Small firms fight shy of the net, survey reveals

Small businesses have a "deep reluctance" to use the internet despite Chancellor Gordon Brown's push to get UK firms online, a survey will reveal tomorrow.

Small businesses have a "deep reluctance" to use the internet despite Chancellor Gordon Brown's push to get UK firms online, a survey will reveal tomorrow.

Produced by the cable company NTL, it finds that some 61 per cent of businesses with less than 50 staff are shying away from e-commerce and the net.

The report also reveals that companies in manufacturing, retail and wholesale show the greatest reluctance to use the technology, unable to see its relevance to their businesses.

And managers, particularly in trade rather than professional sectors, say they are unhappy about letting staff use email and giving them access to the net.

Despite promised tax cuts for IT equipment, most small businesses say cost is the biggest barrier to going online.

NTL will tomorrow use the research to launch a new service aimed at small business customers, called "NTL Business Essentials". It will include broadband net access, mobile communications, web hosting and consultancy services for a monthly flat fee.

There are 1.1 million small businesses, representing up to 90 per cent of all UK firms, and the sector is set to become the new battleground for telecoms outfits.

Chris Hutchings, managing director of NTL's business group, said that, as most telecoms firms had to date focused on the consumer and FT-SE 250 companies, small businesses had been "left out of the equation".

He denied the margins in the small business sector made it difficult to make money and claimed that NTL's small business initiative would make a profit within two to three years.

As well as providing broadband net access via cable, NTL is also expected to bid aggressively for one of the licences for wireless broadband access.

The Government will launch the auction on 16 October, and is expected to raise up to £2bn. But NTL will face stiff competition from, among others, Energis, Orange and the US telecoms group Winstar.