Program History and Overview Approved Program Revisions How to look up Leads in your Area Comstor Selling Tools for the Education Market

Out of the Gate Early E Rate 2006

     World’s largest “

networking and telephony only

” channel provider Vendor-focused, convergence (video, voice and data solutions) distribution strategy Industry leader of branded, value-added services and support programs Presence on every continent with 1,200+ people strong Worldwide headquarters in Tarrytown, NY, U.S.

Comstor Corporate Mission

Corporate Principles     Make our customers more successful than their competitors Be a significant contributor to our vendor’s success Continuously evolve and improve our internal effectiveness and efficiency Profitability driven – earnings first, revenue second Corporate Goals      Deliver profitable solutions to the channel Align infrastructure to meet market conditions Evolve value-add business model to meet customer needs Maximize resources to gain efficiencies and increase productivity throughout supply chain Assure long-term viability of customers Most important of all:

We have no mechanism to sell anything to end users, We can only succeed by making our partners more successful!

The Comstor Approach to Vertical Market Penetration

Industry Expertise

 Branding of the Comstor Vertical Edge Programs    Strong Industry Association Affiliation and Participation Government Agency Expertise Connecting Partners with Established End-users

Partner Services

 Trade Show Representation   Lead Generation Services Solutions Based Proposals     Training via Classroom, Web and Teleconference One Stop Reference and Lead Center via the Comstor Web Site End-User and Reseller Presentations to Drive Demand Seminar-in-a-Box Presentations for Partners

Helping Close the Business – with Services to Help Revenue Growth

 Special Pricing and Financing    Industry leading million dollar plus demo rooms for hands on demonstrations Strong Pre-Sales and Post-Sales Support from Design to Installation to Staging to Financing Participation in Our Industry Leading GSA Program

From Universal Access To E-Rate

The Telecommunications Act of 1934 The Telecommunications Act of 1996  Universal Access for every American is born  Universal access for Schools & Libraries is born  Every residence in America should have access to a phone  Expanded Universal Service from low income and rural telephone service to schools, libraries and rural health care facilities  A levy of a few cents is added to metropolitan phone bills to pay for rural access infrastructure  Discounts on Interstate & Intrastate telecommunication services  Includes advanced telecommunications and information services

America’s Promise To Our Children:

“In our schools, every classroom in America must be connected to the information superhighway with computers and good software and well trained teachers by the year 2000 .”

President William Jefferson Clinton State of the Union Address January 1997

The Telecommunications Act of 1996

A Vehicle For Schools & Libraries to: Acquire and pay for POTS Connect To The Internet Discounts on: Telecommunications Services Internet Access Internal Connections (Networking & Telephony Infrastructure) Estimated Cost: $13,000,000,000 Estimated Time to complete: 5 Years (E-Rate is now an ongoing Federal Program) Funding is set at $2.25 Billion per year

E-Rate is Primarily a K-12 Opportunity

There are 119,235 K-12 Schools in the US Public – 91,833 Private - 17,410 Religious - 9,992 99% of them are now connected 92% of all “instructional rooms” are connected City Schools 88% Towns 96% Rural Areas 93%

*There are now more classrooms with Internet access than telephones source: NCES 2004-011 January 2004

Cumulative National Data Year 2003

Funding Year “5” - July 1,2002 to September 30 2003

Discount Band Internal Connections Internet Access Telcomm 20-29% 30-39% 40-49% 50-59% 60-69% 70-79% 80-89% 90% Total: $0.00 $0.00 $0.00 $0.00 $0.00 $37,215,872.75 $436,823,811.00 $1,035,075,189.33 $615,800.18 $1,234,629.51 $28,147,259.96 $28,286,326.48 $42,390,274.33 $50,452,737.80 $62,972,568.16 $28,498,746.61 $1,509,114,873.08

$242,598,343.03

$2,191,348.13 $6,858,212.06 $107,829,023.15 $111,764,148.10 $170,002,116.85 $216,988,753.32 $201,592,747.29 $73,448,403.42 $890,674,752.32

Total $ $2,807,148.31

$8,092,841.57

$135,976,283.11

$140,050,474.58

$212,392,391.18

$304,657,363.87

$701,389,126.45

$1,137,022,339.36

$2,642,387,968.43

% of $ by Discount Band 0.11% 0.31% 5.15% 5.30% 8.04% 11.53% 26.54% 43.03% 100.00%

Demand By Year - Service Type & Total Requested

(How much do they want and what do they want to do with it?)

