Expanding Broadband in Rural America: Small Business and Innovation Answer the Challenge

By at 23 June, 2017, 10:52 am

by Raymond J. Keating-

Broadband access has brought amazing benefits to individuals, families and small businesses. Of course, challenges still persist, for example the lack of access in rural America, and on June 22, House Small Business Subcommittee on Agriculture, Energy, and Trade held the first of an expected series of hearings focused on the rural broadband deployment efforts of small telecommunications companies.

As Subcommittee Chairman Rod Blum (R-IA) said, “Our small businesses, particularly ones in rural areas, depend on new telecommunications technologies to compete across town and across the world. The nation’s small telecommunications providers are the ones that traditionally supply the bulk of broadband services to the most rural parts of America, and it is no easy task.  We’ve been making progress over the past few years, but more needs to be done to put rural America on par with urban America. These small businesses are ready, willing, able, and frankly itching to get out there and build these networks, if only Washington would get out of their way.”

Telecommunications Sector is Overwhelming About Small Businesses

Indeed, as SBE Council has pointed out time and again, our dynamic telecommunications industry broadly is about the advancement of entrepreneurship and small business, not just as consumers but as firms operating in the telecommunications sector. It turns out that, based on U.S. Census Bureau data, 83.1 percent of employer firms in the telecommunications sector have less than 20 workers, and 94.8 percent have fewer than 100 employees.

The small business theme came through at the hearing. For example, Mike Romano, senior vice president for industry affairs and business development at NTCA – the Rural Broadband Association, observed:

“Fixed and mobile broadband, video, and voice are among the services that many rural Americans can access thanks to our industry’s networks and commitment to serving sparsely populated areas. These technologies serve as a small business incubator in rural areas that would otherwise see entrepreneurial activity gravitate toward the urban areas with greater resources.”

In his testimony, Tim Donovan, the senior vice president for legislative affairs at the Competitive Carriers Association, highlighted the economic impact of broadband investment made by small and large businesses:

“The Hudson Institute recently found that the investments and ongoing operations of small rural broadband businesses contribute $24.1 billion annually to the nation’s gross domestic product, with 66 percent ($15.9 billion) of that amount benefiting urban areas. The same report also found that an estimated 70,000 jobs can be attributed directly to economic activity of small, rural broadband providers, underscoring how broadband is an important driver of job growth. A separate report found that when a county gains access to broadband, there is approximately a 1.8 percentage point increase in the employment rate, with larger affects in rural areas.”

He added, “It is not just important for today’s economy; mobile broadband is vital to tomorrow’s economic development through next generation or 5G services and the Internet of Things.”

Key Challenges: Regulation Tops the List

Regarding the challenges faced by small businesses, Dave Osborn, CEO at VTX1 Companies, pointed out:

“Small companies like mine wait years and spend hundreds of thousands of dollars per project on environmental, archaeological, and historical preservation reviews. It is not uncommon for small companies like mine to experience delays of up to 18 to 24 months in getting broadband projects going because of these types of reviews. This is particularly problematic in parts of the country that have shorter construction seasons than Texas.”

In the end, as technological investment and innovation push ahead, government needs to remove barriers to such advancements. That includes, for example, implementing pro-growth, pro-investment tax reform, as noted by AT&T CEO Randall Stephenson recently. It also very much means that broad-based regulatory reform and relief must push ahead, along with more specific reforms that would help broadband deployment like the current FCC’s move to reform the commission’s February 2015 decision to regulate broadband like a 1930s rotary phone monopoly; streamlining regulatory reporting requirements; reducing obstacles to deploying and upgrading facilities on federal lands; and removing state and local barriers to broadband investment. These steps are critical as advancements continue to present opportunities for small businesses, workers and consumers, including in rural communities, such as via deployment of the next generation of high-speed 5G wireless networks and the use of TV white spaces to expand access to broadband Internet services.

So much has been achieved in terms of broadband investment and innovation. Imagine how bright the future will be if the U.S. provides real tax and regulatory relief, reform and stability. As Chairman Blum put it, building and innovating when it comes to broadband will continue to move forward, “if only Washington would get out of their way.”


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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