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May 12, 2004
TESTIMONY OF CHARLES W. ERGEN
COMMITTEE ON JUDICIARY
The Satellite Home Viewer Improvement Act ("SHVIA") helped create a more level playing field for cable and satellite TV providers in the multichannel video programming distributor ("MVPD") market. But there are still many significant differences in the regulatory treatment of cable and satellite that affect their relative attractiveness to consumers. Congress should take the following steps to alleviate these regulatory differences and ensure that satellite can compete vigorously with cable in the MVPD market.
? Section 119 of the Copyright Act, which allows satellite carriers to transmit distant network programming to "unserved households," should be reauthorized and made permanent like the license governing cable operators. Eligible distant signal subscribers also should not be denied the choice as to whether to watch their local broadcaster or a distant broadcaster on their satellite platform, if local service becomes available via satellite in their area.
? Congress should extend the "grandfather" clause in Section 119 so that households that subscribed to distant network signals prior to October 31, 1999 can continue to receive such signals.
? The lack of parity between the royalty mechanisms that apply to competing MVPDs, and between the resulting royalty rates should be addressed in this SHVIA reauthorization. The rate satellite pays today yields generally higher payments than the cable mechanism. Satellite should not be subject to a cost of living increase that looks back and calculates a cumulative increase based on inflation for the past five years, followed by a new CARP process to relegate rates. This will further exacerbate the disparity and put satellite carriers at a further competitive disadvantage vis-à-vis cable.
? By extending the compulsory license to allow satellite TV providers to offer DTV programming to households that are not served with a local over the air digital signal, Congress would increase demand for digital television sets among satellite TV subscribers. This will spur the lagging DTV transition and help firm up the December 31, 2006 DTV transition deadline set for broadcasters to return their analog spectrum.
? Regulatory parity between cable and satellite may be improved (but still not completely alleviated) by giving satellite TV providers the ability to retransmit "significantly viewed" stations within a community. Congress should afford the same market modification opportunities to satellite that cable systems have.
? The sunset on the non-exclusivity and good faith requirements for retransmission consent should be eliminated. These limitations on broadcasters' ability to negotiate retransmission consent agreements are essential for the preservation of a competitive MVPD market and for keeping video programming prices low.
? Congress should not outlaw EchoStar's two-dish plan for complying with its must-carry obligations, nor require an unrealistic compressed time schedule for transitioning local markets to one dish.
COMMITTEE ON JUDICIARY
"REAUTHORIZATION OF THE SATELLITE HOME VIEWER
Wednesday, May 12, 2004
226 Dirksen Senate Office Building
Testimony of Charles Ergen
Echostar Communications Corporation
Chairman and Chief Executive Officer
TESTIMONY OF CHARLES W. ERGEN
Chairman and Chief Executive Officer
EchoStar Communications Corporation
U.S. Senate Committee on Judiciary
May 12, 2004
Thank you Chairman Hatch, Senator Leahy, and distinguished members of the Committee, on behalf of EchoStar Communications Corporation, I want to thank you for inviting our company to discuss with you the Satellite Home Viewer Improvement Act. My name is Charles Ergen, and I am Chairman and Chief Executive Officer of EchoStar Communications Corporation.
The reauthorization of the Satellite Home Viewer Improvement Act ("SHVIA") offers Congress an excellent opportunity to preserve and extend the pro-competitive measures in the current Act, as well as to improve regulatory parity between cable and satellite TV providers. While SHVIA helped create a more level playing field for cable and satellite TV providers in the multichannel video programming distributor ("MVPD") market, there are still many significant differences in the regulatory treatment of cable and satellite that affect their relative attractiveness to consumers. In reauthorizing and revising SHVIA, Congress should take steps to eliminate these regulatory differences and ensure that satellite carriers can continue to compete vigorously with cable in the MVPD market. At the same time, care should be taken not to impose new requirements on satellite carriers that further disadvantage them relative to their primary MVPD competitors, the dominant cable industry.
