Pennsylvania Broadband Investment Incentive Program Overview

Pennsylvania Office of Broadband Initiatives

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PBIIP Webinar Housekeeping

• All participants will be in listen only mode

• If you have a question

• Send the question through the chat window in GotoMeeting to the moderator

• We will address questions at the end of the webinar

• We will do the best we can to answer the questions we receive during the webinar, otherwise we will provide a response as soon as we can

• Send the question to info.pabroadband@pa.gov.

• These questions will be responded to after the webinar

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Introductions

• Pennsylvania Office of Broadband Initiatives - Mark Smith, Executive Director

• Pennsylvania Department of Transportation - Jason Sharp, Chief Counsel; Leo Bagley, Executive Deputy Secretary

• CostQuest Associates - Jim Stegeman, President; Mark Guttman, Vice President

• Tilson Technology Management - Chris Campbell, Principal Consultant

• DLA Piper – John Beahn, Partner; Ian Forbes, Associate

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Pennsylvania Broadband Investment Incentive Program (PBIIP)

• Governor's Goals

- Ensuring every Pennsylvanian has access to high-speed internet

- Broadband investments in underserved and unserved areas throughout Pennsylvania

• Pennsylvania Broadband Investment Incentive Program (PBIIP) Program

- Commonwealth funding program offered in connection with FCC’s Connect America Fund (CAF) II Auction

- Program should help bidders proposing to serve areas in Pennsylvania to bid more competitively in the CAF Auction

• Future Efforts

- The PBIIP will work to obtain the federal, state and private funding necessary to deploy broadband services to every Pennsylvanian

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Review of the FCC CAFII Auction

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Design and Bidding Process

Reverse Auction

• Multiple round, descending clock auction

• Two stages: geographic independent stage until budget sufficiency, followed by head-to-head bidding

Weighting of the Tiers

• FCC adopted “weights” for various speed and latency combinations to account for consumer preference for high-speed, low-latency service

• Support reduced by tier weights:• Support ≈ (B/R – W)/100 * R

• B = Bid Amount

• R = Reserve Price

• W = Weights for Speed + Latency

TIER SPEED MONTHLY CAPACITY

WEIGHT

Gigabit1 Gbps/500

Mbps> 2 TB 0

Above-Baseline

100 Mbps/20 Mbps

> 2 TB 15

Baseline 25 Mbps/3 MbpsHigher of 150 GB

or U.S. median45

Minimum 10 Mbps/1 Mbps 150 GB 65

Latency

For each tier, providers must commit to either low latency (≤ 100 ms) or high latency (≤ 750 ms and a Mean

Opinion Score (“MOS”) of ≧ 4)

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Timeframe

• The FCC has released its schedule for the CAF II Auction, which includes a number of upcoming deadlines

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Pennsylvania Opportunities in the CAF II Auction

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Pennsylvania Opportunities in the CAF II Auction

