TELECOMMUNICATIONS

Federal Broadband 

Deployment Programs 

and Small Business

Report to Congressional Requesters

February 2014

GAO-14-203

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-203, a report to

congressional requesters.

February 2014

TELECOMMUNICATIONS

Federal Broadband Deployment Programs and Small 

Business

Why GAO Did This Study

Increasingly, small businesses rely on 

Internet-based applications to improve 

efficiencies and expand market 

access. Although broadband Internet 

access is widely available to 

businesses, areas of the country 

remain that still have little or no 

access. Since 2008, federal programs 

have provided over $15 billion in 

funding to help deploy broadband to 

these areas. Additionally, some 

municipal governments have begun to 

build and operate networks to provide 

broadband access to their 

communities.

GAO was asked to describe issues 

related to broadband availability for 

small businesses. This report 

addresses (1) the federal government’s 

efforts to ensure the availability of 

broadband services for small 

businesses, and (2) the effect of 

selected federally funded and 

municipal networks on broadband 

service and small businesses. GAO 

reviewed documents and interviewed 

officials from five federal agencies that 

support broadband deployment and 

research on broadband availability. 

GAO interviewed service providers that 

received federal funding, municipal 

network operators, and small 

businesses in four states, and 

collected speeds and prices for 

broadband services in selected 

communities in these states. The 

states, communities, and businesses 

were selected based on the presence 

and use of a federally funded or 

municipal network.

GAO is not making any 

recommendations. In commenting on 

this report, the agencies provided 

technical comments, which GAO 

incorporated as appropriate.

What GAO Found

Federally funded programs to expand broadband access encompass but do not 

specifically target small businesses. These programs—the Broadband Initiatives 

Program (BIP), Broadband Technologies Opportunities Program, Community 

Connect Grants, Connect America Fund, Rural Broadband Access Loan and 

Loan Guarantee Program, and Telecommunications Infrastructure Loan 

Program—have eligibility requirements based on the need of an area, as well as 

deployment requirements that can maximize the number of businesses served. 

For example, the Community Connect grants require providers to serve all 

businesses and residences in deployment areas. Since these federal programs 

do not target deployment to small businesses, they do not measure the impact 

on small businesses. However, BIP has a specific goal to increase access to 

rural Americans and provide broadband speeds to businesses, and in August

2013, the United States Department of Agriculture reported BIP’s funding had 

resulted in over 5,800 businesses’ receiving new or improved broadband service

since 2009. Other programs have broader goals and measures related to the 

program’s purpose, such as serving schools and libraries. 

Improvements to broadband service have resulted from federal funding and the 

existence of municipally operated networks. Service providers have used federal 

funding for expansions and upgrades, such as building out to previously 

unserved areas and replacing old copper lines with fiber optic cable, resulting in 

faster and more reliable broadband connections. GAO examined broadband 

services for 14 federally funded and municipal networks and found they tended to 

have higher speeds than other networks. For example, in 9 of the 14 

communities where GAO collected information on broadband speeds and prices, 

federally funded or municipal networks offered higher top speeds than other

networks in the same community and networks in nearby communities. 

Additionally, prices charged by federally funded and municipal networks were

slightly lower than the comparison networks’ prices for similar speeds. Prices for 

lower to mid-range speed tiers available from federally funded and municipal 

networks in nonurban areas also compared favorably to prices in urban areas in 

the same state. However, providers in urban areas were more likely than those in 

nonurban areas to offer higher speeds. According to small businesses GAO met 

with, the speed and reliability of their broadband service improved after they 

began using federally funded or municipal networks. Furthermore, according to 

small business owners, the improvements to broadband service have helped the

businesses improve efficiency and streamline operations. Small businesses that 

use the services of these networks reported a greater ability to use bandwidthintensive applications for inventory management, videoconferencing, and 

teleworking, among other things.

View GAO-14-203. For more information, 

contact Mark Goldstein at (202) 512-2834 or 

GoldsteinM@gao.gov
Page i GAO-14-203 Telecommunications 

Letter 1

Background 3

Federally Funded Efforts to Expand Broadband Encompass but 

Do Not Specifically Target Small Businesses 8

Selected Federally Funded and Municipal Networks Have 

Improved Broadband Service for Small Businesses 10

Agency Comments 21

Appendix I Objectives, Scope, and Methodology 22

Appendix II Speeds and Prices Offered by Federally Funded and Municipal 

Broadband Service Providers That Were Part of GAO’s Analysis,

as of September 30, 2013 27

Appendix III GAO Contact and Staff Acknowledgments 28

Tables

Table 1: Example Uses of Different Broadband Speeds 3

Table 2: Federal Programs Providing Funding for Broadband 

Infrastructure Deployment (2008 to 2012) 7

Table 3: Selected Federal Program Requirements Related to 

Eligibility and Deployment of Broadband Infrastructure 9

Table 4: Operational Improvements That Small Businesses 

Attributed to Broadband Service Enhancements 20

Table 5: Communities Included in Speed and Pricing Analysis 26

Figures

Figure 1: Number of Communities with Available Download 

Speeds in Selected Ranges, as of September 30, 2013 12

Figure 2: Comparison of Highest Advertised Download Speeds,

as of September 30, 2013 13

Figure 3: Comparison of Broadband Service Prices at Selected 

Speeds, as of September 30, 2013 15

Contents
Page ii GAO-14-203 Telecommunications 

Figure 4: Comparison of Monthly Broadband Service Prices at 

Selected Speeds for Urban and Nonurban Areas 17

Abbreviations

BIP Broadband Initiatives Program 

BTOP Broadband Technology Opportunities Program 

Commerce Department of Commerce

DSL digital subscriber line

EDA Economic Development Administration 

EPB Electric Power Board

FCC Federal Communications Commission

Gbps gigabits per second

kbps kilobits per second 

Mbps megabits per second 

NTIA National Telecommunications and Information 

Administration 

RUS Rural Utilities Service

SBA Small Business Administration

SBDC Small Business Development Centers

USDA United States Department of Agriculture

USF Universal Service Fund

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-14-203 Telecommunications 

441 G St. N.W.

Washington, DC 20548

February 7, 2014

The Honorable Nancy Pelosi

Democratic Leader

House of Representatives

The Honorable Henry Waxman 

Ranking Member 

Energy and Commerce Committee 

House of Representatives

The Honorable Anna G. Eshoo 

Ranking Member 

Subcommittee on Communications and Technology 

Energy and Commerce Committee

House of Representatives

Small businesses are a critical part of the United States’ economy, 

contributing substantially to job and revenue creation. E-commerce and 

online applications for accounting, payroll, and other aspects of business 

operations are becoming an important tool for helping small businesses 

increase efficiency, improve market access, reduce costs, and increase 

the speed of transactions. However, even in areas where Internet service 

is available, it may not be broadband and may not provide speeds fast 

enough to support the applications that some small businesses need.

