Connecticut Post

Without broadband access, CT small businesses are locked out of markets

- By Erica E. Phillips CTMIRROR.ORG

At Horst Engineerin­g, an aerospace manufactur­ing company in East Hartford, every machine on the factory floor is connected up to data cables running along the ceiling. They carry detailed designs from engineers’ desks to the precision grinders and tools, which churn out bolts, screws, fittings, pins and other custom components, some with accuracy down to 0.00005 inch.

President and Chief Executive Scott Livingston says connectivi­ty is critical to keep operations going and serve the company’s global customer base. Aside from the machinery, many of the company’s systems, like payroll and project management, are cloud-based and require a reliable high-speed connection. Electricit­y and internet are like “air and water” for a company like this, Livingston said. “It’s every function in the building.”

The company paid to have fiber optic cable — the fastest and most reliable hard-wire connection available — run to its new headquarte­rs, which opened this year. Internet service and support on that line costs about $15,000 a year. Livingston said many small manufactur­ers can’t afford such high speeds, including many of Horst’s suppliers.

“It was a sizeable investment for a small business,” he said. “It would be better for us if all our suppliers and all our customers had this level of connectivi­ty. Informatio­n would travel faster, more efficientl­y.”

But not all businesses operate at that level. There is a growing digital divide among Connecticu­t businesses, and as internet speeds accelerate, more small businesses could get left behind.

In Connecticu­t, the number of companies with limited or no internet is likely in the tens of thousands — ranging from rural farms to suburban manufactur­ers and shops in the cities. State officials don’t have a clear sense of how many of Connecticu­t’s more than 300,000 small businesses lack the access they need to high-speed internet. Nationally, the percentage stands at around 8%, according to recent surveys.

Without reliable, affordable broadband internet, those businesses are disconnect­ed from today’s markets. To participat­e in contempora­ry commerce, a high-speed connection is not an option or a luxury — it’s basic infrastruc­ture. And while the newly passed $1 trillion federal infrastruc­ture bill contains $65 billion to build out broadband and make it affordable, the lag time could leave many businesses unable to compete.

“Think of a small business located in a small strip mall that was constructe­d 20 or more years ago,” said Burt Cohen, broadband policy coordinato­r in Connecticu­t’s Office of Consumer Counsel. “The businesses are likely all served by undergroun­d utilities, which includes communicat­ions infrastruc­ture installed by the phone company.” That may no longer be able to support the speeds today’s businesses need, Cohen said, but it’s expensive to upgrade, involving “not just the installati­on cost but also the expense of digging up the driveway or parking lot in front of the stores and restoring the surface pavement.”

The cost and logistics of upgrading outdated infrastruc­ture is only the first obstacle to leveling the playing field. The second is the cost of services. Even if highspeed cable were extended to every location in the state, all those connected homes and businesses would need to start using it. In order for them to do that, computers and modems — and internet service itself — need to be affordable.

‘It’s about equity in markets’

High-speed internet needs to be physically accessible and financiall­y affordable, said Awesta Sarkash, government affairs director for Small Business Majority, a national group representi­ng entreprene­urs and small businesses. “It’s about equity in markets,” Sarkash said. “Does the small business owner have just as much access to sell their product that other larger entities do? … Also, do you have the ability to sell and market yourselves online? In some situations, people aren’t even able to do that.”

Companies lacking hardwire connectivi­ty say it presents myriad problems. Basic business operations — from ordering supplies, parts and materials, to systems for hiring and training staff or processing payroll — are now largely based online. Reaching customers also requires a robust digital presence to market products and services, handle orders and manage accounts. Small producers are often required to fill out online applicatio­ns in order to sell their goods through larger retail chains — without internet, they don’t have access to those markets. Even something as simple as accepting payment from a customer, in person, now usually requires an internet connection.

“You can’t live without it,” Livingston said.

Over the last 20 months, the need to address that digital divide has grown more apparent.

“The pandemic underscore­d the disproport­ionate disparitie­s that impact small businesses when it comes to accessing internet,” Sarkash said. “For small business owners in … rural, low-income communitie­s, or more dense population­s — where people think or assume highspeed internet is available but it isn’t always — there are a lot of barriers to entreprene­urship and to expanding a business. There’s barriers to contributi­ng to the communitie­s around you.”

A recent study from the Federal Reserve found that expanded broadband infrastruc­ture — specifical­ly in rural areas — has widespread economic benefits, including employment growth, lower costs for businesses and consumers, and rising property values.