County FCC Locations

FCC CAFII Reserve

10 Year County FCC Locations

FCC CAFII Reserve

10 Year

Adams 41 186,870 Juniata 116 674,500

Allegheny 371 1,378,020 Lackawanna 772 2,695,700

Armstrong 102 684,890 Lancaster 103 247,580

Beaver 437 1,378,980 Lawrence 334 1,213,060

Bedford 329 2,708,460 Lebanon 344 1,403,170

Berks 660 1,610,500 Lehigh 75 298,870

Blair 437 2,165,400 Luzerne 475 1,988,830

Bradford 2,206 10,764,230 Lycoming 3,086 14,172,130

Bucks 221 1,072,480 McKean 2,145 12,057,600

Butler 520 1,546,980 Mercer 1,464 3,801,720

Cambria 1,611 5,248,730 Mifflin 970 2,624,280

Cameron 258 1,394,420 Monroe 135 682,010

Carbon 405 1,099,100 Montgomery 124 623,230

Centre 2,830 14,108,940 Montour 667 1,838,750

Chester 249 541,620 Northampton 10 10,020

Clarion 674 2,275,050 Northumberland 1,150 5,062,910

Clearfield 4,202 26,241,430 Perry 127 196,490

Clinton 1,947 16,128,720 Philadelphia 191 514,470

Columbia 1,554 5,837,340 Pike 660 3,329,710

Crawford 3,521 8,907,530 Potter 4,164 25,821,930

Cumberland 96 479,980 Schuylkill 1,105 3,902,590

Dauphin 197 938,870 Snyder 2,611 8,122,750

Delaware 164 577,500 Somerset 5,511 24,437,620

Elk 260 2,297,990 Sullivan 516 2,488,030

Erie 3,572 7,485,000 Susquehanna 1,452 6,344,240

Fayette 1,845 6,962,250 Tioga 2,724 16,488,430

Forest 1,901 7,449,680 Union 123 1,406,660

Franklin 18 286,850 Venango 2,145 9,511,740

Fulton 75 484,560 Warren 4,726 18,616,610

Greene 175 1,820,390 Washington 2,055 9,706,970

Huntingdon 1,738 10,202,550 Wayne 2,184 7,104,260

Indiana 4,943 18,685,180 Westmoreland 1,047 4,281,900

Jefferson 1,079 5,089,280 Wyoming 398 2,319,650

York 2,204 4,881,590

Grand Total 84,551 366,909,770 9

PBIIP Objectives

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PBIIP Objectives

• Commonwealth funding should enable CAF II Auction bidders proposing to serve areas in Pennsylvania to bid more competitively in the FCC’s Auction

• Program funding only will be provided to bidders that are awarded support in the FCC CAF II Auction

• Program focusing support on projects providing at least 100/20 Mbps broadband with future capabilities of 1 Gbps

• PBIIP funding only available to bidders providing service to FCC CAFII applicable program areas

• PBIIP bidders must commit to building out the awarded areas by mid-2022

• PBIIP bidders must provide a benefit to PennDOT

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FCC Anti-CollusionCommonwealth Non-Disclosure

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FCC Anti-Collusion/Commonwealth Non-Disclosure

• The Program will comply with the FCC’s CAF II Auction anti-collusion requirements

• The PBIIP team has established a secured data portal for applicants to submit the confidential business and operational information outlined in the Program Guidelines

• The Program intends to hold information submitted by applicants as confidential information and will not disclose one applicant’s submitted information to another applicant or another potential bidder in the CAF II Auction

• The Program is implementing robust and specific procedures to safeguard all information submitted by potential bidders

• Qualification and Commonwealth support information will be provided to applicants on an individualized basis and not made available to other applicants or bidders in the CAF II Auction

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PBIIP Overview

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PBIIP Overview

• Eligibility

• Commonwealth Incentive

• Minimum Commonwealth Support

• Incentive Amount

• Commonwealth Support

• Transportation Benefits

• Application Process

• Post Award Support/Project Reimbursement

• Calendar

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Eligibility

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Eligibility

• To become Eligible for the PBIIP

• Compliance with CAF Auction Requirements• Applicants must be designated as a qualified by the FCC

• Speed and Performance Requirements• The Commonwealth will only support projects that are submitted to the FCC as Above Baseline or Gigabit Performance

Tiers, and at low latency

• Completion Date• Applicants must agree to achieve substantial completion of their projects no later than June 30, 2022

• Technical Capability, Financial Capacity, and Operational History • Applicants must have the technical, financial and operational capability to deliver broadband in the proposed CBGs

• Support for Transportation Benefits• Applicants Transportation Benefit must be accepted

• Qualified applicants will receive notice via the primary contact that they provided as part of their Qualifications at the same time as it provides information about Incentive Amounts, targeted for July 10, 2018

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Commonwealth Incentive

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Commonwealth Incentive High-Level Summary

• PBIIP has set a Minimum Commonwealth Support for every CAF II Census Block Group (CBG) offered to qualified applicants who bid and win in the CAF II Auction

• Applicants submit Incentive Requests to PBIIP for the Total Support that they need to serve Pennsylvania CBGs offered in the auction (from CAF and the Commonwealth combined)

• After receiving Incentive Requests, PBIIP sets Incentive Amounts for CBGs contained in Incentive Requests—the maximum amount of Commonwealth Support that it is prepared to pay

• Incentive Amounts may or may not be more than the Minimum Commonwealth Support

• Knowing the Incentive Amounts available to them, qualified applicants bid in the CAF II Auction as they see fit

• Winning qualified applicants receive a final Commonwealth Support award based in part on the CAF Support that they’ve won in the Auction.

