Partnerships with Private Industry:
The Wave of the Future?
Insights into the Public/Private Partnership
Plan to Support the CSU's Telecommunications
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.
Rosenfeld Library, UCLA