Legislature(2007 - 2008)CAPITOL 106

03/20/2007 11:00 AM House ECONOMIC DEV., TRADE, AND TOURISM


Download Mp3. <- Right click and save file as

Audio Topic
11:01:34 AM Start
11:02:00 AM HB147|| HB167
11:52:34 AM Presentation by M2z Networks
12:18:48 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 147 TOURISM CONTRACT MATCHING FUNDS TELECONFERENCED
Moved Out of Committee
+= HB 167 APPROP: TOURISM MARKETING TELECONFERENCED
Moved Out of Committee
+ Presentation by M2Z Networks: TELECONFERENCED
"Revolutionizing Wireless Broadband"
                    ALASKA STATE LEGISLATURE                                                                                  
 HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL                                                               
                       TRADE AND TOURISM                                                                                      
                         March 20, 2007                                                                                         
                           11:01 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mark Neuman, Chair                                                                                               
Representative Carl Gatto                                                                                                       
Representative Kyle Johansen                                                                                                    
Representative Bob Lynn                                                                                                         
Representative Andrea Doll                                                                                                      
Representative Mike Doogan                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Vic Kohring                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
HOUSE BILL NO. 147                                                                                                              
"An Act relating to matching funds in state tourism marketing                                                                   
contracts with trade associations."                                                                                             
                                                                                                                                
     - MOVED HB 147 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 167                                                                                                              
"An Act making special appropriations for a contract with a                                                                     
qualified trade association and for a marketing program; and                                                                    
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED HB 167 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PRESENTATION BY M2Z NETWORKS                                                                                                    
                                                                                                                                
     - HEARD                                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                              
BILL: HB 147                                                                                                                  
SHORT TITLE: TOURISM CONTRACT MATCHING FUNDS                                                                                    
SPONSOR(s): REPRESENTATIVE(s) HARRIS BY REQUEST                                                                                 
                                                                                                                                
02/21/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/21/07       (H)       EDT, FIN                                                                                               
03/13/07       (H)       EDT AT 11:00 AM CAPITOL 106                                                                            
03/13/07       (H)       Heard & Held                                                                                           
03/13/07       (H)       MINUTE(EDT)                                                                                            
03/20/07       (H)       EDT AT 11:00 AM CAPITOL 106                                                                            
                                                                                                                                
BILL: HB 167                                                                                                                  
SHORT TITLE: APPROP: TOURISM MARKETING                                                                                          
SPONSOR(s): REPRESENTATIVE(s) JOHNSON                                                                                           
                                                                                                                                
02/28/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/28/07       (H)       EDT, FIN                                                                                               
03/13/07       (H)       EDT AT 11:00 AM CAPITOL 106                                                                            
03/13/07       (H)       Heard & Held                                                                                           
03/13/07       (H)       MINUTE(EDT)                                                                                            
03/20/07       (H)       EDT AT 11:00 AM CAPITOL 106                                                                            
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CHARISSE MILLETT, Staff                                                                                                         
to Representative John Harris                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the hearing on HB
147, on behalf of Representative Harris, sponsor.                                                                               
                                                                                                                                
JEANNE OSTNES, Staff                                                                                                            
to Representative Craig Johnson                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the hearing on HB
167, on behalf of Representative Johnson, sponsor.                                                                              
                                                                                                                                
DAVE COBB, Business Manager                                                                                                     
Valdez Fisheries Development Association Inc.                                                                                   
Valdez, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of HB 147 and HB 167.                                                                  
                                                                                                                                
COLLEEN STEPHENS, President                                                                                                     
Valdez Visitors Bureau                                                                                                          
Valdez, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 147 and HB 167.                                                                 
                                                                                                                                
BONNIE QUILL, Director                                                                                                          
Mat-Su Convention and Visitors Bureau                                                                                           
Palmer, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 147 and HB 167.                                                                 
SANDRA WHITE, Manager                                                                                                           
Talkeetna Air Taxi                                                                                                              
Talkeetna, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 147 and HB 167.                                                                  
                                                                                                                                
DEB HICKOK, President, and CEO                                                                                                  
Fairbanks Convention and Visitors Bureau;                                                                                       
Chair                                                                                                                           
Marketing Committee                                                                                                             
Alaska Travel Industry Association (ATIA)                                                                                       
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 147 and HB 167.                                                                  
                                                                                                                                
PARK KRINGER, President                                                                                                         
American Village of Alaska, Inc.                                                                                                
Glennallen, Alaska                                                                                                              
POSITION STATEMENT:  Testified in support of HB 147 and HB 167.                                                                 
                                                                                                                                
