'E-Rate' Vendors Still Wondering How and When They'll Be Paid

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The Form 471s that were pouring into the Schools and Library Corp.'s Iowa City processing center last week represent thousands of contracts that schools and libraries have inked with businesses to supply millions of dollars of telecommunications services and equipment under the federal "E-rate" program.

Few figures are yet available from the Washington-based SLC, but vendors report that they've pushed hard to win a share of the business that will be generated by the discount fund, which could total $2.25 billion this year.

Many have invested in training their staff members and customers in the intricacies of applying for the education-rate discounts and tailoring packages of services and equipment to meet eligibility requirements. Those tasks have been complicated by the SLC's many clarifications, one of which was handed down as late as last week.

"Like people on all sides, we've been somewhat bogged down in terms of the process," said Christina A. Malone, the senior market manager for education at U S West, a telephone company based in Denver that serves much of the Southwest, excluding California and Nevada.

Ms. Malone said the start-up glitches have made schools conservative in their goals for the first year of the program. "The first thing they're going to go after is getting funding for their existing stuff," she said. "Once the program is demonstrated as a reality, later this year and in future years, they're going to tap into new stuff."

Paying the Bills

Now that most of this year's discount applications are being processed, companies are turning to other concerns, such as how much, by what method, and when they will be paid.

"Our biggest concern is about billing, getting enough information on the discount levels from the SLC so we can actually bill our customers," said Steve Kohn, the director of education initiatives and strategic alliances at Bell Atlantic, a New York City-based phone company that serves the mid-Atlantic region and New England.

Ira Fishman, the executive director of the Schools and Libraries Corp., said both applicants and vendors will receive that information after the agency reviews the Form 471 applications, but he wouldn't say when.

Companies also voice concern that the SLC has not yet released Form 486, which schools must send to the agency to verify that services have been delivered, at which time the agency will begin to accept invoices from the schools' vendors.

Mr. Fishman said the form is still under review. He also said he did not know when payments to vendors would begin, but that after that point, the vendors would be paid within 40 days of the time they submitted their invoices.

Until then, vendors and their customers are making a variety of arrangements to pay for services that are eligible for discounts, which on some services will be applied retroactively to Jan. 1. In many cases, the school or library is paying the regular price.

Mr. Kohn, who is based in Washington, said he's heard of a few small vendors that were just billing schools at their discounted rate, but he said that was the exception.

Vendors and schools are putting most new services on hold until their discounts are announced and the payment process begins.

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