Jan. 20, 2006 -- While the Internet's reach continues to spread, the majority of small businesses located in rural areas -- two-thirds -- still do not have terrestrial broadband access to the Internet, according to a new study.

The study, released by Hughes Network Systems and Survey.com in January, surveyed 250 small businesses nationwide, to gauge their knowledge of the broadband Internet options that are available to them.

HNS, based in Germantown, Md., provides satellite broadband Internet access worldwide - an option that residents and businesses in rural areas sometimes pursue because they don't have terrestrial DSL or cable access.

"There's no one place to go to learn how to hook your business up to broadband," said Peter Gulla, vice president of marketing for HNS. He blames the lack of broadband Internet use among small businesses on the fact that it's difficult for these businesses to learn about their Internet access options. According to research conducted by the Small Business Administration in March 2004, the majority of small businesses use dial-up services to connect to the Internet.

Though ordinary phone lines transmit the DSL signal, telephone service providers must add special equipment to their existing phone hubs to enable DSL to transmit. The equipment isn't cheap, which keeps service providers from upgrading in rural areas.

"It comes down to population density," said Josh Holbrook, an analyst with the Yankee Group, a research firm based in Boston. The smaller the population that would benefit from DSL, the less likely a service provider will invest the money into DSL equipment. Small rural businesses "are at a competitive disadvantage because they can't use the same applications" as businesses with high speed Internet, Holbrook said.

In northern New Hampshire, the Colebrook Development Corporation, a volunteer community organization, is taking matters into its own hands. The CDC is building a wireless broadband network in Colebrook, a border town with Vermont and in close proximity to Maine.

Larry Rappaport, a Colebrook selectman and manager for the wireless project, said that the CDC is two months away from launching the five wireless hubs in the area. Funds for the project were secured by Sen. John Sununu (R-N.H.) as well as from local private grants.

"I'm concerned with the economic direction in the northern counties of New Hampshire, Vermont, and Maine," Rappaport said. With manufacturing jobs leaving the community, Rappaport said the CDC wants to make sure residents can use the Internet to start businesses and continue to earn a living.

The Lyndon Freighthouse in Lyndonville, Vt., owned and operated by the Paris family, recently hooked up to the Internet with a grant from the U.S. Department of Agriculture and the Small Business Development Center. The grant was awarded to 12 towns in the Northern Kingdom region of Vermont -- part of a two-year study to see how small businesses would improve with broadband access.

The SBDC chose the Lyndon Freighthouse because it's a relatively new business; the freighthouse itself is a historic landmark dating back to 1868. Eric and Cathy Paris bought the building in 1999 that now houses a gallery, ice cream parlor, full-service restaurant, gift shop, and a Starbucks.

The grant allowed the Parises to buy the equipment needed to offer wireless Internet in their space, through a DSL line provided by Verizon. Visitors are able to access the Internet free for an hour; unlimited access is available with a purchase of food, beverage, or ice cream at the Freighthouse. The signal reaches as far as the picnic tables outside on the deck. The Parises also purchased three used laptops for people to use who don't own their own.

"It has been bringing in people we didn't see before, for both business and personal reasons," Cathy Paris said.

Paris has noticed that customers of all ages are taking advantage of their wireless hotspot -- families, visiting businesspeople, college students, and vacationers in town skiing.

"We wouldn't have stepped forward to buy the equipment without the grant," Paris said.