Legislature(1999 - 2000)
03/20/2000 05:03 PM House EDT
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT
AND TOURISM
March 20, 2000
5:03 p.m.
COMMITTEE CALENDAR
E-COMMERCE OVERVIEW, PART 1
TAPE
00-5, SIDE A
CALL TO ORDER
Chair Phillips called the House Special Committee on Economic
Development and Tourism meeting to order at 5:03 p.m.
MEMBERS PRESENT
Committee members present at the call to order were
Representatives Phillips, Cissna, Halcro, and Dyson. Other
representatives in attendance were Representatives Berkowitz and
Kemplen.
SUMMARY OF INFORMATION
CHAIR PHILLIPS opened the meeting with remarks about E-commerce
and how E-commerce was not even a word that would have come to
mind 10 years ago. The world is changing fast due to
technological advancements, and this committee wanted to take up
the issue to keep the legislature at its forefront. On a
historical note, this will be the first time a legislative
committee meeting will have been broadcast over the Internet.
"There will be a lot of technological firsts in the coming years,
and I'm sure that this committee will be trying to continue in
that direction along with Fran Ulmer who has seen a few firsts as
chair person of the Technology Information Committee (TIC)."
REPRESENTATIVE CISSNA stated that she was pleased to finally have
this meeting and that she was concerned that all Alaskans have
access to a "road", not just those along a paved road, and that
the Telecommunications Highway can be that road.
REPRESENTATIVE CISSNA mentioned a few details about E-commerce:
It's on the rise (in 1999 - $111 billion, in 2003 expected to be
$1.3 trillion); Alaska ranks high in technology at the foresight
of the TIC; Alaska's high-tech industry has 400 businesses, which
equals only 4 percent of state gross product; wages are higher in
the high-tech industry and average $20,000 higher than the
average private-sector wage.
LIEUTENANT GOVERNOR FRAN ULMER gave an overview of E-commerce and
how it relates to E-government but realized that there are many
spokes to the wheel of E-business:
1) E-education - needed to develop workers capable of
working in the industry;
2) E-infrastructure - needed to get the services to rural
users includes bandwidth issues;
3) E-investment - money needed to spur the development of
the industry;
4) E-research and development - must have source of new
innovation like Austin, Texas;
5) E-regulation - Regulatory Commission of Alaska;
6) E-enabling - taxation issues enter into this;
7) E-government - what can the government do to encourage
the industry?
LIEUTENANT GOVERNOR ULMER talked about E-government and the TIC,
which was created by legislative resolve in 1988 at the request
of Red Boucher. The TIC is a coordinating mechanism for the
delivery of voice data and video information for government.
Committee includes members from the University of Alaska,
government, and executive branch. The TIC does its work by
committee and subcommittees, meeting quarterly. There is a
Technical Advisory Committee, Emergency Communications Committee,
Geographic Information System (GIS) Committee among others. The
TIC plan, created in 1996, states what are the technology areas
of priority for the state, both short term and long term. An
updated plan is on the way. The TIC was responsible for the
state a web page where people can register their vehicle, get a
hunting license, find out who's running for office, and find the
status of their permanent fund dividend applications. The web
erases distance as a barrier.
LIEUTENANT GOVERNOR ULMER noted the TIC is currently working on,
for the year 2000, online reservations for the Alaska marine
ferry system, Denali KidCare applications and payment of fees,
leases and hunting permits.
LIEUTENANT GOVERNOR ULMER said another important part of the TIC
is to set standards for state government to simplify and
streamline government processes for both state workers and the
public they serve. State workers can get specific training to
improve their skills in their job. The Lieutenant Governor is
particularly proud of this.
LIEUTENANT GOVERNOR ULMER indicated the state has received many
awards regarding its forward thinking in the field of technology
such as second in the nation in the Digital State Award and other
very prestigious awards.
LIEUTENANT GOVERNOR ULMER said the TIC cooperates with other
organizations such as the Alaska Science Technology Foundation
(ASTF). The TIC has used money from ASTF to wire the schools for
Internet (NET-days), teacher grant programs and others.
LIEUTENANT GOVERNOR ULMER announced an FCC [Federal
Communications Commission] sponsored, Federal-State Joint
Conference on digital connectivity is coming to Alaska. Some
portions of the state are not adequately connected. The
commission is interested in small pockets of unconnected rural
and inter-city areas. The FCC conference on advanced services
will be in Anchorage on April 17. The FCC has become aware that
they have to reach out to states as partners to create greater
access to E-commerce.
LIEUTENANT GOVERNOR ULMER reviewed the cyber-crime bills that may
be important to the state and mentioned that Governor Knowles has
introduced some legislation to address this. The committee
members are recommended to look at that at and are urged to move
them ahead this session.
