Rural SMBs Depend on Broadband -- If They Can Get It

Rural small business owners are just as dependent as their urban counterparts on high-speed Internet access, and maybe even more so because of their location, according to a new study.

In the study, conducted by Hughes Network Systems, a major global provider of satellite Internet services, a large majority of rural small business owners said broadband Internet access was "extremely important" to their business success. Close to 100 percent of the 600 business owners or key managers surveyed said the use the Internet regularly for business purposes. Sixty percent said they are online at work more than 20 hours per week.

The demand for high-speed Internet access in rural parts of the nation has been one of the key points of contention in a debate over the Federal Communication Commission's (FCC) planned auction of wireless radio spectrum in the 700 MHz band. The spectrum, which is being used by television stations until 2009, is considered highly suitable for wireless broadband because of its ability to penetrate walls and other solid objects.

But the auction has been controversial because of the way the FCC is planning to apportion the spectrum and because of charges that small wireless companies are being disadvantaged by auction rules. Others have criticized the agency because only a portion of the bandwidth will be "open access."

One of the industry's major players, Verizon Wireless, sued the FCC last month in an attempt to block the open access auction. But a federal judge declined a request for an expedited hearing, which will allow the auction, scheduled for early 2008, to go forward. FCC Chairman Kevin Martin said the auction rules will remain unchanged, which means the winner of that spectrum must allow consumers to connect using any device or software.

As a result, some say the nation's big four wireless providers will boycott that auction in favor of other closed portions of the spectrum that had been set aside for small wireless operators. There have been reports, however, that Google or Yahoo! may bid for the open spectrum. BusinessWeek also recently reported that Apple may bid as well.

All current wireless systems are closed, which means wireless carriers can restrict the types of cell phones used to access them and limited the software that can be used. The carriers argue that the phone is integral to the system, although all land line phone service is unrestricted.

The Hughes survey only went to 600 businesses that are subscribers to its wireless satellite services. The company has a customer base of about 350,000 users. According to the survey, the overwhelming majority (86 percent) use the Internet to download files; 32 percent use it to manage a company Web site; 24 percent use it for instant messaging; and 12 percent use it to manage inventory.