Weekly Wireless Report WEEK ENDING January 30, 2015

INSIDE THIS ISSUE: This Week’s Stories Samsung’s Smartphone Crown Slipping THIS WEEK’S STORIES January 29, 2015

Samsung’s Smartphone Crown Slipping It was more bad news for Samsung Electronics Co. Thursday as the worldwide smartphone leader posted a big drop in quarterly mobile earnings. The earnings report came the day after rival Apple Inc. FCC More Than Quintuples reported the biggest profit in corporate history. The Legal Definition Of ‘Broadband’ The South Korea-based electronics giant reported that year-to-year earnings from smartphones and other mobile gadgets had dropped 64 percent to $1.80 billion in the fourth quarter of 2014, contributing PRODUCTS & SERVICES to the company’s first annual earnings drop in three years.

Get Started With Snapchat Samsung’s mobile division endured its fifth consecutive quarter of decline. The mobile unit's share of Discover Samsung's operating profit fell from almost 70 percent in 2013 to about 58 percent last year. That’s in sharp contrast to Apple's record-breaking 74.5 million iPhone sales in the year’s final quarter thanks to Facebook Launches Facebook the success of its big-screen iPhone 6 and 6 Plus. Lite App Designed For 2G Networks In Emerging Markets While Samsung did not release its smartphone sales figures, it said shipments in its smartphone and tablet categories were down in the quarter. EMERGING TECHNOLOGY Samsung is slowly getting squeezed out by popular competitors from the high end and the low end in Facebook Dives Deeper Into the form of Apple and Xiaomi, respectively. Last year in the second quarter, Xiaomi passed Samsung to Yelp, Foursquare World With become the biggest smartphone vendor in China. Place Tips However, the company said it expected shipments and average selling prices for handsets to pick up in Rolls Out Touch- the first quarter following the launch of new mid-tier models like the Galaxy A. Oriented Office For Android We reached out to Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy, who MERGERS & ACQUISITIONS suggested that perhaps Samsung has its work cut out for it when it comes to regaining its footing in the phone market. Jay Z Splashes Out $56 Million On Spotify Rivals WiMP And "Samsung appears to be in a free fall in phones," he said. "They have to do a better job aligning their Tidal technological capabilities, what consumers are asking for and new innovations that they can create."

Dixons Carphone Just Made A One bright spot for Samsung was its semiconductor division. Samsung posted fourth-quarter operating Deal That Should Avert A profit of $4.88 billion in chip sales. That was the division’s highest in more than four years, helping Samsung recover from a 60 percent drop in operating profit in the third quarter. Phones4U-Style Disaster

There was steady demand for Samsung's memory chips, which are used in servers and handsets, INDUSTRY REPORTS including Apple , as well as improved sales from its system chips business. Samsung said it AT&T Beats Expectations, expects to lead industry shipment growth for DRAM and NAND chips in 2015. Roars Back With 854K Postpaid Net Adds The company said it would pay an end-2014 dividend that’s up 41 percent per share from the dividends issued at the end of 2013. Wall Street analysts speculated that the gesture was meant to reassure Microsoft Sells Record 10.5M shareholders amid weaker profits and uncertainties about the succession plans for the family-owned Lumia Phones In Q4, As It Samsung Group. Works To Integrate Nokia "Samsung drove the transition to large phones, but their latest phones innovated on things that people didn’t find valuable like a heart rate monitor and multi-windowing, and their design is perceived as cheap and plasticky in the U.S.," said Moorhead. "Samsung makes massive investments in R&D but they need to apply it better."

mobile-tech-today.com

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FCC More Than Quintuples The Legal Definition Of ‘Broadband’ January 29, 2015

It used to be that a paltry 4 Mbps down and 1 Mbps was all it took for an internet connection to be considered "broadband," but the Federal Communications Commission has just flipped that definition on its ear. FCC commissioners voted 3-2 in favor of upping the broadband threshold, and pretty dramatically too: Now service providers will have to offer speeds of 25 Mbps down/3 Mbps up if they want to apply that label. Need a little perspective? The average American home broadband connection pulls down around 11 Mbps, while some 17 percent of Americans technically don't have broadband internet anymore.

