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Verizon Discount Program May Undercut VARs: Page 2 of 4

"We thought we would win [the deal], and on the surface, it looked like we did," Grillo said.

Yet Verizon ended up winning the bid because the carrier included an additional discount of about $22,000 in VCAP funds, Grillo said. In the end, the project was put on hold, but Grillo said the experience left a bad taste in his mouth.

Verizon has extended the opportunity to apply for VCAP discounts to more than 40 New Jersey schools, according to documents on NJEDge.net, the Web site of New Jersey's Higher Education Network. NJEDge.net describes VCAP as a "recent innovation at Verizon where financial incentives in the form of discounts are given to Verizon's most strategic clients. This incentive is applied to new purchases of approved Verizon products."

Verizon also is exploring the possibility of allowing solution providers to resell its networking solutions with VCAP discounts, according to a Verizon partner approached by the carrier about the idea.

"They are very motivated, and they will give hardware away because they are just looking for the long-term residual," said the Verizon partner, who requested anonymity.