The Micro$oft Monitor
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Published by NetAction Issue No. 21 January 8,1998
Repost where appropriate. Copyright and subscription info at end of
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Questions Delay Corporate Takeover of Cal State University Technology
NetAction Project Director Nathan Newman was one of several witnesses who
testified before the California Legislature on January 6, 1998, regarding
plans for a corporate takeover of California State University's technology
systems by Microsoft, GTE, Fujitsu and Hughes. The hearings were called
after NetAction, along with student and faculty activists, criticized the
California Education Technology Initiative (CETI), a plan for private
management of technology at the 23-campus California State University
system through a for-profit corporation. NetAction and other critics of
the plan pointed out the dangers of handing Microsoft and its corporate
allies a monopoly over technology in the schools that are training the
high-tech workforce of the future.
The hearing was sponsored jointly by the Assembly Higher Education
Committee, the Assembly Budget Committee on Education, and the Senate
Budget Committee on Education. Legislators opened the hearing with a long
list of questions about the CETI deal, including what the ultimate cost
will be to taxpayers, and what effect a ten-year technology contract with
Microsoft and GTE will have on innovation. At the conclusion of the
hearing, the legislators reiterated their concerns about CETI and
announced plans for more hearings to continue the investigation into
whether CETI threatens the public interest.
Under pressure, the California State University administration announced
that it would delay signing a contract with the CETI corporate partners
until at least March, 1998. This represents a real victory for activists,
since the CSU administration's goal had been to sign the contract in
December, 1997.
After students, faculty and staff representatives were asked to speak
about the CETI initiative, NetAction's Nathan Newman testified about the
public interest implications of granting this technology monopoly. What
follows is the written draft of Newman's testimony.
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Comments to the California Legislature
By Nathan Newman, NetAction Project Director
January 6, 1998
Hello, my name is Nathan Newman and I am speaking here as Program Director
for NetAction, a public interest advocacy group committed to democratic
use of technology and open computing standards. We strongly oppose the
CETI proposal and hope the state legislature will block its
implementation.
While our organization has strong concerns about the technological and
anti-trust implications of the CETI consortium, I would like to start my
presentation with our worries about its financial implications, since the
supposed "savings" of this plan are the main reason given for its
adoption.
CETI is being sold as a "free lunch" where the California State University
will get upwards of $300 million in technology upgrades with, according to
the CSU administration, no cost or loss of control by students, staff or
faculty. Now, any time one hears about a free lunch, you should generally
suspect that you are being taken for a ride. But you don't have to have a
suspicious mind in the case of CETI; the CETI partners themselves have
made clear that they expect to make not only a healthy profit but to gain
strategic advantages for each of their corporations. Up front, the
consortium expects to be making a profit within four years. This is on
top of the profits each individual company will get from being the nearly
exclusive technology supplier to both the consortium and to students,
faculty and staff. For a modest up front investment in technology, most
of whose ownership will be retained by the consortia in any case, the CETI
partners are being given a monopoly worth billions of dollars.
Worse, these profits will be paid for by limiting the technological
choices of students and faculty. In section 9.5.2 of their August
proposal, the CETI partners made it clear that their cost savings are
based on promoting a narrow set of technologies supplied by GTE,
Microsoft, Hughes and Fujitsu. In their words, "Support for
non-mainstream products which are anticipated to be low in volume will not
allow the cost savings forecasted for the mainstream products like the
standard PC." Other cost savings and, coincidentally more profits for the
partners, will come from giving tech support only for chosen software
technology such as Microsoft Windows and Microsoft's Office applications,
which the partners note will lead to "minimizing the training required to
bring everyone to a minimum proficiency level."
An explicit provision of the CETI proposal is that "the CSU system will
work with CETI to allow for the use of incentives to faculty and staff in
the development of revenue generating projects." What this means is that
the CSU system will allow the consortia partners to create economic and
technical biases in favor of technology that generates revenue for the
consortia - violating what should be academic support for neutral and open
computing standards. This will chill technology innovation in favor of
the lowest common technology denominator.
The proposal is also a danger to equal access to technology among
students. The CETI proposal gives these corporations control of
technology decisions about marketing a range of services to students, such
as technical support and off-campus Internet access, that had previously
been considered part of tuition at the University. We can expect economic
stratification between haves and have-nots within the University as some
students can afford these "enhanced" services and others are left out.
The CETI proposal is a thinly disguised tuition increase for students
whose "self funding" will be largely based on shifting costs onto students
through a menu of fee-based services.
Unbelievably, in a world of fast-moving technology, the California State
University system is giving a ten-year contract to one set of vendors.
This just highlights the problem with privatizing control of the CSU's
technology system to a for-profit entity. While there are no doubt
economies and cost savings to be made through the concentrated purchasing
power of the CSU campuses, it is nearly insanity to commit to one set of
vendors over such a long period of time given the rapid technological
change we have seen. A much better approach would be competitive bidding
every few years among a range of contractors, many of whom don't even
exist today but will deliver the best products tommorrow - a possibility
foreclosed by the ten-year monopoly of the CETI deal.
