Shentel concerned about BEAD’s rate regulation

BEAD

“The possibility of having to set certain prices for low-income customers” worries Shentel.

WASHINGTON, June 16, 2024 – Shentel, a fiber-first broadband company that hopes to serve 600,000 locations in the Mid-Atlantic by the end of 2026, does not expect the Biden administration’s Broadband Equity, Access program to and Deployment will help in closing the digital market share.

“We are concerned about the possibility of having to set certain prices for low-income customers, as well as the potential labor rates we will have to pay for construction, as well as some burdensome reporting requirements,” said Shentel Executive Vice President and Chief Operating Officer Ed McKay on Friday.

BEAD, run by the Department of Commerce’s National Telecommunications and Information Administration, 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 accused NTIA of pressuring states to price low-income plans in order to receive BEAD funding. Republicans told NTIA officials that the BEAD Act prohibits rate regulation. NTIA administrator Alan Davidson denied the allegations.

“We continue to monitor, but I think the likelihood that we will be a significant player in BEAD is probably less likely than we were with previously allocated (American Rescue Plan Act) funds,” McKay said.

McKay’s comments came during an hour-long webcast hosted by Jonathan Chaplin, US Communications Analyst at New Street Research. Shentel’s senior vice president and chief financial officer also participated in the webcast James Volk.

The wide-ranging discussion included the impact of the end of the Affordable Connectivity Program, competition from fixed wireless access and potential industry consolidation.

Edinburg, Virginia-based Shentel had about 4% of the 155,000 internet subscribers enrolled in ACP before the program ran out of funds on May 31. About 75% of its ACP subscribers were customers before receiving ACP’s $30 discounted monthly internet plan.

The company doesn’t expect the end of AKP to be groundbreaking.

“We hope this situation will end and in all likelihood we will not see a significant impact from the cancellations,” McKay said. “We continue to offer a lower pricing plan to customers who have participated in the ACP program in order to retain as many of them as possible.”

On the competition side, Volk said Shentel doesn’t see an impact from T-Mobile and Verizon’s rapidly expanding fixed wireless access service. It said it expects the competitive threat to the broader wireline ISP industry to diminish over time.

“I think fixed wireless will reach… some limits. These are mainly mobile companies offering stationary wireless solutions. “I think at some point they will run out of some of that opportunity,” Volk said.

Volk also said he thinks companies producing optical fiber today will consolidate.

“We think there will be some fiber consolidation for the domestic industry as everyone starts to move slower,” Volk said. “We would also like to take part in this. We want to make sure that we have the capital that will enable us to be a buyer. We are big enough to be taken over, but we are also small enough to be taken over.”