LIEUTENANT GOVERNOR ULMER said once the e-rate regulations were
in place, the TIC was told that it needed to have a mechanism to
use the Internet in the school before the applications would be
granted. Karen Crane of the Department of Education & Early
Development (EED) worked hard so that the schools would be ready
once the money began flowing. Combined with the ASTF grant money
the Department was ready to move ahead with getting the districts
wired.
REPRESENTATIVE DYSON asked whether people with disabilities who
need to be able to access state services are on the radar screen
of the TIC.
LIEUTENANT GOVERNOR ULMER replied that yes, these problems are
being looked at. In fact, there are computers that have Braille
interaction and computers that recognize voice interaction, so as
the technology becomes more common place, the cost will come down
and will see more of this available for those in need here in
Alaska.
REPRESENTATIVE DYSON inquired to find out if the opportunity to
have Alaska's courts allow video-conferencing court appearances
for testimony.
LIEUTENANT GOVERNOR ULMER says this is now working and tele-
health initiatives are also progressing. The court system is
pioneering this bail hearing and court appearances are being done
for children over the Internet.
REPRESENTATIVE DYSON asked the Lt. Gov. what she thought the
state would need in bandwidth for the future.
LIEUTENANT GOVERNOR ULMER replied "a lot!" but her crystal ball
was not clear enough to say for sure.
REPRESENTATIVE BERKOWITZ asked if there has been any thought of
Internet cost equalization.
LIEUTENANT GOVERNOR ULMER said both the states of Washington and
Minnesota have proposed legislation that attaches fees to phone
bills that will help to buy down the cost of rural Internet
access, but these bill are not moving. They are really only for
the purposes of discussion.
REPRESENTATIVE KEMPLEN asked if there have been any telecommuting
initiatives for the state of Alaska.
LIEUTENANT GOVERNOR ULMER said she is not aware of state of
Alaska employees doing this now, but there has been some
discussion of this and certainly there has been some benefits
recognized in the private sector.
DR. KENWORTHY, Alaska Science Technology Foundation, stated four
points:
Alaska's technology economy is small per capita but has one
of the fastest growing rates across the country. E-commerce
represents both an opportunity and a threat to existing
businesses.
In a survey of information technology employers, they felt
finding quality, information technology employees is the
most important challenge. This eclipses the connectivity
issue. It is important for industry and education to be
able to talk in technical terms about what is needed in
workforce. High-tech business council funded for $600,000
for 16 months to drive information technology strategy for
state and industry. This will help fund the education of
workers, whether 18 year olds or mid-career types.
The private sector is responding to e-commerce initiatives;
it will be driven by the large companies of the world.
Businesses will have to conform to paperless ordering
procedures or the big companies' business will go to other
suppliers.
As a state with a web site, it must decide whether putting
applications on the net is something it wants and can
handle.
DR. KENWORTHY mentioned that these four points are important to
create the capital and technology needed to grow high-tech
businesses. Bidco has been funded for Alaska growth capital,
which provides early stage risk capital for pre-bankable deals.
InvestNet helped launch entrepreneur and investors matching
organization.
DR. KENWORTHY said three of four unwired schools will be wired.
$5 million matching funds went into a fund that was for wiring
schools. Digital divide is not within the schools. The problem
is in the rural area where the distance for the wire to the
places off the road system is one of small markets and too few
people to spread the investment over. This is the challenge.
The good news is that young people are leading the way here; in
many cases, students are teaching the teachers. The next issue
is one of professional development of teachers and using the
access for good education.
REPRESENTATIVE KEMPLEN asked whether the ability to provide
affordable bandwidth by the state, as an anchor tenant to provide
public services, is a solution to the digital divide.
DR. KENWORTHY replied this is a partial solution, this is not an
across-the-board subsidy, and there should be a degree of
competition. There will be an attempt to provide user-driven
services instead of access provider-driven content. The effort
the state put into making the state services available on the
Internet will positively affect the digital divide.
REPRESENTATIVE CISSNA said she does not want a lot of physical
state intervention in the industry but wants to know if TV cable
will play any role in the scheme of things.
DR. KENWORTHY stated that it was excellent that they are
developing the technologies, and the competition is good. The
different organizations that regulate old services are
antiquated. But those people offering similar services are able
to offer through different regulatory methods. Companies are
hedging their bets to which method will pull ahead.
REPRESENTATIVE ROKEBURG stated that Mr. Kenworthy should not give
up on DSL [Digital Subscriber Line] cable. It will be more than
competitive with cable modems and other broadband technology
because of new developments.