Naturally, cable and internet service providers aren't going to be thrilled. Just last week, a lawyer for the National Cable & Telecommunications Association urged the commission not to fiddle with the standard broadband requirements because outspoken proponents for the change (in this case, Netflix and Public Knowledge) are overestimating what makes sense to provide to consumers. If this increase is all it takes to get those companies riled up, they're probably none too pleased with some commissioners' blue sky thinking. After all, FCC Commissioner Jessica Rosenworcel stated today that she thinks the broadband threshold "frankly, should be 100 Mbps" -- a move that would finally put the United States in line with the speedy connections available in countries like South Korea. According to the 2014 State of the Internet report issued by Akamai, Korea tops the global charts with an average download speed of 23.6Mbps (which worked out to about six times the world average).

Here's the thing to remember about the FCC: It doesn't have the power to ring up Comcast, Verizon, Time Warner and all of their money-grubbing ilk to say "make your internet faster or else!" All it did was change what counts as "broadband" internet -- from here on out, it's up to service providers to change how they play the game. Of course, that's not to say that the FCC lacks the authority to prod some of those more reticent players into action; CNBC points out that the commission could use these updated rules to help decide how it grants and divvies up subsidies to internet service providers that are meant to spur broadband expansion.

.com

Products & Services Get Started With Snapchat Discover January 28, 2015

On Tuesday, Snapchat announced a new service called Discover. The service brings daily video “Think of Discover as a place content from various content providers such as CNN, Vice News and ESPN. The content is refreshed within Snapchat (of all apps) every 24 hours with new stories, videos and photos for you to view. Think of Discover as a place within you can go to catch up on the Snapchat (of all apps) you can go to catch up on the latest news, listen to the hottest music or receive cooking lessons from professional chefs. latest news, listen to the hottest music or receive After updating to the latest version of Snapchat on your iOS or Android device, you'll have access to Discover. cooking lessons from professional chefs.” To access the new feature, swipe to the left from the main screen where you'd normally go to view Stories posted by your friends. In top-right corner is a new, circular button that launches the Discovery screen. I've had mixed results with swiping to the left again from the Stories screen, with some

instances resulting in Discover being opened while others resulted in nothing happening at all.

Currently a grid of 12 content providers is displayed on the main Discover screen. Tapping on any of the icons will launch the respective channel.

Each channel offers up a different of text articles and videos. When you first launch a channel, you're greeted with a familiar Snapchat-like message; it's short in nature, giving you just a glimpse of what the story is about. You can swipe up on any given preview to either read the article, or watch the accompanying video.

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From what I can tell, videos range in length from just under a minute to over 15 minutes depending on the source and content covered.

At any time you can swipe down on a video (or article) to go back to the list of content from a channel, with another swipe taking you back to the main Discover screen.

cnet.com

Facebook Launches Facebook Lite App Designed For 2G Networks In Emerging Markets January 27, 2015

Facebook wants everyone across the world to have Internet access--partly so they can log onto Facebook--and the company quietly created and launched a new app to make sure consumers in emerging markets with older and slower wireless networks can still experience the benefits of the social network on their phones.

According to TechCrunch, which first reported the news, over the weekend Facebook quietly launched its Facebook Lite app in a handful of countries in Asia and Africa, including Bangladesh, Nepal, Nigeria, South Africa, Sudan, Sri Lanka, Vietnam and Zimbabwe. The report, without citing its sources, said that Facebook is testing the app and may expand it to other markets, but that a wider launch is not a certainty and Facebook could decide to shut the project down in the future.

The Facebook Lite app is available only for Android phones, is just 252 KB in size, and is designed specifically to work on 2G networks and in areas with poor wireless connectivity. Reports indicate that the app is based on the Snaptu version of Facebook that runs on feature phones, but adds functionality like push notifications and camera integration to make it more of a smartphone experience.

According to CNET, Facebook said the app is still being tested, though it is available via Google Play if users live in a country where it's supported.

