I’ve been covering the business and regulatory beats for a while but over this past week, I’ve learned more about the rural and small telco industry than I have in a couple of years. Last week I met with Windstream’s CEO, Jeff Gardner, and yesterday I attended the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO) conference in Phoenix.

I think it’s easy to overlook these companies because, well, they’re small – geographically and in terms of subscribers. But as philosopher Emmanuel Kant said, “Look closely, the beautiful may be small.” In this case, when it comes to brainstorming new revenue streams and giving customers what they want, these groups strike me as movers and shakers to watch.

Probably the biggest news to come out of OPASTCO is the organization’s partnership with Microsoft. The two groups want to create new business models for rural telcos. That’s because a lot of rural telcos lose potential income to over-the-top companies such as Google that provide a service a telco could be providing. To that end, Microsoft and OPASTCO are in the beta stages of creating co-branded e-mail, instant messaging and unified communications that a telco would sell to SMBs. They’ll roll out the services once – if – they get enough commitment from OPASTCO members.

Microsoft demoed the platform to a full house on Monday, so that was good. OPASTCO members liked what they saw and heard but remained concerned about costs, tech support, and whether there will be applications such as Webinar hosting and video instant messaging. The answer to the last three items is “yes.” Unfortunately, Microsoft couldn’t give an idea of costs because, reps said, it hadn’t yet secured OPASTCO member interest.

That was a bad call. If Microsoft could have at least given OPASTCO members a rough idea of what they would pay, it might have gotten more firm nods than shoulder shrugs or raised eyebrows.

Still, OPASTCO members shouldn’t blow this opportunity, and I don’t think they will. Being able to roll out the latest-and-greatest products with your company’s name and Microsoft’s brand would lend a lot of credibility to small companies competing against cable and incumbents.

Rural telcos are devising other interesting ways to attract subscribers and retain the ones they already have.

Take Ringgold Telephone Co. in Georgia. The telco serves a mere 2,000 people, but it’s producing its own children’s and hobbies shows, as well as documentaries. (Ringgold is steeped in Civil War history.) General Manager Phil Erli did confess that he’s spending more than he’s making on local content but the programming is such a hit internally and in the community that no one wants to shut it down.

I have to admit, local content usually has terrible production value, from the sets to the actors to the scripts. But Ringgold obviously has some talented volunteers in its town. We watched clips from the company’s lineup and, while some of the shows had hoky moments, I was impressed overall with the quality of the acting, writing and sets. I hope this effort does Ringgold well.

Erli and others spoke about local content becoming a revenue stream for more telcos (revenue would be ad-generated) but it’s an undertaking to consider carefully. As Erli noted, local content hasn’t made Ringgold any money. However, it is a way to distinguish the small local telco from the impersonal Verizons and AT&Ts. The question is whether that will translate into more subscribers/higher sales for the smaller companies.

One way Windstream is trying to convert small-dollar customers into bigger money makers is by offering a computer financing program. Gardner told me last week that a lot of rural residents can’t afford a computer upfront. So, Windstream sells computers bundled with broadband. Gardner said this not only adds to Windstream’s customer numbers, it also plays into the public policy goal of getting broadband to everyone in America. Granted, Windstream only packages its “broadband lite” (512kpbs) service with the computer, but anything’s better than the turtle-crawl of dial-up, especially to someone who’s only ever used dial-up.

Overall, small and rural telcos know they’ve got to keep up in an industry where RBOCs, cable and even satellite can steal customers at any time. From what I’ve seen this past week, they’re going about it the right way. I plan to keep an eye on this segment of the industry. I got to met some great people at OPASTCO – next I’ll be NTCA in New Orleans, so if you’d like to meet, I’d like to learn more about what you’re doing to compete and serve your customers. For now I’d love to start a dialogue, starting with, What are your biggest regulatory and business challenges right now? What innovative ideas is your company implementing? Leave comments and let me know.