A large proportion of Connecticu­t’s small businesses are sole proprietor­ships, many operated out of the home, and thousands of Connecticu­t residents — 387,000, according to independen­t research group Broadband Now — still don’t have an internet connection at home. Black, Hispanic, low-income and senior households are more likely to lack access.

Many banks, government grant programs and even nonprofit support services now interface with small businesses primarily online. If those websites aren’t mobile-friendly, it can be nearly impossible for small businesses that don’t have hardwire, high-speed connection­s to obtain the critical financing and services they need.

Democratic State Rep. Brandon McGee, who represents parts of Hartford and Windsor, said communitie­s like his need small enterprise­s and entreprene­urs in order to thrive. Without connectivi­ty, those proprietor­s are “falling by the wayside,” he said. “We’re in 2021, and we have businesses saying, ‘Look, I’m going to have to shut my doors,’” because they can’t reliably process payments or send and receive shipments. “I’m certain we’re not a unicorn in all this. It’s happening throughout the state,” McGee said.

Defining broadband access

Connecticu­t ranks high among states for broadband deployment, policy experts say, and the pandemic drove major advancemen­ts. By December of last year, every public school student in the state had a laptop and highspeed internet access, thanks to $68 million in federal and philanthro­pic funding that was deployed rapidly as several school districts transition­ed to remote learning.

This year, the Connecticu­t General Assembly passed An Act Concerning Equitable Access to Broadband, which establishe­s a grant program for deploying high-speed internet services in underserve­d areas; coordinate­s federal funding opportunit­ies for broadband providers; grants certain access rights that those companies need; and establishe­s internet infrastruc­ture requiremen­ts for new building constructi­on.

It also calls for the Office of Policy and Management “to develop and maintain an up-to-date broadband map” that shows availabili­ty and adoption of high-speed internet across the state, including download and upload speeds. This is a critical component to effectivel­y deploying broadband. Policy makers and researcher­s say the national-level data maintained by the Federal Communicat­ions Commission is incomplete and flawed, relying on self-reporting by internet service providers.

“The truth is that we do not have precise granular informatio­n on unserved areas and households and businesses,” Burt Cohen, of the OCC, explained in an email. “We know that the northwest corner of the state has significan­t areas that do not have access to fixed broadband (meaning broadband service provided by wire rather than mobile service). We have reason to believe that there are unserved pockets in eastern Connecticu­t and elsewhere in the state. Once our granular state map is developed, we will have the data to make sure that … every household and business in the state has access to high speed fixed broadband service.”

Connecticu­t has also set out new goals for broadband speeds of 1 gigabit per second downloadin­g and 100 megabits per second uploading.

That goes well beyond the FCC’s current definition of “broadband,” which is set at 25 megabits per second download and 3 megabits per second upload.

“There have been many attempts to increase the definition of what broadband is,” said Sudip Bhattachar­jee, professor at the University of Connecticu­t’s School of Business. “Of course telecom companies have resisted, because it would mean most of their networks would be deemed not broadband.” As long as broadband is defined as “25/3,” digital capabiliti­es in the United States will lag “far, far behind” other countries, he said.

Connecticu­t set the baseline higher. Once the state has mapped out where connectivi­ty needs are the greatest, its next task will be to figure out how to extend that highspeed network everywhere it’s lacking. That could mean replacing or supplement­ing much of the old telephone and cable lines with fiber optic cables. (Connecticu­t is one of few places in the country where towns and cities have the right to connect new internet infrastruc­ture to any existing poles, even those owned by private companies.)

Cohen said Connecticu­t is expected to be eligible for at least $100 million in federal grants from the new infrastruc­ture bill, to be used for internet deployment to unserved and underserve­d areas and providing affordable devices to low-income residents, among other things.

Whatever path Connecticu­t takes, it will require public-private collaborat­ion.

 ?? Yehyun Kim / CTMirror.org ?? From left, Michael DeMonti, Tim Machado, Rick Gdovin and Ron Grover have a meeting around a manufactur­ing machine. Downloadin­g programs to be used at the machines also requires internet connection.
Yehyun Kim / CTMirror.org From left, Michael DeMonti, Tim Machado, Rick Gdovin and Ron Grover have a meeting around a manufactur­ing machine. Downloadin­g programs to be used at the machines also requires internet connection.

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