The app is just the latest in a series of steps Facebook has taken to increase its relevance in mobile, especially in developing markets. In November, Internet.org, the organization spearheaded by Facebook that focuses on expanding Internet access around the world via mobile, launched an app in Kenya that enables users to browse health, education, finance, employment, communication and local information services without data charges. Separately, Facebook teamed up with mobile operator Airtel Kenya to offer some Internet services for free to the carrier's subscribers. Facebook already offers basic Internet services for free in Zambia via Airtel and in Tanzania via Tigo, operated by Millicom.

As more consumers in emerging markets get smartphones, and as average smartphone prices globally continue to drop, Facebook wants to make sure it is offering its service to those customers however it can. In many cases though, carriers in those countries have not yet launched high-speed mobile broadband networks, which likely pushed Facebook to develop Facebook Lite as a stopgap solution.

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Emerging Technology Facebook Dives Deeper Into Yelp, Foursquare World With Place Tips January 29, 2015

With Facebook's latest recommendations feature, you may have to see your friends' vacation photos, whether you like it or not.

The social network announced a new feature for its that uses your phone's location services to more information about the places you visit. Called Place Tips, the feature draws on posts created from a place's page and from your friends. Now when you visit a location your friends have been before, Facebook will bring up their related posts and photos.

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Place Tips is optional, and will appear only if you've given Facebook permission to access your location. The company will start testing Place Tips in the New York City area, using cell networks, Wi-Fi and GPS to determine your location. The network won't share your location publicly, according to the company. For now, the feature is only available for iPhone users.

It's another stab at building recommendations into your social-media experience, and a deeper dive into a market currently dominated by Yelp, and to a lesser extent, Foursquare. Facebook wants to make sure users keep coming back to its mobile app. Adding contextual, and personalized, location information is another way to hook users.

"Place tips will show you fun, useful and relevant info about the place you're at," reads a Facebook blog post.

If you visit a restaurant, for example, the business' page may show you popular menu items and upcoming events, in addition to your friend's photo of a favorite dish there.

Facebook has been consistently expanding its personalized recommendation features to take advantage of its growing mobile traffic. Nearly 84 percent of its 890 million daily users access Facebook through a mobile phone, according to the company's latest earnings report.

The network started showing you when your friends were having fun nearby in April, and then launched Place pages in November in hopes of building a database of businesses and activities for users.

cnet.com

Microsoft Rolls Out Touch-Oriented Office For Android January 29, 2015

It seems like it took just about forever for Microsoft to roll out Office for iPad -- and it took even longer “Microsoft built Word, Excel, for Redmond to serve up Office for Android. But it’s finally available, along with Outlook for iOS and a and PowerPoint for Android preview for Android. tables from the ground up Microsoft built Word, Excel and PowerPoint for Android tablets from the ground up with touchscreen with touchscreen functionality functionality in mind. And it's perfect for mobile productivity, according to Kirk Koenigsbauer, corporate in mind…Some of the design vice president of Microsoft’s Office 365 Client Apps and Services. features include large touch “Consider a pharmaceutical sales rep on a train in Chicago, updating her monthly budgets in Excel. Or points that work to make it a student in a Madrid coffee shop writing a paper in Word, while collaborating with other students back at the dorm. Or a consultant from Bangalore at his client’s site, wirelessly projecting a PowerPoint easy for people with big presentation to a large screen,” he wrote in a blog post. “These are just a few scenarios our engineering fingers to navigate teams anticipated when we designed the apps -- for touch, on the go and tuned for Android tablets.” commands so an external Koenigsbauer said Microsoft designed the apps to be “unmistakably Office, while optimized for Android keyboard is not required.” tablets.” Some of the design features include large touch points that work to make it easy for people with big fingers to navigate commands so an external keyboard is not required.

“Existing documents open and render beautifully and are accessible instantly from device to device via

a roaming ‘most recently used’ file list,” Koenigsbauer said. “Within each app, we’ve prioritized the most important features for mobile scenarios.”

For example, Koenigsbauer said users can review documents by tracking changes and adding comments, and then share the work. Excel spreadsheets offer support for formulas, charts, tables, PivotTables, sorting, filtering and comments. And PowerPoint presentations offer support for rich formatting and embedded video, transitions and animations.