DEE DEE KAY, Sales Manager for Lodging                                                                                          
Talkeetna Alaskan Lodge and Seward Windsong Lodge                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified in support of HB 147 and HB 167.                                                                
                                                                                                                                
ALAN LEMASTER, Owner                                                                                                            
Copper River Salmon Charters;                                                                                                   
Gakona Junction Village                                                                                                         
Gakona, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 147 and HB 167.                                                                 
                                                                                                                                
TRACY BEAUDOIN, Executive Director                                                                                              
Glennallen/Copper Valley Chamber of Commerce                                                                                    
Glennallen, Alaska                                                                                                              
POSITION STATEMENT:  Testified in support of HB 147 and HB 167.                                                                 
                                                                                                                                
BRETT CARLSON, Member                                                                                                           
Board of Directors                                                                                                              
Alaska Travel Industry Association                                                                                              
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 147 and HB 167.                                                                 
                                                                                                                                
JOHN MULETA, Founder and Chief Executive Officer                                                                                
M2Z Networks Inc.                                                                                                               
Menlo Park, California                                                                                                          
POSITION STATEMENT:  Provided the M2Z Networks presentation.                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR MARK NEUMAN called the House Special Committee on Economic                                                              
Development, International Trade and Tourism meeting to order at                                                                
11:01:34  AM.   Representatives  Doogan, Doll,  Lynn, and  Neuman                                                             
were present at the call  to order.  Representatives Johansen and                                                               
Gatto arrived as the meeting was in progress.                                                                                   
                                                                                                                                
HB 147-TOURISM CONTRACT MATCHING FUNDS                                                                                        
HB 167-APPROP: TOURISM MARKETING                                                                                              
                                                                                                                                
11:02:00 AM                                                                                                                   
                                                                                                                                
CHAIR NEUMAN announced that the  first order of business would be                                                               
HOUSE BILL NO.  147, "An Act relating to matching  funds in state                                                               
tourism marketing  contracts with trade associations",  and HOUSE                                                               
BILL  NO.  167,  "An  Act making  special  appropriations  for  a                                                               
contract with a  qualified trade association and  for a marketing                                                               
program; and providing for an effective date."                                                                                  
                                                                                                                                
CHAIR NEUMAN  said that public  comment would be held  jointly on                                                               
HB 147 and HB  167 due to the close subject  matter of the bills.                                                               
Following  the  consideration  of  the bills,  there  will  be  a                                                               
presentation by  M2Z Networks.   He requested that  staff members                                                               
review the bills.                                                                                                               
                                                                                                                                
11:03:03 AM                                                                                                                   
                                                                                                                                
CHARISSE MILLETT,  Staff to Representative Harris,  sponsor of HB
147, informed the committee that  the current statute for funding                                                               
tourism  marketing requires  a 50  percent to  50 percent  match.                                                               
This  bill will  change that  percentage to  a 90  percent to  10                                                               
percent match, with the state providing 90 percent of the funds.                                                                
                                                                                                                                
11:04:04 AM                                                                                                                   
                                                                                                                                
JEANNE  OSTNES, Staff  to Representative  Johnson, sponsor  of HB
167,  informed the  committee that  HB 167  is an  appropriations                                                               
bill for  funding from  the general fund  and the  vehicle rental                                                               
tax account.   She  stated that  this increase  in funding  is an                                                               
indication of  the state's support  of marketing for  the tourism                                                               
industry.                                                                                                                       
                                                                                                                                
CHAIR NEUMAN  called for  questions from  the committee  prior to                                                               
public testimony.                                                                                                               
                                                                                                                                
11:05:21 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  DOOGAN asked  how the  90 percent  to 10  percent                                                               
match split was determined by the sponsors of HB 147.                                                                           
                                                                                                                                
MS.   MILLETT  responded   that   the   Alaska  Travel   Industry                                                               
Association (ATIA)  is currently providing funding  in the amount                                                               
of $8 million; however, the ATIA  does not expect the cruise ship                                                               
industry to  continue its contribution  of $4 million for  the FY                                                               
07  budget.   In  addition, funding  from members  for  FY 07  is                                                               
estimated  at $2  million.   A  total of  $4  million, after  the                                                               
state's contribution, is insufficient  to maintain a national and                                                               
international   marketing  campaign,   she   said.     The   ATIA                                                               
anticipates  the  need  for  a  FY 07  marketing  budget  of  $20                                                               
million.                                                                                                                        
                                                                                                                                