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Minimum Commonwealth Support

• 10% of the 10-year FCC Reserve for a CBG, but

• Not less than $50 per location in the eligible blocks, and

• Not more than $730 per location in the eligible blocks

• Values have been determined and set by the PBIIP team for each CBG

• File is available for download onhttps://www.governor.pa.gov/broadband/

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Commonwealth Minimum Support

County FCC Locations

FCC CAFII Reserve

10 Year

Minimum

Commonwealth

Support County FCC Locations

FCC CAFII Reserve

10 Year

Minimum

Commonwealth

Support

Adams 41 186,870 13,533 Juniata 116 674,500 59,053

Allegheny 371 1,378,020 115,059 Lackawanna 772 2,695,700 245,467

Armstrong 102 684,890 53,676 Lancaster 103 247,580 23,361

Beaver 437 1,378,980 133,183 Lawrence 334 1,213,060 117,314

Bedford 329 2,708,460 203,275 Lebanon 344 1,403,170 136,674

Berks 660 1,610,500 158,870 Lehigh 75 298,870 29,252

Blair 437 2,165,400 205,591 Luzerne 475 1,988,830 175,857

Bradford 2,206 10,764,230 1,065,156 Lycoming 3,086 14,172,130 1,398,990

Bucks 221 1,072,480 91,006 McKean 2,145 12,057,600 1,181,969

Butler 520 1,546,980 152,182 Mercer 1,464 3,801,720 377,731

Cambria 1,611 5,248,730 515,285 Mifflin 970 2,624,280 249,127

Cameron 258 1,394,420 133,303 Monroe 135 682,010 49,354

Carbon 405 1,099,100 88,924 Montgomery 124 623,230 51,503

Centre 2,830 14,108,940 1,282,831 Montour 667 1,838,750 184,108

Chester 249 541,620 49,684 Northampton 10 10,020 1,002

Clarion 674 2,275,050 205,433 Northumberland 1,150 5,062,910 500,284

Clearfield 4,202 26,241,430 2,352,349 Perry 127 196,490 13,510

Clinton 1,947 16,128,720 1,364,564 Philadelphia 191 514,470 48,581

Columbia 1,554 5,837,340 580,588 Pike 660 3,329,710 294,064

Crawford 3,521 8,907,530 885,637 Potter 4,164 25,821,930 2,570,369

Cumberland 96 479,980 37,967 Schuylkill 1,105 3,902,590 376,526

Dauphin 197 938,870 79,334 Snyder 2,611 8,122,750 811,335

Delaware 164 577,500 52,480 Somerset 5,511 24,437,620 2,436,582

Elk 260 2,297,990 173,213 Sullivan 516 2,488,030 233,455

Erie 3,572 7,485,000 737,828 Susquehanna 1,452 6,344,240 623,960

Fayette 1,845 6,962,250 685,995 Tioga 2,724 16,488,430 1,597,508

Forest 1,901 7,449,680 744,968 Union 123 1,406,660 80,509

Franklin 18 286,850 12,315 Venango 2,145 9,511,740 931,312

Fulton 75 484,560 27,711 Warren 4,726 18,616,610 1,856,059

Greene 175 1,820,390 110,757 Washington 2,055 9,706,970 924,419

Huntingdon 1,738 10,202,550 973,933 Wayne 2,184 7,104,260 703,391

Indiana 4,943 18,685,180 1,846,228 Westmoreland 1,047 4,281,900 385,913

Jefferson 1,079 5,089,280 491,270 Wyoming 398 2,319,650 216,773

York 2,204 4,881,590 486,197

Grand Total 84,551 366,909,770 34,995,637 21

Establishing Incentive Amounts

The Incentive Amount is the maximum available Pennsylvania support in a CBG. The Program will establish Incentive Amounts this way.

1. The Program will gather Incentive Requests

• Where do applicants say they need support?

• How much support do they say that they need?

• The PBIIP team will screen for the reasonability of these requests

2. Minimum Commonwealth Support dollars for CBGs not requiring PBIIP support will be released for use in developing the Incentive Amounts for the auction

• NOTE: Should all CBGs be assigned an Incentive Amount, the Minimum Commonwealth Support value will become the Incentive Amount, as there will be no released funds to target additional support

3. The PBIIP team will target the released funds to those CBGs that they believe:

• Maximize the number of unserved locations served as a result of winning bids in the CAF II auction

• Efficiently target Commonwealth funding to provide broadband service to unserved locations in Pennsylvania

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Determination of Commonwealth Support

Determination of Commonwealth Support

• Commonwealth Support will only be made available to Qualified Applicants who win CBGs in the CAF II Auction for which they have submitted an Incentive Request and for which the Program has established an Incentive Amount