The term “broadband” commonly refers to Internet access that is high 

speed and provides an “always-on” connection, so users do not have to 

reestablish a connection each time they access the Internet. The 

telecommunications infrastructure that supports broadband access is, by 

and large, built and operated by private industry. Since 2008, the federal 

government has provided over $15 billion in grants and loans to 

telecommunications providers to build or improve broadband networks to 

further the national goal of universal broadband access. In addition, public 

entities such as municipal governments are stepping in to build and 

operate broadband municipal networks in some communities.

You asked us to provide information on the availability of broadband to 

small businesses and the impact of federal programs on broadband 

access for small businesses. This report describes (1) the federal 

government’s efforts to ensure the availability of broadband services for 
Page 2 GAO-14-203 Telecommunications 

small businesses, and (2) how selected federally funded and municipal 

networks have affected broadband service and small businesses.1

To address our reporting objectives, we reviewed documents from and 

interviewed officials at the U.S. Department of Agriculture’s (USDA) Rural 

Utilities Service (RUS), the Department of Commerce’s (Commerce) 

National Telecommunications and Information Administration (NTIA) and 

Economic Development Administration (EDA), the Federal 

Communications Commission (FCC), and the Small Business 

Administration’s (SBA) Office of Advocacy. To determine the effect of 

federally funded and municipal networks on broadband services for small 

businesses, we interviewed Internet service providers that received 

federal funds, municipal network operators, and small businesses in four 

states. We selected the states based on several factors, including the 

presence of a network that received federal funding for infrastructure in 

the past 5 years. In identifying small businesses to interview, we chose 

those that were users of the federally funded or municipal networks and 

that had fewer than 500 employees, based on FCC’s National Broadband 

Plan, which addresses recommendations to support broadband growth in 

small and medium-sized enterprises of this size.2

We conducted this performance audit from February 2013 to February 

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings based on our audit objectives. We believe that the evidence 

Additionally, we 

collected information from wireline service providers on broadband 

speeds and prices in communities in four states where federally funded or 

municipal networks are present, in similar areas without federally funded 

or municipal networks, and in urban areas. For more information, please 

see the detailed methodology in appendix I.

 1

Throughout this report we refer to federally funded networks and municipal networks. 

Federally funded networks are networks that received monetary support from one of the 

federal programs discussed in this report. These federal programs do not entirely pay for 

the networks. Municipal networks are eligible to receive federal funding but not all 

municipal networks discussed in this report received federal funding. 

2

There is no standard definition of small business. SBA’s definition of small business 

varies according to industry, generally based on either the number of employees or 

revenues, and broadband service providers have their own guidelines for the size and 

type of business that qualifies for their small business services. 
Page 3 GAO-14-203 Telecommunications 

obtained provides a reasonable basis for our findings based on our audit 

objectives.

Broadband speeds are described in upload and download capabilities 

measured by the number of bits of data transferred per second and 

include kilobits (1 thousand bits per second), megabits (1 million bits per 

second), and gigabits (1 billion bits per second). Download speed refers 

to the speed at which data is transferred from the Internet to the 

consumer. Upload speed refers to the speed at which data is transferred 

from the consumer to the Internet. FCC currently considers speeds of 4 

megabits per second (Mbps) download and 1 Mbps upload or greater to 

be broadband. The speeds required by small businesses vary depending 

on how the business uses its Internet connection, the number of users, 

and the number of applications running concurrently, among other 

factors. Examples of uses supported by different download speeds are 

described in table 1.

Table 1: Example Uses of Different Broadband Speeds

Download speed Example of use at this speed

3 Mbps Download a 100-page text document with graphics in about 6 

seconds

10 Mbps Host a multi-point videoconference for a group of five

100 Mbps Download a 2 gigabyte high-definition video in about 3 minutes

Source: Columbia Telecommunications Corporation.

Note: This table is drawn from Columbia Telecommunications Corporation, The Impact of Broadband 

Speed and Price on Small Business (Kensington, MD: United States Small Business Administration, 

Office of Advocacy, November, 2010).

Broadband service is provided through a variety of technologies, 

including:

• Digital subscriber line (DSL). This service is delivered by local 

telephone companies over their copper-wire telephone networks used 

by traditional voice service.

• Cable modem. This service is delivered by cable operators through 

the same coaxial cables that deliver sound and pictures to television 

sets.

Background

Broadband Transmission 

Technologies
Page 4 GAO-14-203 Telecommunications 

• Fiber optic. Fiber optic technology converts electrical signals carrying 

data to light and sends the light through transparent glass fibers about 

the diameter of a human hair.

• Satellite. This wireless service transmits data to and from subscribers 

through a receiver dish to a satellite in a fixed position above the 

equator, eliminating the need for a copper wire or coaxial cable 

connection.

• Wireless. Land-mobile or terrestrial broadband service that connects a 

business or home to the Internet using a radio link.

Broadband access can be shared or dedicated. Shared access means 

users share the connection to the Internet, and thus speeds can be 

variable based on the number of users accessing the network at one 

time. Dedicated access provides a reliable point-to-point connection with 

guaranteed speeds. For some small businesses with the need to send 

sensitive or large amounts of data, such as financial institutions or 

medical centers, a dedicated connection or special access line may be 

beneficial. However, most small businesses do not need such a 

connection.

Broadband Internet access is widely available throughout the United 

States to both residences and businesses. According to the National 

Broadband Map,3 which measures national access to broadband, as of 

December 2012, approximately 98 percent of the U.S. population had 

access to wireline or wireless broadband service of 3 Mbps download and 

768 kilobits per second (kbps) upload.4

 3

See, accessed January 14, 2014, 

A study completed for SBA’s 

Office of Advocacy in 2010 similarly found that over 96 percent of urban 

http://www.broadbandmap.gov. The map represents 

the most comprehensive nationwide data on broadband availability and is a joint effort of 

NTIA and FCC to report broadband speeds and technology available across the United 

States. 

4

While FCC’s broadband speed benchmark is 4 Mbps download and 1 Mbps upload, FCC 

and NTIA report on the 3 Mbps download and 768 Kbps upload speed because it is the 

closest speed to the FCC benchmark about which data is collected for the National 

Broadband Map. 

Broadband Availability and 

Access
Page 5 GAO-14-203 Telecommunications 

small businesses and approximately 92 percent of rural small businesses 

reported access to wireline or wireless broadband.5

Still, some areas of the United States remain underserved or unserved by 

broadband infrastructure.6 Service gaps exist primarily in nonurban 

areas.7

• Low population. The limited number of potential subscribers in an 

area makes it difficult for providers to recoup the costs of building a 

network.

For example, according to data used in the National Broadband 

Map, nearly 100 percent of urban residents have access to 3 Mbps or 

higher download speeds, and about 94 percent of nonurban residents 

have access to such speeds. Likewise, wireline broadband access is 

available to 99 percent of urban populations and 82 percent of nonurban 

populations. The unserved and underserved areas that remain in the 

United States tend to be where conditions increase the cost of broadband 

deployment, and the difficulty in recouping deployment costs makes it 

less likely that a service provider will build out or maintain a network. 