Microsoft also released Outlook for iOS and a preview of Outlook for Android to help iPad and Android tablet users tackle e-mail overload. The Outlook app offers e-mail, calendar, contacts and files, and separates mail into two tabs -- “Focused” and “Other.”

We turned to Wes Miller, an analyst at Directions on Microsoft, to get his take on Office for Android tablets and the new Outlook app. He told us Office for Android is likely to be a good parallel to what we see on the iPad -- and at least a starting point of what we’ll see when Windows 10 gets the new apps.

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“Outlook for iOS is actually derived from the Acompli software they acquired in December. They brought the company in house, rebranded it and turned it back around,” Miller said. “The differences are apparently very subtle between the e-mail client and the app. The app that’s called Outlook is almost identical to the one that used to be called Acompli, which its customers liked.”

But will users adopt Outlook? Miller is not so sure. He said Microsoft faces an unfortunate problem with Outlook for iOS and Android. “Microsoft can’t be the default,” Miller said. “On iOS devices I use the iOS feature and it just works.”

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Mergers and Acquisitions Jay Z Splashes Out $56 Million On Spotify Rivals WiMP And Tidal January 30, 2015

Jay Z might have 99 problems, but a streaming service ain't one. The rapper is splashing out $56 million on Swedish company Aspiro, which runs WiMP and high-quality audio service Tidal.

Jay Z's Project Panther has tabled a bid of 464 million Swedish crowns (around $56 million, AU$72.5 million or £37 million) for Aspiro. Buying a music service puts the musician and business mogul in competition with rival Swedish streaming service Spotify and with Beats, the streaming and headphone brand founded by fellow rapper Dr Dre and bought by Apple for $3 billion last year.

WiMP is a music streaming service that offers 25 million songs and 75,000 music videos to around half a million subscribers in Norway, Sweden, Denmark, Germany and Poland. That's a fraction of the 15 million paying subscribers to Spotify, but it's still a significant number.

Aspiro also runs Tidal, which launched in the UK and US last year and offers high quality audio in the lossless FLAC format for $19.99 or £19.99 a month.

Jay Z, real name Shawn Carter, is the rapper behind "99 Problems" and "Empire State of Mind". One half of a power couple with singer Beyoncé, he's estimated by Forbes to be worth around $520 million dollars thanks to business ventures including the Rocaware clothing range, Armand de Brignac champagne, 9IX fragrances, the Roc Nation sports agency and a stake in NBA basketball team the Brooklyn Nets. Previous dabblings with technology companies include the early release of his album "Magna Carta Holy Grail" to Samsung devices.

cnet.com

Dixons Carphone Just Made A Deal That Should Avert A Phones4U-Style Disaster January 29, 2015

Although there were a multitude of reasons behind Phones4U's demise, one of the key factors was the overwhelming lack of support from the UK's major carriers. Three and O2 severed ties with the company way in advance of its closure, but it was a shake of the head from both Vodafone and EE that dealt the final blow. For a short time, it looked as if the mobile reseller model could be under threat, spelling trouble for Phones4U rival Carphone Warehouse, a retailer that had just been picked up by Dixons Retail for £3.8 billion.

Turns out that the company had nothing to be worried about. O2 pledged its support and Vodafone's reason for ditching Phones4U was so that it could sign an exclusive deal with Dixons Carphone. That left EE, which has today joined the competition in securing a new multi-year partnership with the retailer. That means you'll be still able to pick up a contract on any of the UK's biggest three carriers in a Carphone Warehouse or selected Currys or PC World store, if that's what works for you.

engadget.com

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Industry Reports AT&T Beats Expectations, Roars Back With 854K Postpaid Net Adds January 27, 2015

