Landrieu, Snowe Seek Better Broadband Uptake by Small Businesses

A Universal Service Fund revamp and additional public funding are needed to bring broadband to small businesses and encourage adoption, top government and broadband industry officials said Tuesday. At a hearing of the Senate Small Business Committee, FCC Chairman Julius Genachowski said high prices, sparse availability and low digital literacy are the largest barriers keeping broadband from small businesses. And NTIA Administrator Larry Strickling called continued funding in fiscal 2011 critical to ensuring a successful broadband stimulus program under the American Recovery and Reinvestment Act.

Committee Chairman Mary Landrieu, D-La., forcefully staked out her committee’s claim to broadband issues. Building out broadband is “not technically the jurisdiction of this committee,” she said. “But what is the jurisdiction of this committee is how fast, how cheaply and how quickly we can get this service to the small businesses in this country.” Broadband connects small businesses to far-off customers and has “changed the traditional business models that all small business owners once relied on,” Landrieu said. Broadband improves small businesses’ efficiency, productivity, competitiveness and the ability to create jobs, said Ranking Member Olympia Snowe, R-Maine. But policymakers should avoid “excessive government” intervention, she said.

Snowe demanded an FCC timetable of broadband deployment goals. Genachowski said such a document is coming soon. “One of our next steps is to fill out all the milestones on the way,” he said. The FCC recently released an action plan for acting on recommendations in the plan, Genachowski added. Putting the plan into action is a key challenge, said RUS Administrator Jonathan Adelstein. “There’s a lot of issues in front of the commission dealing with competition policy” and universal service policy, but “fleshing that out is something that this commission … is very able to do."

Genachowski and Strickling said revamping USF is central to spreading broadband to additional small businesses. “Probably the most important single issue is the reform of the universal service program,” said Strickling, “because that … will provide a lasting mechanism to ensure that these facilities get built out to all reaches of the country.” Revamping USF and intercarrier compensation is critical, agreed Tom Gerke, CenturyLink executive vice chairman. “Both issues have tremendous impact on the economic case for bringing broadband to rural communities."

Strickling urged senators to approve funding for broadband stimulus oversight as proposed in the president’s fiscal 2011 budget. That would prevent “waste and fraud” in the program, he said. Meanwhile, Snowe supported adding $50 million for the Small Business Development Centers to improve training and outreach on broadband. “Additional resources will be required,” agreed Sean Green, associate administrator for investment at the U.S. Small Business Administration. “Small businesses need better tools and training to maximize broadband literacy.” The SBA is reviewing recommendations in the broadband plan and doesn’t have a position yet on how much money is needed, he said.

The NTIA “redoubled efforts” to spur participation by small businesses in its second broadband funding round, Strickling said. Part of that effort was Broadband Match, an “e-Harmony for broadband” to link up funding applicants, he said. In round two, the NTIA got about 900 applications seeking $11 billion total in grants, and 21 percent were from small businesses, he said.

Two big problems facing small businesses are special access and spectrum acquisition, said Susan Walthall, the acting chief counsel in the SBA Office of Advocacy. “Small carriers have continuously reported increased rates in special access,” demonstrating a lack of market competition, Walthall said. “The combination of high prices and few alternatives creates a difficult burden for these small business providers,” she said. Meanwhile, the office is working with the FCC to revise “designated entity” rules to allow small businesses to compete in auctions with bidding credits, Walthall said.

The private sector doesn’t mind the government playing a part in broadband deployment as long as it concentrates money on unserved areas, Gerke said. Chairman Steve Friedman of the American Cable Association said he’s disappointed that some round-one money went to projects in areas already served by incumbents. Local governments are closer to small businesses in their areas and should be involved in deployment decisions, said Louisiana Utilities Services Director Terry Huval.

Local broadcasters are small businesses, and policymakers should be careful not to hurt them with broadband rules, said NAB President Gordon Smith. “The choice is not broadband versus broadcast,” because Americans want both, he said. Spectrum reallocation must not be compulsory for broadcasters, Smith said. And NAB opposes proposed spectrum fees, which “could force [broadcasters] off the air,” he said.

Government should free up additional spectrum as soon as possible, said CTIA President Steve Largent. He endorsed a bill by Sen. John Kerry, D-Mass., and Snowe that would require the NTIA and the FCC to do a spectrum inventory (S-649).

The hearing room was packed, but was attended by less than half of the committee’s senators. Only committee leaders Landrieu and Snowe stayed the whole time. Landrieu plans a follow-up hearing in “about three weeks” with witnesses representing small businesses that use broadband and others that don’t, she said. Meanwhile, the committee on Tuesday released a guide for small businesses interested in applying for broadband loans and grants, Landrieu said. The guide, available on the committee’s Web site, will help “connect small entities with valuable Federal resources,” she said.