These conditions include:

 5

Columbia Telecommunications Corporation, The Impact of Broadband Speed and Price 

on Small Business (Kensington, MD: United States Small Business Administration, Office 

of Advocacy, November, 2010).

6

The definitions of unserved and underserved were part of a Notice of Funds Availability 

announced by NTIA and designed to implement grant programs under the American 

Recovery and Reinvestment Act of 2009 (74 Fed. Reg. 33104, July 9, 2009). The speeds 

in these definitions are much lower than the FCC’s broadband benchmark of 4 Mbps 

download and 1 Mbps upload. According to the Notice of Funds Availability, an unserved 

area is one in which at least 90 percent of households cannot subscribe to the minimum 

broadband speed and service, defined as advertised speeds of at least 768 Kbps 

download and at least 200 Kpbs upload. An underserved area is one in which (1) 50 

percent or less of households have access to the minimum broadband speed, (2) no 

provider offers service speeds of at least 3 Mbps, or (3) 40 percent or less of the 

households choose to subscribe to a broadband service. The availability of, or adoption 

rates for, satellite broadband service are not considered in determining whether an area is 

unserved or underserved. 

7

The definitions of urban and nonurban are based on the Census Bureau’s urban and 

rural classification. Within this classification, the Census Bureau identifies two types of 

urban areas: (1) urbanized areas of 50,000 or more people; and (2) urban clusters of at 

least 2,500 and less than 50,000 people. Rural areas encompass all population, housing, 

and territory not included within an urban area. For purposes of this report, we refer to 

urbanized areas as urban areas and we refer to urban clusters and rural areas as 

nonurban areas. 
Page 6 GAO-14-203 Telecommunications 

• Difficult terrain. Challenging terrain, such as mountains, may increase 

construction costs for wireline service and can affect wireless service 

by creating physical barriers or otherwise limiting the ability to transmit 

data.

• Natural Disasters. Areas that experience severe weather or natural 

disasters may lose broadband access temporarily, which increases 

costs because of the need to repeatedly repair or replace 

infrastructure. For instance, Hurricane Sandy took down a service 

provider’s copper lines that provided DSL service for Fire Island, New 

York. The service provider decided to replace the copper lines with a 

more costly but resilient fiber network.

The federal government provides support in the form of grants and loans 

for the construction and upgrade of broadband infrastructure. Much of this 

support facilitates broadband deployment to underserved and unserved 

areas. Table 2 describes the federal programs that have provided the 

most funding for broadband deployment in the past 5 years.8, 9

 8

SBA does not provide funding for broadband deployment. However, it does provide 

funding to nonprofit Small Business Development Centers (SBDC). SBDCs provide 

training and education to encourage greater use of broadband. SBA also supports 

research by its Office of Advocacy on the use and availability of broadband. 

9

The Department of Commerce’s Economic Development Administration also had 

programs in fiscal years 2008-2012 that support the construction of public infrastructure, 

which may include broadband infrastructure. Programs include Economic Adjustment 

Assistance, Public Works, Disaster Supplement Appropriations, Global Climate Change 

Mitigation Incentive Fund, Community Trade Adjustment Assistance Program, and the 

Disaster Relief Opportunity Fund. The focus of these programs is to support economic 

recovery, promote regional competiveness, or to help areas recover from a natural 

disaster, rather than explicitly fund the construction of broadband infrastructure. 

Federal and Municipal 

Support for Broadband 

Deployment
Page 7 GAO-14-203 Telecommunications 

Table 2: Federal Programs Providing Funding for Broadband Infrastructure Deployment (2008 to 2012) 

Program Agency Description

Broadband Initiatives 

Program (BIP)

Rural Utilities Service (USDA) a Awarded approximately $3.5 billion in competitive grants and 

loans to public and private sector entities in 2010.

Funding targeted last-mile infrastructure projects that provide 

service directly to end users, including satellite and technical 

assistance programs, as well as middle mile projects.

Broadband Technology 

Opportunities Program 

(BTOP)

National Telecommunications 

and Information Administration 

(Commerce) b

Awarded approximately $4 billion in competitive grants to public 

and private sector entities in 2009 and 2010.

Projects focus on building middle mile infrastructurec

Community Connect Grants

and 

providing broadband services to schools, medical providers, public 

safety agencies, and other community anchor institutions. 

Rural Utilities Service (USDA) Awarded approximately $48 million over the past 5 years for 

grants to applicants proposing to provide broadband service on a 

“community-oriented connectivity” basis.

Funding must be appropriated annually. 

Connect America Fund FCC d Has made available up to $4.5 billion annually since 2012 for 

ongoing support of voice and broadband-capable networks.

Aims to provide universal availability of modern networks capable 

of providing voice and broadband service to homes, businesses, 

and community anchor institutions, among other goals.

Rural Broadband Access 

Loan and Loan Guarantee 

Program 

Rural Utilities Service (USDA) Awarded about $625 million in loans over the past 5 years for 

facilities and equipment providing broadband service in rural 

communities.

Targets rural communities with populations under 20,000.

Telecommunications 

Infrastructure Loan 

Program

Rural Utilities Service (USDA) Awarded about $2.9 billion in loans over the past 5 years to 

improve, expand, build, and acquire infrastructure to support 

broadband service in rural areas.

Loans are available to incumbent telephone providers, 

cooperatives and non-profits, among others. 

Source: GAO presentation and analysis of information from Commerce, FCC, and USDA.

a Congress appropriated funds for the BTOP and BIP programs under the American Recovery and 

Reinvestment Act of 2009 (Pub. L. No. 111-5, 123 Stat. 115 (2009)). All funds were obligated prior to 

the end of fiscal year 2010. In the joint Notice of Funds Availability, NTIA and RUS provided that 

projects should be completed within 3 years of receiving an award. 74 Fed. Reg. 33104, July 9, 2009.

b As part of BTOP, in support of broadband adoption, NTIA awarded grants to public computing 

centers and sustainable broadband adoption projects that funded access to broadband, computer 

equipment, and job training.

c

Middle mile infrastructure provides a link from the Internet backbone to the last mile networks of 

local providers (such as cable or phone companies) that provide broadband service to end users. The 

availability of broadband service to end users depends upon access to adequate middle-mile 

facilities, which can be costly to deploy in rural areas.

d The Connect America Fund is part of ongoing Universal Service Fund reform aimed at eventually 

replacing existing high-cost support mechanisms. The high-cost program within the Universal Service 

Fund (USF) provides subsidies to telecommunications carriers that serve rural and other remote 

areas with high costs of providing telephone service. GAO has ongoing work on the USF reforms and 

their impact on broadband deployment and other issues.
Page 8 GAO-14-203 Telecommunications 

Some municipalities also support broadband deployment by funding, 

building, and operating networks to provide broadband access to their 

communities, much as some cities offer utilities such as water and 

electricity. The municipal entity providing this service may be, for 

example, a department within the city government, or a cooperative 

formed among several communities. Communities have used federal 

funds, issued bonds, and taken out loans to fund the construction of 

municipal broadband networks. In some instances, voter referendums 

have been required for the city to take out loans or bonds for this 

purpose.

