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The Canadian Wireless Market and the Big 3: It’s Always Been a Matter of Trust

Michael Geist - Mon, 10/06/2014 - 06:13

Appeared in the Toronto Star on October 3, 2014 as Wireless Industry’s Tired ‘Trust Us’ Argument

Fresh off the contentious hearing on the future of television regulation, the Canadian Radio-television and Telecommunications Commission jumped back into the fire last week with a hearing on the wireless market that focused on whether changes are needed to the wholesale market to improve competition.

The Big 3 – Bell, Telus, and Rogers – unsurprisingly oppose new measures, arguing that the Commission should reject the Competition Bureau’s independent finding that there are competition concerns along with the smaller players and consumer groups that support new regulations. Instead, they argue that Canadians can trust that the market is already competitive and that reforms would reduce investment and harm the quality of the networks.

If that message evokes a sense of déjà vu, perhaps that is because it is seemingly always a matter of trust when it comes to Canadian wireless services.

Trust us, said the Canadian Wireless Telecommunications Commission in 2000, when concerns were raised about marketplace competition. “The Canadian wireless market has been competitive from the outset,” assured the industry association.

Trust us, said Rogers Wireless Communications in 2004 as it made the case for merging with Microcell and reducing the number of major wireless competitors from four to three. The merger would leave Canada with only one GSM provider, but it will not substantially lessen or prevent competition, the company claimed.

Trust us, said the wireless carriers in 2006 as the then-new Conservative government acquiesced to telecom lobbying by introducing a new policy direction for the CRTC to rely on market forces to the maximum extent feasible. The directive has been invoked each time the CRTC considers new regulatory measures.

Trust us, said the wireless carriers in 2007 when the government began considering a spectrum set-aside to allow for new entrants into the marketplace. Telus maintained that there is no need for a set-aside in “vigorously competitive” market, while Rogers characterized the new entrants as “all-time corporate welfare bums.”

Trust us, said the wireless providers in 2008 when the government considered rules such as tower sharing and domestic roaming agreements alongside the new entrant spectrum set-aside. The companies argued that there was no need for the policy measures, which it said were contrary to reliance on market forces. In 2014, the CRTC concluded that Rogers had for years included unfair clauses in their domestic roaming agreements.

Trust us, said Bell in 2010 when it argued against relaxing foreign investment restrictions in the telecommunications market. The company claimed that there was no problem accessing foreign capital and no need for reforms based on “ill-defined problems.”

Trust us, said the wireless carriers, when concerns about unfair marketing were raised. In 2010, the CRTC settled a major do-not-call case against Bell, with the company agreeing to pay $1.3 million over unauthorized telemarketing calls from independent providers selling Bell services.

Trust us, said the CWTA as provinces began in 2011 to introduce enforceable consumer protection codes for wireless services. A non-binding code of conduct is sufficient, it argued. By 2013, the CRTC had created a national wireless code in response to consumer frustration with lengthy contracts and locked phones.

Trust us, said the wireless carriers, when eyebrows were raised over advertising claims. In 2010, the Competition Bureau brought an action against Rogers over its advertising which led to a federal court ruling that ordered the company to pay $500,000 in penalties over the failure to perform adequate testing to substantiate its claims. Meanwhile, Bell paid a $10 million penalty to the Competition Bureau for misleading advertising in 2011.

Trust us, said the wireless companies when privacy advocates raised fears about the collection and use of customer information. In 2013, the Privacy Commissioner of Canada experienced a major increase in complaints, largely attributed to Bell’s customer monitoring and profiling habits.

For years, the Big 3 have used the same message to consistently oppose new measures aimed at fostering greater competition. With Canadian wireless prices still among the highest in the G7, Canadian consumers hope they can trust the government and CRTC to take action.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post The Canadian Wireless Market and the Big 3: It’s Always Been a Matter of Trust appeared first on Michael Geist.

