ORLANDO -- Digital Home Summit -- Ringgold Telephone Co. Inc. , a tiny independent telco in northeastern Georgia, pioneered IPTV deployment in 2003, years ahead of larger telcos such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). Now Ringgold is trying to pioneer what comes after IPTV, having pulled the plug on the service without ever seeing a single dollar of profit from video.

Ringgold is finding profit in reselling Dish Network LLC (Nasdaq: DISH)'s video service and is considering a holiday offer that would combine a free Roku Inc. , Apple Inc. (Nasdaq: AAPL) or Clearleap -powered box for OTT video alongside the installation of an off-air HD antenna for free broadcast channels available to customers who sign a long-term contract for Ringgold's broadband service.

The idea is to get them to cut the cable cord, says Phil Erli, EVP of Ringgold, who spoke here yesterday. Erli and Ringgold went all-in with its IPTV service, offering one of the first telco video-on-demand (VoD) services and producing local content that included high school sports, talk shows, fitness programs and dramatic programming about the history of the region.

Now Ringgold is helping its customers decide if OTT video is right for their needs with a new online tool.

"We know we have to make this simple for them," he says. "It's too easy to just turn on the TV and let the cable company handle it. We want them to understand they have a lot more control than they might think."

IPTV headaches
The major problems with IPTV largely fell into two categories: middleware that was available and affordable for Ringgold didn't rise above the "me-too" level for what local cable was offering; and retransmission costs ate up any potential profits, Erli says.

He cites a local NBC affiliate that insisted on a contract that ultimately would cost Ringgold Tel $5.25 per month, per subscriber -– that one expense would eat up any possible profits.

"These weren't negotiations, they told me what we would pay," Erli says. "This business just doesn't scale, not as long as a local provider can stick a gun in your ribs and say, 'Give me all your money.'"

Ringgold started with Minerva Networks Inc. middleware, and couldn't get the DVR and HD capabilities it wanted ahead of the local cable operator. Erli explored other options, including Microsoft Corp. (Nasdaq: MSFT)'s Mediaroom, but that approach required too many servers to be cost-effective for a small telco.

The telco targeted 30 percent penetration for its video service, delivered in part over a fiber-to-the-home (FTTH) network, but never hit that the number because, as Erli admits, its video product was "mediocre."

Ringgold retained more than half of its IPTV customers when it switched to Dish, and some of those who were angered and left the service for cable have come back, Erli says. He believes the rising cost of pay TV will lure even more back to an OTT offering, especially when it's paired with HD broadcast, which pulls in the major networks and about 12 total stations in the Ringgold area, and with a growing amount of content viewable online.

— Carol Wilson, Chief Editor, Events, Light Reading