Fiber-optic project shows C&P knows Schaefer Admirable partnership or disturbingly cozy relationship?

July 09, 1993|By John W. Frece and Michael Dresser | John W. Frece and Michael Dresser,Staff Writers

Top executives at Chesapeake & Potomac Telephone Co. obviously know how Gov. William Donald Schaefer thinks.

The company's recent proposal to connect every high school and college in Maryland with a state-of-the-art fiber optics network was an offer Mr. Schaefer simply couldn't refuse.

The plan offered the monumental scale that appeals to Mr. Schaefer the builder. Laser beams and cables of hair-thin glass fibers replace the bricks and mortar on which the 71-year-old governor built his reputation. Their impact could be every bit as compelling as a baseball stadium or light rail line.

The project's tilt toward the future clearly captured the imagination of a man who sees himself as a visionary. The technology has the potential to deliver information with speed and efficiency -- to do old tasks as they have never been done before.

Mr. Schaefer instinctively recognized the competitive advantages to businesses if Maryland zoomed into the fast lane of an international race to create a 21st century information highway. He and his aides also seized on the historical value of putting such a network in place during Mr. Schaefer's final year as governor.

Moreover, at a time of crimped state budgets, the cost to Maryland appears minimal. C&P is fronting the $30 million to install the network -- and throwing in about $10 million worth of video equipment as a sweetener -- though taxpayers will help pay for that investment as the state's colleges and high schools sign up to buy the system's services.

The clincher for the "do it now" governor was that there was no need to wait for an interminable study to produce a telecommunications master plan. C&P was ready to start digging trenches and stringing up cable now.

C&P knew it was a gift horse this governor would never subject to a dental exam.

But while the accord announced June 30 showed impressive vision and competitive fire on the part of the Schaefer administration and C&P, it also raised questions about how the deal was cut.

Viewed one way, the agreement is a brilliant example of a public-private partnership -- a win-win situation. Viewed another

way, it seems to demonstrate a disturbingly cozy relationship between the state and C&P that clearly gave the company an advantage over its competitors.

The announcement capped at least three years of internal discussions of telecommunications issues both at C&P and in the governor's office, talks that were initially parallel but later converged.

In September 1991, the consulting firm Ernst & Young produced a report that concluded the state's data, telephone, radio and other telecommunications networks were not interconnected, were often duplicative, or were ineffective. Among a range of recommendations, the report suggested creation of an Information Technology Board to coordinate the $250 million a year the state already was spending on computers, telephones and other rapidly changing telecommunications technology.

That same month, Frederick D. D'Alessio replaced Mr. Schaefer's longtime friend and adviser, J. Henry Butta, as president and chief executive officer of the C&P Telephone Co. of Maryland. C&P's parent corporation, Bell Atlantic, is considered one of the most aggressive of the "Baby Bells" in moving toward fiber optics communications.

Intention revealed

In May 1992, Mr. D'Alessio publicly revealed C&P's intentions. In testimony before Maryland's Public Service Commission, he announced that C&P and the state Department of Economic and Employment Development had established a joint committee to discuss technology-related issues. He also outlined plans strikingly similar to the accord announced last week.

"By the end of 1998," he told the commission in testimony not widely reported at the time, "distance learning services will be made available to any middle school, high school, college or university with an interest in those services." He soon began meeting privately with Economic Development Secretary Mark L. Wasserman, state Superintendent of Schools Nancy S. Grasmick, and Higher Education Secretary Shaila R. Aery to work out the details.

Last fall, an old friend of the governor's appeared on the scene: Francis J. Knott. Nephew of Henry Knott, a millionaire Baltimore developer with close political ties to Mr. Schaefer, the younger Mr. Knott, 46, met the governor as a teen. He had led the effort to revitalize York Road and had helped run Mr. Schaefer's second mayoral campaign.

Information highways

Since then, Mr. Knott had become an expert in telecommunications, touting the potential applications of digital "information highways." He proselytized on the subject in Iowa and elsewhere. Mr. Wasserman heard him speak and watched a videotape Mr. Knott sent that showed what North Carolina was doing.

"It made me ask, 'Why are we lagging?' I saw us spinning our wheels," said Mr. Wasserman, who brought Mr. Knott and the governor together last fall.

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