AT&T Mobility beat analysts' expectations in terms of subscriber growth for the fourth quarter, but saw “[AT&T CFO John Stephens] churn rise amid intensifying competition. AT&T also saw its margins drop in the quarter, as had been said the carrier would likely expected. see higher churn in the fourth Despite the tough competitive environment, AT&T notched 1.9 million total net wireless subscriber quarter than it had in the additions in the quarter, including postpaid net adds of 854,000. Those figures easily surpassed what year-ago period. He also said AT&T did in the year-ago period. In the fourth quarter of 2013, AT&T reported 809,000 total net wireless the combination of higher customer additions, including postpaid net adds of 566,000. churn, promotions, and more The carrier's postpaid net add performance also outpaced what some analysts had been expecting. subscriber growth would cut Analysts at Credit Suisse had expected 850,000 postpaid net subscriber additions for AT&T, while into fourth-quarter margins. Wells Fargo had expected 750,000 postpaid net adds and postpaid churn of 1.15 percent (it wound up being higher, at 1.22 percent). Both predictions turned out to be true.” AT&T CFO John Stephens had warned in December that the carrier would likely see higher churn in the fourth quarter than it had in the year-ago period. He also said the combination of higher churn,

promotions and more subscriber growth would cut into fourth-quarter margins. Both predictions turned out to be true.

During the company's earnings conference call, AT&T CEO Randall Stephenson said that the company is going to be focused in 2015 on growing its smartphone base as well as on offering new wireless services to business customers. He noted that while AT&T is seeing pressure in the feature phone market and is losing customers there, he said the company will use its Cricket prepaid brand to counteract those trends. Stephenson added that in the fourth quarter the Cricket brand had positive net adds; he pointed out that Cricket is very complimentary to the lusacell and Nextel Mexico assets AT&T is buying in Mexico.

Here's a breakdown of AT&T's key quarterly metrics:

Subscribers: Although AT&T's 854,000 postpaid net adds were up more than 50 percent from the year-ago period, they contained 969,000 postpaid tablet net adds, implying that AT&T lost 115,000 phone and other postpaid customers. AT&T said it added just 148,000 net postpaid smartphone customers in the quarter.

The company's 1.9 million total net adds more than double what AT&T had in the year-ago period, and included nearly 1.3 million connected device net adds, including 800,000 connected car subscribers.

It was not all rosy news for AT&T though, as the company lost 180,000 prepaid net subscribers, especially GoPhone and session-based tablet subscribers, and also lost 65,000 net reseller customers.

Financials: AT&T said total wireless revenues, which include equipment sales, jumped 7.7 percent year-over-year to $19.9 billion. Wireless equipment revenues increased 72.3 percent to $4.8 billion, as more customers chose equipment installment plans as opposed to subsidized devices. Wireless service revenues actually fell 3.7 percent to $15.1 billion, reflecting continued customer growth of Mobile Share Value plans. Customers who choose to finance the cost of their device in monthly installments through AT&T's Next plan get access to discounted Mobile Share Value service pricing and earlier device upgrades.

As expected, AT&T's wireless margins took a hit on the back of strong seasonal gross subscriber additions and upgrades, as well as adoption of Mobile Share Value plans and continued investment in new services. AT&T's wireless operating income margin was 16.3 percent, down from 21.4 percent in the year-ago quarter. When adjusting for integration costs, AT&T said its wireless EBITDA service margin was 36.7 percent compared to 37.4 percent in the year-ago quarter.

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Mobile Share: AT&T said Mobile Share plans, including Mobile Share Value plans, now represent more than 52 million connections, or almost 70 percent of its postpaid subscribers. That's up from nearly 47 million connections, or about 62 percent of postpaid subscribers, at the end of the third quarter.

The carrier said that in the fourth quarter, an increasing number of subscribers chose Mobile Share Value plans. The number of Mobile Share accounts more than doubled year-over-year to reach 18.4 million, with an average of about three devices per account.

Further, AT&T said at the end of the fourth quarter, half of its Mobile Share accounts had 10 GB or larger data plans, up from 27 percent in the year-ago quarter. AT&T added that helped drive an 18 percent year-over-year increase in wireless data billings. In total, about 85 percent of postpaid smartphone subscribers are on AT&T's usage-based data plans (tiered data and Mobile Share plans), up from 75 percent a year ago.

Smartphones: AT&T posted a record 10.1 million postpaid smartphone gross adds and upgrades, up from 7.9 million a year ago and 6.8 million in the third quarter. AT&T said smartphones now represent 83 percent of its postpaid phone base and 94 percent of postpaid phone sales.

