Draper-based USDTV's four-year attempt to offer a low-cost, family-friendly alternative to cable and satellite television has come to an end.

USDigital Inc. announced Monday that it is ceasing operations, closing down USDTV and laying off its 10 remaining employees.

The action will leave more than 3,000 USDTV subscribers along the Wasatch Front, as well as about 4,000 in the Dallas/Fort Worth, Albuquerque and Las Vegas markets, scrambling for a new TV service.

"What makes this so difficult is that ... we've been able to really launch a pioneering effort that has never existed before in the history of the American broadcasting system as we know it," Steve Lindsley, chief executive officer of USDigital, said Monday.

Formed in June 2003 and commercially launched in December 2005, USDTV leased portions of the digital spectrum from local television stations. Customers with a set-top box and antenna received about 30 channels of "off-the-air" wireless digital TV service for $19.95 monthly.

Lindsley said the decision to shut down the business came after its primary investor, Denver-based NexGen Telecom, "experienced a significant financial setback ... in a non-related business" in last year's fourth quarter.

"(NexGen) came to me during the holiday time period and said that (it) was no longer going to be able to continue to fund the company, which was really a blow for us," Lindsley said. "We had to immediately enact a reduction in force and really slow down our plans."

He said the USDTV management team tried to find a replacement financier, and he still thinks someone could have been found to bankroll the company.

"But the issue has been timing ... to bridge us until the bigger companies could do their due diligence and make a decision," Lindsley said. "Short of being able to find that bridge, unfortunately we ran out of runway, so to speak, so we've had to make the very difficult decision to close down the service and shut down the company."

USDigital said in a release that it is making arrangements with another company to convert the USDTV set-top box so subscribers can keep receiving free, over-the-air local digital and high-definition TV channels without the USDTV cable service.

The company said it also is trying to make arrangements with other TV service providers to give USDTV customers a special offer if they choose to switch. More details will be posted online at www.usdtv.com as they become available.

"We've had a very loyal customer base, and we'd like to be as helpful as we can," Lindsley said.

He said U.S. Digital Television initially was funded by a group of media companies, but it was placed in Chapter 7 bankruptcy by those companies in July 2006. The company was purchased out of bankruptcy in September 2006, and NexGen committed to "funding the company for the long haul," Lindsley said.

Because of that commitment, he said, the company rehired its management team and staffed up to a total of 50 employees. But the good news didn't last.

Lindsley said he has no immediate plans to try to offer a similar service in the future — even though he remains passionate about USDTV's goals of saving people money on family-friendly entertainment.

"We've really worked to provide a fresh alternative," he said, "and I think that's what has been the tool that has driven us all these years."

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