Shentel Concerned About Rate Regulation by BEAD

'The potential for having to set certain prices for low-income customers' is a concern to Shentel.

Shentel Concerned About Rate Regulation by BEAD
Photo of Shentel Executive Vice President and Chief Operating Officer Ed McKay, courtesy of Shentel

WASHINGTON, June 16, 2024 ­– Shentel, a fiber-first broadband company hoping to pass 600,000 Mid-Atlantic locations by the end of 2026, isn’t looking to the Biden administration’s Broadband Equity, Access, and Deployment program to help close the digital divide.

“We're concerned about the potential for having to set certain prices for low-income customers, and we're concerned about potential labor rates that we have to pay for the construction and also some of the onerous reporting requirements,” said Shentel Executive Vice President and Chief Operating Officer Ed McKay on Friday.

BEAD, run by the National Telecommunications and Information Administration in the Commerce Department, includes $42.45 billion in broadband deployment grants available to all U.S states, five territories, and the District of Columbia.

Some Republicans on Capitol Hill have accused NTIA of pressuring states to set the price of low-income plans in order to receive BEAD funding. The Republicans have told NTIA officials the BEAD law bans rate regulation. NTIA Administrator Alan Davidson has denied the allegations.

“We're continuing to monitor, but I think we're probably less likely to be a big player in BEAD than we were in the [American Rescue Plan Act] funds that were previously granted,” McKay said.

McKay’s comments came during a one-hour webcast hosted by Jonathan Chaplin, U.S. Communications Analyst at New Street Research. Also on the webcast was Shentel Senior Vice President and Chief Financial Officer James Volk.

Among other things, the wide-ranging discussion covered the impact of the end of the Affordable Connectivity Program, competition from fixed wireless access, and potential industry consolidation.

Shentel, based in Edinburg, Va., had about 4% of its 155,000 Internet subscribers enrolled in the ACP before the program ran out of money on May 31. About 75% of its ACP enrollees were customers prior to receiving ACP’s $30 monthly Internet subscription discount.

The company does not expect the end of ACP to be disruptive.

“We’re hopeful as it winds down, in all likelihood that we're not going to see a significant churn impact,” McKay said. “And we are continuing to offer a lower price plan for those customers that were on the ACP program to retain as many of those as we can.”

On the competitive front, Volk said Shentel is not seeing an impact from fast-growing fixed wireless access service by T-Mobile or Verizon. He said he expects the competitive threat to lessen in time for the broader wireline ISP industry.

“I think the fixed wireless access is going to reach … some limits. They're mainly a mobile business that is doing fixed wireless. I think at some point in time, they're going to run out of some of that capacity there,” Volk said.

Volk also said he thinks companies that are building fiber today will consolidate.

“We think there's going to be some consolidation in the fiber to the home industry, once everybody's builds start to slow,” Volk said. “We'd like to participate in that, too. We want to make sure we have some capital available to being a buyer. We're big enough to acquire, but we're also small enough to get acquired.”

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