Reauthorization of Section 119 - Carriage of Distant Network Signals
Under Section 119 of the Copyright Act, which is set to expire on December 31, 2004, satellite carriers are allowed to make distant network programming available to "unserved households." Satellite carriers' ability to provide distant signals is of crucial importance to millions of consumers, mostly in rural areas, who cannot receive an adequate, over-the-air local broadcast signal. One of the reasons there are so many unserved households is because the cost to broadcasters of serving these additional households often exceeds the advertising revenue that the broadcasters hope to generate. To ensure that such households continue to have access to distant network signals from their satellite providers, we urge you to reauthorize Section 119 and to make the statutory license permanent. Cable operators currently enjoy a permanent license with respect to distant signals. Satellite carriers should enjoy the same right.
Broadcasters have asked you to limit our ability to provide distant signals in markets in which we provide local-into-local service. We oppose this change to the distant signal license. Consumers who do not have access to an over-the-air signal, and who have to pay for their television service, should have a choice as to whether to watch their local broadcaster or a distant broadcaster on their satellite platform. Just as a consumer in Kalamazoo, Michigan can purchase either the Kalamazoo Gazette or the Los Angeles Times, satellite subscribers who qualify under the current law should continue to have this same basic choice. It is not right to penalize satellite carriers for making the substantial investments necessary to provide local-into-local service by taking away their distant signal rights. Nor is it right to penalize consumers by taking away an option they have today merely because a satellite carrier has worked to make available to them an additional option.
By reauthorizing the distant signal license, you will also be providing a spur to broadcasters to improve and extend their over-the-air signal to reach as many households as possible. In contrast, taking away that license would remove any such incentive for broadcasters who find it less costly to serve unserved households by cable or satellite than to improve their signals.
Section 119 also permits satellite carriers to retransmit non-network broadcast stations (i.e. superstations) to satellite subscribers. Superstations are a staple of cable line-ups and their availability on satellite systems has been a key driver of growth in the satellite television industry. Reauthorization of Section 119 will ensure that satellite carriers will continue to have the same opportunity as cable to offer such popular programming to satellite subscribers.
Also, Congress should extend the "grandfather" clause in Section 119 so that households that subscribed to distant network signals prior to October 31, 1999 can continue to receive such signals. We have hundreds of thousands of satisfied, long-term subscribers that have come to rely on this provision. There is no reason to disenfranchise them now.
And Congress should not place a new deadline on eligible consumers' ability to receive distant stations. Congress has now had long enough experience with the distant station license to appreciate its benefits. The license should become permanent.
The lack of parity between the royalty mechanisms that apply to competing MVPDs, and between the resulting royalty rates, is also of major concern to EchoStar. First, cable enjoys a permanent compulsory license that includes a permanent copyright structure. The royalty rates that satellite carriers pay, on the other hand, are subject to review by Congress every few years, along with the temporary licenses that Congress has been enacting since 1988, and to a varying methodology for computing rates. This lack of permanence fosters uncertainty.
Second, royalty rates under the cable compulsory license are calculated according to a statutory formula and may be adjusted for inflation only--once every 5 years. Satellite carriers, on the other hand, have been subject to a process of rate adjustments by a Copyright Arbitration Royalty Panel. In 1997, this process led to such excessively high rates that Congress had to step in and reduce them. Third, while it is difficult to compare the rates that cable and satellite carriers pay because of the complexities of the cable formula, the net effect has been that satellite carriers pay much more than cable systems in the majority of cases. I understand that some parties have presented isolated hypothetical examples where the reverse may be the case. The problem is that these mixes of distant stations appear to be aberrant and not to correspond to the typical case. But there is a simpler way to solve this Gordian knot than by weighing studies based on two or three examples: impose on cable systems too, whatever rates you decide to impose on satellite carriers. A regime of uniform rates and a uniform method for adjusting them would achieve parity between satellite and cable automatically. It would be useful to solicit the cable industry's views on this proposal.
You should also resist requests to relegate rate-setting to a new CARP process. CARP proceedings are cumbersome and protracted, and their outcome is totally uncertain. Satellite carriers would have to price distant stations in their offerings to consumers with the hovering threat of significantly higher royalty rates that may make these offerings uneconomical. In addition, the manner in which prior CARPs have implemented the statutory standards has been misguided. The last CARP derived the excessive rates that I mentioned above mainly by looking at the rates paid by cable systems, not for the same distant broadcast stations, but rather for the most popular cable networks, such as CNN and ESPN. This is to compare apples to oranges. Among many other factors, cable networks give distributors valuable "ad avails," or free ad time, in exchange for the fees they receive. By contrast, in the case of distant broadcast stations, satellite carriers are prohibited by the terms of the Section 119 license from deleting any content and inserting their own ads. In sum, by relegating the rate-setting function to a CARP process, you could be paving the path for another unreasonable result that you might have to step in again and try to rectify, as you had to do in 1999. I urge you not to go down that path.