REPRESENTATIVE DOOGAN  observed that  the percentage is  based on                                                               
the present situation.  He  asked whether HB 167 contains details                                                               
for the use of the additional money.                                                                                            
                                                                                                                                
11:07:44 AM                                                                                                                   
                                                                                                                                
MS. OSTNES  explained that the  details will be contained  in the                                                               
state's contract  with the ATIA.   She noted that the  funding is                                                               
for the  expansion of  marketing and that  the ATIA  will discuss                                                               
its budget with the committee.                                                                                                  
                                                                                                                                
CHAIR  NEUMAN added  that  the tourism  industry  feels that  the                                                               
Alaska Cruise Ship  Initiative (ACSI) will result  in a reduction                                                               
of support from the cruise line industry.                                                                                       
                                                                                                                                
MS. OSTNES  pointed out that  the previous $5 million  match with                                                               
the industry resulted in a net surplus.                                                                                         
                                                                                                                                
REPRESENTATIVE DOLL  asked if the  requested increase  in funding                                                               
will be a permanent change.                                                                                                     
                                                                                                                                
11:10:25 AM                                                                                                                   
                                                                                                                                
MS. MILLETT  responded that  the 90 percent  to 10  percent match                                                               
will be a permanent change in the statute.                                                                                      
                                                                                                                                
CHAIR  NEUMAN  added  that  all funds  are  appropriated  by  the                                                               
legislature each year.                                                                                                          
                                                                                                                                
CHAIR NEUMAN asked for public testimony.                                                                                        
                                                                                                                                
DAVE  COBB,   Business  Manager,  Valdez   Fisheries  Development                                                               
Association Inc., informed the committee  that he supports HB 147                                                               
and HB 167.  This legislation,  he said, is very important to the                                                               
future of tourism  in Alaska.  Marketing  campaigns are essential                                                               
to ensure  that the visitor  industry remains a strong  sector of                                                               
the economy.   Mr.  Cobb said  that Valdez  Fisheries is  a local                                                               
aquaculture  program  that  has   developed  a  successful  sport                                                               
fishing and visitor industry.   He said that the visitor industry                                                               
in Valdez  consists of  small businesses that  depend on  a large                                                               
statewide program for an effective  marketing campaign.  Mr. Cobb                                                               
concluded by saying that Alaska's  visitor industry is one of the                                                               
state's largest employers, and is  a major element in the economy                                                               
of Valdez and other small communities.                                                                                          
                                                                                                                                
11:12:48 AM                                                                                                                   
                                                                                                                                
CHAIR NEUMAN  recalled previous testimony that  stated 51 percent                                                               
of tourism businesses have 5 or fewer employees.                                                                                
                                                                                                                                
COLLEEN  STEPHENS,   President,  Valdez  Convention   &  Visitors                                                               
Bureau,  informed  the committee  that  the  Valdez Convention  &                                                               
Visitors Bureau membership is comprised  of 175 small businesses.                                                               
The  economy  of  Valdez,  she  said,  is  tied  to  tourism  and                                                               
especially to the independent traveler.   Beginning in the 1990s,                                                               
independent  travel  and  public funding  for  tourism  marketing                                                               
began  to decline.    Tourism benefits  all  Valdez citizens  and                                                               
citizens statewide by providing a  tax base.  Alaska must compete                                                               
for tourism business  to maintain these benefits  to its economy.                                                               
On behalf  of small tourism  businesses, she urged  the committee                                                               
to support HB 147 and HB 167.                                                                                                   
                                                                                                                                
11:15:11 AM                                                                                                                   
                                                                                                                                
BONNIE  QUILL, Director,  Mat-Su Convention  and Visitors  Bureau                                                               
(Mat-Su CVB), said  that the Mat-Su CVB's 300  members are asking                                                               
for  the committee's  support  of HB  147 and  HB  167.   Through                                                               
cooperative marketing  with the ATIA,  the Mat-Su CVB  creates an                                                               
awareness   of  the   Matanuska-Susitna  valley   as  a   visitor                                                               
destination.   The Mat-Su  CVB does not  have a  marketing budget                                                               
sufficient  to  make  connections  with visitors.    Without  the                                                               
marketing  of   ATIA  the  Mat-Su   CVB  would   have  difficulty                                                               
continuing to increase the number of visitors to its area.                                                                      
                                                                                                                                
