The Small Business Broadband Boom

By Steve
Butler,, 15 April 2002

Small businesses in North America have been signing up for
broadband access in significant numbers during the early part of 2002, as digital
subscriber line (DSL) initiatives by phone companies such as Verizon, SBC Communications
and Bell Canada are starting to pay off. Some local phone companies are seeing business
DSL subscription rates that exceed earlier rates from mid-2001 by as much as 500%.

Indeed, the landscape of small business internet access is
undergoing a significant shift in 2002, and it will most certainly be quite different by
year-end than it was at the beginning of 2001. Back then, Dun and Bradstreet found in its
annual small business survey that the majority of respondents accessed the internet via a
dial-up connection.

Similar results were found by an Ipsos-Reid survey of small businesses in Canada, in
which 51% of small office/home office (SOHO) businesses relied upon a dial-up internet connection.

On the other hand, Canadian SOHOs were more likely to have
broadband internet access than their US counterparts, with 47% of respondents saying that
they already had high speed internet access. However, it is interesting to note that 55%
of the 308 SOHOs surveyed indicated that their PC was often used for non-business purposes
by other members of their household.

In another study of US business broadband subscribers that
was conducted in the autumn of 2001, the Yankee Group found that 92% of respondents chose
to get a DSL connection for the sake of having a faster internet connection speed. Just
over half of small businesses said that they obtained a DSL connection because it permits
them to run applications that require a faster bandwidth.

But despite this enthusiasm for an always-on internet
connection and faster speeds for navigating the internet, the question remains — is a
broadband connection something that small businesses really need?

Among the new patterns of internet use that small
businesses reported in the Yankee Group study, several companies said that they more
frequently received e-mails with large attachments or went online to download research and
read the news. The biggest change came in the use of distance learning, however, which saw
the percent of small businesses using the internet for such purposes jump 222%. The use of
virtual private networks (VPNs) saw the second-highest increase, with adoption growing by 169%.

As the march of small business broadband use gains momentum
in 2002, small business internet use will likely undergo further changes. Increased
telecommuting, and the use of teleconferencing will certainly grow. And perhaps more
significantly, small business use of hosted software solutions will also begin to expand
— something that will likely please Microsoft and Oracle, among other leading software
vendors that are changing how they sell their software.

For more information on how Canadian and US small and medium size businesses
are using the internet today, please see eMarketer’s North America E-Commerce Report.

eMarketer Senior Analyst Steve Butler wrote the the E-Commerce Trade and
B2B Exchanges Report, the IT Spending Report and The CRM Report. E-mail him at
[email protected] with comments, suggestions and questions.