ED NEUMAN said he was looking at becoming a full-fledged teacher
and found out that he couldn't get classes over the Internet for
his teaching certification. He found out that Southeast Alaska
is less desirable and less profitable than Uganda, Zaire and
other parts of the third world. A new GCI satellite, with the
ability to service all of Alaska is operational, but it is
offered to our schools at $800 per month with an already realized
85 percent discount. Small communities operate at $0.74 to $1.20
per minute. Mr. Neuman sees Southeast Alaska's schools and
infrastructure falling farther and farther behind as the
connectivity issue escalates.
CHAIR PHILLIPS asked if he knows the status of Southeast Alaska's
fiber optic cable.
MR. NEUMAN said no he didn't and nobody mentioned that to him.
Hollis has line from Klawock Lake for power and telephone but was
told by AT&T [American Telephone and Telegraph] "they got what
they got" and should be thankful for it.
PAULA SCLERA, Special Staff Assistant, Office of the Lieutenant
Governor, stated that there was not fiber optic cable to Sitka
and Ketchikan.
ROBIN NAUGHTON, Engine Interactive, began by stating she is
excited by this topic and the topic of E-commerce from a web
development firm's perspective. Engine Interactive started in
early 1995 working with Dairy Gold, USWest and the Salt Lake
Olympic Committee. They do the web development to make the web
sites look good to the user but also the back-end work to make
sure the web page interacts with the database. Washington is a
great place because of its proximity in location to other
technological firms, the university and the technology talent
pool. They are having the challenge of a lack of qualified
employees, as would be the case in Alaska.
MIKE SHORE, Engine Interactive, stated that it would be harder
for them to do the business in Alaska because of the proximity
they currently have to the tech companies.
CHAIR PHILLIPS stated that once the state was fully wired up that
would make no difference.
ROBIN NAUGHTON said that initially that was why they went to
Seattle because face-to-face communication was still thought
necessary but now it's not as critical. It is now moving toward
more international business.
TED QUINN, Cubed International, Capital Office Systems and
Capital Office Supply, oversees Capital Office Supply. It
started in Juneau in 1946 as a mom and pop office supply store.
Mr. Quinn's father bought into the business in 1976 and in 1984
his brother and he moved to Anchorage to open Capital Office
Systems. It's been a family business for a number of years. In
1993 they took the business over from his father. Last December
they moved the headquarters to Anchorage into a true showpiece
facility with modular flooring, modular lighting and modular
furniture. A new way of working, in the new millennium, there
are no offices, everyone has laptops and they can work wherever
they want. Last summer he and his brothers met to discuss the
desire to change the office supply business. His retail stores
were costing 60 percent of their overhead but only bringing in 20
percent of their revenues. The barriers of transportation have
been reduced with the advent of Fed Ex and UPS [United Parcel
Service]. So they moved (not closed) the stores to the Internet.
MR. QUINN said they have lowered overhead dramatically and
increased the level of customer service by using the online order
system and shipping freight into Juneau overnight from Anchorage.
They have made a successful transition to the Internet age.
MR. QUINN noted on the flip side, after the close of the retail
outlet in October, revenues dropped initially, but revenues were
down only 2 percent. Internet use is now 28 percent of their
business. In September, 71 customers used the Internet; 161 in
October; 205 in November; 220 in December; 380 in January; and
521 in February. There is not much growth in the Juneau market,
but the Internet opens up other business opportunity.
MR. QUINN told the committee that state supply contract is a non-
mandatory contract based on a discounted list price. The state
still bids contracts for $100 or $200 dollars. Pick and click
process can change the process, by reducing the hassle factor and
lowering costs.
MR. QUINN mentioned that after the state awards that Lieutenant
Governor Ulmer mentioned, the state web site got 200,000 hits a
month. Pat Costello at JuneauPhoto.com is getting 500,000 hits
per day. That is a success story he hopes to follow by doubling
his volume in the coming year.
CHAIR PHILLIPS asked for a written synopsis of the state
procurement idea to submit to the Legislative Council.
REPRESENTATIVE CISSNA asked whether there is more flexibility in
job hours.
MR. QUINN replied yes, they can work anywhere, they are open at
all times.
ANDY KLINE, state webmaster, stated that it is exciting to be a
part of the historic first Webcast. The Webcast is a streaming
video technology played across a realplayer video at four frames
per second versus 30 frames per second for Gavel-to-Gavel. There
are some technological limitations, but there are lots of other
ways to distribute this kind of information.
COMMITTEE ACTION
The committee took no action.
ADJOURNMENT
CHAIR PHILLIPS adjourned the meeting at 6:44 p.m.
NOTE: The meeting was recorded and handwritten log notes were
taken. A copy of the tape and log notes may be obtained by
contacting the House Records Office at 129 6th Street, Suite 229,
Juneau, Alaska 99801-2197, (907) 465-2214, and after adjournment
of the second session of the Twenty-first Alaska State
Legislature this information may be obtained by contacting the
Legislative Reference Library at 129 6th Street, Suite 102, (907)
465-3808.
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