Legislature(2007 - 2008)CAPITOL 106
03/20/2007 11:00 AM House ECONOMIC DEV., TRADE, AND TOURISM
| Audio | Topic |
|---|---|
| Start | |
| HB147|| HB167 | |
| Presentation by M2z Networks | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 147 | TELECONFERENCED | |
| += | HB 167 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
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.
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