Shentel To FCC: U.S. Treasury-Funded Overbuilders Crushed Our FWA Business
By Ted Hearn, Editor of Policyband
Washington, D.C., Jan. 20, 2024 – A telecommunications company in rural Virginia says it shut down its wireless Internet service two years ago after fiber providers planned to compete using U.S. Treasury money funneled through a state program.
Shentel, based in Edinburg, Va., said it planned to offer Internet to a portion of 2,500 Virginia locations over its fixed wireless access (FWA) service called Beam. Shentel received financial support from the Federal Communications Commission's Connect America Fund (CAF) for the deployment project.
“Unfortunately, [Shentel] was unable to continue this new Beam fixed wireless business once the Virginia Department of Housing and Community Development awarded federal Treasury subsidies to fiber providers to overbuild locations that would have otherwise been served by Shentel’s existing Beam fixed wireless service in adjacent counties,” Shentel told the FCC this month.
Shentel shut down Beam in 2022 and sold off its 2.5 GHz spectrum licenses the following year.
“Since fixed wireless service was now subject to a subsidized overbuild, the Beam fixed wireless business model was deemed unsustainable and was turned down in 2022,” the company said.
For months, incumbent broadband ISPs have stressed their concerns about government-funded competition, saying it would waste taxpayer money, jeopardize funding needed for unserved locations, and dash hopes of closing the digital divide.
Shentel said Beam offered 25/3 Mbps speeds – which met the FCC’s definition of broadband.
However, the National Telecommunications and Information Administration’s $42.45 Broadband Equity, Access, and Deployment (BEAD) Program considers locations receiving 25/3 speeds as underserved and eligible for government-funded fiber competition.
Shentel referred to government-funded overbuilding in a declaration filed with the FCC on Dec. 14, 2023 as part of the agency’s Net Neutrality proceeding.
But it appears Shentel wasn’t referring to its Beam service.
“We have seen American Rescue Plan Act funding utilized by other providers in at least two of our markets to overbuild our existing broadband cable plant, bringing further competition,” said Chris Kyle, Shentel's Vice President of Industry Affairs and Regulatory.
The ARPA created the Capital Projects Fund within the Treasury Department to award $10 billion to infrastructure projects, including broadband network deployments across the country.
Shentel invested approximately $24.7 million in Beam. The 2023 spectrum sale brought in about $21.1 million, according to Shentel's filing with the Securities and Exchange Commission.
In a Jan. 14 letter to the FCC, Shentel said it is offering 100/20 Mpbs wireline service to all required locations built so far, including locations where Beam was available or going to be made available.
But Shentel said the Beam shutdown put it behind schedule in offering 100/20 Mbps to all 4,247 locations required by the FCC's subsidy award. The company said it still had 435 locations to reach and asked the FCC to establish Dec. 31, 2024 as the new deadline.
"In 2022, [Shentel] was subsequently forced to start the long and more costly process of building wireline broadband plant to the same 2,500 locations initially targeted by Beam fixed wireless,” Shentel explained.
Other delays cited by Shentel were pole attachment disputes and unexpected cost increases. Original per-location costs were $1,228, compared to actual costs of $7,200 per location, the company said.
Shentel, partnering with Shenandoah County, said it has received a $20.8 million subsidy under the Virginia Telecommunications Initiative to help offset the $47 million in total cost to wire 6,500 unserved and underserved locations in Shenandoah County.