Broadband Or Bust

For many small businesses, the shining promise of high-speed access still seems a long way off

Things move slowly in the Hudson Valley township of Schodack, N.Y. There's Gem Farms Buffalo, which, despite being "your one-stop shopping source for all your buffalo needs," seldom suffers a stampede of business. There's Goold Orchards, which has pressed its own apples for 90 years. And there's the Internet: It tops out at 56 kilobits per second.

Fifteen miles south in Kinderhook, N.Y., whose population of 8,118 makes it only slightly smaller than Schodack, things are different. Businesses there can now get high-speed, or broadband, Internet access, allowing them to download Web content 50 times faster than their northern neighbors can. Convinced it will give her a competitive edge, Lynn M. Strunk, owner of Lynn Strunk Realty Inc., is getting ready to sign up for the new digital subscriber line (DSL) service. "We get a lot of our business off the Internet," she says.

Welcome to most of America, a maddening patchwork of high-speed and low-speed Internet access areas. Despite the incessant drone of Internet service providers promising high-speed Web surfing, one-third of small businesses can't tap into the newer services. Why? Reaching every nook and cranny of the country is expensive, and service providers are hesitant to install expensive equipment in sparsely populated regions where they might not turn a profit.

And it won't get better for 12 to 18 months, until new, less expensive technology enables service providers to reach more small businesses. "We find it a little frustrating," says Debra Milstein, office manager of Piasecki Steel Construction Co. in Schodack. Like a lot of construction companies that seek municipal work in New York State, Piasecki Steel is required to download bidding information over the Web. Unfortunately, Piasecki Steel can't get high-speed Internet service and risks losing out to rivals who can. So, reluctantly, it has placed an order for ISDN (integrated service digital network), an older technology that offers a 128 Kbps connection at best.

But even that will have to wait until the spring thaw, when Verizon Communications (VZ) workers will have access to the underground telephone lines connecting Piasecki Steel's offices to the world. To make matters more frustrating, Piasecki Steel employees who live just miles away, in places such as Kinderhook, can get 256 Kbps DSL service in their own homes. Such selective deployment may seem random to customers, but it makes sense from the providers' point of view: Berkshire Telephone is based in Kinderhook and serves only Columbia County, in upstate New York. Verizon, through partnerships with other ISPs, offers DSL service in 21 states and the District of Columbia. Consequently, Schodack is low on the list.

About 600,000 businesses now have DSL hookups, says Dave Burstein, editor of technology newsletter DSL Prime. Competing technologies--cable modems and wireless--together number their non-home-based small-business subscribers in the tens of thousands. While getting high-speed access has been challenging, choices are growing. WorldCom (WCOM), Sprint (FON), and AT&T (T) are aggressively rolling out fixed wireless networks and have dozens of cities already up and running. AOL Time Warner (AOL), AT&T, Cox Communications (COX), and other cable companies have been widening the bandwidth of their networks to accommodate heavy Web traffic. And telephone companies have been testing new technologies that improve DSL's speed, make it cheaper to install, and nearly double the distance of its signal.

Which broadband technology is best for your small company? It depends on your business, your budget, and your location. As competing services enter the same market, you can expect special deals, such as free modems, installation, or even free service for a month or two.


Wireless is one of the best bets for small businesses. At least for now. This medium--typically called fixed wireless because data are sent between a user's computer and a stationary antenna--is the easiest and most cost-effective for both ISPs and users to install. While not as powerful as DSL, wireless services are likely to show up first in many regions, particularly secondary and tertiary cities such as Memphis, Tenn., or Fresno, Calif. For Lauran James, owner of CyberTrain, a tiny computer-training business on the outskirts of Memphis, WorldCom Inc.'s fixed wireless service was just right. "I didn't realize how slow my 56K connection was until I tried this," says James. Since November, CyberTrain has paid $150 a month to connect her four full-time employees and as many as ten students to the Internet.

Another good thing about fixed wireless: While it could take months to get your DSL hookup, it'll take just a day or two to get your fixed wireless installed and activated. Expect to spend $500 to $800 for business installations and equipment, plus an additional $150 to $200 in monthly charges.

Fixed wireless does have its drawbacks, however. To work, there must be a relatively clear "line of sight" between the antenna mounted on the user's rooftop and the service provider's antenna, sometimes located as far as 35 miles away. Also, while users can download Web pages at a respectable 1 million bits per second (Mbps), uploading data is much slower--512 Kbps, or less. So, forget trying to host any high-volume e-commerce Web sites. "If you're strictly looking at high speed--for non-transaction-based information--fixed wireless is a great opportunity," says Curt Williams, broadband services products manager at Sprint Corp. "If you're a small business that needs to connect to suppliers, I would lean more toward DSL."


The most common form of DSL, known as "asymmetrical," or ADSL, allows users to download as much as 7 Mbps of data from the Web and upload as much as 640 Kbps. For that, businesses can expect to pay about $200 a month, plus $150 for the modem. But ISPs that offer DSL have been besieged by complaints of poor customer service and slow deployment. On Jan. 16, Cohen Milstein Hausfeld & Toll, a law firm in Washington, D.C., filed a class action lawsuit against Verizon, claiming that the company failed to provide promised DSL service to consumers and businesses. Verizon spokesman Larry Plumb says the suit is without merit and Verizon will contest it. "We stand behind DSL," he adds.

But problems with DSL providers go back for years. Chris Hedrick, founder and CEO of, an online computer-training business with offices in Tacoma and Olympia, Wash., closed his Olympia site after getting fed up with U.S. West Inc., now part of Qwest Communications International (Q). "It took 42 different calls to get our DSL connected in Olympia, and I knew the CEO," says Hedrick, who until 1999 served as technology policy advisor to Washington Governor Gary Locke. Last June, Hedrick consolidated his entire operation in Tacoma--which operates its own city-owned ISP, Click!Network.


A high-speed cable connection offers a compelling alternative, if you can get it. Of the 3.8 million cable modems now installed nationwide, fewer than 38,000 are installed in businesses, says Michael W. Harris, founder of market researcher Kinetic Strategies Inc. in Phoenix. For example, Time Warner Cable of Maine, one of the cable operator's most prolific cable modem installers, has installed 23,000 cable modems--just 2,000 of those in businesses, including 1,600 with 50 or less employees.

Cable providers typically charge $80 to $225 a month for standard business connections (1.5 Mbps or less). Premium services--for example, a dedicated line that provides 2 Mbps uploading and downloading--can run as high as $1,000 a month. While cable is oft-criticized for being less reliable and more vulnerable to hackers than DSL, some industry analysts say cable is now superior because of recent advances in technology.

To be sure, all of these options are enticing to the speed-impaired, but if you still can't get any of them, you have two choices: Wait up to 18 months for an Internet service provider to find you--or move your business. And if you live in Schodack, N.Y., you may want to consider a visit to Gem Farms Buffalo. It'll give you something to do while your computer is connecting to the Internet.

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