A company that provides US schools with free - but controversial - high-speed Internet network has raised $30 million in venture capital and a further $20 million in lease funding.
Zapme has attracted controversy because of the continous stream of advertisements that appear on the PCs connected to the network.
Among the new investors are Sylvan Learning Systems, Hewlett Packard, Xerox and Leasing Technologies International. The money will be used to expand its computer infrastructure and satellite Internet network.
The startup has signed up 7,000 of 120,000 schools in north America and has another 10,000 on its waiting list.
While Zapme officials acknowledged their goal is to make money, they insist their mission is to get the Internet into schools that cannot afford it. "We are a for profit company, but it's important to recognise our vision," said president Frank Virgil.
Its vision, continued Virgil, "Is that all students have access to modern learning tools in the digital age. These are our future leaders and a lot of them don't have access. We're hoping that we can become the great equaliser."
The original idea was to charge for the technology but it soon became obvious that the schools could not pay. "That's when we came up with the idea to use advertisements," Virgil said.
The programme has received much criticism from education groups, who say it is not appropriate for schools to offer student attention to advertisers and corporate sponsors.
Recently the company has developed alternative revenue streams, cutting advertisements to be worth around 50 percent of its income. It charges a technology placement fee to computer companies and has struck a deal with one of the investors, Sylva Learning, to allow it to use the schools' computer labs for after-hours tutorials and training. It also resells its bandwidth after school closes, when the students are no longer using it.
Forrester Research analyst Shar VanBoskirk says Zapme is smart and has done a lot of thinking about the service, but still has doubts about children-targeted advertising. "You're selling a captive audience to advertisers and that's touchy with parents and educators," VanBoskirk said.
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