Year

1998 1999 2000 2001 2002 2003 2004

Telecomm Services

$703.6

$678.7

$1,072.7

$1,285.6

$1,404.8

$1,306.7

$1,273.9

Internet Access

$114.3

$166.6

$363.3

$447.0

$411.9

$438.5

$326.7

Internal Connections

$1,484.5

$1,461.7

$3,285.3

$3,462.1

$3,919.2

$2,972.8

$2,677.8

* Numbers are in thousands of dollars

Total

$2,302.4

$2,307.0

$4,721.3

$5,194.7

$5,735.9

$4,718.0

$4,278.4

Funding Approvals By Year By Discount Level

1998 1999 2000 2001 2002 2003 2004 70 th percentile All percentiles 82 nd percentile 86 th percentile 81 st percentile 70 th percentile 81 st percentile

*Remember that ALL requests for phone bill money and ISP money are approved “off the top”, and for us, percentile brackets are only important to hardware or priority two opportunities.

Who Is Eligible for E-Rate Monies?

K Through 12 Schools

As defined by The Elementary & Secondary Education Act of 1965 Must be Non-Profit Must Not Have An Endowment Exceeding $50 Million

Libraries

As Defined By The Libraries Services & Technology Act Must Be Eligible For Assistance Under The LSTA Library Must Be Funded As An Individual Entity

Multi-School Consortiums

Consortia can only include Eligible Schools & Libraries

What Must Schools Do To Participate?

Schools Must Have An Inventory Assessment Schools Must Have A State Approved Technology Plan Schools Must Fill Out The Required Applications Funds Must Have Been Budgeted And Approved to pay for the non subsidized portion of the requested services, connections, and hardware.

Discounts on all Purchases

% of students eligible for the national school lunch program

less than 1 1 to 19 20 to 34 35 to 49 50 to 74 75 to100

Estimated % of U.S. schools in the category

3 31

Urban discount (%) Rural discount (%)

20 40 25 50 19 15 16 16 50 60 80 90 60 70 80 90 (We’ll talk separately about what the word “discount” means in this context.)

Discounts on all Purchases – What Does That Mean?

Telecommunication Services

Each school and library in the country has been assigned a “discount rate”. This was established by taking the number of free hot lunches distributed every day in that school, and dividing that number by the entire population of the school.

Telecommunication Service funds are “guaranteed money”. All Telecommunication Services funding comes off the top of the annual $2.25 Billion allocated to E-Rate. In other words, if a school fills out the paper work, they are guaranteed the money.

Internet Access

Each school and library in the country has been assigned a “discount rate”. This discount rate was established by taking the number of free hot lunches distributed every day in that school, and dividing that number by the entire population of the school.

Internet Access funds are “guaranteed money”. All funding for Internet access comes off the top of the annual $2.25 Billion allocated to E-Rate. Again, if a school fills out the paper work, they are guaranteed the money.

Internal Connections

Internal Connections funds are distributed in a different manner. Due to the huge demand in funding, monies are allocated by a needs basis. In the past this has meant that only the neediest schools, those in the 90 percentile bracket have been guaranteed to receive funding. New revisions to the E-Rate which go into affect this year will change that.

Eligible Services and Products

Connectivity Services POTS Long Distance service Cable Wireless Satellite ISDN T1 Other “high bandwidth” services * voice messaging Networking Hardware Wiring Routers Switches Hubs Network servers System software Wireless LANs Voice Over IP Private Branch Exchange Firewalls You can download a free updated eligible services and products guide at: http://www.sl.universalservice.org/reference/eligible.asp

Ineligible Services and Products

personal computers FAX machines modems/cable modems NICs asbestos removal cameras electrical wiring teacher training curriculum software televisions electrical upgrades training content consultants printers monitors air conditioning information services

Eligible Services and Products - Revision

Pursuant to the FCC’s Second Report and Order (FCC 03-101, released on April 30, 2003), the Schools and Libraries Division (SLD) is instituting a pilot program to create a database of products eligible for funding as Internal Connections. Manufacturers will be able to post their eligible products to the database to assist E-rate applicants in their selection of Internal Connections products.

Enrolling manufacturers must have a Service Provider Identification Number (SPIN). Please refer to slides 10 and 11 for information on how to apply for a SPIN.

https://slpin.universalservice.org/mfpin/ EPDPublic/PublicInterface/Search.aspx

https://slpin.universalservice.org/mfpin/ EPDPublic/PublicInterface/Search.aspx

What Was the Ysleta Decision?

