04/07/2005
CONTACT: Michelle Dimarob, (202) 554-9000
Small-Business owners shop around for the best deal
WASHINGTON, D.C., April 7, 2005 — If the people who run America’s telephone companies think they have small business’ number, they had better think again. According to a National Small Business Poll released today by National Federation of Independent Business, one out of four owners of small firms switched local telephone-service providers in the past three years, and more than three-fourths of those who shopped said the cost of their current service drove their decision.
Holly Wade, policy analyst for the NFIB Research Foundation, said more than 40 percent of those who responded to the survey believe there is more competition for their business today than three years ago. On average, these entrepreneurs were aware of between three and four local-service providers in their areas.
“Healthy competition among telecommunication companies allows small-business owners to choose from a wide variety of new and traditional services ranging from local telephone lines to high-speed Internet,” Wade said. “Small-business owners rely on the availability of these services to pick and choose the telecommunication services that best meet their individual needs.”
Price is a key factor in small-business shopping habits. The cost of telephone service continues to be an ongoing concern for them, ranking 16th among their business problems and priorities.
But price is not the only motivating force. Nearly half—49 percent—of those who shopped said they wanted to consolidate their services with one provider. More than 40 percent were dissatisfied with the quality of the service they received and nearly one-third expressed concern that changes were made in their service plans without their prior consent or knowledge.
At the same time, although telephone bills have gotten a bad reputation for confusing fees, taxes and regulatory charges across all levels of government—federal, state and local—just one-third of small-firm owners believe the invoices they receive are confusing.
Cellular phone usage habits among small firms are something that should get the telecommunications companies’ attention, too. Nearly eight out of 10 small-business owners use a cell phone for business purposes; 44 percent buy them for select employees.
Not surprisingly, cell phone usage grows as the size of the small firm increases. Eighty-five percent of those with 20 or more employees use at least one of the portable devices for business purposes, a share that drops to 76 percent among firms with between one and nine workers.
More than half—56 percent—shopped for a new cell phone service-provider in the past three years. Poor service was cited most frequently as the reason they looked. Among those shoppers, nearly two-thirds—63 percent—switched.
Competition in the cell phone industry is increasing. Fifty-five percent of the small-business owners expressed a belief that there is greater competition for their business than there was three years ago. Five providers, on average, could be identified in the respondents’ areas.
More than three-fourths confirmed that their cell phone is essential or important in their operations. An overwhelming majority—98 percent—of those who own construction companies expressed this belief.
Known for their efficiency, small-business owners often bundle telecommunications services with one provider. Nearly two-thirds said they combined their local and long-distance service plans, but only 12 percent bundle their cell phone service with other telecommunication services.
The Internet is a hot property for Main Street firms: 82 percent use it for business purposes and more than half of those have a high-speed service, most commonly digital subscriber lines (DSL).
They are not shy about shopping for Internet service providers, either. In the past three years, the survey found, nearly half—47 percent—sought out a new provider of high-speed Internet hook-ups and three-fourths of those eventually switched. Almost six out of 10 blamed cost as the main factor in shopping.
Although owners are under pressure from their competitors to keep up with new technologies, they say they are not overwhelmed by the vast number of telecommunication products that are available and feel comfortable that they can make sound decisions purchasing the services they need.
Seventy percent of those who responded to the survey said they personally evaluate their company’s telecommunication’s options; 22 percent rely on the advice of an employee. Just four percent seek advice from outside consultants.
“Small-business owners help stimulate the telecommunications market by actively shopping for alternative service providers,” Wade said. “But the landscape may be changing soon. Pending mergers of the largest telecommunication companies may reduce the number of competitors in the marketplace.”
Access the complete poll at http://www.nfib.com/object/telecomm.html.
The executive interviewing group of the Gallup Organization collected the data for this National Small-Business Poll for the NFIB Research Foundation. The interviews were conducted in December 2004 from a national sample of 750 small employers. “Small employer” was defined for purposes of this survey as a business owner employing no fewer than one individual and no more than 249. The National Federation of Independent Business is the nation’s largest small-business advocacy group. A nonprofit, nonpartisan organization founded in 1943, NFIB represents the consensus views of its 600,000 members in Washington, D.C., and all 50 state capitals.
