Small and midsize businesses can increasingly expect to find high-speed connections whenever they need them, but they still need to accommodate the still-significant group of customers stuck with slower-speed lines.
Broadband adoption is one area that has not been dampened by the recent economic downturn. Currently, more than half of the connections in the United States support high-speed communications, and that percentage continues to rise at a rapid rate, according to market research firm Gartner. That means small and medium businesses can increasingly expect to find high-speed connections whenever they need them, but companies still need to make accommodations for the small, shrinking, but still-significant group of customers stuck with slower-speed lines.
Broadband has become quite popular in the US. Currently, three out of every five US homes have a broadband connection, and the number is expected to increase to 78% (representing 27 million new connections) by 2013, according to the market research firm.
Broadband Is Getting Cheaper
Several factors are driving the growth. PCs are becoming more affordable, so more people have devices capable of supporting high speed connections. The migration from dial-up continues as carriers are now delivering relatively inexpensive broadband services. In fact, competition has intensified as traditional cable companies and telecommunications suppliers encroach on each other's turf. Increasingly, these service providers are offering their customers bundles combining video, voice, and data services for relatively low monthly fees.
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The ongoing movement to broadband has a positive impact on small and medium businesses. As carriers build out their networks, they have been delivering high-speed services to businesses as well as to consumers. Telcos and cable companies have been rounding out their business offerings and now offer a variety of services in many areas. In fact, broadband penetration is quite high in large cities and their surrounding areas. Companies of all sizes are increasingly relying on these networks to pump their marketing materials to potential customers via the Internet -- not mention selling goods directly online. Increasingly, this means complex, interactive graphics and even streaming video, which require fast connections.
Lots Of People Are Still Out Of The Loop
But small and medium businesses still face a dilemma. Despite the buildup, a sizable segment of the population (two out of every five people) still does not have a broadband connection and many (one out of every four) will not have one even in another five years.
These individuals typically live in poor neighborhoods or rural areas. Despite ongoing discussions among public and private organizations about how to bridge this Digital Divide and bring broadband services to these individuals, no clear-cut solution has emerged.
Carriers face a difficult challenge serving these customers. In many cases, there is no sound financial model for running the necessary wiring to the underserved locations. In sparsely populated areas, there simply are not enough potential customers to allow service providers to recoup the miles of cable they would have to lay down.
Does Satellite Solve The Problem?
Satellite communications has been a popular alternative in such areas, but this technology has limitations. First, satellite service providers have not been able to match the speeds delivered by their terrestrial counterparts. Rather than transmissions that support multiple Mbps of bandwidth, satellite is limited to a few hundred Kbps. Even more important for business customers, satellite provides much higher speeds for network downloads than for network uploads -- uploads are often five to possibly ten times slower than downloads -- so the performance of two-way applications (especially video and voice conferencing) on these networks can be scattershot.
There has been movement toward having the government take a major role in bridging the Digital Divide. In fact, a significant portion of the stimulus package has been focused on building out network infrastructure in rural areas. These plans are just beginning to take shape, so it is unclear how long it will take for them to make a difference, and how successful the effort ultimately will be.
In sum, there remains a significant disparity in networking capabilities across the United States. Consequently, businesses need to be aware of the gap and put checks into their business plans to accommodate them. While broadband connections are winning the popularity contest, small and medium businesses must make accommodations for people stuck on low-speed networks. It's easy for highly wired companies in affluent urban areas to forget about these folks, but doing so eliminates more than 100 million Americans as potential customers.
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See more columns by Paul Korzeniowski.
Paul Korzeniowski is a Sudbury, Mass.-based freelance writer who has been writing about networking issues for two decades. His work has appeared in Business 2.0, Entrepreneur, Investor's Business Daily, Newsweek, and InformationWeek.
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