As for cost of living adjustments to the current rates, they might be an appropriate adjustment mechanism on a going forward basis. I urge you, however, not to impose a cost of living increase that looks back and calculates a cumulative increase based on inflation for the past five years. In addition to the customary inequities of retroactivity, the problem here is that the base rate was too high to start with in 1997, and remains too high today. As I have mentioned, that rate satellite pays today yields generally higher payments than the cable mechanism. To compound it with a cumulative five year look back adjustment would further exacerbate the disparity and put satellite carriers at a further competitive disadvantage vis-à-vis cable.
Transition to Digital Television
The reauthorization of SHVIA also offers Congress an opportunity to broaden the existing definition of "unserved household" so that consumers who cannot receive a digital television (DTV) signal from their local broadcaster will have the ability to receive it from their satellite TV provider. This will spur the transition to digital TV broadcasting, which has lagged to date despite the statutory deadline of December 31, 2006 for the relinquishment of analog TV spectrum. Specifically, a significant number of viewing households (as of February 2004, all except 17 out of 210 markets) still lack access to a full complement (ABC, CBS, NBC, FOX, and PBS) of full-power digital broadcasts from the networks serving their areas. And while the broadcasters have told Congress that only a handful of network stations have failed to build DTV stations that operate at full power, a study the NAB recently presented to the FCC contradicts this claim - even according to that partisan study, more than half the operational DTV stations are not operating at their licensed power level. Consumers cannot reasonably be expected to make the investment in DTV equipment if they cannot even receive DTV signals.
By extending the compulsory license to allow satellite TV providers to offer DTV programming to households that are not served with a local over the air digital signal, Congress would increase demand for digital television sets among satellite TV subscribers. With more digital TV sets in the market, broadcasters will have increased incentives to make their digital signals available to more households sooner. To a significant extent, the rate of DTV adoption has been slow because consumers are not willing to buy DTV sets until there is more DTV programming, while broadcasters are not willing to provide DTV programming until more consumers have DTV sets. Allowing satellite carriers to beam distant DTV signals to unserved households would help leverage the deployment of DTV in one part of the country into other parts of the country that have no such service. By accelerating the rate of DTV adoption in this way, the vicious cycle that impedes DTV deployment may at last be broken.
To achieve this, however, it is not enough to ask the FCC to submit a report to Congress about an appropriate predictive model. First of all, this is a "death by committee" approach: it would ensure that nothing happens to expedite the DTV transition until after the deadline for the transition has elapsed.
Second, no model is necessary in cases where the local broadcaster has not built any DTV facilities whatsoever. In those cases, there is no need for a prediction - all of the households that the broadcaster was supposed to reach with a DTV signal are certainly unserved. Consequently, Congress should allow immediate distant HDTV service to those DTV unserved households for which no prediction is necessary, and should require the FCC to establish a DTV predictive model by expedited rulemaking for all other cases.
Not surprisingly, this plan is vehemently opposed by broadcast interests. But these same broadcasters are busily developing lots of creative ideas for extracting all the benefits offered by digital spectrum, including a plan to use their DTV spectrum to set up wireless cable systems to compete with satellite and traditional cable systems. At the same time, they are failing to hold up their end of the bargain with the American public by providing full power DTV and returning the analog spectrum on a timely basis. The broadcasters should not be permitted to reap all of the benefits of digital, while shirking their obligations. Congress should adopt our proposal to hasten the digital transition.
Determining Which Households are "Unserved Households"
Congress also has an opportunity to improve the process for determining which households are "unserved households" under Section 119 in the following ways.
First, it can improve the model used to predict whether a household can receive a local network signal of grade B intensity so as to take into account interference conditions and "multi-path" transmission problems. Currently, the Individual Location Longley Rice ("ILLR") model predicts many households to be served when in fact they cannot receive an adequate signal because local interference conditions have weakened the signal. In addition, even when the signal strength is adequate, a household may receive an unwatchable picture as a result of "ghosting" caused by multi-path transmissions. Such households should be treated as unserved. Congress should also consider directing the FCC to increase the grade B intensity threshold to reflect modern consumer expectations about picture clarity. The current standard was adopted in the 1950s and based on consumer quality expectations from that era of hazy TV reception. Modern consumer expectations are considerably higher.
