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Board rebukes RRA director



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By STEPHANIE M. PETERS STAFF WRITER - Published: October 24, 2009

Department of Public Service Commissioner Dave O'Brien spoke to the Rutland Redevelopment Authority with cautionary words this week about operating a fiber-optic broadband network, referencing Burlington Telecom's financial woes as an example of where such a project can go wrong.

However, discussion of Burlington Telecom at the Thursday evening meeting elicited strong objections from RRA Executive Director Tom Macaulay, who insisted that Burlington is not indicative of the success of municipal "fiber-to-the-home" broadband industry in other parts of the country.

"To say that Rutland can't do (this project) because of what happened in Burlington I think is inappropriate," Macaulay said. "To say that the densely populated areas (of the state) aren't underserved (with broadband access) isn't true."

Macaulay was rebuked by members of his Board of Commissioners, who challenged his characterization of what O'Brien said as a statement that the RRA "shouldn't even bother to try."

The brief dispute, which came toward the end of the meeting, did lead to a more frank discussion specific to the business plan for Rutland Telecom – even though O'Brien had been invited to the meeting to speak generally about his office's take on fiber optics and what necessity the RRA would have to prove in order to get a Certificate of Public Good to operate.

Rutland Telecom hopes to offer every resident and business in 14 towns in the Rutland region phone, Internet and cable services.

Macaulay explained that Rutland Telecom's business plan differs from that of Burlington because, in Rutland, the company will be owned by a limited liability corporation that is owned by the RRA, which by Rutland City charter is a separate entity from the city.

Macaulay said he'd received one legal opinion backing his belief that city taxpayers would not bear any risk under that arrangement. The RRA is also pursuing nonrecourse financing from the 2008 Farm Bill, which Macaulay said is a different type of funding than that used by Burlington.

The RRA has contracted with consultant Valley Net, which is working to set up EC Fiber, another municipally owned fiber-optic network between White River Junction and Montpelier. Valley Net's principal, Tim Nulty, is also the former head and founder of Burlington Telecom.

O'Brien argued, however, that how the company is set up doesn't change the numbers. Like Burlington Telecom, Rutland Telecom is basing its projections on a 40 percent penetration or take rate. O'Brien said that in actuality, Burlington has realized a 25 percent market share.

"The majority of the market is still held by the people who were already there," he said. "I can't sit here and say what went wrong, but the bottom line is the bottom line and the numbers haven't borne out.

"I think Burlington's experienced this the hard way – in the marketplace, all that matters in the end is that people are willing to pay you for the service … Don't underestimate people's interest in just getting the Patriots game on Sunday."

O'Brien offered the RRA the opportunity to sit down with experts from his office and discuss their plan prior to submitting an application for the Certificate of Public Good. He also said he'd take material Macaulay provided from an organization called the Fiber-to-the-Home Council and share it with his office. Included in that packet was a list of 41 other municipal projects currently in operation around the country.

After O'Brien left, several RRA board members asked Macaulay if he could prepare information and a presentation to help educate them on the details of the telecom proposal.

"It's clear that you have a really good understanding of this," said Mark Foley Jr., the interim board chairman. "But it hasn't been articulated to us in a way we can fully understand it … I think we've made a lot of half-informed decisions and that can't go any further."

Macaulay was asked to prepare that information for next week. On Tuesday, the board is set to meet with city auditor Randall Northrop.

stephanie.peters@rutlandherald.com








READER COMMENTS


"Arrogance"? Maybe. Macaulay's got an awful track record of trying to ram flimsy, questionable, poorly-supported and ill-conceived developmental projects down the throats of whatever community he's living in at the time. Of course, more often than not, he fails in his attempts to do so, so maybe the anti-telecom folks are worrying about the Washington Generals suddenly beating the Harlem Globetrotters, know what I mean?

As I and many others have already said: Tom, you need to lay out -- in clear, unambiguous and forceful language -- the following:

1. WHAT Rutland Telecom will be.
2. WHY this area needs Rutland Telecom.
3. WHO will benefit from Rutland Telecom.
4. HOW those people will benefit from Rutland Telecom.
5. WHEN Rutland Telecom will start making any impact on the community.

Honestly, Macaulay, if you can't do those things in one well-written op-ed article in the Herald -- and soon -- you might as well pack it in on this one.
-- Posted by That Guy on Mon, Oct 26, 2009, 1:48 pm EST

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The sucess of this project lies with communites buying in and then having their residents make the switch. At this point
I am doubtful of the sucess. RRA seems to believe that they possess some quality that Burlington did not, but I have not heard what that is.I also believe that Macaualy's arrogance will be the downfall of this project!
-- Posted by None None on Sun, Oct 25, 2009, 9:30 am EST

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Macaulay was right to call it inappropriate. Burlington did it incorrectly. It has been executed correctly elsewhere. It is possible to do this the right way here.

Telecommunications is a way Vermont can move forward without abandoning our heritage we grip so tightly.
-- Posted by Scott Frank on Sat, Oct 24, 2009, 4:26 pm EST

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"This initiative is clearly direct competition with the private sector and should not be encouraged."

