Telecommunications: Federal Broadband Deployment Programs and Small Business
Published: 2014-02-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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 bandwidth-intensive applications for inventory management, videoconferencing, and teleworking, among other things.

section_title: Letter
paragraphs: 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  small businesses, and (2) how selected federally funded and municipal  networks have affected broadband service and small businesses.
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.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.
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.
subsections: section_title: Background
subsections: section_title: Broadband Transmission Technologies
paragraphs: 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.
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.
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.
section_title: Broadband Availability and Access
paragraphs: Broadband Internet access is widely available throughout the United  States to both residences and businesses. According to the National  Broadband Map, 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.Office of Advocacy in 2010 similarly found that over 96 percent of urban   A study completed for SBA’s  small businesses and approximately 92 percent of rural small businesses  reported access to wireline or wireless broadband.
Still, some areas of the United States remain underserved or unserved by  broadband infrastructure. areas. 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:    Service gaps exist primarily in nonurban
Low population. The limited number of potential subscribers in an  area makes it difficult for providers to recoup the costs of building a  network.
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.
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.
section_title: Federal and Municipal Support for Broadband Deployment
paragraphs: 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.
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.  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.
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.
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.  Nebraska prohibits any political subdivision that is not a public power  supplier from providing broadband or Internet services. Financially,  some municipal networks have been successful while others have  struggled to pay off bonds or loans used for capital investment.
section_title: Federally Funded Efforts to Expand Broadband Encompass but Do Not Specifically Target Small Businesses
paragraphs: 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  areas of need. Table 3 shows selected federal funding requirements  related to eligibility and infrastructure deployment for the six federal  programs previously described.
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  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.
section_title: Selected Federally Funded and Municipal Networks Have Improved Broadband Service for Small Businesses
subsections: section_title: Service Improvements
paragraphs: 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  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.
section_title: Speeds and Prices
subsections: section_title: Speed
paragraphs: 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.
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.
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.
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  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.
We found that providers in urban areas generally offer higher speeds than  those in nonurban areas. 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. However, in one funded  community one competitor also offered speeds of 100 Mbps.
section_title: Impact of Network Improvements on Small Businesses
paragraphs: 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.
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. 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.
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.
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.
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  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.
section_title: Agency Comments
paragraphs: 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.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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  businesses that use the services of these providers. 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. 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. 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.
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. 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; 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. 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. For each service  provider identified, we collected information on advertised download and  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. 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.
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.
section_title: 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
paragraphs: 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 Top  available  advertised  speed (Mbps)
Most common speed  subscribed to by  businesses (Mbps)
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.
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: 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.