Second, Congress could improve SHVIA's waiver and signal strength testing process, which is not working as envisioned. Five years of experience with this process shows us that it often leads to a bad customer experience. In some instances, the law is unclear; in other cases consumers have unrealistic expectations; and in still other cases, DBS providers and their customers are subject to the whims of broadcasters. We recommend narrowing the waiver process to permit only consumers predicted as receiving weak Grade B signals to request a signal strength test. We also recommend an explicit clarification of what we believe to be the current law: that broadcasters may not revoke waivers once given so long as a subscriber receives continuous service from the DBS provider - the customer should not be victim to whimsical rescissions of previously granted waivers. Further, the rules should be clarified to eliminate consumer confusion when a subscriber is predicted to receive the same network signal from two local network affiliates in different DMAs. In those cases, a waiver should be required only from the network station in the subscriber's DMA. This will eliminate the need for customers to get multiple waivers from affiliates of the same network.
Third, Congress should clarify that where there is not the full complement of four network stations in a given DMA (e.g. ABC, CBS, NBC are present, but not Fox), then satellite providers can import a distant signal of the missing network into that DMA, even though some households in the DMA might be predicted to be served by an affiliate of that network in a neighboring DMA.
Carriage of Broadcast Stations
Significantly Viewed Stations. We encourage the Senate to improve regulatory parity between cable and satellite by giving satellite TV providers the ability to retransmit "significantly viewed" stations within a community, and afford the same market modification opportunities that cable systems have. Significantly viewed signals should also be exempted from network nonduplication, syndicated exclusivity and sports blackout rules in the communities where those stations are significantly viewed. We note that, even with these changes, cable operators will still enjoy a broader copyright license than the license of Section 119, but these adjustments will help lessen the gap.
Retransmission Consent. The Committee should also eliminate the sunset on the non-exclusivity and good faith requirements for retransmission consent. Currently, for local stations that elect retransmission consent rather than must-carry, Section 325(b)(3)(C)(ii) of SHVIA and the Commission's rules prohibit exclusive retransmission consent agreements and require the local station to negotiate retransmission agreements in good faith. These requirements sunset on January 1, 2006.
EchoStar considers these limitations on broadcasters' ability to negotiate retransmission consent agreements to be essential for the preservation of a competitive MVPD market and for keeping video programming prices low. Exclusive retransmission consent agreements not only can result in limiting the distribution of a local station's signal to a single MVPD (rather than all of the providers that choose to carry that signal), but may even give that unfair advantage to an affiliate of the local broadcaster. In addition, elimination of the good faith requirement might further encourage troublesome current practices such as bundling of programming networks. Many local broadcast stations are now controlled by conglomerates with many other video programming properties. EchoStar's experience has been that retransmission consent negotiations provide such companies with the opportunity every three years to renegotiate video programming deals or to foist on MVPDs additional video programming that consumers do not want as a condition of retransmission consent for important local broadcast stations. While the good faith requirement has not been very effective in preventing such practices and may need to be strengthened, EchoStar believes that it does have an influence on the bargaining behavior of broadcasters and should, at a minimum, be preserved.
Also, Congress should resist the "symmetry" of imposing "reciprocal" requirements on distributors. Such restrictions make sense only when the negotiating party has market power that it can use as leverage in the negotiations. This is true of broadcast stations that elect retransmission consent versus must-carry, and it may also be true of the dominant MVPDs - cable systems. But it is not true of all MVPDs, and Congress should not impose such obligations across the board on all distributors. To do so would only give broadcasters a negotiating tool that would neutralize the discipline Congress intended to impose on broadcasters by making provision for a unilateral good faith obligation in 1999.
Local-into-local and Two-dish
EchoStar is a pioneer of local-into-local service. We knew that it was essential to provide such service if we were to compete effectively with cable. We lobbied Congress in the late 1990s for the rights to be able to retransmit such signals, and were pleased when Congress passed SHVIA to give satellite providers such rights. We then invested billions of dollars in satellite technology to launch local markets as quickly as possible. Today, EchoStar offers more local broadcasters' signals within their local communities than any other cable or satellite TV provider. DISH Network was the first satellite TV provider to offer local channels with a roll-out of 13 markets. In less than five years since passage of SHVIA, EchoStar's DISH Network has launched local-into-local service in 119 television markets, serving more than 86% of the country.