Government Goes for the “Head in the Sand” Approach on Voluntary Warrantless Disclosures

Michael Geist - Thu, 10/02/2014 - 08:58

In the aftermath of the Supreme Court of Canada’s Spencer decision, I argued that the decision upholding the reasonable expectation of privacy in subscriber information contradicted the government’s claims supporting Bills C-13 and S-4, leaving the government’s lawful access strategy in tatters. I noted that it faced a choice:

The Canadian government could adopt the “bury our heads in the sand approach” by leaving the provision unchanged, knowing that it will be unused or subject to challenge. That would run counter to the spirit of the Supreme Court ruling, however, and do nothing to assist law enforcement.

Yesterday, the government did just that, as Bill C-13 passed another legislative hurdle with the reported committee version of the bill was approved by the House. During the debate, the government insisted that the legislation is consistent with the Spencer decision. While it is true that the voluntary warrantless disclosure provision does not directly contradict the Spencer decision, the reality is that it has been rendered largely moot. In other words, the government is touting a legislative solution to assist law enforcement that the police will not use and that telecom companies will ignore.

The government has been trying for years to make it easier for law enforcement to obtain subscriber data and has been foiled at pretty much every turn. Early versions of lawful access bills included a wide range of subscriber information data that would have been required to be disclosed without a warrant.  Later bills dropped some of the data points and following the Vic Toews’ debacle, eliminated mandatory warrantless disclosure altogether.

Bill C-13 shifted to voluntary warrantless disclosure by granting legal immunity for such disclosures, but the Spencer decision eliminates the utility of voluntary disclosure in most circumstances. Indeed, most major telecom providers now say they require a warrant and the Department of Defence has indicated that it has changed its policy on subscriber requests in light of the Spencer decision since it will now seek judicial authorization for all requests.

The government seemed to admit the very limited scope of the provision during an earlier House of Commons debate, when Conservative MP Bob Dechert stated:

In R. v. Spencer, the court expanded the privacy protections afforded to information related to an Internet protocol, or IP, address in certain circumstances, thereby taking this information out of the realm of information that can be provided voluntarily. However, the court did not suggest that voluntary disclosures were now impermissible. Rather, it held that voluntary assistance could still be provided in exigent circumstances, or pursuant to a reasonable law, or where there is no reasonable expectation of privacy. This clearly leaves scope for permissible voluntary assistance and provision of information without judicial pre-authorization. Since the R. v. Spencer decision still allows for voluntary assistance to police in those circumstances, the clarification and the protection from immunity contained an existing subsection 487.014(2) and proposed subsection 487.0195(2) are still needed.

In other words, the government now justifies a blanket immunity on the basis of voluntary disclosures in emergency circumstances. Since no one disputes that there can disclosures in emergency circumstances, immunity from liability is largely irrelevant.

The government should amend the bill to reflect the narrow scope and acknowledge the impact of Spencer on the law. Its preference for the “bury its head in the sand” approach leaves it looking out-of-touch with respect to privacy law, while fighting for a provision that does not assist law enforcement.

The post Government Goes for the “Head in the Sand” Approach on Voluntary Warrantless Disclosures appeared first on Michael Geist.

Ontario Government Soft Pedals Netflix & Google Regulation, But Record Speaks For Itself

Michael Geist - Tue, 09/09/2014 - 06:30

As CRTC Chair Jean-Pierre Blais anticipated, the Government of Ontario’s call for regulation of online video services attracted considerable attention, including comments from Canadian Heritage Minister Shelly Glover roundly dismissing the possibility. Glover stated:

“We will not allow any moves to impose new regulations and taxes on internet video that would create a Netflix and Youtube Tax.”

Last night, I received an email from a spokesperson for Ontario Minister of Tourism, Culture and Sport Michael Coteau that tried to soften the call for online video regulation. The spokesperson stated:

“The presentation today provided important elements for CRTC consideration as it undertakes its review. The government is not advocating for any CanCon changes, or that any specific regulations be imposed on new media TV, until more evidence is available.”

I asked for clarification on what “more evidence” means. The spokesperson responded that there will be over 100 presentations at the CRTC hearing and that all need to be heard from before moving forward.

Yet a review of the Ontario government submission to the CRTC and its prepared remarks yesterday make it clear that the government strongly supported immediate regulatory reforms and that the need for “evidence” is actually a reference to revenue thresholds that would trigger mandatory payments by foreign online video providers.

