MONROE, Ore. -- This bucolic town of 680 people doesn't have a sushi restaurant or the dozens of latte bars that populate the city of Portland, some 100 miles to the north. But Monroe does have one thing Portland doesn't: television delivered over the phone lines.

Since April, Monroe's residents have been able to get Internet protocol television, a service that uses high speed Internet connections to deliver video programming to a consumer's television. Known as IPTV, it is accelerating the dawn of interactive TV, where consumers can now check their phone's caller ID on the TV screen and will later get video on demand and be able to click and view different camera angles while watching sporting events on TV. Portland, meanwhile, isn't likely to get TV over phone lines for another year.

Monroe's denizens are getting IPTV courtesy of Monroe Telephone Co., a local company owned and operated by the Dillard family since 1956. Serving 950 homes over 50 square miles in western Oregon's Benton County, Monroe Telephone has converted its network four times in the last 40 years. Its most recent upgrade started two years ago when John Dillard, Monroe Telephone's president, put cutting-edge technology into the heart of the nearby foothills and Willamette River bottom lands.

"If I wanted to survive, it was a necessity for me to do all of this," says Mr. Dillard, 60, who completed the overhaul earlier this year.

In the Internet age, big cities such as New York and Dallas are often seen as the earliest adopters of the latest technology. But the rapid pace of Internet technology has created some ironies where rural centers have moved more quickly than urban areas to embrace new tech services. Residents of tiny towns such as Sallon, Nev., Greybull, Wyo., and Kingfisher, Okla., can now all boast that they get IPTV, while city dwellers in Portland and San Francisco won't get the service for at least another 12 months.

The rural areas have surpassed the cities largely because of nimbler local telecom companies that have taken matters into their own hands. While behemoths such as AT&T Inc. and Verizon Communications Inc. are hamstrung by the daunting red tape and logistics of rollouts to millions of consumers, many smaller companies have charged ahead by exploiting some weapons only available to firms of their size.

For one, the rural telecoms can receive aid from the Rural Utilities Service, a division of the Agriculture Department. To prevent rural phone companies from falling behind, the division loans small telecoms enough money to pay for 80 percent of a network upgrade. Since 2002, when this broadband program was enacted, 57 loans totaling more than $800 million have been dished out, says an agency spokesman. Monroe Telephone, for one, took advantage of this program.

"For the rural phone companies, there's pressure to get on the map earlier, rather than wait until it's too late," says Jeff Heynen, an analyst at Infonetics Research, a research firm in San Jose, Calif. Mr. Heynen says there are now 313,000 IPTV subscribers in North America, 95 percent of who subscribe through rural telephone companies. While AT&T has rolled out IPTV in San Antonio, Texas, it is just marketing the service to 5,000 homes there, he notes.

Michael Coe, an AT&T spokesman, says the company plans to make IPTV available to 19 million customers by 2008. In addition, he notes, AT&T's IPTV is more sophisticated than others. AT&T's IPTV has a search function where consumers can search for a program using an actor or title name, for example, something Monroe's service currently lacks. AT&T's service also offers video on demand; Monroe's service won't offer that until next year.

So far, just 50 customers have signed up for IPTV in Monroe. They pay $34.50 a month, or virtually the same as the $35 monthly fee that is being charged for satellite TV. Mr. Dillard, who is planning a big IPTV marketing push, says he hopes to attract another 200 new customers by year end.

Jackie Crowson is one Monroe resident who signed up for the service in April. The 59-year-old teacher, who has lived in the town for 30 years, says she likes the service because it allows her to subscribe to individual TV channels rather than channel packages. "We are small and rural and when I tell people we have this (IPTV) they are surprised," says Ms. Crowson.

Founded in 1912, Monroe Telephone was purchased by Mr. Dillard's father, John Dillard, in 1956 for $5,000. While growing up, Mr. Dillard and his two siblings did "chord board" work at the company, where they manually connected phone lines between calls. They also spliced cable and dug holes for telephone poles.

In 1972, Mr. Dillard bought Monroe Telephone from his father for $40,000. He has since become a town leader, serving as mayor between 1988 and 1992. Today, he employs 12 people, including his wife Donna, son David and daughter-in-law Debbie. He's a familiar figure in town. Locals -- farmers, lumber workers and commuters to the nearby towns of Corvallis and Eugene -- who get upset about their telecom services often complain to Mr. Dillard directly at the local Long Branch Bar and Grill diner.

It was some of these complaints that pushed Mr. Dillard into pursuing advanced tech services. In particular, Hewlett-Packard Co. engineers who live in Monroe and who work at the company's large Corvallis campus, some 30 miles north, became a vocal contingent who pressured Mr. Dillard to remain on the cutting edge.

In 2001, Mr. Dillard also saw more competition from satellite companies like Echostar Communications Corp.'s Dish Network and News Corp.'s Direct TV. Mr. Dillard, who began offering cable in 1983, felt he couldn't compete with the hundreds of channels that the satellite TV offered. So he considered upgrading his cable system, but concluded the rebuild would be too costly.

His alternative was to go with less expensive telephone lines using fiber optic pipelines, the strands of optically pure glass as thin as human hair that carry digital information over long distances. Upgrading from networks of copper wires to these fiber optic lines would help beef up Monroe's broadband capacity to allow video to be carried over the phone lines. In 2002, Mr. Dillard contacted equipment providers Calix Networks Inc., Siemens AG's Myrio Corporation and Tut Systems Inc. to build Monroe Telephone's new infrastructure.

The upgrade occurred in two phases starting that same year. The first phase involved deploying the fiber optic lines around the town. The second phase, completed earlier this year, centered on installing video equipment and hi-speed Internet gear. The revamp cost around $3 million.

Mr. Dillard has had to make some adjustments along the way. The complexity of the new network forced him to hire a manager capable of overseeing an Internet-based and basic phone system. In May, he hired Brett Edman, a former H-P network engineer, for the job. "It used to be that I could just hire any old guy from off the street and train him," says Mr. Dillard. "Not anymore."

Mr. Edman says he was initially skeptical Monroe Telephone could deploy IPTV. But after touring the dug-up corn and sugar beet fields where the fiber optic lines were implanted, and surveying Monroe Telephone's headquarters, where its networking equipment is stored and operated, he says he could see the infrastructure was already in place.

"When I bring this up with other network guys, they are amazed about what's going on," Mr. Edman says. "Right now the little guys are at it. But it won't be too long before the bigger markets follow."