Selling telecom services to the education vertical market, to the public K-12 sector in specific, has its advantages. Agent or carrier-savvy VARs get access to built-in leads, an annual RFP schedule and a multibillion federal fund paying for technology including voice, Internet and other needs. But there are drawbacks, too, such as long sales cycles and stringent paperwork processes. There’s more and partners should be warned up front: Follow the government's rules when it comes to K-12 bidding. If you don't, and you get caught, you stand a good chance of going to prison.
Nuances of Education Vertical Sales
You know your technology services and providers inside and out. You know how to sell. But when it comes to the education sector, and public K-12 in particular, there’s more you need to know.
In 1996, as part of the Telecom Act, Congress established the Universal Service Fund. One part of the fund, E-Rate, sets aside billions of dollars for schools and libraries so they may buy telecom and data services at discounts of between 20 and 90 percent, depending on need. Each year, most K-12 schools issue RFPs for communications services. They are supposed to choose service providers based on lowest cost. E-Rate supports discounts on four kinds of technologies and related oversight: voice, data, internal connections (routers, hubs, switches) and maintenance of those internal connections. So, for example, hosted VoIP qualifies for E-Rate money while premises-based systems do not. You might think that rural, impoverished or low-population areas would be first in line for the highest E-Rate discounts, since those demographics seem to meet the criteria of greatest need for universal service. That’s not the case. “The truth is, they use the free lunch program to determine the need of the school," said Greg Howard, co-founder of US Telecom Group. In other words, populous cities such as New York, Phoenix or Los Angeles often end up with the bulk of E-Rate money, paying just 10 percent out of pocket. The merits of this are best debated elsewhere, but for channel partners serving metro regions, there’s one overriding fact: Competition for education customers is tough.
Which Telecom Services Are in Demand?
- Internet access. “Every single year, the bandwidth requirements go up and up," Howard said. That’s because more schools are turning to video-centric interactive learning on laptops and tablets. They also are upgrading to bigger pipes, often moving from T1s to MPLS and cable connections to accommodate ever-increasing data demands. “One of my school systems started out with a 10MBps pipe … at $2,500 a month at the time," said Howard. “They now are on an MPLS network with 350MBps at the headquarters and 50-100MBps per school. They bill approximately in the $20,000 range and the bid this year should end up in the $42,000 range because two of the high schools are getting iPads for every kid."