Crossed Wires on Fiber-Optics Deal

August 17, 1993

By attempting to tip-toe around Maryland's normal procurement procedures, the governor's chief adviser on information technology finds himself in an awkward position: there's the appearance of a conflict of interest, even though Francis J. Knott may have done nothing wrong.

We have little doubt Mr. Knott wants to do the right thing for his longtime friend, Gov. William Donald Schaefer. Mr. Knott seeks to propel Maryland into the vanguard of high-tech telecommunications, linking schools together via a controversial $40 million fiber-optic line built by C&P Telephone Co. The trouble is that Mr. Knott and Mr. Schaefer want to handle this matter as though it were a private-sector deal: negotiate an agreement with C&P and then build the fiber-optic network.

But this may not be in the best interests of the Maryland taxpayer. Who knows what other companies might offer if given the chance? By cutting a deal with C&P, the governor and Mr. Knott would be foreclosing the state's options.

A complication is Mr. Knott's dual role as head of the governor's Information Technology Board and as a consultant to Northern Telecom Ltd., a supplier that could well benefit were C&P to build Maryland's fiber-optics network. A spokesman for the state's cable TV industry calls this conflict "improper and inappropriate."

These competitors also worry the ITB seems to favor C&P and that Mr. Knott will naturally view other proposals with skepticism. They want a chance to compete for this key contract, but they fear the playing field is no longer level.

Further muddying things is the role of Public Service Commission chairman Frank Heintz, also a member of the Knott panel, in voting to reverse an unfavorable PSC ruling against C&P that indirectly frees up rate-payer money for the fiber-optics project -- a project Mr. Heintz supports.

All this gives the agreement with C&P a malodorous whiff. For that reason, the panel should re-open this matter and send out a "request for information" to all telecommunications companies interested in building a fiber-optics network for state high schools. Then, the panel should draw up bid specifications to guarantee Maryland the very best "distance learning service" available. Such a move would ensure fairness, and ensure that Maryland schools get the most advanced system.

Once a fiber optics network is laid, the builder of that network will control this communications link of the future. The builder will also have a big price advantage in being able to tap into this network to service businesses throughout Maryland at affordable rates. Thus, the governor's panel ought to proceed with caution. The best way to do that is to insist on competitive bids. Let the marketplace decide who offers the best system.

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