                                                                                                                                
SANDRA  WHITE,   Manager,  Talkeetna   Air  Taxi,   informed  the                                                               
committee that her  family has worked in tourism  in Alaska since                                                               
the late  1960s.  She said  that she has trained  dozens of other                                                               
Alaskans  who are  now employed  in  the tourism  industry.   Her                                                               
experience  is that  the Alaska  Cruise Ship  Initiative tax  has                                                               
changed  the climate  of tourism  in  Alaska.   Ms. White  opined                                                               
that, even though  her business does not have  contracts with the                                                               
cruise  ship  industry,  the state  should  now  support  tourism                                                               
through  the passage  of these  bills.   Tourism  in Alaska,  she                                                               
said,  should  not be  allowed  to  dwindle.   The  community  of                                                               
Talkeetna benefits from tourism by  the development of trails and                                                               
growth.  She continued to say  that the original intent of HB 147                                                               
is  that the  funds  from  the vehicle  rental  tax  are paid  to                                                               
support  tourism marketing.   She  concluded by  saying that  her                                                               
small  business  is unable  to  continue  a sufficient  marketing                                                               
campaign alone.                                                                                                                 
                                                                                                                                
11:19:14 AM                                                                                                                   
                                                                                                                                
CHAIR  NEUMAN asked  for  the percentage  of  Talkeetna Air  Taxi                                                               
customers that are from outside Alaska.                                                                                         
                                                                                                                                
MS.  WHITE answered  that  90  percent of  her  business is  from                                                               
outside the state.                                                                                                              
                                                                                                                                
DEB HICKOK, President and CEO,  Fairbanks Convention and Visitors                                                               
Bureau;  Chair,  Marketing   Committee,  Alaska  Travel  Industry                                                               
Association informed  the committee  that the  passage of  HB 147                                                               
and HB  167 is  a vote for  small business in  Alaska.   The ATIA                                                               
marketing committee  is composed of  30 volunteers, most  of whom                                                               
represent small  businesses.  This  committee, she  said, directs                                                               
and monitors the  advertising sales and marketing  programs.  The                                                               
marketing  committee  and  ATIA  staff  can  provide  a  detailed                                                               
proposed spending  plan for  the FY 07  budget of  $26.5 million.                                                               
In addition, the  ATIA organization is a  small business program.                                                               
Research shows that domestic travelers  see an Alaska vacation as                                                               
too  expensive  and  time  consuming.     Increased  funding  for                                                               
marketing  is  the  only  way to  compete  for  visitor  dollars.                                                               
Fairbanks   and   the   interior   have   difficulty   attracting                                                               
independent and  winter travelers.   A vote for these  bills, Ms.                                                               
Hickok continued, is a vote  for committee member's constituents,                                                               
friends, and neighbors.                                                                                                         
                                                                                                                                
11:24:44 AM                                                                                                                   
                                                                                                                                
PARK  KRINER,  President,  American   Village  of  Alaska,  Inc.,                                                               
informed the committee  that he has been in  the tourism business                                                               
for  35  years.   When  tourism  funding  was high,  visits  from                                                               
tourists  could   be  credited  to  national   and  international                                                               
television advertising.  Today,  business in the American Village                                                               
gift ship  is down  by 13  percent from the  previous year.   Mr.                                                               
Kriner  said that  the  benefits  from HB  147  and  HB 167  will                                                               
trickle down  to every  business in  Glennallen and  provide jobs                                                               
for high school and college students.   He asked why would we not                                                               
fund an industry that provides  economic stability.  He concluded                                                               
by saying that  he supports HB 147 and HB  167, which will enable                                                               
residents to stay in Alaska through the winter.                                                                                 
                                                                                                                                
CHAIR NEUMAN added  that a visitor stopping in a  town will often                                                               
stop at several different businesses.                                                                                           
                                                                                                                                
DEE DEE KAY, Sales Manager  for Lodging, Talkeetna Alaskan Lodge,                                                               
and Seward  Windsong Lodge,  testified that  her work  in tourism                                                               
has supported  her family for  20 years.   In her  experience she                                                               
has  found  that Alaska  travel  marketing  delegations are  very                                                               
small  compared to  those  of other  states.   Talkeetna  Alaskan                                                               
Lodge is  able to  provide not only  summer lodging,  but remains                                                               
open during the  shoulder season to benefit  the local community.                                                               
She  said   that  she  believes  tourism   profits  have  allowed                                                               
Talkeetna  to  build  a  new   clinic,  and  have  supported  new                                                               
businesses  in  Seward.    Ms.  Kay  encouraged  members  of  the                                                               
committee to  support HB 147 and  HB 167 and thereby  support the                                                               
visitor business which  is a unique, clean,  fun, and competitive                                                               
industry.                                                                                                                       
                                                                                                                                