The Ontario government submission to the CRTC provides a detailed vision of regulating online video providers. It recommends that the CRTC immediately put in place “thresholds and performance measures” that would “permit the future imposition of new media TV system Cancon financial obligations.” It envisions thresholds based on the number of subscribers or subscription revenues with the goal of imposing financial obligations once a certain number is achieved.

The same submission explains why the government believes that only foreign online video providers should face these obligations (it would exempt domestic providers), noting:

Regulating foreign OTT providers with respect to Cancon would result in more symmetrical regulation, and in a significantly greater contribution to the Canadian broadcasting system with respect to Cancon (spending and broadcasting). Not expanding regulatory supports for foreign OTT providers could thwart continued growth and development of Canadian new media industries, thereby impeding achievement of broadcasting policy objectives, especially production of original/first-run made-for-new media and TV programming.

Those do not appear to be the words of a government waiting to hear from other witnesses. In fact, yesterday’s prepared remarks included the following:

“The ministry recommends that the CRTC put thresholds in place now that would permit future Cancon financial obligations for foreign over-the-top providers, as soon as the evidence warrants.”

When combined with the government’s full submission, it becomes clear that the “evidence” is a reference to foreign online providers hitting the thresholds, not the comments of other presenters.  Moreover, the call for creating thresholds now would itself involve the creation of new regulations.

The post Ontario Government Soft Pedals Netflix & Google Regulation, But Record Speaks For Itself appeared first on Michael Geist.

Ontario Government Asks the CRTC To Impose New Regulations and Fees on Internet Giants Such as Netflix and Google

Michael Geist - Mon, 09/08/2014 - 11:26

This afternoon, the Ontario government appeared before the CRTC as part of its future of television hearing. The Ontario government issued a clear call for new regulation of so-called new media companies such as Netflix and Google. The government states:

In order to create a more level playing field, the ministry recommends decreasing this regulatory imbalance. The ministry believes the best way to accomplish this is to expand the regulation of new media TV, rather than by lightening the current regulation of traditional TV.

What does the expansion of regulation involve?

For the Ontario government, it includes regulating foreign online video services. The Ontario government wants the CRTC to impose Canadian content obligations on the foreign providers, though interestingly it recommends exempting Canadian online video providers. The recommended regulations would include reporting requirements on all revenues and financial contributions to Cancon production once the services reach a certain size.

In fact, the Ontario government says that if foreign operators do not face new regulations, the CRTC should consider “non-regulatory incentives” for financial contributions (it cites elimination of data caps for some online video providers as an example, though acknowledges that such an approach may violate net neutrality rules).

The post Ontario Government Asks the CRTC To Impose New Regulations and Fees on Internet Giants Such as Netflix and Google appeared first on Michael Geist.

The CRTC’s Future of TV Hearing: “There is No Such Thing as Too Much Choice”

Michael Geist - Mon, 09/08/2014 - 05:56

Rogers Communications unveiled its plan for streaming more than 1,000 National Hockey League games on the Internet last week. Having invested billions of dollars to obtain the Canadian broadcast and Internet rights to NHL hockey, the cable giant pointed to the future of broadcast by embracing consumer demand for making games available online.

As part of the launch, Rogers Media president Keith Pelley responded to questions about the approach by stating “there’s no such thing as too much choice. Let the consumer decide what they want to watch.” Pelley was speaking about hockey streaming, but my weekly technology law column (Toronto Star version, homepage version) notes his comments should resonate loudly this week in a broader context as the Canadian Radio-television and Telecommunications Commission opens its much-anticipated public hearing on the future of television in Canada.

The CRTC hearing has already generated thousands of advance comments from major stakeholders and individual Canadians. It has also unleashed considerable angst from established broadcasters, broadcast distributors, and content creators, who fear that the broadcast regulator will overhaul the current system by implementing changes such as mandatory pick-and-pay channel selection for consumers and reforms to longstanding policies such as simultaneous substitution (which allows Canadian broadcasters to substitute Canadian commercials into U.S. licensed programming).

In fact, the CRTC has left little doubt that change is on the way. In a working document released late last month, it narrowed the likely outcomes to include requiring a mandatory basic cable service at a fixed cost (as low as $20 per month), a mandated pick-and-pay system that would allow consumers to select individual channels rather than being bound by unwanted packages, and the gradual elimination of simultaneous substitution.

