Phil Erli was an early IPTV convert. The executive VP of Georgia-based ILEC (incumbent local exchange carrier) Ringgold Telephone has been “doing” IPTV for five years, deploying well ahead of AT&T and other major global carriers. But as he told a NAB audience Monday, real-life experience has made him somewhat cynical about IPTV’s real-world prospects.

“It is the future, but it’s not here yet,” Erli said. He also warned other independent telcos that they shouldn’t expect to make massive profits on IPTV — or any profits at all. “Video is a must for the bundle, but it won’t be a money-maker,” he said. “I don’t think anybody’s making money on IPTV.”

Expectations of more than 30 percent penetration is unrealistic as well, Erli said. “We expected to have 30 percent market share by now,” he said. But Ringgold is stuck at 18 percent penetration.

The problems are multitudinous, Erli said, who attributed most of Ringgold’s woes to vendor issues. Smaller telcos, like Ringgold, that deployed IPTV early, are stuck with middleware that doesn’t have advanced features and applications, Erli said.

“They told us we would have services we couldn’t dream of — well, we can’t dream of them because they don’t exist yet,” he said. Instead, IPTV looks more like cable services looked 10 years ago, lacking HD capabilities and digital video recorder features that compete with what cable offers today.

Ringgold competes with Charter Cable and isn’t in a position to get into a price war with a much larger company, but that is what consumers expect, Erli said.

Erli also complained that some of what his vendors, including middleware vendor Minerva, have delivered has not been field tested, leaving him feeling like a guinea pig. “Road maps are a joke,” Erli said, because vendors fail to live up to their promises. Ringgold hasn’t gotten the CPE choices it was promised and is now stuck with set-top boxes that are five years old.

Erli would gladly change middleware vendors, but there are few other choices. Siemens/Myrio has left the U.S. independent market and Microsoft’s quote for Ringgold would have required the company to buy 52 servers to handle its 1800 customers.

Ringgold has invested heavily in customer service, offering 24/7 support that is vastly better than anything Charter offers, but customers aren’t willing to pay extra for that, and they won’t choose Ringgold solely for the extensive local content it has developed. If the telco had all the HD and DVR functions of Charter, then local content and good customer service might tip the balance, but that isn’t the case, Erli said.

The bottom line is that telcos have to get into IPTV to replace revenue lost by eroding wireline sales, but they also need to be realistic, Erli said. IPTV is no panacea.