11:30:01 AM                                                                                                                   
                                                                                                                                
ALAN  LEMASTER, Owner,  Copper River  Salmon Charters  and Gakona                                                               
Junction Village,  informed the  committee that  his part  of the                                                               
state,  from Valdez  to  Fairbanks, and  Palmer  to the  Canadian                                                               
border, has been severely impacted  by the reduction of marketing                                                               
dollars.    Fewer highway  travelers  and  border crossings  have                                                               
resulted  in the  closures  of small  businesses.   Mr.  LeMaster                                                               
recalled  that  in  the  past   the  cruise  ship  and  air  line                                                               
industries dominated  tourism in Alaska.   Presently, however, 80                                                               
percent of  ATIA's members are  small businesses with  fewer than                                                               
five  employees.     During  25  years  in   business,  he  said,                                                               
marketing costs  have increased and  he supports the  estimate of                                                               
$25 million needed  to market Alaska tourism at  the 1980s level.                                                               
He stressed  that state money  for tourism is  not a gift  but an                                                               
investment.  Research indicates  that increased funding will give                                                               
ATIA  the  ability  to  bolster   television  marketing  with  an                                                               
emphasis  on   travel  to  rural   Alaska  and   the  independent                                                               
businesses  across  the  state.   Mr.  LeMaster  noted  that  the                                                               
increased funding will  also be directed at  the small businesses                                                               
that have been  neglected.  He encouraged the  legislature to re-                                                               
invest the  vehicle rental tax  money into the  marketing efforts                                                               
of the vibrant visitor industry.   The investment will ensure the                                                               
success  of the  visitor industry  and increase  revenue for  the                                                               
state.   He urged the  committee to  make a strong  investment in                                                               
the tourism industry of tomorrow.                                                                                               
                                                                                                                                
11:36:34 AM                                                                                                                   
                                                                                                                                
TRACY  BEAUDOIN,  Executive  Director,  Glennallen/Copper  Valley                                                               
Chamber  of Commerce,  said  that she  agreed  with the  previous                                                               
witnesses and  added that  rural business  owners need  help from                                                               
the state.                                                                                                                      
                                                                                                                                
REPRESENTATIVE DOLL remarked:                                                                                                   
                                                                                                                                
     I'm kind of  curious about the effect  of the marketing                                                                    
     dollars that we're going to  be putting in and when the                                                                    
     tourism trade started  to decline.  I see  that we have                                                                    
     an increase  in cruise ship  traffic and more  and more                                                                    
     it  would appear  that people  in  this country  prefer                                                                    
     taking  short,  quick  ...  these  wonderful  trips  on                                                                    
     cruise ships and  they pretty much stay  on those ships                                                                    
     or they, there's  a contract with the  ships to certain                                                                    
     tour  activities  and  I'm  wondering  if  there's  any                                                                    
     correlation  between  the  increased number  of  cruise                                                                    
     ships  coming and  the  way they  contract  and set  up                                                                    
     their recreational activities  for there passengers and                                                                    
     the actual  decline of business  ... to the  small tour                                                                    
     companies. ...  If we add  more money into this  are we                                                                    
     really going to  get the benefit for the  dollar or are                                                                    
     things changing on a world  level, that we're no longer                                                                    
     going to see that kind of return on that dollar.                                                                           
                                                                                                                                
REPRESENTATIVE LYNN suggested  that the increase in  the price of                                                               
gasoline may limit travel on the road system.                                                                                   
                                                                                                                                
BRETT  CARLSON,   Member,  Board  of  Directors,   Alaska  Travel                                                               
Industry  Association, answered  yes; the  cruise ship  companies                                                               
are  providing vacations  that the  global market  demands.   Mr.                                                               
Carlson said that  cruise travel success is based on  a trip that                                                               
is easy  to book,  short, and available  at a  competitive price.                                                               
In addition, the  cruise industry spends $70 million  per year on                                                               
advertising.  A  drive or fly and drive vacation  can not compete                                                               
in cost with  a cruise vacation.  However, he  said that he feels                                                               
that tourists  who are independent  travelers are going  to other                                                               
destinations due to a lack of marketing by Alaska.                                                                              
                                                                                                                                
11:41:39 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO  confirmed that the cruise  industry budgets                                                               
$70 million per year for marketing.                                                                                             
                                                                                                                                