Municipal networks have achieved varying degrees of public acceptance 

and financial success. In some communities, these networks have been 

welcomed because they are the only broadband service provider. In other 

communities, the municipality functions as a competitor to cable and DSL 

providers and lawsuits have been filed by incumbent service providers to 

prevent municipalities from building networks. Some states have passed 

legislation to prevent communities from becoming service providers. 

Nevada, for instance, prohibits cities with a population of 25,000 or more 

from selling telecommunications services to the general public.10

Nebraska prohibits any political subdivision that is not a public power 

supplier from providing broadband or Internet services.11 Financially, 

some municipal networks have been successful while others have 

struggled to pay off bonds or loans used for capital investment.

Federal broadband programs do not target deployment to small 

businesses. As previously discussed, federal programs target deployment 

to areas that are unserved or underserved. Many programs do, however, 

have requirements that can result in networks maximizing the number of 

small businesses and residences served. For example, USDA’s 

Community Connect grants require that the service provider offer 

broadband services to all residences and businesses in the proposed 

service area. To be eligible for the Rural Broadband Access Loan and 

Loan Guarantee Program at least 25 percent of the households in an 

area must currently be underserved. Thus, the program’s funding 

supports providers who will serve residences and small businesses in 

 10Nev. Rev. Stat. Ann. § 268.086 and Nev. Rev. Stat. Ann. § 710.147

11R.R.S. Neb. § 86-594 

Federally Funded 

Efforts to Expand 

Broadband 

Encompass but Do 

Not Specifically 

Target Small 

Businesses
Page 9 GAO-14-203 Telecommunications 

areas of need. Table 3 shows selected federal funding requirements 

related to eligibility and infrastructure deployment for the six federal 

programs previously described.

Table 3: Selected Federal Program Requirements Related to Eligibility and Deployment of Broadband Infrastructure

Federal program Eligibility requirement related to area’s need Service deployment requirements 

Broadband Initiatives Program (BIP) 

(USDA)

Required that 75 percent of a funded area be 

rural and without access to high-speed 

broadband service.

Required that service is provided to the 

entire territory of each census block in the 

proposed service area for last mile projects 

unless waiver is sought and approved.

Broadband Technology Opportunities 

Program (BTOP) (Commerce)

Required that proposed service areas were 

unserved or underserved.

None.

Community Connect Grants (USDA) Requires that the proposed service area is 

rural and does not have broadband service 

available. 

Requires that the network offer service to 

all residences and businesses in the 

proposed service area.

Connect America Fund (FCC) Requires that the proposed service areas are 

high-cost census blocks or within the provider’s 

service area.

Requires that service providers certify that 

they are taking reasonable steps within 5 

years to offer broadband throughout their 

service area or provide service upon 

request.

Rural Broadband Access Loan and 

Loan Guarantee Program (USDA)

Requires that proposed service areas are rural 

and at least 25 percent of the households are 

underserved.

Requires that a minimum of 5 Mbps 

(download plus upload speeds) is available 

to every customer in the proposed service 

area.

Telecommunications Infrastructure 

Loan Program (USDA)

Requires that the proposed service areas are 

rural.

Requires that borrowers provide evidence 

that service will be made available to the 

widest number of rural users.

Source: GAO analysis of information from USDA and USDA statutes and regulations.

Since these programs do not focus on deployment to small businesses, 

they do not measure their impact on small businesses, including the 

broadband speeds and prices available to them. However, each program 

has broader goals and measures, some of which encompass the impact 

on businesses. For example, BIP supports USDA’s goal to increase the 

number of rural Americans with access to broadband service and provide 

the speeds needed by business, health care, public safety, and others. 

Consistent with this goal, RUS reported in August 2013 that more than 

5,800 businesses had received new or improved service as a result of 

BIP funding since passage of the Recovery Act in 2009, even though BIP 

does not have specific performance targets regarding services to 

businesses. BTOP supports NTIA’s strategic goal of driving innovation 

through policies that enable broadband growth and support e-commerce. 

Accordingly, NTIA measures the number of community anchor 

institutions, such as schools and libraries, that received broadband 
Page 10 GAO-14-203 Telecommunications 

connections through BTOP and the miles of broadband network 

deployed. NTIA also collected data on interconnection agreements that 

allow small internet service providers to provide broadband service.

According to service providers we spoke with, federal funding was 

instrumental in their network expansion or upgrade. For example, officials 

from Monroe Telephone Company in Oregon stated that without the 

federal support they received through BIP, they would not have expanded 

their network due to the area’s low population density and mountainous 

terrain. Monroe officials stated that they used the loan of $1.4 million and 

grant of $4.2 million, both from BIP, to expand broadband access to 1,200 

households and small businesses in two counties that previously only had 

dial-up or satellite service. In another example, officials at Paul Bunyan 

Telephone Cooperative in Minnesota stated that the RUS loan they 

received enabled them to expand their broadband service years earlier 

than otherwise would have been possible.

Federal programs have supported improvements to broadband networks 

through grants and loans for expansions, upgrades, and building of new 

networks, according to the service providers we spoke with. Providers 

expanded their existing networks by laying new fiber optic lines or using 

other technologies to make broadband available in areas that were 

previously unserved or underserved. For example, Intermountain Cable in 

eastern Kentucky used a Community Connect grant to expand its 

broadband network to Hurley, Virginia. According to officials at 

Intermountain Cable, Hurley previously only had satellite broadband 

service. SandyNet, a municipal broadband provider in Sandy, Oregon, 

used BIP funding to build fiber optic lines, allowing SandyNet to expand 

its wireless service further into rural areas. Providers also used federal 

funds to upgrade and improve the reliability and speed of their existing 

networks. For example, in northwest Minnesota, Garden Valley 

Telephone Company used an RUS Telecommunications Infrastructure 

loan to upgrade the copper lines in the rural areas it serves with fiber 

Selected Federally 

Funded and 

Municipal Networks 

Have Improved 

Broadband Service 

for Small Businesses

Service Improvements
Page 11 GAO-14-203 Telecommunications 

optic lines, which provide a faster and more reliable connection. For 

homes and small businesses in these areas, speeds have gone from 

approximately 1 Mbps download to a top advertised speed of 30 Mbps. In 

other areas it serves, Garden Valley used portions of the loan to make 

smaller scale improvements, loan to make smaller scale improvements, 

changing some of the hardware attached to existing copper lines to 

increase speeds. Finally, federal funds or, in the cases of some 

communities, other sources of funding such as municipal bonds, have 

been used to build new broadband networks. The North Georgia Network 

used a $33 million BTOP grant to build a 260-mile fiber optic network that

provided broadband to businesses and residences. MiNet, a municipal 

network operated by the cities of Monmouth and Independence, Oregon, 

used city funds and a loan from the state of Oregon to build a fiber optic 

network that provides download speeds of up to 1 Gbps.

