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Microsoft Dropped From University Partnership

Computers: Cal State officials cite political and business factors in decision to cancel $300-million wiring deal with firm.


California State University officials Thursday dropped Microsoft Corp. from a proposed $300-million partnership to wire the 22-campus system, saying they did not want to be dragged into the debate over whether the software giant is a monopoly.

Chancellor Charles B. Reed said that dumping Microsoft as a partner should not doom the deal because the Redmond, Wash.-based company was a minor player in the talks between Cal State and four private companies. What's more, the university system is likely to use mostly Microsoft software anyway.

But the decision is yet another example of how Microsoft and its founder, Bill Gates, the richest man in America, have become lightning rods for criticism in recent months.

At Cal State, faculty and students waged widespread protests over corporate intrusion into academia, some jesting that the university system would be renamed "Microsoft State U."

Richard West, Cal State's senior vice chancellor for business and finance, said it made little sense to keep Microsoft as a partner "from a political point of view. . . . It's costing us a little money, but it's not worth the political costs."

A Microsoft official said the company believed that business concerns--not its image--prompted the action. "The final investment they wanted us to make exceeded what we wanted to do," said Elizabeth W. King, general manager of Microsoft's education customer unit.

Reed, who took over as chancellor of the nation's largest university system in March, similarly insisted that dollars and cents were behind the move to drop Microsoft. The company, he said, showed little interest in helping other partners guarantee $300 million in loans to build the fiber-optic backbone that will interconnect campus computers and telecommunications operations.

Indeed, Cal State also dismissed Hughes Electronics as a proposed partner Thursday, saying it too showed no enthusiasm for sharing the financial risks. That leaves GTE and Fujitsu as the remaining private players in the California Educational Technology Initiative, as the partnership is called.

Reed said he will spend the next few months looking for new companies willing to join the project so it can be finalized in the next academic year.

In exchange for their backing, the corporations would get exclusive rights to sell computers, telephone service and other high-tech products to Cal State's 344,000 students, 38,000 faculty and staff. Cal State itself would kick in $95 million a year.

"No one in higher education has ever done this before," Reed said. "There is no blueprint or model. . . . So we need to spend more time to make sure we get it right."

Cal State negotiators had been working around the clock to finalize a deal this week so faculty members could scrutinize it before their summer break. The delay was greeted with relief by faculty leaders.

James L. Wood, chairman of the sociology department at San Diego State University, called the decision "a good public relations move on the part of the chancellor's office. It is difficult for a new chancellor to come in with all of these antitrust charges swirling around a partner."

James Highsmith, chairman of the Cal State faculty's Academic Senate, noted that many faculty members remain concerned about undue corporate influence over the content of online courses and what such a partnership means for academic freedom and rights to intellectual property.

Nathan Newman, program director at NetAction, a San Francisco-based group that has lobbied against the deal, called Microsoft's departure "a real victory for consumers" because the company "would have had a 10-year monopoly" over a captive base of university students, faculty and staff.

But Newman said he still finds GTE's role in the deal "disturbing," because it could give the firm an unfair advantage--by virtue of government subsidies--in gaining the right to build a data communications network linking campuses across the state.

"The deal affects the public," Newman said, calling for a review of any pact by the state Public Utilities Commission.

Chancellor Reed, though, said a public-private partnership is "still the way to go" in making the Cal State system computer-friendly, given the university's inability to pay for the job itself in an era of declining dollars from Sacramento and widespread opposition to raising student fees.

Despite Thursday's action, both Reed and Microsoft's King predicted that the company would wind up providing much of the software.

One option would be something similar to a licensing agreement that gave Indiana University deep discounts on Microsoft software in exchange for making a significant commitment to the firm's products.

"We are going to do business with them anyway," Reed said, "because they are the only ones we can do business with."

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