MR. CARLSON answered yes; the  cruise industry spends $70 million                                                               
in marketing and advertising for travel in Alaska.                                                                              
                                                                                                                                
REPRESENTATIVE  GATTO observed  that,  according  to the  sponsor                                                               
statement,  the  cruise  industry  will  no  longer  be  able  to                                                               
contribute voluntarily to the state marketing program.  He said:                                                                
                                                                                                                                
     I  can't  make  the   connection,  between  if  they're                                                                    
     spending $70  million and they can't  contribute to the                                                                    
     state  marketing   program,  does  this   mean  they're                                                                    
     willing  to spend  $70 million  of their  own money  on                                                                    
     advertising, but  won't contribute a couple  of million                                                                    
     to ATIA.                                                                                                                   
                                                                                                                                
MR.  CARLSON surmised  that Representative  Gatto is  right.   He                                                               
added  that the  bottom  line  is that  the  tourism industry  in                                                               
Alaska has been able to raise  $5 million; $3 million is based on                                                               
voluntary contributions and $2 million  is for contributions that                                                               
add value.   He noted that the cruise industry  will be providing                                                               
$100  million  to  the state  involuntarily  through  the  Alaska                                                               
Cruise Ship Initiative tax.                                                                                                     
                                                                                                                                
11:43:26 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GATTO compared  the  statement  "will no  longer"                                                               
able to" with the statement "will no longer."  He remarked:                                                                     
                                                                                                                                
     Is that  an intent?   I guess  what I'm trying  to find                                                                    
     out is,  did they make  a declaration, or is  this just                                                                    
     an estimate in the  sectional analysis of a probability                                                                    
     or a likelihood or maybe a guess.                                                                                          
                                                                                                                                
MR.   CARLSON  opined   that  the   statement  is   a  reasonable                                                               
likelihood, and that no declarations have  been made, as yet.  He                                                               
added that  the ATIA would not  stake the future of  thousands of                                                               
small  businesses  on the  hope  that  the cruise  industry  will                                                               
continue its voluntary contribution.                                                                                            
                                                                                                                                
REPRESENTATIVE  GATTO asked  whether  the  contribution is  truly                                                               
voluntary or is based on an assessment or dues.                                                                                 
                                                                                                                                
MR.  CARLSON replied  that the  cruise  industry contribution  is                                                               
voluntary.   The purchase  of advertising  in the  ATIA "Vacation                                                               
Planner"  and participation  in outside  marketing events  totals                                                               
$2.5 million in value added contributions to ATIA's budget.                                                                     
                                                                                                                                
REPRESENTATIVE  DOLL asked  the  bill sponsors  whether there  is                                                               
flexibility in the 90 percent to 10 percent match ratio.                                                                        
                                                                                                                                
MS. MILLETT responded that the percentage  is a policy call to be                                                               
made by  the legislature.   She added  that marketing  dollars do                                                               
not go far when funding a competitive national campaign.                                                                        
                                                                                                                                
MR.  CARLSON opined  that  the  percentage is  based  on the  $20                                                               
million minimum that  ATIA estimates is necessary.   This minimum                                                               
amount is determined  by comparisons with what is  spent by other                                                               
destinations.   Mr.  Carlson concluded  by saying  that ATIA  can                                                               
raise $2 million this year.                                                                                                     
                                                                                                                                
11:49:02 AM                                                                                                                   
                                                                                                                                
CHAIR NEUMAN closed public testimony.                                                                                           
                                                                                                                                
REPRESENTATIVE LYNN moved  to report HB 147,  25-LS0560\C, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO objected.                                                                                                  
                                                                                                                                
11:49:59 AM                                                                                                                   
                                                                                                                                
A  roll  call vote  was  taken.   Representatives  Doogan,  Lynn,                                                               
Johansen,  Doll,   and  Neuman   voted  in   favor  of   HB  147.                                                               
Representative Gatto  voted against  it.   Therefore, HB  147 was                                                               
reported  out   of  the  House  Special   Committee  on  Economic                                                               
Development, International Trade and Tourism by a vote of 5-1.                                                                  
                                                                                                                                
11:49:57 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  DOOGAN  requested a  copy  of  the detailed  ATIA                                                               
proposed budget for FY 07.                                                                                                      
                                                                                                                                
11:51:18 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE LYNN  moved to report  HB 167, 25-LS0656\C  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO objected.                                                                                                  
                                                                                                                                
