Shentel (Shenandoah Telecommunications Company) executives told investors and analysts on the company’s recent Q2 earnings call that it saw less of an impact from satellite competitors than in Q1, particularly in its Glo Fiber regions, with satellite remaining “a relatively small contributor to churn.” But the company is clearly keeping the low-Earth orbit (LEO) satellite threat in its sights.
In a post on its website on July 29, coinciding with the company’s second quarter earnings call, Shentel published a piece called “Starlink’s Hidden Costs: Why Your Internet Bill Might Be Much Higher Than Advertised.”
“Starlink has changed the conversation around internet access. Powered by thousands of low-Earth orbit satellites, the service has made high-speed internet available in places that once had few or no broadband options,” states the un-bylined post from Shentel about SpaceX’s LEO service. “But the advertised monthly price tells only part of the story. Depending on your location and service needs, the actual cost of Starlink can be hundreds or even thousands of dollars higher than many consumers initially expect.”
The post goes on to detail how “equipment costs, demand surcharges, optional data charges, and other fees that aren’t always obvious in advertisements” often lead to higher Starlink costs than anticipated for prospective customers.
“Depending on where you live, Starlink may add a one-time surcharge simply because your area has high network demand. In some high-demand markets, customers have reported demand surcharges of up to $1,500, although fees vary by location, service plan, and network availability,” states Shentel.
The company also highlights Starlink’s capacity constraints, writing: “When many users connect within the same coverage area, network resources are shared. That’s one reason Starlink has implemented demand-based pricing and different service tiers to manage network congestion.”
Shentel’s post acknowledges that Starlink is an “important option for many rural and remote areas where fiber, cable, or other wired broadband options are unavailable” but stresses the superiority of a wired connection if available.
“If you’ve already signed up for Starlink and are having second thoughts, check whether you’re still within the 30-day return window and therefore still eligible to return the equipment for a refund,” writes Shentel.
‘Virtually no churn’
While the dedicated Starlink-isn’t-all-that-great piece seems a notable feature in the News section on the cable/fiber provider’s website, taken together with the company’s recent earnings reports – and the broader conversation around satellite’s impact on the terrestrial broadband market – it highlights the threat posed to cable and fiber providers in a world where LEO service is gaining in awareness and popularity.
Data from Recon Analytics published in May revealed that Starlink is currently picking up roughly 20% of its customers from cable providers, owing in part to promotional offers. Ookla also published data this year showing that Starlink has more subscribers in urban than rural environments in a handful of states.
On Shentel’s Q2 earnings call on July 29, the company’s CEO, Edward McKay, said the broadband provider saw fewer customers move to satellite than in Q1 – when he said Shentel saw “a little bit of churn to Starlink” in incumbent markets. But he noted the company is still monitoring the situation.
“Our average monthly churn was 1.21% in the second quarter, which continues to be among the best in the industry,” McKay said, according to a transcript of the earnings call.
“The impact from satellite competition declined from the first quarter and remained a relatively small contributor to churn. We saw further improvement in June, and we’ll continue to monitor competitive activity across all technologies,” he added.
Pressed further on the Q2 call by New Street Research analyst Vikash Harlalka regarding satellite trends, McKay elaborated that Shentel saw no material impact from satellite competitors to its Glo Fiber areas, rather “just a minimal impact in the incumbent broadband markets in the rural areas.”
McKay further attributed the slower churn both to Glo Fiber’s adjusted rate card and to satellite backing off “some of their aggressive promotions,” from free equipment to introductory rates.
Fiber forward
Overall for Q2, Shentel saw continued growth for its Glo Fiber business, marked by 6,200 net adds and its 100,000th customer. Total revenue grew 5.5% year-over-year to $93.5 million, with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) growing 12.9% to $32 million for the year.
The company attributed its wins in the quarter to its fiber businesses: “Fiber revenue, which includes both Glo Fiber and Commercial Fiber, grew 21.4% year-over-year in the second quarter, reflecting the strong momentum we continue to see across both fiber businesses. For the first time, our fast-growing fiber businesses represented 51% of consolidated revenue in the second quarter, exceeding the combined revenue for our incumbent Broadband and RLEC businesses,” said McKay during the earnings call.
He added that the company is “on track to substantially complete our Glo Fiber expansion in 2026, reaching 510,000 passings.”