The Schools and Libraries Division has supplied directions to those school districts that will be permitted to re-bid their contracts for the 2002 E-rate funding year as a result of the Federal Communications Commission's recent Ysleta decision. As a result of that decision, a small number of large school districts and a consortium will be permitted to re-apply after the FCC decided that based on the SLD's approval of the application of the El Paso Independent School District in 2001, the districts might have concluded that the bidding practices they followed were permissible under E-rate program rules. The Ysleta, Donna, Galena Park, and El Paso school districts in Texas, the Navajo Education Technology Consortium and Albuquerque School District in New Mexico, the Oklahoma City school district in Oklahoma and the Memphis school district in Tennessee will be permitted to reapply, based on appeals that the districts and/or IBM filed with the FCC. Additional school districts that had appealed their rejections to the SLD first will also be permitted to re-apply, but the SLD has not yet publicly announced the names of those districts. The applicants will not be permitted to re-apply for discounts for services that they already used, particularly telecommunications services or Internet access. The SLD's instructions noted that the "total amount of money" that the applicants seek in their new applications "cannot exceed the amount of pre-discount funding" that they had originally sought. "More specifically, no applicant can receive funding in excess of the amount for which you originally applied in each individual funding request," the SLD told the applicants. It was unclear how the FCC intended to evaluate that.

The SLD specified that the determination of eligibility would be based on the list of eligible services for the 2004 funding year. An SLD staff person said the applicants were supposed to use their discount rate information from the 2002 funding year.

E-Rate Year 2005 Major Change – “2 in 5”

2 in 5 ….. We conclude that each eligible entity may receive commitments for discounts on Priority Two services, except as discussed below, no more than twice every five funding years.

The practical effect of this rule will be to permit applicants to receive funding once every three years for internal connections, as supported by the record, but will allow applicants to obtain internal connections in two consecutive years as part of a staged implementation of internal connections.

In order to give applicants sufficient planning time, we conclude that this rule will become effective beginning with support received in Funding Year 2005. Commitments for Priority Two services received in years prior to Funding Year 2005 will not be considered in determining an applicant’s eligibility to receive support for Priority Two services.

*This ruling does not affect services, just hardware

E-Rate Year 2005 Major Clarifications

TRANSFER OF EQUIPMENT

The FCC prohibits all transfers of equipment for a period of three years after purchase. Three years or more after purchase, such equipment may be transferred, but not in consideration of money or anything else of value. Also, in the limited circumstance when the location where the equipment was originally installed is temporarily or permanently closed, the equipment may be transferred to another E-rate –eligible entity even if that entity does not have a comparable discount level.

SERVICE SUBSTITUTIONS

In the past, services for which a service substitution was requested could not result in an increase in price. Service substitution requests may now substitute an eligible service with a higher pre-discount price, although USAC will only provide support based on the lesser of the pre-discount price of the original service or the substitute service.

PROHIBITION ON FREE SERVICES

Applicants must pay the entire undiscounted portion of the cost of any services they receive through E-rate. The value of all price reductions, promotional offers, trade-in allowances, vendor discounts, and "free" products or services must be deducted from the pre-discount cost of services indicated in Funding Requests. Costs, trade-in allowances, and discounts must be fairly and appropriately derived. A proportionate cost allocation is required between eligible and ineligible components.

The provision of unrelated free services by the service provider to the applicant constitutes a rebate of the undiscounted portion of the costs, a violation of the FCC’s rules.

CIPA- The Children's Internet Protection Act And the Federal E-Rate Program

 School & Library Internet Filtering Mandated by Law - HR 4577  All Public Schools must filter content against pornography  All Public School Libraries filter content against pornography  Schools must be in compliance by October 31, 2004  Schools not in compliance with CIPA will lose all Federal Funding http://www.whitehouse.gov

http://www.whitehouse.com

CIPA- The Children's Internet Protection Act

A number of schools have been required to repay some E-rate discounts they received because they were not in compliance with the requirements of the Children's Internet Protection Act by the date they were supposed to be. The situation came to light in mid-January as a result of petitions filed by Verizon Network Integration Corp. and Verizon-New Jersey with the FCC.

According to the Verizon appeals, the Morris Catholic High School in Denville, NJ, and the Queen of Peace High School in North Arlington, NJ, had certified that they were in compliance with CIPA when they sought discounts on Internet access for the E-rate funding year that started on July 1, 2002. In the case of Morris Catholic, the SLD determined that they were not in compliance until August 12, 2002, and required them to return $526.05 in discounts received on Verizon services. In the case of Queen of Peace, the SLD found that they were not in compliance until January 14, 2003 and required them to return $1,036.27.