According to some providers, these federal and municipal investments 

have stimulated competition. In some areas that received federal funds or 

where a municipal network was built, other broadband providers took 

steps to improve the speed and reliability of their service. For example, 

following the construction of a fiber-to-the-home municipal network in 

Monticello, Minnesota, the two other broadband providers in the area 

made investments in their infrastructure to improve their broadband 

speeds. One of these providers stated that all of its networks undergo 

periodic upgrades to improve service, but upgrade schedules can change 

in order to stay competitive when there is a new service provider in a 

particular market.

To assess the potential effect of federal funding or municipal support on 

broadband availability, we collected information on speeds and prices 

offered by federally funded and municipal networks in 14 nonurban 

communities (subsequently referred to as “funded” communities.)12

 12Of the 14 funded communities in our analysis, 10 were served by 7 networks that 

received federal funding. The remaining 4 communities were served by 3 municipal 

networks that did not receive federal funding. A list of the service providers that were part 

of this analysis, as well as the prices and speeds they offer, and the type of federal 

funding they received is provided in appendix II. 

We 

compared this information with speeds and prices offered by other service 

providers in those same communities and service providers in 14 similar 

City of Windom, Minnesota, and 

Windomnet

In 2002, a referendum passed in the City of 

Windom, Minnesota, authorizing construction 

of a fiber broadband network to be operated 

by Windomnet, the municipally owned cable 

operator. At the time, there was one other 

broadband provider serving Windom. 

Construction of Windomnet’s 35-mile fiber 

network around the city was completed in 

2005. The network was funded by revenue 

bonds worth $9.4 million and additional 

credit of $1 million. Windomnet offers fiberto-the-home service to the entire community 

of residents and businesses. As of 2013, 

Windomnet had over 1,800 subscribers, 

including about 200 business subscribers, 

most of them small businesses. Windomnet 

offers download speeds ranging from 1.5 

Mbps to 1 gigabit per second (Gbps). 

Source: GAO presentation of information from Windomnet.

Speeds and Prices
Page 12 GAO-14-203 Telecommunications 

nonurban communities (subsequently referred to as “comparison”

communities) without federally funded or municipal networks.13, 14

We found that more service providers in funded communities offered 

service at higher speed ranges than providers in comparison 

communities, as shown in figure 1. For example, twice as many funded 

communities as comparison communities have a provider that offers 

speeds of 51 Mbps or higher. However, among the 14 funded 

communities and 14 comparison communities included in our analysis, all 

have at least one service provider that offers download speeds of at least 

4 Mbps, which is FCC’s current benchmark for broadband.

Figure 1: Number of Communities with Available Download Speeds in Selected 

Ranges, as of September 30, 2013

 13Our analysis was conducted based on advertised speeds collected during the time 

period of July 1, 2013, through September 30, 2013.

14A list of communities included in our analysis is shown in appendix I. 

Speed
Page 13 GAO-14-203 Telecommunications 

Note: Each cluster of bars reports on the availability of speeds within each range for the same 28 

communities. Thus, the maximum number of communities for each bar is 14.

We also compared the highest speed offered by service providers. Our 

analysis found that federally funded and municipal networks most often 

had the highest advertised top speed when compared with top speeds 

offered by nonfederally funded and non-municipal networks in the same 

community, and networks in nearby comparison communities. In 9 of the 

14 sets of communities included in this analysis, federally funded or 

municipal networks had the highest advertised top speeds, as shown in 

figure 2. For example, a federally funded network in a community in 

northeast Georgia advertised a top download speed of 100 Mbps, while 

the highest speed advertised by other providers in the same community 

and in the nearby comparison community was 40 Mbps. In the five other 

cases, networks in nonfederally funded communities offered speeds that 

were equal to or higher than speeds available in funded communities.

Figure 2: Comparison of Highest Advertised Download Speeds, as of September 30, 2013

Note: Three of the federally funded communities only have federally funded networks, thus no bar 

appears in the graph for nonfederally funded networks in these communities.

a Each cluster of bars represents a set of communities included in our analysis.
Page 14 GAO-14-203 Telecommunications 

We found that prices offered by federally funded and municipal networks 

were slightly lower than prices offered by nonfederally funded networks in 

the same community and networks in comparison communities. For 

example, for speeds of 4 to 6 Mbps, federally funded and municipally 

operated networks charged prices that were on average about $11 per 

month less than nonfederally funded networks in the same community 

and about $20 less per month than networks in comparison communities. 

The price differences are greater in the 7 to 10 Mbps download range, 

where federally funded and municipally operated networks’ prices were 

on average about $30 less per month than nonfederally funded networks 

in the same community and about $35 less per month than networks in 

comparison communities. There were some cases where federally funded 

or municipal networks offered substantially lower prices than networks in 

comparison towns, such as the municipal network in Windom, Minnesota, 

which offered 10 Mbps download service for approximately $38 a month, 

while two networks in a comparison town offered the same speed for 

about $100 to $110 per month. Figure 3 illustrates the prices for selected 

speed ranges offered by all the providers included in our analysis and is 

broken out by federally funded and municipal networks, nonfederally 

funded networks in the same community as a federally funded or 

municipal network, and networks in comparison communities. As this 

figure shows, prices in all the ranges are generally lower for federally 

funded or municipal networks, and at the 4 to 6 Mbps and 7 to 10 Mbps 

download ranges, networks in comparison communities tend to have 

higher prices than both federally funded and municipal networks and 

nonfederally funded networks located in the same community.

Price
Page 15 GAO-14-203 Telecommunications 

Figure 3: Comparison of Broadband Service Prices at Selected Speeds, as of 

September 30, 2013

We also compared broadband speeds and prices in the nonurban funded 

and comparison communities with the speeds and prices in urban areas. 

For download speeds below 10 Mbps, average prices in nonurban areas 

were lower than average prices in urban areas. For example, for speeds 

of 4 to 6 Mbps, the average price was about $23 less in nonurban areas 

than in urban areas, and for speeds of 7 to 10 Mbps the average price 

was about $9 less. The lower prices offered by networks in nonurban 

communities could be due to providers having lower costs to recoup 

because some receive federal or municipal support or due to the limits 

imposed by weak market demand, typical of many nonurban areas. In this 

analysis it is difficult to identify the exact reason for the lower prices in the 

Comparison with Urban 

Communities
Page 16 GAO-14-203 Telecommunications 

nonurban communities. For speeds of 11 to 25 Mbps, urban areas offered 

prices that were on average $21 less than nonurban areas.