Early on, in order to make maximum use of scarce spectrum resources, we began providing local-into-local service in a number of markets using a 2-dish solution. Under this solution, subscribers who want local stations in certain markets are provided with a second dish completely free of charge so that they can receive all of their local stations. Once the second dish is installed, the fact that the local stations are being provided through two dishes instead of one is completely transparent to the consumer - all the local channels are listed contiguously on our electronic program guide. The use of the 2-dish solution has allowed us to deliver local-into-local into more markets, more quickly than would otherwise have been possible.
Notably, our two dish solution is no different conceptually from the requirement, in many locations, of multiple over-the-air antennas to receive all local stations. The multiple antennas are necessitated by the fact that all broadcasters in a market seldom use the same transmitter tower, or even locate their individual towers in the same area. Where transmitter towers are located in different areas, multiple reception antennas pointed in the direction of the different transmitters are necessary. Ironically, while broadcasters have decried EchoStar's two-dish solution, broadcasters appear to expect consumers to accept the need for multiple over-the-air antennas as a fact of life.
Nevertheless, the broadcasters are asking Congress to outlaw our company's specific plan for complying with must-carry and require its abolition within one year. The wiser course is to resist these misguided calls and let consumer preferences be the guiding criterion that will lead to optimal carriage of local broadcast stations. There are many good reasons for this.
First of all, it is important to recognize that a "same dish" requirement for all broadcast stations does not necessarily mean a "single dish" for all consumers. If our two dish plan were prohibited, compliance with the new rule would still require many two-dish markets, albeit with all broadcast stations on the same dish. In those two-dish markets, all subscribers that want even one network station will need a second dish. Furthermore, compliance with the rule will likely require some current single-dish markets to be converted to two-dish markets, as shown by DIRECTV's own attempt at remapping EchoStar's system.
Second, prohibiting our plan would cause massive disruption and possibly loss of local service for our subscribers in 15 to 30 markets. This is because moving a market A station from a wing slot to a "full-CONUS" spot beam that now provides some local stations from markets A, B and C will require the displacement of markets B and/or C from the spot beam. This in turn means that the subscribers whose stations are displaced will need a second (or different) dish. To illustrate, take our EchoStar 7-11 spot beam. That beam currently provides more fully effective competition to cable, and more choice for consumers, in Chicago, Indianapolis, St. Louis and Grand Rapids. It has the physical capacity to carry a total of 24 channels. Some have suggested that we should increase the compression ratio of our signals to squeeze more channels onto the spot beam. We have concluded, however, that increasing the compression ratio above current levels would degrade signal reception quality to a level we are unwilling to impose on our customers. We do not compress our signal to a greater extent on any of our satellites, whether spot beam or full CONUS.
Consequently, the entire capacity of that spot beam is consumed by four channels from Chicago, seven channels from Indianapolis, six channels from St. Louis and seven channels from Grand Rapids. In order to be able to serve all of these markets, five channels from Chicago, two channels from Indianapolis and two channels from St. Louis were placed on the wing satellite located at 61.5 degrees in compliance with existing law. If the law is now changed, the five wing channels from Chicago could be placed in the spot beam, but since the capacity of the spot beam is limited to 24 channels, in order to comply with a single dish edict this would necessitate that all of the channels from Indianapolis, St. Louis and Grand Rapids which are currently in the spot beam be relocated to the 61.5 degree location, or to a satellite located at some other orbital position in order to make all markets in this spot beam "same dish" markets.
Equally important, the number of subscribers that will need second or new dishes will overwhelm EchoStar's capacity to install them. The result? With a one-year time frame, many subscribers will lose their local service.
