From the December 2006 issue of Wealth Manager Web • Subscribe!

Broadband Maze

High-quality broadband access is critical to the ability of small businesses to remain competitive, increase productivity, and improve customer communications. Imagine downloading an 8 Mbyte PowerPoint presentation or Excel spreadsheet on a dial-up modem. About 19 minutes later, the file would be ready--compared with roughly 43 seconds on a 1.5 Mbps broadband link. But which of the many available options should an advisory firm pick?

Fortunately, small businesses have many choices, depending on their budget and their needs. If a small firm is using the Internet only for Web surfing and email, a phone provider like AT&T might be the best option, says Bruce McGregor, senior analyst at California-based Current Analysis, a source of industry developments and market trends in the telecommunications industry. "Business customers are getting more savvy with the technology, and they understand the technology now. They're trying to find the best price to meet their budget and office needs," he says.

Whatever choice they make, firms will need support. Small financial firms don't have the luxury of an IT department, so Kip Gregory, principal of The Gregory Group in Washington, D.C., suggests finding a resource to troubleshoot any technical difficulties. "This is not something an advisor should do for himself," Gregory says. "He should delegate it to an IT support person to suggest options in their market."

Gregory recommends small financial firms also consider the importance of upload speeds in addition to download speeds. Financial advisors who send large spreadsheets to customers through email need a broadband service that adequately supports this requirement.

Here are a few of the options available to small businesses:

Cable Modem

This service runs across the same cable that provides cable TV service. The service provider supplies the required modem. Prices range from $40 to $60 per month. Cable providers generally tout their speed over price. Users are always connected, and speeds are very fast--up to 6 Mbps. Moreover, the cable does not tie up phone lines while the user is online. However, since the service is "always on," there are potential security risks. Also, cable service is not available everywhere yet, and performance can vary depending on how many other users are in the area.

DSL (Digital Subscriber Lines)

Existing telephone lines deliver high-speed Internet access. Voice and data transmit on the same line at the same time using two different frequencies. Prices range from $15 to $35 per month, depending on the connection speed. DSL prices continue to drop, and these providers push their low prices. Users are always connected at speeds faster than standard dial-up--from 768 Kbps to 3 Mbps. On the downside, performance depends on physical location from a central office, and it can be difficult to have it installed.

Satellite Broadband

Unfortunately, many small businesses lack broadband options, according to a 2005 survey conducted by Hughes Network Systems. Results reveal that 60 percent of all U.S. businesses with 10 or fewer employees don't have access to cable or DSL. More than 75 percent of small businesses in rural areas don't have access to either of them. Many small business owners may not know about other available options, such as satellite broadband. "This could be a route to think about if you don't have access to cable or DSL" McGregor says. "It's significantly more expensive, but they've got you because you need the service."

This form of broadband uses a satellite dish to connect to the Internet--either in one-way or two-way options. Two-way satellite broadband both sends and receives data, while one-way communicates with the Internet in just one direction. Prices range from $100 to $220 per month, with additional equipment and installation costs. The service is available in places DSL and cable are not, and can support a large number of users with one satellite "footprint." But for a single user, it's very expensive, and a heavy rainstorm can knock out service.

Fiber Optics

Meanwhile, "light waves" may take over as the next generation broadband connection. Fiber optics offer uploads and downloads at lightening speed. Verizon FiOS Internet Service is deploying a fiber optic network across the United States and plans to pass 6 million locations by the end of 2006. The fiber optic network offers immediate bandwidth for file transfer. Prices begin at $39.95 without a calling plan and go up to $199.95 for 30 Mbps download speed and 5 Mbps upload speed. The network runs even in bad weather, and it can be very affordable, with value pricing based on speed. Right now, however, it is only available in major markets

These broadband solutions provide the major options when financial firms consider upgrading their situation. As always, service, reliability and provider must also be taken into consideration.

Vicki Powers is a Texas-based freelance writer who often covers business and technology issues.

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