Furthermore, nonurban communities with federally funded or municipal 

networks tended to have lower prices than nonurban comparison 

communities and urban communities. For example, in the 4 to 6 Mbps 

download range, nonurban networks in funded communities offered 

average prices that were about $16 less than the prices offered by 

networks in comparison communities and $32 less than networks in 

urban communities, and $20 and $19 less, respectively, in the 7 to 10

Mbps speed range. In the 11 to 25 Mbps range, nonurban funded 

communities offered lower average prices than comparison communities, 

but urban areas offered lower average prices than both the nonurban 

funded and comparison communities. Figure 4 illustrates the prices that 

service providers offer for selected speed ranges in urban and nonurban 

areas.
Page 17 GAO-14-203 Telecommunications 

Figure 4: Comparison of Monthly Broadband Service Prices at Selected Speeds for 

Urban and Nonurban Areas
Page 18 GAO-14-203 Telecommunications 

We found that providers in urban areas generally offer higher speeds than 

those in nonurban areas.15 Among the locations included in our analysis, 

providers in all 8 of the urban areas offered download speeds of 100 

Mbps or higher, whereas providers in only 7 of the 28 nonurban areas 

offered download speeds of 100 Mbps or higher. Six of the 7 nonurban 

areas were funded communities with speeds of 100 Mbps provided by a 

federally funded or municipal network.16 However, in one funded 

community one competitor also offered speeds of 100 Mbps.

Small businesses we spoke with reported improvements in the speed and 

reliability of their broadband service after they began using federally 

funded or municipal networks. Of the 27 small businesses we spoke with 

who are customers of federally funded or municipal networks, 20 reported 

an improvement in their broadband speeds.17

 15For more information on rural and urban broadband availability, access January 14, 

2014, 

For example, in southwest 

http://www.ntia.doc.gov/report/2013/broadband-availability-beyond-ruralurbandivide. National Telecommunications and Information Administration. Broadband 

Availability Beyond the Rural/Urban Divide. (Washington, D.C.: May 2013). 

16These six funded communities were served by four federally funded or municipal 

networks.

17The remaining seven small businesses either did not address the question because they 

did not know the speed of their previous service or did not have a previous broadband 

provider.

Chattanooga’s Gigabit Network

The municipally operated electricity provider in 

Chattanooga, Tennessee, used its federally 

funded smart grid to provide fiber-to-the-home 

broadband service. Coupled with $290 million 

in bonds the Electric Power Board (EPB) 

received a Department of Energy Recovery 

Act grant to improve its electricity 

infrastructure by building a smart grid with 

fiber to the home. A smart grid is a network 

that uses information technology to deliver 

electricity efficiently, reliably, and securely. In 

planning to build the electricity smart grid, 

EPB realized that with additional investment it 

could use the smart grid fiber to provide 

broadband service as well. As a result, all 

homes and businesses in the 600 square 

miles served by EPB now have fiber 

connections to monitor electricity, and each 

business and home can now receive 

broadband service up to 1 Gbps across this 

same fiber network. According to some small 

businesses, this has resulted in a number of 

small startups and small business incubators 

in Chattanooga, drawn by the high speed 

network, the low cost to operate a small 

business, and a culture that supports 

entrepreneurs.

Source: GAO presentation of information from EPB and 

selected Chattanooga small businesses.

Impact of Network 

Improvements on Small 

Businesses
Page 19 GAO-14-203 Telecommunications 

Minnesota, a farm equipment sales and service company reported that it 

switched from its previous broadband provider because the provider’s 

service could not supply the desired broadband speeds. Now the farm 

equipment company has broadband speeds nearly twenty times its 

previous speeds. Similarly, 18 of 27 small businesses we spoke with told 

us that their new service is more reliable than the service of their previous 

provider.18

While reliability and speed were reported as improving, small businesses 

we spoke to reported that the effect of the new network on price varied. 

Several reported the price of broadband service went down, particularly a 

few businesses that previously relied on satellite service for broadband. 

However, some small businesses we spoke with reported that the price 

for the new service was similar to or more than their previous service. For 

example, an information technology company in northeast Georgia told us 

that it pays approximately $20 more per month but stated it was worth the 

additional cost because of the increased reliability and additional speed.

These small businesses said they experienced less network 

downtime and no significant slowdowns in speed at points in the day 

when usage increased. Many service providers told us that they used 

fiber optics for their expansions or upgrades, contributing to greater 

reliability and speed.

Small business owners we met with who use the services of federally 

funded or municipal networks told us that they made improvements to 

their business operations, often because the speed of online applications 

was improved, which allowed them to operate more efficiently. Table 4 

describes some of the improvements that small businesses told us they 

experienced due to the enhancements to their broadband service.

 18The remaining nine small businesses either did not address the reliability of the new 

network or did not have a previous broadband provider.

Cities of Monmouth and Independence, 

Oregon, MINET Fiber Network

MINET is a fiber optic network in Monmouth 

and Independence, Oregon. The two cities 

decided in 2004 to build their own fiber 

network for economic development purposes. 

City officials believed that availability of 

broadband services would help to keep 

existing jobs and attract new employers. The 

fiber network was built with city funds and a 

state loan. MINET passes 6,400 businesses 

and homes at the curb. In June 2013, 

MINET’s customers included about 500 local, 

mostly small businesses, according to MINET 

officials, a number that comprises about 90 

percent of local businesses. Most businesses 

subscribe to download speeds of 7 Mbps or 

10 Mbps, although MINET can offer download 

speeds up to 1 Gbps.

Source: GAO presentation of information from MINET.
Page 20 GAO-14-203 Telecommunications 

Table 4: Operational Improvements That Small Businesses Attributed to Broadband Service Enhancements

Operational improvements Examples

Online inventory management A hardware store in Dawsonville, Georgia, uses its broadband connection to access online 

manuals for its small engine repair service. This allows the store to more quickly review parts 

manuals, and identify and order the correct part. 

An oil company in Windom, Minnesota, uses the broadband service provided by the municipal 

network to remotely monitor the fuel levels at its gas stations. This was previously handled by the 

station manager faxing in reports twice a day. Fuel levels are now updated every 15 minutes. 

Customer service The owner of a computer support business in Monmouth, Oregon, stated that he can now have 

up to six computers connected to his network. This allows him to more quickly update software 

and clear viruses from customers’ computers and, as a result, serve more customers.

The owner of a resort in northern Minnesota told us that his customers are able to access the 

Internet from the resort now. This enables them to work from the resort without having to 

commute to a town to get Internet access.

Technical capabilities A manufacturer of countertops for private airplanes, located in northeast Georgia, stated that the 

improved broadband service allows the company to conduct videoconferences to discuss design 

issues. This is particularly beneficial because they can look at the designs or any problems with 

the product. 

A lamb distributor in Junction City, Oregon, uses the high speed broadband capabilities to hold 

video conferences. He uses this for sales calls with restaurants, meetings with his employee in 

Portland, and meetings with the farmers that raise his sheep. 

Telework High speed broadband has allowed a radiologist in Chattanooga, Tennessee, to read x-rays, 

MRIs, CAT scans and ultrasounds from home. The speed of the network allows the radiologist to 

create a final report from home, which can be critical in emergency situations, but previously 

could only be completed in the office.

A print shop in Monmouth, Oregon, has been able to allow its graphic designer to work from 

home more frequently and allow the owners to work from their home office.

Other operational improvements A developer of aircraft technical manuals in Sandy, Oregon, can now send and receive large 

data files using a high speed broadband connection. Prior to obtaining the high speed 

connection, the developer sent the files to the aircraft manufacturer in Germany via overnight 

delivery. 