While these changes are likely to spur a barrage of horror stories and dire warnings throughout the hearing – broadcasters will claim that the pick-and-pay will effectively kill some unpopular channels and broadcast distributors will warn that increased choice will lead to higher prices – the Rogers hockey streaming announcement signals most of what Canadians really need to know.

First, the CRTC is not forecasting the future of television as much as it is catching up to today’s reality. A broadcast regulatory system premised on limited consumer choice and scarce airwaves has given way to virtually unlimited options and an abundance of delivery mechanisms. With Rogers able to offer nearly the entire NHL season on the Internet, the conventional broadcast system already faces enormous competitive challenges. If the established system does not offer consumers sufficient flexibility and choice, they will go elsewhere.

Second, the Rogers announcement reinforces the importance of existing regulations designed to foster competition online.  The company noted that its package would be available to all Canadians, regardless of which cable or wireless provider they use. The broad availability of the service can be attributed both to the economic benefits of selling to a bigger market and to regulatory rules that restrict vertically integrated companies from granting themselves undue preferences.

Moreover, Rogers acknowledged that data used by its wireless customers to stream hockey games would count against their monthly cap. That approach reflects the need to conform to Canada’s net neutrality rules that are designed to maintain a level playing field and represents an about-face from an earlier television streaming service.

Third, as Pelley noted, there is no such thing as too much consumer choice when it comes to the options to watch programs when, where, and on what device Canadians want. The Canadian broadcast regulatory system has long benefited channels with limited viewership and broadcast distributors who forced consumers to purchase unpopular channels as part of expensive packages.

The CRTC hearing is ultimately about shifting away from that model by providing consumers with more choice. That change should force broadcasters to improve their products and broadcast distributors to offer competitively priced services. As the Rogers approach to streaming hockey demonstrates, if they fail to do so, consumers now have other options.

The post The CRTC’s Future of TV Hearing: “There is No Such Thing as Too Much Choice” appeared first on Michael Geist.

“There is No Such Thing as Too Much Choice”

Michael Geist - Mon, 09/08/2014 - 05:49

Appeared in the Toronto Star on September 6, 2014 as The Takeaway for the CRTC’s Future of TV Hearing

Rogers Communications unveiled its plan for streaming more than 1,000 National Hockey League games on the Internet last week. Having invested billions of dollars to obtain the Canadian broadcast and Internet rights to NHL hockey, the cable giant pointed to the future of broadcast by embracing consumer demand for making games available online.

As part of the launch, Rogers Media president Keith Pelley responded to questions about the approach by stating “there’s no such thing as too much choice. Let the consumer decide what they want to watch.” Pelley was speaking about hockey streaming, but his comments should resonate loudly this week in a broader context as the Canadian Radio-television and Telecommunications Commission opens its much-anticipated public hearing on the future of television in Canada.

The CRTC hearing has already generated thousands of advance comments from major stakeholders and individual Canadians. It has also unleashed considerable angst from established broadcasters, broadcast distributors, and content creators, who fear that the broadcast regulator will overhaul the current system by implementing changes such as mandatory pick-and-pay channel selection for consumers and reforms to longstanding policies such as simultaneous substitution (which allows Canadian broadcasters to substitute Canadian commercials into U.S. licensed programming).

In fact, the CRTC has left little doubt that change is on the way. In a working document released late last month, it narrowed the likely outcomes to include requiring a mandatory basic cable service at a fixed cost (as low as $20 per month), a mandated pick-and-pay system that would allow consumers to select individual channels rather than being bound by unwanted packages, and the gradual elimination of simultaneous substitution.

While these changes are likely to spur a barrage of horror stories and dire warnings throughout the hearing – broadcasters will claim that the pick-and-pay will effectively kill some unpopular channels and broadcast distributors will warn that increased choice will lead to higher prices – the Rogers hockey streaming announcement signals most of what Canadians really need to know.

First, the CRTC is not forecasting the future of television as much as it is catching up to today’s reality. A broadcast regulatory system premised on limited consumer choice and scarce airwaves has given way to virtually unlimited options and an abundance of delivery mechanisms. With Rogers able to offer nearly the entire NHL season on the Internet, the conventional broadcast system already faces enormous competitive challenges. If the established system does not offer consumers sufficient flexibility and choice, they will go elsewhere.

