with providing universal service to all Americans. Currently, the FCC regulates interstate and international communications by wire, wireless, satellite and cable.
Policymakers identified reforming the Universal Service Fund (USF) as one way to expand broadband. The USF, generally, is money collected from telecommunications companies and then allocated to carriers with the mission of providing universal service to small businesses at an affordable rate. However, broadband was not included in the FCC’s original definition of telecommunications services from the 1996 Telecommunications Act. In 2007, the FCC Federal-State Joint Board recommended that broadband and internet services should receive support from the USF to meet the nation’s communication goals. The FCC has adopted that recommendation and started making changes to its policies.
Broadband is an essential tool for small businesses and their ability to compete in the global economy. This hearing will provide an opportunity for members of the Small Business Committee to examine the effectiveness of current federal programs aimed at expanding broadband to small businesses in rural America.
Source: Nydia M. Velazques, New York Ranking Member of Committee on Small Business, and Sam Graves, Missouri Chairman, Official Hearing Memorandum Document