A small convenience store in northern Minnesota where the owner also operates a restaurant, 

gas station, motel, and campground at the same location, uses the high speed broadband for 

many purposes including obtaining hunting and fishing licenses for customers. Previously, 

obtaining a single license could have taken 20 to 30 minutes but now can be completed in only a 

few minutes.

Source: GAO presentation of information obtained from interviews with small businesses.

Small business owners we spoke with said that the operational 

efficiencies they experienced as a result of better broadband service have 

not yet resulted in increased revenues. Only one small business we met 

with sought to improve their revenue potential by relocating to an area 

with better Internet service. Rather than relocate, a different small 

business owner stated he would pay more to get a dedicated line for 

faster or more reliable service. Other small businesses stated that 

broadband service would not alone determine where they set up their 
Page 21 GAO-14-203 Telecommunications 

business but might be one of many factors considered. Similarly, the 

communities that built high speed broadband networks did so to attract 

some new businesses, as well as retain existing businesses.

We provided a draft of this report to NTIA and EDA within the Department 

of Commerce, USDA, SBA, and FCC for review and comment. NTIA and 

FCC provided technical comments, which were incorporated, as 

appropriate. The other agencies reviewed the draft but had no comments.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution of it until 30 days from 

the date of his letter. At that time, we will send copies of this report to the 

Secretary of Commerce, the Secretary of Agriculture, the Administrator of 

the U.S. Small Business Administration, and the Chairman of the Federal 

Communications Commission. We will also make copies available to 

others on request. In addition, the report will be available at no charge on 

the GAO Web site at http://www.gao.gov.

If you or your staff have any question, please contact me at (202) 512-

2834 or goldsteinm@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff that made major contributions to this report are 

listed in appendix III.

Mark L. Goldstein

Director, Physical Infrastructure Issues

Agency Comments
Appendix I: Objectives, Scope, and 

Methodology

Page 22 GAO-14-203 Telecommunications 

This report describes: (1) the federal government’s efforts to ensure the 

availability of broadband services for small businesses, and (2) the effect 

of federally funded and municipal networks on broadband service and 

small businesses.

To address both reporting objectives, we reviewed documents from and 

interviewed officials at the U.S. Department of Agriculture’s (USDA) Rural 

Utilities Service (RUS), the Department of Commerce’s (Commerce) 

National Telecommunications and Information Administration (NTIA) and 

Economic Development Administration (EDA), and the Federal 

Communications Commission (FCC) about their efforts to ensure the 

availability of broadband services for small businesses. We also reviewed 

documents and interviewed officials at the Office of Advocacy within the 

Small Business Administration (SBA) about its research on the availability 

and use of broadband by small businesses. We reviewed program rules 

regarding funding applicability and eligibility for FCC, RUS, NTIA, and 

EDA programs that provide funding for broadband infrastructure; status 

reports for the Broadband Technology Opportunities Program (BTOP) 

and the Broadband Infrastructure Program (BIP); SBA’s Office of 

Advocacy’s study on small business access to broadband; and reports 

from FCC and NTIA on broadband deployment and availability. We also 

reviewed reports and surveys from academic institutions, think tanks, and 

trade associations on the topics of broadband deployment, economic 

development, and small business. We interviewed representatives of a 

telecommunications trade association, representatives of small business 

interests, and large and small broadband service providers in an effort to 

obtain a variety of viewpoints on issues related to small business and 

broadband services. To identify the strategic objectives, goals, and 

performance measures of federal broadband infrastructure programs, we 

reviewed budget summaries and performance plans, performance and 

accountability reports, and other agency documents for these programs 

from USDA, NTIA, RUS, and FCC.

To describe the effect of federally funded and municipal networks on 

broadband service and small businesses, we obtained and analyzed 

information from a variety of sources. We visited towns in Oregon, 

Minnesota, Tennessee, and Georgia, where we interviewed a 

nongeneralizable selection of Internet service providers that received 

federal funds, municipally operated network providers, and small 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 23 GAO-14-203 Telecommunications 

businesses that use the services of these providers.1 We selected these 

states and the specific locations within the states on the basis of the 

presence of at least one project that received federal funding for 

broadband infrastructure in the last 5 years; the presence of a municipally 

operated broadband network, which also may have received federal 

funding; and geographic diversity, i.e., sites were in different regions of 

the county. The locations were chosen to collectively include at least one 

project from each of the major federal broadband infrastructure 

programs.2 We selected small businesses to interview that were users of 

the federally funded or municipal networks and that had fewer than 500 

employees, based on FCC’s National Broadband Plan, which addresses 

support for broadband growth in small and medium enterprises of this 

size.3

 1

Although most interviews were conducted in person, some were conducted via 

telephone.

While the results of our interviews cannot be projected to all service 

providers and small businesses because they were selected using a 

nonprobability approach, they illustrate a range of possible views and 

experiences.

2

These programs are the Broadband Technology Opportunities Program, the Broadband 

Initiatives Program, the Rural Broadband Access Loan and Loan Guarantee Program, 

Community Connect Grants, and the Telecommunications Infrastructure Loan Program. 

EDA also has programs that may support the construction of public infrastructure, 

including broadband infrastructure. Programs include Economic Adjustment Assistance, 

Public Works, Disaster Supplement Appropriations, Global Climate Change Mitigation 

Incentive Fund, Community Trade Adjustment Assistance Program, and the Disaster 

Relief Opportunity Fund. We interviewed a Community Trade Adjustment Assistance 

grantee; however, we did not interview others because the focus of these programs is to 

support economic recovery, promote regional competiveness, or to help areas recover 

from a natural disaster, rather than explicitly fund the construction of broadband 

infrastructure. We did not include projects that received funding from FCC’s Connect 

America Fund because funding was dispersed in December 2012, and carriers have 3 

years to fulfill their obligation to deploy infrastructure. Two locations included in our 

analysis that we did not visit in person are Hurley, Virginia, and McMinn County, 

Tennessee. We spoke with one broadband provider that received an RUS Community 

Connect Grant to provide broadband service in Hurley, Virginia. As previously mentioned, 

we spoke with a grantee that received a Community Trade Adjustment Assistant from 

EDA to provide broadband infrastructure to two industrial parks in McMInn County, 

Tennessee. 

3

There is no standard definition of small business. SBA’s definition of small business 

varies according to industry, generally based on either the number of employees or 

revenues, and broadband service providers have their own guidelines for the size and 

type of business that qualifies for their small business services. 
Appendix I: Objectives, Scope, and 

Methodology

Page 24 GAO-14-203 Telecommunications 

We collected information on broadband speeds and prices offered by all 

wireline providers in the locations we visited where federally funded or 

municipal networks were present. We only included wireline broadband 

service in our analysis because unlike some wireless service (e.g., 

satellite and mobile broadband), wireline broadband generally offers 

higher speeds and greater reliability that businesses require.4 For 

comparison purposes, we also collected speed and pricing information for 

all wireline providers in nearby towns that were similar to these locations 

in terms of population, income levels, and number of wireline service 

providers, but where federally funded or municipal networks were not 

present;5 and in two urban areas in each of the same states. Table 5 lists 

the locations visited, the nearby towns, and the urban areas visited in 

each state. In total we collected pricing information on fourteen nonurban 

towns that received federal funding or have a municipal network, 14 

nonurban comparison towns, and 8 urban areas.6 We used the National 

Broadband Map, a joint effort of NTIA and FCC to analyze and map 

broadband speeds, and comparable efforts managed by the states to 

identify wireline service providers in these locations.7

 4

One network, SandyNet, provides wireline and wireless service. SandyNet received 

federal funding to expand wireless access in rural areas. 