Second, the Rogers announcement reinforces the importance of existing regulations designed to foster competition online.  The company noted that its package would be available to all Canadians, regardless of which cable or wireless provider they use. The broad availability of the service can be attributed both to the economic benefits of selling to a bigger market and to regulatory rules that restrict vertically integrated companies from granting themselves undue preferences.

Moreover, Rogers acknowledged that data used by its wireless customers to stream hockey games would count against their monthly cap. That approach reflects the need to conform to Canada’s net neutrality rules that are designed to maintain a level playing field and represents an about-face from an earlier television streaming service.

Third, as Pelley noted, there is no such thing as too much consumer choice when it comes to the options to watch programs when, where, and on what device Canadians want. The Canadian broadcast regulatory system has long benefited channels with limited viewership and broadcast distributors who forced consumers to purchase unpopular channels as part of expensive packages.

The CRTC hearing is ultimately about shifting away from that model by providing consumers with more choice. That change should force broadcasters to improve their products and broadcast distributors to offer competitively priced services. As the Rogers approach to streaming hockey demonstrates, if they fail to do so, consumers now have other options.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post “There is No Such Thing as Too Much Choice” appeared first on Michael Geist.

Why U.S. Pressure Is Behind the Stalled Canadian Anti-Counterfeiting Bill

Michael Geist - Tue, 09/02/2014 - 06:52

Last year, the federal government trumpeted anti-counterfeiting legislation as a key priority. The bill raced through the legislative process in the winter and following some minor modifications after committee hearings, seemed set to pass through the House of Commons. Yet after committee approval, the bill suddenly stalled with little movement throughout the spring.

Why did a legislative priority with all-party approval seemingly grind to a halt?

My weekly technology law column (Toronto Star version, homepage version) suggests that the answer appears to stem from the appointment of Bruce Heyman as the new U.S. ambassador to Canada. During his appointment process, Heyman identified intellectual property issues as a top priority and as part of his first major speech as ambassador, singled out perceived shortcomings in the anti-counterfeiting bill.

Heyman’s primary concern relates to in-transit shipments, which involve goods that do not originate in Canada and are not destined to stay in Canada. The Canadian bill excludes in-transit shipments from the scope of new rules that grant customs agents unprecedented powers to seize suspect shipments without court oversight.

According to Heyman:

“We are pleased Canada has introduced legislation that will give its border officials the authority to seize pirated and counterfeit goods, but the United States is concerned because the bill does not apply to goods that are shipped through Canada, from a third country to the U.S.”

The Canadian position is based at least in part on serious concerns about misuse of in-transit seizures.  For example, in November 2008, Dutch customs agents seized a shipment of AIDS/HIV medications at Schiphol Airport near Amsterdam. The Nigeria-destined medications originated in India, which produced a generic version of abacavir, an anti-retroviral drug. The global health group UNITAID had purchased the 49 kilograms of abacavir with the Clinton Foundation scheduled to assist in their distribution once they reached Africa.

The seizure in the Netherlands came at the request of GlaxoSmithKline, the pharmaceutical giant that claimed the Indian drug violated its patent rights and contained counterfeit materials. UNITAID maintained that the drugs were not counterfeit, but the seizure dragged on for months.

The Dutch seizure was not an isolated incident. During 2008 and 2009, Doctors Without Borders found at least 19 shipments of generic medicines from India to other countries were impounded while in transit in Europe. Several years later, the Court of the European Justice ruled against in-transit seizures, concluding that there was no infringement in the EU.

While Dutch seizures of Africa-bound pharmaceutical drugs have little connection to Canada, the experience with in-transit seizures of generic pharmaceutical drugs provides an important cautionary tale of why countries are right to resist targeting shipments that do not originate domestically and are destined for a different country. Indeed, many groups maintain that the seizure of generic pharmaceuticals in transit would pose a threat to international trade, development and public welfare.

Despite the delay, there is little doubt that the anti-counterfeiting bill will ultimately become law. In fact, with some of the bill’s provisions included in the Canada – Europe trade agreement, there may soon be a treaty requirement to address border measures.

