Phoenix-based Dotsafe Inc.–the company that reportedly offered its first 2 million customers free internet filtering–has quietly gone out of business, leaving many school districts scrambling.

“Dotsafe is no longer in business, and the assets and the contracts … that Dotsafe was performing in the internet filtering market are currently being distributed,” said Neil Kohler, the company’s former chief executive, in an interview April 20.

“The company ran into the obstacles that a lot of dot-coms have had,” he said. “The board of directors elected to cease operations in the middle of March, rather than put any more money into the organization.”

Kohler said he is not involved in the company’s wind-down, since he left Dotsafe March 1 to take another job. He said he was told that Dotsafe advised its customers of the company’s demise via eMail March 30, although school districts contacted by eSchool News for this story said Dotsafe had not notified them.

Charles Molé, district network manager at Parsippany-Troy Hills Township School District in New Jersey, said he wasn’t aware that Dotsafe had gone out of business until hearing a telephone message from eSchool News April 20.

Donna Wildman, acting technology coordinator at West Jefferson Hills School District in Pennsylvania, said a sales representative from another company informed her that Dotsafe was no longer in business, although her district also had unexplained problems connecting to Dotsafe’s server recently.

“I happened to be on vacation when it happened, so nobody could access the internet while I was gone. It was a minor inconvenience,” Wildman said.

“I tried contacting the company several times. They don’t have a message saying they went out of business,” she added. “I left several messages and, of course, no one called back.”

Steve Bauer, technology director for the Cupertino Union School District in California, said his district had just selected Dotsafe as its internet-filtering provider. Bauer was in the process of setting up the service around the end of March when he received a call from the company notifying him that the district would have to pay for the service.

“They said that, although they had a tentative agreement to [provide free filtering], they wouldn’t be able to offer free filtering because of their bottom line,” Bauer said. “I knew they were in trouble, [but] I didn’t know they were in that much trouble.”

Kohler defended Dotsafe’s business model, saying the shutdown was a result of venture capitalists choosing not to invest in dot-coms any longer. “That [business] model was ingenious when the internet model was working,” he said.

He added that it was unfortunate that the internet economy collapsed just when Dotsafe was building momentum. In February, Dotsafe announced that after securing 2 million customers, it would begin charging all new customers who signed up for the service.

In a company statement dated Feb. 1, Kohler said, “Our free offer has succeeded beyond our dreams. We will now begin offering the same world-class solution for a fee, at steep discounts, so we can continue to effectively serve the school community.”

Kohler admitted that Dotsafe might have waited too long before it started charging for the service.

“We were started back in the day when people said they would pay for advertising space,” Kohler said. “Even though we didn’t advertise to students, there was a way to access sponsorships.”

Many school customers who relied on Dotsafe’s free service are now scrambling to find an alternative, in order to comply with the Children’s Internet Protection Act this fall.

“Our budget was already voted on, on the 17th [of April], and there were no funds appropriated for filtering,” Molé said. “Based on the size of our district–we have 14 schools–it will cost between $30,000 and $50,000 to get filtering software.”

He added, “The first thing I have to do is break it to my superintendent and devise some sort of plan. … If we have not got [another filtering solution] by September, we may lose [eRate funds], because they require us to have filtering. We are stuck here in a situation that is going to be hard to get out of.”

Links:
Parsippany-Troy Hills Township School
http://www.pthsd.k12.nj.us

West Jefferson Hills School District
http://www.wjhsd.k12.pa.us

Cupertino Union School District
http://www.cupertino.k12.ca.us