Partnerships with Private Industry:
The Wave of the Future?
Insights into the Public/Private Partnership
Plan to Support the CSU's Telecommunications
Infrastructure Initiative
Michael K. Mahoney
Associate Vice Chancellor for Information Technology, Academic Affairs
CSU Long Beach
Carol Womack (UC Irvine) and Kelly Janousek (CSU Long Beach)
co-moderated this program.
THE SECOND SPEAKER moved from the fairly familiar world
of largely "intellectual partnerships" with industry--albeit with great
sums of money being made and changing hands on both sides--to essentially
similar, if somewhat "grittier" aspects of doing business itself with industry.
Dr. Michael K. Mahoney,
offered background and perspectives on a particular public/private partnership
that failed on the business end, but nevertheless proved to be a valuable
lesson--in some ways, even a bargain--for the CSU.
The failure was CETI--the California Education Technology Initiative--a
proposed partnership between the California State Universities and four
major communications and high-tech corporations: GTE, Microsoft, Fujitsu,
and Hughes.
CETI originated in CSU's "Integrated Technology Strategy" devised in 1993/94.
That strategy formed a pyramid, with outcomes on top, initiatives and projects
in the middle, and access (networks, hardware, and software), training,
and support providing the foundation. One of the crucial missteps at the
outset was building in a network infrastructure with a glaringly unrealistic,
terribly-timed, $300 million price tag.
Dr. Tom West, Assistant Vice Chancellor, Information Resources & Technology,
in the CSU Chancellor's Office, proposed a public/private partnership as
the means by which to fund the infrastructure. In return for funding the
initiative, the companies involved would receive all of the CSU's
technology business--and be able to generate still other revenues. Then
CSU chancellor, Barry Munitz approved the idea, informing CSU presidents
in October 1996 that the CSU would proceed with it.
A Systemwide Internal Partnership Committee was formed to solicit infrastructure
proposals from the largest information technology (IT) companies. By September
1997, IBM, GTE, and Ericsson emerged as finalists; GTE was selected as the
winner. GTE's 80-page draft proposal, which quickly, and considerably to
the surprise and dismay of the CSU team, became publicly known, also included
certain soon-to-be-eye-brow-raising proposals known as the "Flagship 50"
for generating revenues for GTE.
The CETI industry team included GTE (telecommunications, and general oversight);
Hughes (Direct TV and Direct PC); Fujitsu (telephone switches and laptop
computers); and Microsoft (software). In return for their investments, the
team companies wanted (1) to be the Internet services provider (ISP)
for CSU faculty, students--anyone, in fact; (2) to provide telephone services
and increase that market share; (3) to place banner advertising on CSU Web
sites; (4) to sell CSU-endorsed products, such as GTE calling cards; and--arguably
most unsettling of all, to CSU faculty--(5) to develop educational content
for distance learning and extended education.
Faculty were understandably up in arms, and students took a jaundiced view
of CETI, as well. At one point, they replaced a Humboldt State sign with
"Microsoft University," although Microsoft actually never represented more
than 5% of the entire deal. Following ensuing protests, increasingly troubled
dealmaking, and GTE's eventual realization that it could not make a return
on its investment, the initiative collapsed in June 1998.
However, despite the ultimate failure of the CETI partnership, from the
standpoint of the CSU's growth and development as an institution, several
distinct successes stand out: the university received (essentially at no
cost) the fruits of planning and consultation by some of the biggest players
in the IT industry; the CSU came together as a system, and they discovered
that the individual campuses could work together toward a common
goal. 4CNet--the network backbone that
was created--does exist today, connecting all CSU campuses and California
Community Colleges. The network performs increasingly slowly, though, and
will need substantial upgrading.
Among the more specific lessons learned: (1) There is much genius in the
CSU system; (2) the CSU system unquestionably needs the kind of common ground
that the Integrated Technology Plan provides; (3) big business ". . . can't
always do everything better than we can . . ."--the business people don't
always know better!; (4) the CSU cannot--must not--relinquish control of
its IT destiny; (5) we should never assume that any proposal is "merely
a draft," and therefore "safe" from untimely public scrutiny; (6) when working
with big business, we must be able to change directions and shift focus
quickly; and (7) we must involve the people in the trenches--those who actually
set up the networks, and the labs--because they really know how things work!
In the aftermath of CETI, the CSU Plan for Integrated Technology is stronger
and better-focused than ever--at a time, fortunately, when the same may
be said of California's economy. Some small-scale public/private partnerships
will, in time, be formed. Needed at this stage are: (1) the infrastructure
buildout-- up and out to the faceplates that cover the wiring; (2) the workstations,
loaded with a standard software suite; and (3) operations and support--the
hardest part of all. The CSU will be requesting $25-$30 million annually
for integrated technology; Governor Wilson has already provided a $25 million
first-time grant.
Michael Oppenheim
Rosenfeld Library, UCLA
Annual
Conference Highlights