With the fall parliamentary session set to start in a few weeks, the emerging question is whether the government will continue to resist foreign lobbying to distort the balance in the bill, by maintaining both the in-transit shipment exclusion and a personal traveler exception, whose removal could lead to increased border searches of physical luggage and electronic devices. If amendments are made late in the legislative process, it may well be a case of caving yet again to unwarranted U.S. pressure on intellectual property laws.

The post Why U.S. Pressure Is Behind the Stalled Canadian Anti-Counterfeiting Bill appeared first on Michael Geist.

Why U.S. Pressure Is Behind the Stalled Canadian Anti-Counterfeiting Bill

Michael Geist - Tue, 09/02/2014 - 06:38

Appeared in the Toronto Star on August 30, 2104 as Why Dutch Guards Holding Indian-Made Drugs Bound for Nigeria Sends a Warning to Canadian Legislators

Last year, the federal government trumpeted anti-counterfeiting legislation as a key priority in its Speech from the Throne. The bill raced through the legislative process in the winter and following some minor modifications after committee hearings, seemed set to pass through the House of Commons. Yet after committee approval, the bill suddenly stalled with little movement throughout the spring.

Why did a legislative priority with all-party approval seemingly grind to a halt?

The answer appears to stem from the appointment of Bruce Heyman as the new U.S. ambassador to Canada. During his appointment process, Heyman identified intellectual property issues as a top priority and as part of his first major speech as ambassador, singled out perceived shortcomings in the anti-counterfeiting bill.

Heyman’s primary concern relates to in-transit shipments, which involve goods that do not originate in Canada and are not destined to stay in Canada. The Canadian bill excludes in-transit shipments from the scope of new rules that grant customs agents unprecedented powers to seize suspect shipments without court oversight.

According to Heyman:

“We are pleased Canada has introduced legislation that will give its border officials the authority to seize pirated and counterfeit goods, but the United States is concerned because the bill does not apply to goods that are shipped through Canada, from a third country to the U.S.”

The Canadian position is based at least in part on serious concerns about misuse of in-transit seizures.  For example, in November 2008, Dutch customs agents seized a shipment of AIDS/HIV medications at Schiphol Airport near Amsterdam. The Nigeria-destined medications originated in India, which produced a generic version of abacavir, an anti-retroviral drug. The global health group UNITAID had purchased the 49 kilograms of abacavir with the Clinton Foundation scheduled to assist in their distribution once they reached Africa.

The seizure in the Netherlands came at the request of GlaxoSmithKline, the pharmaceutical giant that claimed the Indian drug violated its patent rights and contained counterfeit materials. UNITAID maintained that the drugs were not counterfeit, but the seizure dragged on for months.

The Dutch seizure was not an isolated incident. During 2008 and 2009, Doctors Without Borders found at least 19 shipments of generic medicines from India to other countries were impounded while in transit in Europe. Several years later, the Court of the European Justice ruled against in-transit seizures, concluding that there was no infringement in the EU.

While Dutch seizures of Africa-bound pharmaceutical drugs have little connection to Canada, the experience with in-transit seizures of generic pharmaceutical drugs provides an important cautionary tale of why countries are right to resist targeting shipments that do not originate domestically and are destined for a different country. Indeed, many groups maintain that the seizure of generic pharmaceuticals in transit would pose a threat to international trade, development and public welfare.

Despite the delay, there is little doubt that the anti-counterfeiting bill will ultimately become law. In fact, with some of the bill’s provisions included in the Canada – Europe trade agreement, there may soon be a treaty requirement to address border measures.

With the fall parliamentary session set to start in a few weeks, the emerging question is whether the government will continue to resist foreign lobbying to distort the balance in the bill, by maintaining both the in-transit shipment exclusion and a personal traveler exception, whose removal could lead to increased border searches of physical luggage and electronic devices. If amendments are made late in the legislative process, it may well be a case of caving yet again to unwarranted U.S. pressure on intellectual property laws.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post Why U.S. Pressure Is Behind the Stalled Canadian Anti-Counterfeiting Bill appeared first on Michael Geist.

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