By STEPHANIE M. PETERS STAFF WRITER

Tom Macaulay made strides to put the "meat on the skeleton" of Rutland Telecom in a presentation of its business plan to the Rutland Redevelopment Authority's board, but answers to the most significant questions in the project will not come until the organization takes the next step of hiring an attorney.

Macaulay, executive director of the RRA, said he was awaiting a legal opinion of draft documents for the RRA to form a limited liability corporation that would wholly own and manage the proposed telecommunications company. Once established, the LLC would be able to raise funds to cover the cost of the next two steps of the project — the application for a Certificate of public good from the Vermont Public Service Board and completion of a market study required as part of a funding application Macaulay hopes to make to the 2008 Farm Bill.

It's the market study that should address the sticky concern of several members of the board: Would the service have enough of a take rate, or subscription rate, to even make it a viable effort in the Rutland region?

Citing statistics compiled by the nonprofit Fiber to the Home Council, Macaulay explained to the committee Thursday that, after one to four years of operation, the average take rate of the 41 retail municipal systems in operation nationwide is 54 percent. With that in mind, he and consultant Valley Net have set a goal of and the basis for determining Rutland Telecom's profitability at a 40 percent take rate.

As tentatively planned, Rutland Telecom will span 600 road miles, on which there are about 20,000 households and several hundred businesses. To achieve a 40 percent take rate, the company would have to have 8,900 subscribers by the end of the fourth year, according to Macaulay's figures.

That number does not sit well with board member Steve Eddy, who said Thursday he cannot help but consider that Burlington Telecom's only achieved a 29 percent take rate.

"Burlington is not indicative of the industry," Macaulay said.

"I'd like to think that (since it's the only established municipal telecommunications company in Vermont) it would be the best comparison," Eddy said.

Jerry Kreitzer said he'd also be concerned with that projection if Rutland Telecom cannot significantly undercut Comcast in terms of its prices for Internet, telephone and cable service.

Macaulay said that part of the final analysis of numbers that Valley Net is working on includes projections of what would happen if Rutland Telecom only reached a 30 percent take rate or exceeded expectations and achieved a 50 percent take rate. Valley Net is a consulting company operated by Tim and Leslie Nulty. Tim Nulty also prepared the business plans for Burlington Telecom and more recent startup EC Fiber, which is slated to operate in towns between White River Junction and Montpelier.

Currently, however, it's anticipated that the basic monthly fee for a home to be hooked up to the fiber optic system would be $65. After that, customers would be able to pick and choose services a la carte, with a triple-play package of services comparable to Comcast's expected to cost $89, according to Macaulay. Still, those projections will also be run with different price points, he said.

The board also asked Macaulay about recent news that Vermont's utilities, including Central Vermont Public Service and Vermont Electric Power Company, were awarded stimulus funds to help bring smart grid technology, which utilizes fiber optic cable, to the state. Macaulay said he has plans to speak with both companies about whether there is room for collaboration between the projects in either stringing or buying space off the fiber optic cables.

Once an attorney is hired, the board will also have to determine how best to set up Rutland Telecom's Board of Managers — with a majority of members made up of RRA board members, or a minority. In the latter scenario, Macaulay said he thought the RRA would sacrifice a little control, but would ultimately be creating another layer of protection for the taxpayers.

"The underlying issue isn't protection," said Board Chairman Mark Foley Jr. "I agree that's important, but first of all this has to be a plan that works. … (If we can say we have protection) that's great, super. We can all feel good and go to sleep, but is the plan going to fly? Is it going to work? Who's going to run it and how are we going to manage it?"

stephanie.peters@rutlandherald.com