11:52:18 AM                                                                                                                   
                                                                                                                                
A  roll call  vote was  taken.   Representatives Johansen,  Doll,                                                               
Doogan,   Lynn,  and   Neuman   voted  in   favor   of  HB   167.                                                               
Representative Gatto  voted against  it.   Therefore, HB  167 was                                                               
reported  out   of  the  House  Special   Committee  on  Economic                                                               
Development, International Trade and Tourism by a vote of 5-1.                                                                  
                                                                                                                                
^PRESENTATION BY M2Z Networks                                                                                                 
                                                                                                                                
11:52:34 AM                                                                                                                   
                                                                                                                                
CHAIR NEUMAN announced that the  final order of business would be                                                               
the presentation from M2Z Networks Inc.                                                                                         
                                                                                                                                
11:52:44 AM                                                                                                                   
                                                                                                                                
JOHN MULETA,  Founder, and Chief Executive  Officer, M2Z Networks                                                               
Inc. (M2Z Networks), informed the  committee that M2Z Networks is                                                               
a  national wireless  broadband  company  headquartered in  Menlo                                                               
Park,  California, and  with offices  in  Washington D.  C.   M2Z                                                               
Networks  is seeking  a Federal  Communications Commission  (FCC)                                                               
license to  provide free  nationwide wireless  broadband service.                                                               
This  service,  he said,  is  similar  to how  consumers  receive                                                               
television  broadcasts.    Mr.  Muleta said  that  his  22  years                                                               
experience  in   the  telecommunications  industry   ranges  from                                                               
assisting  phone companies  and internet  services providers,  to                                                               
positions as  deputy bureau chief and  enforcement division chief                                                               
for the  FCC.   Mr. Muleta  said he is  a well-known  advocate of                                                               
wireless local number  portability.  Mr. Milo Medin,  also of M2Z                                                               
Networks,  has  over   20  years  of  experience   in  the  field                                                               
developing  provider networks  for the  National Aeronautics  and                                                               
Space Administration  (NASA) and the federal  government, and co-                                                               
founded @Home network.  M2Z  Networks is backed by investors from                                                               
companies  such   as  Google,  Amazon,  Netscape,   and  Redpoint                                                               
Ventures.  These  companies have generated 400,000  jobs and $100                                                               
billion  in  revenue.     Mr.  Muleta  said   that  M2Z  Networks                                                               
represents  the new  industry known  an internet  broadband.   He                                                               
explained  that  broadband is  the  foundation  of education  and                                                               
economic  development  in  the  U.  S. and  is  the  ability  for                                                               
everyone  to communicate  and use  the content  available on  the                                                               
internet.    Providing universal  broadband  access  in the  near                                                               
future is supported by both political parties.                                                                                  
                                                                                                                                
11:58:33 AM                                                                                                                   
                                                                                                                                
MR. MULETA  pointed out that  affordable and  universal broadband                                                               
access is an important issue  for the next generation. Currently,                                                               
the  U.S.  is ranked  21st  in  the  global index  for  broadband                                                               
availability   in  terms   of   speed,   price,  and   geographic                                                               
availability.   The broadband  gap is in  the consumer  and small                                                               
business markets;  in fact,  69 million  American adults  have no                                                               
internet  access.   Speaking  of small  businesses,  he said,  50                                                               
percent do  not have broadband,  and 35 percent have  no internet                                                               
presence.   Mr. Muleta informed  the committee that  M2Z Networks                                                               
has the solution to this problem.                                                                                               
                                                                                                                                
11:59:02 AM                                                                                                                   
                                                                                                                                
MR. MULETA  explained that Alaskans  can benefit  from affordable                                                               
broadband  by  providing this  connection  to  children in  their                                                               
homes.  Having  internet access only at school  and in libraries,                                                               
he said,  is equal to  limiting children's access to  books after                                                               
school hours.  In addition,  economic development is based on the                                                               
ability of Alaska to communicate  with consumers in the Lower 48.                                                               
He stressed that citizens and  visitors need wireless connections                                                               
everywhere  they   travel.    M2Z  Networks   will  provide  free                                                               
broadband  to the  consumer  at 384  kilobits  per second  (kbps)                                                               
service.   Also available will  be paid subscriptions  for faster                                                               
service.   This service  will be  premised on  nationwide roaming                                                               
and  will  reach  95  percent  of  the  U.  S  within  10  years.                                                               
Additionally, M2Z  Networks' use  of WiMax technology  will lower                                                               
cost to consumers.   M2Z Networks has filed an  application for a                                                               
communications license  with the  FCC and has  asked to  lease an                                                               
unpaired  spectrum for  a  five percent  franchise  fee.   Future                                                               
service, he continued,  will block indecent content  for all free                                                               
access  users, and  will  provide free  access  to public  safety                                                               
officials.                                                                                                                      
                                                                                                                                
