Tech Industry

Microsoft-CSU deal delayed again

The signing of a ten-year deal to partner Microsoft and others with the California State University system is stalled for the second time this year.

The signing of a controversial ten-year deal that would partner Microsoft and three other companies with the world's largest university system has been stalled for the second time this year.

The delay comes just weeks after California lawmakers slammed the California State University's (CSU) plan to create a moneymaking corporation with the high-tech heavyweights. Two state representatives called the proposal "exclusionary" and charged that it was drafted with little public input.

The deadline for sealing the deal has been pushed back from March to May. The arrangement originally was to be finalized by January 31.

"We are still negotiating," David Ernst, executive director of integrated technology strategy for CSU, said today. "We need to have the components of what the actual deal is intended to be and put that out for review. We will have a 45-day review period starting at the beginning of March."

As reported in November, Microsoft, GTE, Fujitsu, Hughes Electronics, and CSU plan to create a for-profit "limited liability" company known as the California Education Technology Initiative, or CETI. Under the deal, the companies promise to help finance a $300 million high-tech face-lift for the system by the year 2000. In return, they'll get to develop new revenue streams by selling outside communications services to the system's 350,000-person community--bringing in an estimated $3.8 billion over the next decade.

The plan has been under fire from faculty members, students, and the companies' competitors, who say the plan locks CSU in for too long and could limit choice. CSU contends that campuses will not be strapped to the four vendors' products, and that a private-public partnership is the only way to upgrade the 23-campus system's technological infrastructure.

The state Committee on Higher Education grilled the CSU last month during a hearing on CETI. The committee will hold a second hearing in April instead of March, as previously planned. In the meantime, CSU is answering more than 200 questions generated by the first hearing.

However, in the midst of a federal antitrust case against Microsoft, major concerns were expressed regarding the software giant's involvement with CSU.

Although for now Microsoft is only slated to have a 5 percent stake in CETI, some of its competitors, such as Apple Computer and Netscape Communications, were never invited to submit proposals to CSU. Opponents of the plan say this scenario leaves the door wide open for Microsoft and the others to dominate CSU's technology beyond the next decade.

According to a December draft of the initial three-year plan to build out the CSU's technology infrastructure, Microsoft products will continue to be the primary software and operating system for the university system under the CETI agreement. Microsoft Windows NT Workstation 4.0 and Windows 95 were slated as the operating systems for Intel PCs. However, CSU made it clear that Microsoft's Internet Explorer Web browser would not replace its now-favored Netscape Navigator browser.

Nonetheless, some lawmakers and educators worry that CETI will allow the corporations to monopolize CSU staff and students in the consumer market. CETI does hope to launch a telecommunications company, marketing phone and Net access service to CSU communities.

CSU says people will still have a choice. "Unless we're talking about mind control, most of the people are pretty smart and have a mind of their own. If they can find a better product or price, they can go elsewhere," Ernst contends.