For each service 

provider identified, we collected information on advertised download and 

5

Our criteria for the selection of comparison towns were (1) similar population as defined 

by the Census Bureau’s Urban and Rural Classification where urbanized areas are 50,000 

or more people, urban clusters are at least 2,500 and less than 50,000 people and rural 

encompasses all other areas not included within an urban area (i.e. rural areas are less 

than 2,500 people), (2) per capita income within 20 percent of the site visit town, when 

feasible, (3) location in the same state and within 65 miles of the federally funded or 

municipally operated network in an effort to ensure the comparison town has similar 

terrain and geography to the site visit town, (4) town received no federal funding for 

broadband infrastructure in the past five years and do not have a municipally operated 

network, and (5) number of wireline providers that is similar to the number offering service 

in the site visit towns.

6

The definitions of urban and nonurban are based on the Census Bureau’s urban and 

rural classification. Within this classification, the Census Bureau identifies two types of 

urban areas: (1) urbanized areas of 50,000 or more people; and (2) urban clusters of at 

least 2,500 and less than 50,000 people. Rural areas encompass all population, housing, 

and territory not included within an urban area. When referring to urban areas, we are 

referring only to urbanized area. When referring to nonurban areas, we are referring to 

urban clusters and rural areas.

7

Accessed January 14, 2014, http://www.broadbandmap.gov, http://www.connectmn.org/, 

http://www.connectedtn.org/, http://digital.georgia.gov/map/ , and 

http://broadband.oregon.gov/StateMap/.
Appendix I: Objectives, Scope, and 

Methodology

Page 25 GAO-14-203 Telecommunications 

upload speeds offered to small businesses and the monthly rate charged. 

We collected unbundled, month-to-month pricing when available. Some 

service providers required a customer to have a telephone line and some 

required a contract ranging from 2 months to 2 years. If the service 

provider did not provide separate pricing for small businesses, we 

collected residential speed and pricing information. We obtained this 

information from service providers’ websites or if not available online by 

calling the company directly. We requested speed and pricing for each 

city and town in the sample—either by the town’s name or by a specific 

address if the service provider required one.8 We analyzed the 

information collected to identify difference in speeds and prices between 

the locations with federally funded or municipal networks and similar 

towns without such networks, as well as between urban and nonurban 

locations. Because this information is drawn from a nonprobability 

sample, it cannot be generalized to all locations with federally funded or 

municipal networks, all urban locations, or all nonurban locations.

 8

If a service provider required an address, we used the address of a post office in the 

town because they are generally centrally located in the town and each town in our 

analysis had a post office. 
Appendix I: Objectives, Scope, and 

Methodology

Page 26 GAO-14-203 Telecommunications 

Table 5: Communities Included in Speed and Pricing Analysis

State

Communities with a 

federally funded 

provider or a 

municipal network

Nearby communities 

used for comparison Urban locations

Georgia Dawsonville Jasper Atlanta

Dahlonega Toccoa Savannah

Minnesota Bingham Lake Hanska Minneapolis

Jackson Blue Earth St. Cloud

Monticello Buffalo

Windom Sleepy Eye

Red Lake Falls Warren

McIntosh Audubon

Two Inlets Osage

Oregon Sandy Silverton Portland

Gervais Mt. Angel Eugene

Monroe Halsey

Monmouth Dallas

Independence Aumsville

Tennessee Chattanooga a Knoxville (not applicable)

Source: GAO.

a

In Tennessee, because Chattanooga and Knoxville are both urban communities, we did not include 

additional urban communities from Tennessee in our analysis. Chattanooga was part of the urban 

and rural speed pricing analysis but not part of the other speed and pricing analysis.

We conducted this performance audit from February 2013 to February 

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings based on our audit 

objectives.
Appendix II: Speeds and Prices Offered by 

Federally Funded and Municipal Broadband 

Service Providers That Were Part of GAO’s 

Analysis, as of September 30, 2013

Page 27 GAO-14-203 Telecommunications 

Network Location

Federal program

providing funding

Top available advertised 

speed (Mbps)

Most common speed 

subscribed to by 

businesses (Mbps)

Monthly price of 

most common 

speed a

Download Upload Download Upload

Fibernet 

Monticello

Minnesota None 100 100 10 10 $41.95

Garden 

Valley

Telephone

Company

Minnesota Telecommunications 

Infrastructure Loan 

Program

30 0.512 5 0.512 $40.95

Gervais 

Telephone 

Company

Oregon Broadband Initiatives 

Program

50 25 5 1.5 $44.95

MINET Oregon None 100 50 20 10 $41.00

Monroe 

Telephone 

Company

Oregon

b

Broadband Initiatives

Program

10 2.5 10 2.5 $44.95

North 

Georgia 

Network

Georgia

c

Broadband Technology 

Opportunities

Grant

100 100 15 15 $115.00

Paul 

Bunyan 

Telephone 

Cooperative

Minnesota Rural Broadband 

Access Loan and Loan 

Guarantee Program

25 25 10 10 $44.95

Sandynet Oregon Broadband Initiatives 

Program

1000 1000 5 2 $24.95

Southwest 

Minnesota 

Broadband 

Services

Minnesota Broadband Initiatives 

Program

30 15 10 5 $62.95

Windomnet Minnesota None 30 20 10 2 $37.95

Source: GAO presentation of funding and speed information.

a

The most common speed subscribed to by businesses is based on information gathered during 

interviews or telephone conversations with each provider.

b

The speed and pricing information reported is only for areas where Monroe Telephone Company 

offers fiber optic service.

c

Appendix II: Speeds and Prices Offered by 

Federally Funded and Municipal Broadband 

Service Providers That Were Part of GAO’s 

Analysis, as of September 30, 2013

Information for broadband speed and pricing is reported here only for the Georgia Communications 

Cooperative, a member of the North Georgia Network. Other cooperatives belonging to the North 

Georgia Network may offer different speeds and prices.
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 28 GAO-14-203 Telecommunications 

Mark Goldstein (202) 512-2834 or goldsteinm@gao.gov

In addition to the individual named above, Heather Halliwell, Assistant 

Director; Namita Bhatia Sabharwal; Sharon Dyer; Laura Erion; Eric 

Hudson; Dave Hooper; Josh Ormond; Amy Rosewarne; and Andrew 

Stavisky made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(543318)
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537.

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube.

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts.

Visit GAO on the web at www.gao.gov.

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Please Print on Recycled Paper.