It was a deal only a utility could dream up: The state would give US West $25 million to help extend the company's network throughout Colorado's public schools, locking up a lucrative market. And the phone giant almost got away with it.
Earlier this year, Governor Roy Romer announced that he wanted to improve telecommunications services offered to Colorado schools. US West answered the call with a last-minute plan that nearly sneaked through the state legislature.
An internal US West document obtained by Westword shows that the phone company wanted $25 million of the public's money to help build out its existing network of high-speed data lines and connect them to school buildings around the state. The document, titled "Colorado: World Class Schools for World Class Students," was top-secret, carrying on each page this notice: "Confidential: disclose and distribute solely to US West employees having a need to know."
Under the plan, US West would get the money from the state to extend its network, and the schools would then be beholden to US West to purchase their Internet access. US West promised to pay back the $25 million, but only from the money it collected from the schools. Once US West paid back the loan, all fees paid by the schools would go exclusively to US West. The document shows that US West figured it would bring in $16 million per year, paid by the local school districts.
The chief spokesman for US West in Colorado, David Beigie, won't discuss the particulars of the plan, which he says is still an "internal" document. But he defends the concept of giving US West a monopoly on the school business. Beigie says if other companies are allowed to bid on the work, a few metro districts will be well-served and rural districts will be ignored. Only with a monopoly will US West be able to serve every district, Beigie says.
That argument doesn't hold water with Chuck Malick, a lobbyist for the Western Colorado Congress, a Western Slope citizens' group. Malick says US West's argument is similar to its claim that companies don't want to compete for phone business in rural areas, which he contends just isn't true. "There are a lot of companies, including cable companies, that are trying to do things with schools," Malick says. "If this deal went through, the schools would pay more, the taxpayers would pay more, and US West would end up with all of the money."
Senate president Tom Norton says US West presented the plan to him and Romer several weeks ago. But it came to the attention of other lawmakers only in the waning days of this year's legislative session. Less than a week before the legislature was to adjourn, Norton asked the Senate Transportation Committee to consider House Bill 1072, a measure designed to spend $75 million to improve the state's police-radio system. Several sources who ask not to be named say Norton was clear in saying that he wanted the bill to go to that committee because he knew its members would gut the bill. He asked members of the committee to pass the gutted bill on to the Senate floor, because he wanted to keep the bill's title alive. Under the rules of the legislature, the contents of a bill must match the title of the bill, and HB 1072 was just broad enough that, according to lobbyists and other senators, Norton could fit in a last-minute proposal to include "technology for schools." Several senators say Romer's office was also privately pressing hard to get some form of school-technology proposal attached to the bill both in committee and on the floor.
Norton says he wanted the bill to come to the floor because the state police-radio system is important and because he has always been in favor of increasing technology for schools. But he insists that he wanted to make sure both of the contracts would not be awarded to a "single source." He says he couldn't be convinced that either proposal could meet that test, especially when more details came out about the US West proposal. "We just didn't have enough time to get that all fixed," Norton says.
Spreading new technology to schools is a cause politicians can get excited about, and initial rumblings in both the Senate and House were that this might be a way to save the police-radio bill, which was in trouble. "They tried to make it more palatable to a majority of the legislators by including the money for schools," says Ed Perlmutter, a Democrat from Golden.
"It was pretty obvious what they were trying to do," says Kathy Oatis, a lobbyist for ICG Communications, one of the companies trying to compete with US West as a provider of local phone service. "ICG would like that deal, too."
When Oatis and other lobbyists got wind of the sweetheart deal, they pointed it out to several senators, and the idea didn't last long enough to be turned from a secretive US West proposal into a formal written amendment. Later that same Tuesday, the lobbyists for US West's competitors drafted a proposal that would give the $25 million to schools, but they did it in a way that would give more companies a shot at the market and would not tie the hands of local districts.
By Tuesday evening--with just a little over 24 hours remaining on the legislative clock--Senator Elsie Lacy, head of the all-powerful Joint Budget Committee and the Senate sponsor of the original police-radio bill, tried to marshal support for the competitors' compromise.
Senators say Lacy had the votes needed to pass the amendment, but because a group of senators led by Bill Schroeder, a Republican from Morrison, hated the rest of the police-radio bill, the amendment never surfaced for a vote, and the bill died Tuesday night.
Beigie says US West is disappointed the measure did not become law, because the phone company hopes to roll out a similar plan in other states. But he says the company is not taking the loss lying down.
"There's a number of different fronts that we are using to get into the schools," Beigie says, adding that the plan that didn't make it into law this year may be back. "We're starting over again, looking at next year's session.