Third, there are many misconceptions circulating about our two dish solution. For example, the argument that no one is willing to install dishes to watch programming from two locations is just plain wrong. Almost two million of our customers have had dishes installed to view programming from our 61.5 or 148 degree locations. While the "look angle" from those locations has been cited as a problem by detractors, in fact with respect to most of our 61.5 degree two dish markets, the angle for a dish pointed at EchoStar III, located at our 61.5 degree orbital location, is better than the angle of a dish pointed at the spot beam satellites located at our 119 and 110 degree orbital locations, where the remaining local channels are carried. That is, a consumer is actually more likely to be able to view programming from the 61.5 degree wing location, than from the 119 degree "core" location. Simple math, and the help of a map, confirms the mid-point of 119 and 61.5 degrees longitude to be approximately 90 degrees, a longitudinal line running approximately through Madison, Wisconsin, to Springfield, Illinois and Memphis, Tennessee, to Jackson, Mississippi and New Orleans, Louisiana in the southern United States. From any location east of that line, the look angle to the 61.5 degree satellite is empirically better than is the look angle from a dish which must view programming from a satellite located at 119 degrees.
Another common misconception is that EchoStar charges more for channels located at wing slots, or charges for the dish required to view those channels. Again, this is simply not accurate. The second dish necessary to view those channels, together with professional installation of the second dish and the channels themselves, are in all cases offered absolutely free to the customer. While the cost to EchoStar to provide the second dish and installation is substantial, we absorb that cost, having concluded that it is more important to be able to offer the local channels in the greatest number of markets.
Detractors also have complained that EchoStar does not inform customers of the availability of the wing channels free of charge, and that we discriminate against the wing channels in channel guide location. These assertions are inaccurate. Channels at a wing location are located in our program guide in a fully integrated manner with the channels located at other locations. Channel numbering - regardless of location - is contiguous, with each local channel assigned the channel number it carries off air (with the exception of older EchoStar boxes where off air channel numbering is not possible for any local channels, but all local channels are in that event offered with contiguous numbering). Scrolling through the on screen channel guide, a consumer who has installed a second dish has no visibility to the existence of that second dish and can not in any way distinguish between channels being delivered from satellites located at different orbital positions.
Importantly, where a consumer decides not to take local channels from the wing satellite, the on screen guide boldly advertises the availability of the second dish and installation free of charge. Tuning to the wing channel produces the following bold message: "YOU MUST HAVE A SECOND DISH TO VIEW THIS CHANNEL. DISH NETWORK WILL PROVIDE THE DISH FREE OF CHARGE. CALL 1-800-333-DISH". Clearly, we give our customers notice and the choice of getting the wing slot stations for free, if they want them.
Fourth, it is important to recognize that we have reduced the number of two-dish markets to only 38 out of 119 markets currently being served with local stations. Overall, we now carry a total of 895 of local broadcast stations. Of those, only 106 are offered from one of our wing satellites. Economics has been the driving force for this reduction. Economically, it is in our best interest to offer a single-dish solution where possible simply because we offer the second dish and related hardware, and a professional installation, free to every consumer who wants a second dish. The cost to EchoStar is well over $100 for each second dish installed, a significant incentive to offer channels from a single dish wherever possible, and eliminating the need for governmental intervention. In fact, over the last year we have already transitioned eight two dish markets to a single dish solution (Charlotte, Cincinnati, Ft. Myers, Grand Rapids, Kansas City, Lexington, Miami and Raleigh), and based on the focus on this issue provided in recent weeks, we are pleased to advise that effective this week we have also been able to transition Albuquerque, Phoenix, San Antonio and Tucson from two dish, to one dish solutions. We are also moving a total of 27 channels from wing satellites to spot beams over the next week. As stated, this reduces our two dish markets from 42 to 38 and reduces the number of wing satellite channels from 133 to 106.
In fact, I am prepared to commit to you today that, barring changes in channel configurations in local markets, we do not intend to add any more 2-dish markets beyond the 38 that currently exist. We will continue to migrate existing 2-dish markets to single dish as we are able to find or create additional spectrum capacity to do so. We hope to be able to complete that process entirely within four years. But if we are required to complete the transition on an artificially compressed time schedule (such as the one-year time frame being mentioned), the result will be a lose-lose for consumers and competition. That deadline is both unrealistic and, in any case, unnecessary because EchoStar plans on migrating all of its subscribers to a same-dish solution for local-into-local service within four years anyway. Legislation is simply not necessary to address this transitory issue.
In conclusion, in reauthorizing SHVIA, I urge you to lessen the gap that still separates DBS providers from cable operators, create greater parity between the two competing modes, and resist the creation of obstacles that would further hamper our efforts to compete.