The Verizon petitions were focused on the FCC's Commitment Adjustment procedures, not CIPA per se. So-called COMADs require service providers to reimburse the Universal Service Fund for disbursements made in error or when rules are violated and then to seek restitution from their customers. The service provider community has long objected that this, in effect, turns service providers into the E-rate program's debt collectors. The FCC recently asked if there were any circumstances in which this requirement should be waived and Verizon argued that service providers should not be required to recover funds from applicants when there is no evidence that the service provider was at fault. It argued that Verizon had no way of knowing that the schools had not met the CIPA requirements by the start of the funding year. An SLD spokesman said that the schools were contacted in the course of the review of their Form 486 applications because of "discrepancies" in the certifications they had made for 2001 and 2002 funding year requests. In 2001, recipients of E-rate discounts for Internet access and internal connections were required to certify that they were "undertaking" compliance with CIPA, which was passed in December 2000. By July 2002, these applicants were expected to be in full compliance unless they could qualify for a waiver because of delays associated with state and local procurement requirements. Applicants that seek discounts solely for telecommunications services are not subject to the CIPA requirements.

Understanding the Process: Paper Flow

For further details, see: http://www.sl.universalservice.org/applicants/processflow.gif

Applicant Describes needs Form 470 is filed (December 14)

*

Posted for 28 days at SLC Web Site Vendor Chosen & Form 471* is Filed (by February 17)

66 day window in 2004/5 to finish 28 day process - spec, bid and select vendor

Customer notifies SLD to pay you Form 486 is filed Services Commence Installation or delivery begins (by following 9/30) SLD notifies both School & Vendor of approval (starting in July)

The SLD Website

Note the navigation bars http://www.sl.universalservice.org/vendor

Downloading State Summary Reports

Click on orange “Service Providers” bar

http://www.sl.universalservice.org

Download Form 470 Summary Files

Top of page Bottom of same web page

Tip: Open in Word, Landscape View

Looking Up Individual Applications

Scroll down the page to Site Help, then click on Site Map

http://www.sl.universalservice.org/overview/sitemap.asp

On the Site Map page, scroll down to bottom, to where it says “Service Providers.” Click on “Search Form 470 Applications.”

purchasing.pasco.k12.fl.us

Comstor Selling Tools for the Education Market

You Know, School Purchasing is Alot Like Baseball

The More Times You Get Up to Bat, The More Chances You have to hit the ball There are over 15,000 School Districts in America The vast majority buy products exclusively from participants in their bid lists and commodity codes.

How many bid lists do you participate in?

If there were a way to get on more of them, you’d be interested in hearing about it , wouldn’t you?

The Smarter Edge Program Helping Partners Identify Who the Buyers Are:

State & Regional Supervisors School Superintendents District Level Officials Grant Supervisors Technology Coordinators Tech Ed Instructors Principals Business Managers Parents Groups

Comstor Focuses on Major Factors Driving Sales Today

The average school building in America is   47 years old 73% have had a major renovation 22% of all US Public Schools are legally overcrowded 8% of all US Public Schools are severely overcrowded Public School enrollment in 2006 to hit an all time high of 44.4 million students

Of the 119,235 K-12 Schools in the US:

5,000 are currently under renovation 1,800 new schools are being built each year 1,200 to replace those falling down 600 new schools is the current “rate of growth”

The Smarter Edge School Construction Alert Program

Identifying for You: Construction Opportunities Renovation Opportunities

Where old schools are being upgraded Where new schools are being built Who is designing them Who is building them Who is writing the bid specifications Get in on the design stage of the project…... Where YOU can control the bid specs

Dedicated Local Government Market Resources

Government focused BDM Division sales staffs focused on Government markets Dedicated Government marketing personnel Dedicated Government programs staff Links into vendor Government market programs SMB dedicated personnel SDB-8a Program: Provide guidance and support to pursue new opportunities Professional Services to augment your existing resources Extend your geographic reach nationally and internationally For large integrators, Our referral program can team you with SDB-8a partners by classification and or technical focus

I Heard Local Government Can Now Buy Off of a GSA Contract?

Section 211 of the E-Government Act of 2002 amended the Federal Property and Administrative Services Act to allow for "Cooperative Purchasing." by states and localities access to certain items offered through the General Services Administration's (GSA's), Federal Supply Schedule 70. The General Services Administration Acquisition Manual (GSAM), Part 538.7001, defines state and local government as follow: "The States of the United States, counties, municipalities, cities, towns, townships, tribal governments, public authorities (including public or Indian housing agencies under the United States Housing Act of 1937), school districts, colleges, and other institutions of higher education, council of governments (incorporated or not), regional or interstate government entities, or any agency or instrumentality of the preceding entities (including any local educational agency or institution of higher education), and including legislative and judicial departments."