• The Program will calculate the Commonwealth Support awarded to a winning bidder in a CBG based on:

• The FCC Awarded CAF II Funds

• The bidder’s Total Support value

• The Incentive Amount for that particular CBG

• The Commonwealth Support awarded to a bidder

• Will equal the Incentive Amount if the bidder’s Total Support amount less the FCC Awarded CAF II Funds in a CBG are equal to or greater than the Incentive amount

• Will be lower than the Incentive Amount if the bidder’s Total Support amount less the FCC Awarded CAF II Funds in a CBG are less than the Incentive Amount

• In no event, however, will the Commonwealth Support awarded to a winning bidder in a CBG be less than the Minimum Commonwealth Support for that CBG

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Determination of Commonwealth Support: Example

Auction Result #1

• Applicant “A” wins with CAF Award = $750

• Initial Commonwealth Support = Total Support – CAF Award

• = $900 – $750 = $150

• Final Commonwealth Support cannot be less than Min or more than Max

• Final Commonwealth Support = $150 (Same as Initial)

Before the Auction

Program identifies the following for CBG “001”:

• FCC reserve = $1000

• Minimum Commonwealth Support (“Min”) = $100

Applicant “A” makes Incentive Request for CBG “001”:

• Total Support = $900

Program sets Incentive Amount for CBG “001”:

• Incentive Amount (“Max”) = $200

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Determination of Commonwealth Support: Example

Auction Result #2

• Applicant “A” wins with CAF Award = $900

• Initial Commonwealth Support = Total Support – CAF Award

• = $900 – $900 = $0

• Final Commonwealth Support cannot be less than Min or more than Max

• Final Commonwealth Support = $100 (Based on Min.)

Before the Auction

Program identifies the following for CBG “001”:

• FCC reserve = $1000

• Minimum Commonwealth Support (“Min”) = $100

Applicant “A” makes Incentive Request for CBG “001”:

• Total Support = $900

Program sets Incentive Amount for CBG “001”:

• Incentive Amount (“Max”) = $200

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Determination of Commonwealth Support: Example

Auction Result #3

• Applicant “A” wins with CAF Award = $500

• Initial Commonwealth Support = Total Support – CAF Award

• = $900 – $500 = $400

• Final Commonwealth Support cannot be less than Min or more than Max

• Final Commonwealth Support = $200 (Based on Max)

Before the Auction

Program identifies the following for CBG “001”:

• FCC reserve = $1000

• Minimum Commonwealth Support (“Min”) = $100

Applicant “A” makes Incentive Request for CBG “001”:

• Total Support = $900

Program sets Incentive Amount for CBG “001”:

• Incentive Amount (“Max”) = $200

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Determination of Commonwealth Support: Example Incorporating Performance Tier Weights

Auction Result #4

• If Applicant “A” wins CAF Auction at awarded Price Point (PP) 80 for CBG “001”:

• In Case 1, CAF Award = $800 (due to 0 weight)

• PP 80 - Weight 0 = 80% of reserve

• In Case 2, CAF Award = $650 (due to 15 weight)

• PP 80 - Weight 15 = 65% of reserve

• Total Support is greater in Case 1, even though Commonwealth Support is less

• In Case 1, Final Commonwealth Support = $100

• $900 Total Support - $800 CAF Support = $100

• In Case 2, Final Commonwealth Support = $150 (based on Total Support – CAF Award)

• $800 Total Support - $650 CAF Support = $150

Before the Auction

Program identifies the following for CBG “001”:

• FCC reserve = $1000

• Minimum Commonwealth Support (“Min”) = $100

Case 1—Applicant “A” makes Incentive Request for CBG “001” as Gigabit Performance Tier, Low Latency:

• Requests Total Support = $900

• Has CAF Auction Weight = 0

Case 2—Applicant “A” makes Incentive Request for CBG “001”as Above Baseline Performance Tier, Low Latency:

• Requests Total Support = $800

• Has CAF Auction Weight = 15

Program sets Incentive Amount for CBG “001”:

• Incentive Amount (“Max”) = $200

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Transportation Benefits

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Overview

• All applicants must propose transportation benefit, a required exchange of services for financial incentive

• Defined Transportation Benefit Categories

• PennDOT offices at 10/50/100/1000 Mbps OR

• Connected Devices at ≥ 1.544 Mbps

• Applicants can also propose alternatives provided they are scalable

• Transportation benefits need not only be provided within CBGs where support is sought

