STATEMENT
of the
Honorable Nydia Velazquez, Chairwoman
House Committee on Small Business
“Bridging the Digital Divide: The Role of Small Firm in Expanding Broadband Access”
Wednesday, October 28, 2009

The American Recovery and Reinvestment Act was a blueprint for renewed job growth. As part of a larger effort to put Americans back to work, that legislation included important investments in broadband deployment. And in fact, every $10 billion in broadband investment creates or saves 498,000 jobs annually. Of those positions, more than half are supported by firms with fewer than 500 employees. In other words, this is an opportunity for small businesses to really shine. And with efforts to expand the technology now underway, small firms are already vying for that chance.

By next month, the first round of broadband awards will have been announced. And because telecomm giants like Verizon and Comcast decided not to compete, small firms should win a sizeable chunk of available grants and loans. In fact, NTIA is required to give special consideration to disadvantaged small firms. But unfortunately, that process has been less than seamless. Many small businesses have complained of challenges ranging from excessive paperwork to restrictive capital requirements. In today’s hearing, we’re going to discuss those obstacles. We’ll also look for ways to ensure small firms can enjoy the benefits of broadband deployment - both as the beneficiaries of an enhanced IT infrastructure, and as its engineers. 

Expanded access to broadband presents enormous economic opportunity. Since the mid 1990s, the Internet has played a key role in our economy. With a high-speed Internet connection, any entrepreneur -regardless of location - can tap that growing virtual marketplace. But while overall growth in broadband has been steep, progress has varied by region. Today, only 46% of rural households use the technology, compared to 67% in non-rural areas. Many low-income, urban communities have also fallen behind.  Given the role that the Internet plays in our economy, this disparity marks more than a simple “digital divide”- it means missed opportunities for small businesses. 

New investments in broadband can help recapture those opportunities. But so far, efforts are off to a rocky start. There are a number of challenges working against entrepreneurs. For example, an overly complex application process - one that requires nearly 200 pages of paperwork. More often than not, small businesses can’t afford in-house lawyers, accountants, or support staff. A streamlined application process would mean less red tape and more productivity, and is worth considering. For small firms struggling to access capital, a decreased matching requirement could also go a long way. Asking small businesses to match 20% of total project costs is a tall order, especially at a time when capital is increasingly hard to come by. 

Nine times out of ten, small businesses offer the best value for the taxpayer dollar. Our policies should reflect that fact. But when it comes to broadband projects, it seems we’re not there yet. Small firms deserve a level playing field. I know that both RUS and NTIA are committed to creating a more efficient process, and look forward to working with both agencies in the coming weeks and months.

 Technology is often called the great equalizer of the business world. If done properly, increasing access to broadband will allow small firms to compete with big companies. It will also create new opportunities for small businesses - all while connecting our country with the fastest means of communication. We’ve come a long way since the days of dial-up. New investments in broadband can take that progress one step further, and allow America’s small businesses to help rebuild our economy.