Negotiators from Shentel and Sprint have given up, and the companies' roaming dispute is now headed into arbitration. Shentel executives disclosed the news last week during the company's quarterly earnings call with investors.

"While we had several negotiating sessions with Sprint over the past 90 days, we cannot find common ground for an agreement, and we initiated the dispute resolution process of arbitration," Shentel CEO Christopher French said, according to a Seeking Alpha transcript of his remarks. "The arbitration proceedings are confidential, so we will not be able to make any public comments regarding them other than we expect a resolution by early 2020 and any owed amounts will be recognized and paid retroactive to May 2019."

The Wall Street research analysts at B. Riley FBR estimated that $5 million hangs in the balance for Shentel, and the absence of that money resulted in a significant drag on Shentel's financial results in the third quarter.

As issue is the wireless network roaming agreement between Sprint (the nation's fourth largest wireless network operator) and Shentel (a Sprint affiliate that offers wireless service under the Sprint brand). Sometimes referred to as a "travel fee" that's renegotiated between the companies every three years, the rate essentially sets the cost that each operator pays the other when their customers travel from one network onto the other.

Such agreements are common between big wireless carriers like Sprint and smaller, rural carriers like Shentel because it means their customers can remain connected as they travel outside their operator's wireless coverage footprint.

The merger overhang

It's unclear whether the proposed merger between Sprint and T-Mobile is directly affecting the negotiations between Shentel and Sprint over roaming -- or whether one or both of the parties is using the merger as leverage for a better roaming rate.

But the merger also creates a broader issue for Shentel given that its mobile business (which sits alongside its cable, fiber and fixed wireless efforts) currently relies on its affiliate partnership with Sprint. The company has made clear that, if the merger is ultimately consummated, it would potentially consider a new affiliate agreement with the merged company, or some other transaction.

Some analysts expect the merged Sprint and T-Mobile will take decisive action on the Shentel question: "We now see it as more likely that T-Mobile buys Shentel's wireless business in the event of a successful merger rather than Shentel becoming an affiliate partner of New T-Mobile [the merged company]," wrote the analysts at B. Riley FBR in a note to investors

The cable overhang

While the analysts have a relatively positive outlook on the other portions of Shentels' business, B. Riley FBR noted that it reduced the overall value of Shentel's wireless business (excluding its 221 cell towers) by 22% to just $1.7 billion.

"The main driver of this reduction is that postpaid ARPU [average revenue per user] trends have continued to deteriorate instead of stabilizing The ARPU weakness is mainly the function of higher promotional activity. Our checks show that the promotional environment has continued through October," they wrote in a report to investors.

Indeed, Shentel executives said aggressive mobile pricing from Comcast's Xfinity Mobile and Verizon was cutting into the company's wireless business in the third quarter.

Shentel joins U.S. Cellular in acknowledging the growing threat from cable companies entering the mobile business. Cable companies Comcast and Charter were recently joined by Altice USA in the mobile sector, and it appears that rural and regional operators are feeling the heat first.

 Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano