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Chairman's Testimony on Broadband Access to Small Businesses

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Released: July 18, 2012

Prepared Statement of Chairman

Julius Genachowski

Federal Communications Commission

Hearing on “Digital Divide: Expanding Broadband Access to Small Businesses”

U.S. House of Representatives

Committee on Small Business

July 18, 2012

Chairman Graves, Ranking Member Velazquez, members of the committee, thank you for the
opportunity to be here today.
I’m pleased to join my federal partners – NTIA Administrator Strickling and RUS Administrator
Adelstein.
My primary focus as FCC Chairman has been promoting innovation, investment, competition,
and consumers in the Information and Communications Technology sector. We’ve focused the
agency on maximizing the benefits of broadband communications, and on helping harness wired
and wireless broadband to grow our economy, enhance U.S. competitiveness, and create jobs, as
well as advancing important goals like improved education, health care, and public safety.
A key element of our strategy has been empowering small businesses.
As this Committee well knows, American small businesses are key drivers of economic growth
and job creation. Broadband is increasingly important to the future of small business.
It enables small businesses to grow and jobs to be created anywhere, not only in urban markets
but in small rural towns.
Broadband allows small businesses to market their products and reach customers in the next
neighborhood, the next city, the next state, and even overseas, increasing their revenue.
And broadband allows small businesses to lower their costs through cloud-based services.
Increased revenue. Lower costs. More profits. More jobs.
More than 1 million entrepreneurs – a large percentage of which are small businesses – are
selling products on the eBay, Amazon, and other platforms.
Doing so requires broadband access.
Over the past three years, the FCC has taken a number of actions to help more small businesses
seize the opportunities of broadband.
Let’s start with universal service reform.

Today, 18 million Americans – including many small business owners – live in areas where they
can’t get broadband.
But the Universal Service Fund we inherited was not addressing that gap. It was optimized for
telephone service, not broadband. It had become inefficient and even wasteful, sending money,
for example, to multiple providers in one community, and none to other communities, and it did
not have adequate accountability, allowing recipients to control their own funding spigot.
Last December, I'm proud that the FCC unanimously approved a once-in-a-generation overhaul
of the Universal Service Fund – transforming this 20th century program that supported phone
service into a 21st century, fiscally responsible Connect America Fund that supports broadband.
These reforms put us on a path to connect all unserved Americans and small businesses by 2020.
Just last week, one provider, Frontier, announced that it will be deploying broadband to about
200,000 unserved Americans as part of our reforms.
Our reforms will also help ensure that consumers – including small businesses – paying into the
fund get a fair bang for their buck. FCC staff estimates that roughly a quarter of all universal
service contributions are paid by small businesses – over $2 billion per year. That’s one reason
we’ve set out to eliminate waste and inefficiency throughout USF.
These efforts are complementary to the important work to ensure broadband availability by
NTIA and RUS. Altogether, these cooperative efforts with our federal partners are helping more
small businesses seize the opportunities of broadband.
The Commission is also taking a number of steps to help small businesses access the
productivity and marketing tools of mobile broadband. The new Mobility Fund, which was
established as part of our universal service reform, will spur the build out of advanced mobile
networks in unserved rural areas. And we freed up the largest amount of spectrum for
unlicensed use in 25 years – giving small businesses a new platform for wireless innovation.
We can help small businesses not only by making sure they have access to broadband, but also
by helping ensure they have the basic digital skills to use online resources and applications.
Most small businesses have broadband access, but 58% don’t have a website. That’s 15 million
businesses.
That’s why the FCC, working with the Small Business Administration, created a public-private
partnership to leverage SCORE – SBA’s network of more than 10,000 volunteer business
counselors – to provide broadband tools, training and support for small businesses. This is just a
part of our cooperative efforts with SBA.
Also, the FCC’s Office of Communications Business Opportunities has conducted multiple
workshops to educate small business owners on the opportunities of broadband, in addition to
hosting networking events to connect small business owners with potential partners and sources
of capital.

The freedom and openness of the Internet has enabled small businesses in dorm rooms and
garages to grow into some of the most successful companies in the world. The FCC has adopted
common sense rules of the road to preserve Internet freedom and openness and ensure the
Internet remains a platform for small business innovation and job creation.
The Commission has also taken significant steps to help small businesses protect themselves
from the growing risks of cyber attacks.
Working with the Small Business Administration, the Chamber of Commerce, the National
Urban League, and private companies, we developed and released a Cybersecurity Tip Sheet and
Small Business Cyber Planner, describing a number of commonsense steps small businesses can
take to improve their security.
And as the result of an FCC-led process on cybersecurity, ISPs serving 90% of all U.S.
residential broadband subscribers have committed to adopting voluntary, concrete measures to
combat three major cyber threats: botnets, IP route hijacking and domain name fraud.
Through its public safety responsibilities, the Commission also aids small businesses. The recent
storm that caused significant power and communications outages from the Midwest to the mid-
Atlantic cost small businesses and consumers severely, and knocked out vital emergency
communications.
The FCC coordinated with FEMA and others to assess and respond to the outages, and
immediately after restoration launched an investigation into the Mid-Atlantic outages so that we
can better avoid these communications disruptions in the future and make people safer. We are
expanding that investigation to seek public comment from a broader set of stakeholders, with the
goal of identifying the steps to make our communications and emergency services nationwide
more reliable and resilient.
We take seriously the President and Congress’ directive that we minimize the impact of our rules
on small businesses, and the FCC always considers the impact of our actions on small businesses
and now takes many steps to address the unique issues of small businesses.
Spurred by small businesses, we've had a lot of good news in our broadband sector in the last
three years.
For example, the apps economy, which is largely been driven by small businesses, has already
created nearly 500,000 new jobs and continues to grow.
For all our progress, there are still real challenges ahead, including the spectrum crunch that
threatens to stifle mobile innovation and eCommerce; the need to drive continued improvements
in broadband speeds and capacity; and the broadband adoption gap that leaves tens of millions of
customers out of reach of small businesses.
I look forward to working with members of this committee and to answering your questions.
Thank you.

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