PennDOT Offices Connected Devices Other

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Connected Devices

• May be services to existing deployed devices

• May be service to new devices along PennDOT Priority Routes

• May be services to devices in funded blocks

• Not preferred but possible if applicant’s only option

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Information Required

General Information forAll Transportation Benefit Proposals

• Identify / describe services offered

• Value of the services offered or a method of determining value

• Minimum level of service and schedules for obtaining that level

• Proposed method of measuring performance

• May propose incentive and penalty strategies

Specific Information forDefined Transportation Benefit Proposals

• Benefit described in terms of number of premises/devices connected per $10,000 support

• Timeframe or duration of benefit that can be provided

• Where applicant can provide benefits:

• Offices• Route segments

• Does ability to provide certain locations depend on award of certain CBGs?

• Major terms of SLA offered

• Must be business-class

• Type of service offered

• Data Transport service to PennDOT Network-to-Network Interface (NNI) (e.g. Ethernet) and/or

• Internet

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Map Files and PennDOT Data

• The following information is available to qualified applicants:

• Shapefiles and address lists of PennDOT offices and future requirements

• Shapefiles and address lists of connected device locations

• PennDOT priority routes

• Email info.pabroadband@pa.gov to request the documents you need

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Proposal Acceptance Process

• PA Broadband Program will determine what constitutes adequate levels of benefits based on

• Level of transportation benefit proposed vs. Commonwealth Support requested

• Level of transportation benefits generally proposed across all applications

• Proposals for transportation benefits rejected as inadequate may have an opportunity to revise the proposal

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Application Process

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Application Process

• Expression of Interest (Encouraged)

• Preliminary Expressions of Interest will be accepted on a rolling basis starting April 2, 2018 through May 4, 2018• Instructions on how to submit a Preliminary Expression of Interest letter will be posted to the Program website

• Key Elements: Counties, Transportation Benefits

• Qualifications – Requirements (Mandatory)

• Qualifications shall be filed via a portal maintained by the Commonwealth of Pennsylvania Department of Community and Economic Development• The portal will open on May 4, 2018 and close at 4:00 pm on June 1, 2018

• Key Elements: Reliant on the submission of the FCC Short Form and FCC Qualification, Transportation Benefits

• Incentive Requests (Mandatory)

• The Program intends to release the Incentive Application Incentive Request Forms on or about May 4, 2018• Incentive Request Form will be a standard Microsoft Excel Workbook

• The Program will use the information submitted in the applicant's Incentive Request to determine in which CBGs the applicant may receive an incentive under the Program

• Applicants filing Qualifications will receive instructions on where and how to upload Incentive Request Forms• Incentive Requests must be received no later than 4:00 pm, Eastern Daylight Time on June 18, 2018.

• Key Elements: Total Support by CBG, Transportation Benefits

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Post Award Support/Project Reimbursement

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Post Award Support/Project Reimbursement

• Eligible Expenses

• The Program will only support projects that were not part of an applicant’s capital expenditure plans prior to their filing of the FCC’s Short Form application, and would not be undertaken in the absence of the FCC CAF II and Program funds

• The Guidelines provide detail on what capital expenses will be reimbursed

• Disbursement

• Recipients of Commonwealth Support may receive the support when they incur Eligible Expenses, and subsequently submit those expenses to the Program for reimbursement

• The Program will reimburse 80% of incurred Eligible Expenses, but not more than the Commonwealth Support

• The Program will retain the final 10% of total amount of Commonwealth Support awarded to any recipient

• The Program will only disburse that final 10% of Commonwealth Support when the recipient has achieved Substantial Completion of their projects across all Pennsylvania CBGs won

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Calendar

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Calendar

April 2, 2018: Applicants may begin to file Preliminary Expressions of Interest

May 4, 2018: Last date to file Preliminary Expressions of Interest. Applicants may begin to file

Qualifications and Incentive Requests

June 1, 2018: Last day to file Qualifications

June 18, 2018: Last date to file Incentive Requests

July 10, 2018: Commonwealth informs Qualified Applicants of Incentive Amounts

July 24, 2018: FCC CAF II Auction begins

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Questions?

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For More Information

• Please submit questions in writing

• Send to: info.pabroadband@pa.gov

• Use subject: PA CAF II Incentive Questions

• Final day for questions: June 18, 2018

• Please visit https://www.governor.pa.gov/broadband/ for more information as it becomes available

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