12:03:12 PM                                                                                                                   
                                                                                                                                
MR.  MULETA noted  that M2Z  Networks' competitors  provide high-                                                               
speed  service by  charging for  the  cost of  the equipment  and                                                               
annual service fees  of $720 to $900.  M2Z  Networks is committed                                                               
to provide  a private  sector solution to  a public  policy goal.                                                               
Mr. Muleta encouraged the committee  to focus on promoting market                                                               
based   solutions,   increased    competition,   and   technology                                                               
neutrality for the  benefit of internet consumers.   M2Z Networks                                                               
has applied  for a license  to lease  a portion of  the broadband                                                               
spectrum between  1710 and 2200  megahertz (MHz), and  it expects                                                               
the license to  be granted during 2007.  Mr.  Muleta concluded by                                                               
asking  for committee  members and  all Alaskans  to support  M2Z                                                               
Networks' application by contacting the FCC.                                                                                    
                                                                                                                                
12:07:12 PM                                                                                                                   
                                                                                                                                
CHAIR NEUMAN  asked Mr.  Muleta why his  company has  traveled so                                                               
far to make this presentation.                                                                                                  
                                                                                                                                
MR. MULETA responded that communication  services are national in                                                               
scope and  should cover all  states.  Currently, Alaska  does not                                                               
offer  sufficient   broadband  choices  for   municipalities  and                                                               
consumers.   M2Z  Networks,  he  said, believes  it  is here  not                                                               
simply to provide competition, but  to directly benefit consumers                                                               
with a  free broadband  service, as wide  in scope  as television                                                               
broadcasting,  with  two-way  non-passive interaction  and  in  a                                                               
responsible manner.                                                                                                             
                                                                                                                                
REPRESENTATIVE JOHANSEN asked if  the importance of the broadband                                                               
connection is due  to the future emphasis on  video streaming and                                                               
live video.                                                                                                                     
                                                                                                                                
MR.  MULETA  expressed his  belief  that  the primary  driver  of                                                               
broadband is the  personalization of the internet.   In addition,                                                               
broadband is always available for instant two-way communication.                                                                
                                                                                                                                
REPRESENTATIVE  GATTO asked  for  a definition  of "slamming  and                                                               
cramming".                                                                                                                      
                                                                                                                                
MR. MULETA replied that "slamming"  is the unauthorized switching                                                               
of long distance  providers, and "cramming" is  adding charges to                                                               
the bills.                                                                                                                      
                                                                                                                                
REPRESENTATIVE   GATTO   further   asked  who   participates   in                                                               
"cramming".                                                                                                                     
                                                                                                                                
MR.  MULETA  answered  that  some  phone  companies  offer  their                                                               
billing  information to  other businesses  that then  add charges                                                               
for unsolicited services.                                                                                                       
                                                                                                                                
REPRESENTATIVE LYNN  noted that  local and national  politics can                                                               
be influenced by internet blog sites.                                                                                           
                                                                                                                                
MR. MULETA affirmed  that statistics prove that  the internet can                                                               
impact politics.                                                                                                                
                                                                                                                                
CHAIR NEUMAN  asked what  investments M2Z  Networks will  make in                                                               
Alaska.                                                                                                                         
                                                                                                                                
MR.  MULETA responded  that, after  FCC  licensing, M2Z  Networks                                                               
estimates an  investment of $50  million in Alaska over  the next                                                               
ten years.                                                                                                                      
                                                                                                                                
12:16:02 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO  asked how to stop  unsolicited contact over                                                               
the broadband network.                                                                                                          
                                                                                                                                
MR. MULETA answered that consumers  need to request their service                                                               
providers to stop spam.                                                                                                         
                                                                                                                                
CHAIR NEUMAN asked which Alaska  companies have been contacted by                                                               
M2Z Networks for possible future partnerships.                                                                                  
                                                                                                                                
MR. MULETA  replied that M2Z  Networks has contacted  rural phone                                                               
companies and national  telecommunications cooperatives; however,                                                               
business partnerships can not be  formed prior to the issuance of                                                               
the FCC license.                                                                                                                
                                                                                                                                
12:18:48 PM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special  Committee on  Economic Development,  International Trade                                                               
and Tourism meeting was adjourned at 12:20 p.m.                                                                                 
                                                                                                                                

Document Name Date/Time Subjects