State legislators turned down Cal State's request for funds to wire campuses with state-of-the-art telephone and computer networks, so university officials resourcefully struck a deal last fall with four corporations. GTE, Microsoft, Hughes Communications and Fujitsu agreed to provide $300 million in loans to pay for everything from wires and switches to computers and software. In return, Cal State officials would guarantee that for the next decade, the companies would be the exclusive providers of computer goods and services to the Cal State system. The deal was a commendably creative way to fund what the state couldn't, but it needs some sunshine and retuning.
Cal State faculty, students and Internet consumer groups objected strongly to the deal at a legislative hearing Tuesday. Cal State officials rightly agreed to reconsider some provisions and hold off on signing the deal until at least March.
Cal State should use the time to study the experience of other college systems that rushed into deals to acquire high-tech hardware, then faced huge, unbudgeted maintenance costs. Under the Cal State proposal, the schools' technology dollars could in effect be used by a for-profit consortium made up of the four companies that would among other things finance expensive cable wiring on the system's 22 campuses; the companies could use the wiring to offer private residential phone and Internet service around Cal State campuses. It's a complicated deal that should be given a lot more scrutiny.
A few shaky provisions might be fixed easily, but secrecy is a larger problem. Cal State Senior Vice Chancellor Richard West has said secret negotiations were necessary because media coverage could have scared off the four corporations. But if public disclosure of how Cal State intends to spend taxpayer funds is enough to scare them off, then there should be no deal.
Cal State's business partners do have every right to expect some return on their investment, and they can rightly expect to get it from provisions giving the four corporations the exclusive ability to send promotional materials to Cal State's internal markets--344,000 students, 37,000 employees and 1.7 million alumni.
Concern on campuses that the technology would cost jobs by encouraging off-campus electronic "distance learning" is wrongheaded; the deal would pose no such threat. However, the university cannot ignore worries that this very costly deal is unbalanced in favor of the private companies. The only way to tell is to open up the process.