Companies say they lack reliable broadband connections, despite ranking fully functional broadband as extremely important to their operation.
Study findings by the British Chambers of Commerce (BCC) were published on Monday (27 March).
They show that firms in rural areas are at least twice as likely to have unreliable connections (30%) as those in towns (15%), inner cities (13%), and suburban areas (12%).
BCC director general Adam Marshall said: "Business communities across the UK still report that our digital infrastructure is not fit for purpose
Throughout the country, significant numbers of companies of every size and sector lack reliable internet connectivity – a basic requirement for businesses to operate efficiently in today's world.
Dr Marshall said unreliable connections stunted productivity, causing needless delays, costs and frustration.
"While businesses in every corner of the UK are affected, our research shows that it's rural areas and small businesses that are most likely to suffer.
"An unreliable connection acts as an obstacle to growth, and puts those firms most in need of support at a competitive disadvantage."
All companies surveyed (99%) say a reliable broadband connection is important, (82% say extremely so), yet nearly one in five (18%) suffer from unreliable connections (11% not very reliable; 7% not at all reliable).
Smaller businesses are the most likely to suffer from unreliable broadband, with nearly a quarter (24%) of sole traders and 21% of micro-businesses reporting problems.
The survey suggests that more reliable connections would allow businesses to do more.
Nearly half of businesses (48%) say if the reliability of their broadband connection was improved it would allow them to use more applications, particularly cloud-based services (24%), transfer of large files (22%), remote server access for employees (15%).
Dr Marshall said: "We've been calling on both providers and on government for years to fund the necessary upgrades required to deliver superfast broadband to business communities.
"Regulators, too, must ensure that firms actually get the quality and speeds of connection they are promised.
"While we welcome recent ministerial announcements about investing in 5G technology and efforts to build a world-class digital infrastructure in the UK, there is still a long way to go in getting the basics right.
"The immediate focus must be on providing all companies with connections that are reliable and of sufficient speed, which would boost business confidence and encourage firms to maximise opportunities for growth, trade and investment."
The survey polled 1,465 business people from all regions of the UK online in January 2017 to understand how businesses rate the overall reliability of their broadband connections.
Of the businesses surveyed, 96% were SMEs, 22% operate in the manufacturing sector, and 78% operate in the services sector.
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