In the fourth quarter, AT&T said 5.9 million, or 58 percent, of all its postpaid smartphone gross adds and upgrades were on AT&T Next. That's up from a Next adoption rate of 50 percent in the third quarter. The company now has 15 million postpaid smartphones on Next plans. More than a quarter of AT&T's smartphone base is on AT&T Next, with 58 percent of Next customers on no-device-subsidy plans. Stephens added that AT&T can increase its Next adoption rate in 2015 as sales representatives at big- box retailers become better educated on the plans.

ARPU: The continued adoption of AT&T's Next and Mobile Share Value plans led to year-over-year reduction in its postpaid service average revenues per user. Phone-only postpaid ARPU decreased 10.7 percent compared the year-earlier quarter, down to $60.99. Phone-only postpaid ARPU with AT&T Next monthly billings decreased 4.1 percent year-over-year to $65.86, but increased 0.4 percent from the third.

Churn: AT&T's postpaid churn jumped up to 1.22 percent, up from 1.11 percent in the year-ago quarter, which had been AT&T's best fourth-quarter postpaid churn. AT&T said around 95 percent of its total postpaid base is on AT&T Family Talk, Mobile Share or business plans, and that churn for these plans is significantly lower than for other postpaid subscribers. In the third quarter AT&T had recorded its best-ever, third-quarter postpaid churn at 0.99 percent.

fiercewireless.com

Microsoft Sells Record 10.5M Lumia Phones In Q4, As It Works To Integrate Nokia January 27, 2015

Microsoft sold a record 10.5 million Lumia-branded Windows Phones in the fourth quarter, but is still dealing with the hangover of integrating Nokia's devices and services business.

Overall, Microsoft said its profit in the quarter was $5.86 billion, down from $6.56 billion a year ago. The company said total sales were $26.47 billion, up 8 percent from $24.52 billion in the year-ago period and slightly ahead of analysts' estimates, according to Bloomberg.

Microsoft's results for the quarter include $243 million in integration and restructuring expenses, related to both Microsoft's 18,000 job cuts that were announced in July 2014 and the ongoing integration of the Nokia business (12,500 of those jobs were former Nokia employees).

Microsoft reported phone hardware revenue of $2.3 billion in the quarter.

On the company's earnings conference call, Microsoft CEO said that Microsoft's phone business saw strength in devices such as Lumia 500 and 600 series, the company's entry-level category. "In this segment of the market, the combination of our brand and value standout and we plan to continue to build a beachhead here," he said.

Microsoft CFO said that the company is executing on its phone strategy that it articulated in July, with the plan being to use the Lumia portfolio of phones to increase sales volumes in the low-end

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smartphone segment. That mirrors Microsoft's larger Windows Phone strategy, which has been based around lowering the bill of materials through chipset reference designs via Qualcomm, and enticing OEM partners to create affordable phones by eliminating software licensing fees for the devices.

Hood noted Microsoft sold more than 39 million non-Lumia phones "even while we make changes to the product portfolio and manage this business for profitability. We are looking forward to bringing new products to market that will showcase the features that we presented at our Windows 10 event last week."

Hood added that in terms of the Nokia integration and restructuring, Microsoft has "been focused on optimizing resources across the company which includes reducing the expense base in our phone business. To date, we have integrated the manufacturing and supply chain teams across Microsoft while also rationalizing our phone manufacturing capacity."

Microsoft has cut $1 billion from the phone unit's cost structure and continues "to look for opportunities to drive further efficiencies," Hood said.

Looking ahead to the next quarter, Microsoft said it expects phone hardware revenue to be $1.4 billion to $1.5 billion and "accelerating year-over-year growth in Lumia units driven by our affordable smartphone devices." The company also expects sales volumes and average selling prices of non- Lumia phones to drop next quarter.

With Windows 10, Microsoft is creating a unified that will let developers write universal apps for multiple device sizes, in a bid to jumpstart Microsoft's weak market position in mobile.

Regarding Windows 10 phones, Nadella said earlier this month that "we absolutely are committed to bringing a great line of hardware." He added: "You can be assured that we will do some fantastic work from the flagship phones to the affordable smartphones, and have a full lineup of phones that will be available with Windows 10."

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