So why is the CSU administration agreeing to such a bad deal for
California taxpayers and students? Well, in their public announcements, a
number of administrators have blamed you - the state legislature. And I
have to agree with them. By refusing to provide them with the funds to
make the necessary initial investments, the state legislature has left the
CSU administration to scramble for a few hundred million dollars in
short-term technology funds in exchange for granting a long-term high-cost
monopoly. GTE, Microsoft et al are just taking advantage of this
budgetary straightjacket imposed on the CSUs by the state legislature, a
straightjacket that will no doubt cost taxpayers and students hundreds of
millions, probably billions of dollars over the long-term.
It is short-sighted economically and a tragic loss technologically. It is
this technological loss and its public policy implications beyond the
campus community that I will address now.
NetAction has long promoted a vision of open computing standards, and the
CETI proposal is one the gravest threats to such open standards in many
years. California State University campuses are some of the premiere
training centers for the high-tech workforce of the future and this
proposal promises to turn them into the private training program for
Microsoft.
The CSU administration and the CETI partners claim that students and
faculty will be free to use other technologies but they also state that
tech support will not be provided within the CETI funding framework. More
importantly, by controlling the key central servers that regulate
information flows on campus, students and faculty will be all but forced
to adopt Microsoft products in order to use campus resources.
To give just a simple example of how this will work - and how Microsoft
has functioned with other corporate partners - the on-line Web-based help
systems for students detailed in the CETI proposal will no doubt be
designed to work best or possibly only with Internet Explorer web
browsers. Financial aid software provided by CETI will no doubt be
optimized for Microsoft Excel spreadsheets and other software will all
reinforce one set of proprietary software to the profit of Microsoft and
the CETI partners. Many analysts have noted the "network effects" of the
new information technology where control of one aspect of computing
standards allows companies to control a range of other technological
choices connected to those initial standards.
And with the largest university system in the world adopting
Microsoft-only standards, that will in turn give great incentive for other
users in California and around the country to adopt similar standards,
thereby reinforcing Microsoft's expanding monopoly position. In a time
when Microsoft is being investigated by both the federal government and
the state of California for anti-trust violations, it is unbelievable that
the CSU administration is even conceiving of handing it such a strategic
prize.
This proposal for Microsoft and its allies to administer technology
implementation at the CSU system, including developing classroom
curriculum and training programs for students and staff, comes in the
context of the ongoing privatization of technical education in the
country.
Already, Microsoft-approved curriculum taught by Microsoft-approved
instructors and audited by the Microsoft Corporation is taught at over 300
college campuses across the country, including over 30 campuses in
California. These Microsoft "Authorized Academic Training Program"
participants are pulled into the Microsoft orbit through offers of free
software and training for technical programs left underfunded by state
governments and therefore vulnerable to Microsoft's corporate bribery.
Looked at comprehensively, Microsoft is using its involvement in technical
education and infrastructure to further reinforce its control of
computing. It is an unfortunate fact that our country's whole system of
technical education is being distorted as it becomes one more tool for
Microsoft's monopolistic goals.
I would also note that GTE's involvement is equally problematic. In a
time when the state government is supposed to be promoting a level playing
field for competition in telecommunications, the CETI proposal will
essentially subsidize GTE's creation of a high-speed backbone for phone
and Internet access around the state.
This is not then just a profitable one-time profit gain for the companies
involved but a great strategic advantage against competitors. Those are
not my words but the words of the CETI proposal. In section 7.3 of the
August proposal, the CETI partners admit that their interest in the
project is as follows: "As individual companies each of the partners also
has significant opportunities to gain advantage in its respective
markets." And it notes specifically, "GTE has an opportunity to capture a
larger segment of the California local and long distance telephone
business." To approve this proposal without thorough review by the
California Public Utilities Commission for its competitive implications
would be irresponsible on the part of the state government.
Overall, NetAction recommends the following as principles for any
public-private agreement around technology at the California State
University system:
1. There should be no corporate management of educational institutions by
companies with a direct financial interest in the products purchased by
the campuses or students.
2. Any outside management support should be committed to training
students in a diversity of technologies and be committed to supporting
open computer standards across the board.
3. Any proposal must include an explicit commitment to full and equal
access to technology on campus regardless of economic ability to pay.
4. Educational curriculum should be designed by educators dedicated to
the long-term interests of their students, not corporations looking to
lock in "customers" to proprietary software.
5. No proposal should be approved without a thorough analysis of its
possible impact on technology standards and monopolies outside the
university.
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About The Micro$oft Monitor
The Micro$oft Monitor is a free electronic newsletter, published as part
of the Consumer Choice Campaign <http://www.netaction.org/msoft/ccc.html>.
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Copyright 1998 by NetAction/The Tides Center. All rights reserved.
Material may be reposted or reproduced for non-commercial use provided
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