Categories Covered Under GSA Schedule 70 Include:

Equipment purchases such as computers (desktop, laptop, or mainframe), digital cameras, fax machines, modems, navigation aids, pagers, printers, projectors, scanners, servers, two-way radios, and workstations; Software licenses for programs ranging from database management, electronic commerce, or Internet access to virus detection, mapping, or multimedia design; Firmware, whereby software is burned onto or into memory and cannot be deleted; Professional Services for IT management, computer programming, data conversion, electronic commerce, wireless installations, and related areas; Classroom training for using IT equipment; Maintenance of IT equipment or software; Leasing or rental of IT equipment.

Trends in State and Local IT Spending

Comstor holds it’s own GSA schedules – Last year we moved up to number

13

on the elite GSA Top 20 list Nortel GEM Dealers – Do You Know Why Is This Important to YOU? What new markets can that open for you?

Cooperative Purchasing is taking place in: 50 states 3,139 counties 19,365 incorporated municipalities 30,386 minor subdivisions 3,200 public housing authorities 14,178 school districts 1,625 public educational institutions 550 Indian tribal governments.

Here’s A Hint!

Comstor Sponsors Business Partners onto Nortel’s GSA schedule!

How Can I Make It Happen?

The first step is to find out whether the contract holder has activated the contract for state and local purchasing. Not all contract holders have opted to do so. Once this is accomplished…… The best way for state and local users to access IT cooperative contracts is through an e-library on the GSA Advantage! Web site, www.gsaadvantage.gov

. This Web site serves as the main purchasing portal for all federal GSA contracts, including IT categories. An on-screen icon identifies which Schedule 70 IT contracts are offered under cooperative purchasing. State and local agencies can access the online contract information to conduct price comparisons and market research, as well as place orders directly with vendors (using their own ordering procedures or those recommended by the GSA). “The strength of the program is quite simple and straightforward,”

Service in Arlington, VA.

stated.

company, ask for a price reduction, and then place the order.”

Roger Waldron, Director of the Acquisition Management Center for GSA's Federal Supply

“If state and local [purchasers] want to use the program right now, they can go to GSA Advantage!, survey the product list, identify what they think is the best value, and place an order. Or, they can go to the

The Comstor Smarter Edge Program

Helping Reseller & Manufacturing Partners to:

Better understand the Education Market Learn who the decision makers are Discover opportunities on State & Local Levels Identify construction opportunities Identify renovation opportunities Help schools obtain grants & funding Become valued “Virtual Staff Members” of America’s schools

Still Too Abstract For You?

What about the May 17 Bond Issue in Pinal County in AZ to create Community College Centers in San Tan and Maricopa, as well as expanding the Apache Junction and Casa Grande Campuses?

What about the 20.8 Million dollar bond approved for the High School in Bullhead City, Az.?

What about the May 10 Johnston County, NC bond referendum to build new schools ?

What about Covington, La where voters approved a plan to build 5 new schools for the St. Tammany Parish (School District) ?

What about Baltic SD which just approved a new K-8 school ?

What about the new K-8 School in Yuba CA?

What about Longview Texas which passed a bond issue to build a new Middle School and expand it’s High School ?

What about the new Law School building approved for the University of Colorado in Boulder?

Source: School Construction News March/April 2005

The Comstor Approach to Vertical Market Penetration

Industry Expertise

 Branding of the Comstor Vertical Edge Programs    Strong Industry Association Affiliation and Participation Government Agency Expertise Connecting Partners with Established End-users

Partner Services

 Trade Show Representation  Lead Generation Services      Solutions Based Proposals Training via Classroom, Web and Teleconference One Stop Reference and Lead Center via the Comstor Web Site End-User and Reseller Presentations to Drive Demand Seminar-in-a-Box Presentations for Partners

Helping Close the Business – with Services to Help Revenue Growth

   Special Pricing and Financing Industry leading million dollar plus demo rooms for hands on demonstrations Strong Pre-Sales and Post-Sales Support from Design to Installation to Staging to Financing  Participation in Our Industry Leading GSA Program

Where Can I Go For Further Help?

Ronald Sheps Vertical Markets Manager Comstor 520 White Plains Road Tarrytown, New York 10591 888-612-7331 [email protected]

visit our web sites at: http://www.comstor.com