Again, I'm not a big fan of the RRA of even this project per se, but...

Please name for us all of the telecommunications companies in this particular "private sector" competing for our business in Rutland.

Better yet, I'll spot you one company: Comcast.

Now you name all of the others.
-- Posted by That Guy on Sat, Oct 24, 2009, 4:23 pm EST

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Having given thought to the notion that this venture, aside from having a not such very good business plan, might be an experiment in socialized communication as suggested by a contributer here makes some sense. This initiative is clearly direct competition with the private sector and should not be encouraged.

Other folks can make judgements about the apparent lack of communication(ironic isn't it) given the issue under discussion between the proposer of Rutland Telecom and his board.

Chris Louras is absolutely correct in the position he has taken with the RRA board re: Rutland Telecom.
-- Posted by Larry Dugan on Sat, Oct 24, 2009, 2:58 pm EST

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as we all mourn the passing of Soupy, lets remember one of his greatest quotes..

"If it aint broke, dont fix it."

As much as I hate comcast, they do deliver a fine product.

RIP Soup
-- Posted by Palin is Sweet on Sat, Oct 24, 2009, 11:53 am EST

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The Rutland Region will require a telecommunications system that will reach through the 21st. Century. Will that be satellite directed technology or fiber optic systems remains to be seen. Both technologies are jumping by leaps and bounds. What is of concern are comments made by the Board of Commissioners of the Rutland Redevelopment Authority that they have only been half informed about a project that has been in development for quite some time. Apparently the internal communications within that agency are insufficient. Additionally the latest admission that a founder of the Burlington Telecom system is under contract to the R.R.A. makes one question whether public funds are paying for the consultancy and if so did the Board of Aldermen approve the expenditure. Where did the funds come from? The Special Benefits District Account, the 1/2 cent tax assessment in Rutland City, or out of grant administration fees assessed by the R.R.A.? Only one legal opinion was obtained concerning whether there will be any taxpayer liability if the system defaults. Conceptually the plan is a good one. No question on that issue. However points aren't scored when you lock horns with the head of the Public Service Commission (whether you like him or not) who offered an olive branch to the R.R.A. to sit down and work out needs for a Certificate of Public Good and necessity. Points aren't scored when members of a supervising entity are only half-informed meaning that half of their decision making power has been compromised. The only points gained are from those who would say "Take a hike down your information superhighway." A couple of weeks of informative dialogue with both the R.R.A. Board and the public will not stymie the project. It might generate a new and more energetic level of support from both supporters and detractors. A fiber optic system with unlimited capabilities for the future; owned by a limited liability company owned by the R.R.A. guided by half informed board members. We're back to copper cables. However, there appears to be fiber optic light on the horizon if proper information is provided to consumers and commissioners alike.
-- Posted by Ed Larson on Sat, Oct 24, 2009, 10:41 am EST

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I have excellent broadband and phone service provided by Comcast, and for considerably less than Fairpoint charges. What incentive can a local fly-by-night independent offer that would cause me to want to switch (Thus perhaps the low penetration rate in Burlington)? Are there sufficient areas not being served to justify the expense of this project? Or is this just one more local hallucination conjured up for the tax payers to pay for like our empty Amtrak train?
-- Posted by Marginalized Voices on Sat, Oct 24, 2009, 10:23 am EST

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Well, Mr. Smithy:

Empty drums make much noise but have zero content. Exactly what is your plan to modernize the Rutland telecommunications infrastructure?
-- Posted by Ray Makul on Sat, Oct 24, 2009, 8:40 am EST

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Thanks Mr. Foley. Your suggestion that Mr. Macaulay step back, take a deep breath and fully inform the Board of the RRA is welcome news.

As a suggeston, perhaps the RRA could take a page from the DP playbook and convene public information sessions to inform Rutland City taxpayers about all facets of the initiative proposed by the executive director of the RRA. Daresay, if the RRA Board of Directors feel they have made "alot of half-informed decisions", imagine how ignorant the rest of Rutland citizens, except communication geeks, must feel.

So again, thanks Mr. Foley for reining in the gentleman in your employ who has put forward this telecom plan of which 99.999999% of us remain ignorant.
-- Posted by Concerned About Rutland on Sat, Oct 24, 2009, 8:19 am EST

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Mr. Makul:

A socialized fiber optic network providing internet, TV and phone and operated by a LLC known as the RRA which is a municipality within the municipality of Rutland?

What a brillant idea! Socialized communications. NOT!!!!!!!!!!
-- Posted by Wurdy Smithy on Sat, Oct 24, 2009, 8:00 am EST

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Someone should ask Mr. O'Brien the following question:

If RRA does not invest in the telecommunications infrastructure needed to make Rutland competitive, who will? Fairpoint? HA-HA-HA!!

It is a fundamental economic fact that Vermont is a low density state, and private telecommunications investment dollars can earn a higher return elsewhere. If Rutland wants a modern telecommunications infrastructure to support a 21st century economy, it will probably have to do it itself.
-- Posted by Ray Makul on Sat, Oct 24, 2009, 7:09 am EST

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