Schools zapped by ZapMe! mull legal recourse

Following ZapMe! Corp.’s announcement in November that it no longer would provide free computer labs to schools, some districts are considering taking a legal stance against the company they say has let them down. Others are looking to negotiate a settlement that appeals to both sides.

Thousands of schools were left in the lurch thanks to a change in direction at ZapMe!, a company that made headlines in 1998 with its promise to supply schools with free computer labs in exchange for advertising on student desktops. According to company officials, some 2,000 schools had received the free labs.

ZapMe! subsidiary LearningGate, which now administers the labs, sent a letter to users giving them several choices: pay for the installation and hardware they had been promised for free, work out a deal to rent to labs, or ship the computers back to the company. ZapMe! acquired LearningGate, which produces an application called eGrader, last May.

“We’re looking at this [situation] very closely,” said Chris Mahoney, director of technology for the Lake Hamilton School District in Pearcy, Ark. “The taxpayers have a right for the district to be accountable for money we spend.”

Mahoney’s district had been approved in March for three ZapMe! computer labs, one five-computer lab at the middle school, another five-machine lab at the intermediate school, and a 15-computer lab at the high school. At that time, the district began to invest in bringing its phone lines, electrical capabilities, and furniture up to the required levels for installation of the labs.

After several months of stalling, Mahoney said, ZapMe! sent a letter to Lake Hamilton stating that “[school officials] would have to pay if we wanted the labs installed.”

According to Mahoney, Lake Hamilton spent considerable time and money-at least $4,000, by the district’s own estimates-to get its electrical capabilities up to ZapMe!’s specifications. “They required one circuit for every five computers,” he explained.

The district also incurred bills for several months of charges for unused phone lines in each of the labs, as well as the cost of additional tables and chairs in the lab areas, Mahoney said.

“We dismantled our old computer lab and distributed the computers amongst our classrooms in anticipation of the new lab equipment-so now we have no computer lab,” he added.

Mahoney said Lake Hamilton and neighboring districts Blytheville, Fayetteville, and Hot Springs plan to combine their efforts and draft a letter to the state’s attorney general, bringing the issue to his attention.

According to eSchool News columnist and school law expert David Splitt, however, any legal recourse district officials might have would be based on the agreement they signed with the company, according to contract law.

“The schools did not ever own the equipment,” said Christophe Morin, LearningGate’s vice president of marketing. “The enjoyment of the equipment was what we were giving for free. In the contract, there was a clause saying that we could exit any school with a 30-day notice. We didn’t want to do that, though, so we’ve offered schools some options.”

Splitt sees the issue as a lesson that could prove costly for schools. “[There’s] no such thing as a free lunch,” he said.

Other alternatives

While Lake Hamilton and its neighbors weigh their legal options, other districts are trying to bargain with the company to keep their existing equipment.

Gary Frye is a grant writer at Lubbock-Cooper Independent School District in Texas (K-12, enr. 2,997) and has been responsible for negotiating with ZapMe! since the district received its free lab two years ago. When it signed with ZapMe!, Lubbock-Cooper initially received a 15-unit lab, placing eight units in the high school and seven in the junior high.

But Frye, like others, received a letter from ZapMe! stating it would discontinue its free computer labs in favor of a fee-based model. The letter was followed by a packet from LearningGate specifying the buyout terms.

“The material [LearningGate] sent was very glossy and it said, ‘Make your lab your own.’ Essentially, they asked for $5,995 to keep a five-unit lab, $9,895 to keep the 10-unit lab, and $12,995 to keep the 15-unit lab,” Frye said.

“That included the computers, the server, the printer, the satellite dish, and everything, but it seemed really expensive to us, especially since we don’t need the satellite dish. We have T-1 lines and we’d rather use them, anyway.”

Frye said the $13,000 requested by LearningGate was too much money, considering the Dell computers it supplied lack CD-ROM drives and the equipment already is two years old.

“We’re thinking we’re going to tell them to take their satellite dish and offer them $6,000 for the rest of it,” he said.

But Morin said the company’s buyout terms are already generous.

“The labs are being offered at a 60-percent discount,” he said. “In some districts where they’ve had their lab for longer than 12 months, we’ve even gone 15 or 20 percent beyond that.”

LearningGate has promised its customers free help in applying for eRate funding, provided through a subcontract with consulting firm Funds for Learning. According to Morin, about 300 schools have made use of this benefit.

Some educators who have chosen to purchase their labs are unsure whether LearningGate will keep ZapMe!’s original promise to support the equipment.

“From personal experience I can tell you that the support is not nearly as good as it was,” said Frye, who said Lubbock-Cooper recently experienced high winds, causing the satellite dish to be knocked out of alignment.

“In the past, ZapMe! would send someone out quickly. They were usually faster than the people we paid for service,” said Frye. “Since all this with LearningGate, we called about five days before school started this year-and they are still squirreling away at the problem.”

“It’s true the business has been through a lot of changes,” Morin responded. “But service remains a priority. There has been no switch in ownership, and the level of service is the same as under the ZapMe! model.

“The upgrades are clearly a burden to our ability to deliver service. But we’re dedicated to providing upgrades and support,” he added.


ZapMe! Corp.


Lake Hamilton School District

Lubbock-Cooper Independent School District

eSchool News Staff

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