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Yet another generation of children learning fiscal responsibility the painful way...

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Yet another generation of children learning fiscal responsibility the painful way...

Old 01-10-05, 08:50 AM
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Yet another generation of children learning fiscal responsibility the painful way...

http://www.nytimes.com/2005/01/09/te...rint&position=

Young Cell Users Rack Up Debt, a Message at a Time
January 9, 2005

By LISA W. FODERARO

Chaz Albert, a freshman at Mercy College in Dobbs Ferry, N.Y., is a passionate "texter," someone who loves to send and receive pithy text messages via cellphone. He does it at home, at school and at work. He often prefers texting over talking on his cellphone.

Last month, though, Mr. Albert's habit caught up with him. Only $80 of his $400 cellphone charges were his father's, and most of his own, he said, were for text-messaging.

"I was shocked, but I couldn't do anything about it," he said. "I didn't realize that I got charged for reading text messages. My dad was just like: 'Hey, it's your problem. Pay it.' "

In the last two years, text messages - which cell carriers generally limit to 160 characters - have become a rage among teenagers, who embrace the technology as yet another way to escape a boring class or stay in touch with friends.

But text-messaging, or texting for short, has a downside. It can be expensive. Although phone companies offer relatively inexpensive packages - like Verizon Wireless's $9.99 for 1,000 messages a month - industry experts say that carriers sometimes fail to draw customers' attention to the cost-saving deals, and that customers themselves, especially young people, often exceed the number of messages allowed. In those cases, sending a text message usually costs 10 cents; the cost of receiving one ranges from 2 to 10 cents.

The sticker shock is reminiscent of the early days of cellphones, when users often were surprised by how much they were charged for going over their allotted minutes or for phoning someone outside their calling areas.

Many high school and college students accustomed to sending unlimited instant messages on their computers do not adapt easily to text messaging's pay-per-message format, and end up with unexpectedly high bills when they get involved in keypad conversations that involve hundreds, even thousands, of messages a month. The results are angry confrontations with parents, long-term payment plans and the loss of cellphone privileges.


"It's relatively addictive, and it's only when that first massive bill comes in that you realize that a dime a throw can run up a large bill," said Lee Rainie, director of the Pew Internet and American Life Project, a nonprofit group that studies the social impacts of the Internet.

Sometimes, the only way a cellphone customer can learn the cost of text messaging is to ask, according to industry experts. "They basically just hand you the phone and say, 'Here, have a good day,' " said Allen Nogee, the principal analyst for the wireless technology group at Instat, a market research firm in Scottsdale, Ariz.

Karina Gonzalez, a sophomore at Newtown High School in Queens and a regular sender of instant messages by computer, had her phone confiscated by her mother after her text messages resulted in a $150 phone bill, triple the usual amount. "I cried," she said. "I felt like I lost a piece of me. You can send a million instant messages a day, and it won't cost you anything. If you send one text message, it can cost you like a phone call."

Her friend Denise Lucero, 15, who has never owned a cellphone, surreptitiously used her father's phone for a while, she said, to text-message her friends. One month, those messages pushed his bill to $300.

Then her father started to hide his phone: on top of the refrigerator, under the sofa, behind the television set, in his pillow.

Both girls said their inability to text message made them feel left out of the action. "It's about feeling part of a little group with cellphones," Denise said. "You want to learn what is going on."

Text-messaging has flourished for years in Europe and Asia, where it is immensely popular among young people. In the United States, activity was limited until 2002, when a breakthrough in the wireless market allowed short text messages to be sent among customers of the major cellular carriers. Previously, customers could send messages only to those who used the same carrier.

The service, known as S.M.S. (for Short Message Service), has since taken off. According to a recent report from Forrester Research, a company in Cambridge, Mass., that specializes in technology, Americans sent 2.5 billion text messages a month in mid-2004, triple the number sent in mid-2002.

Teenagers are clearly driving the trend. "Younger people do text messaging a lot more than older folks," said Mr. Nogee of Instat. "They're more used to it from instant messaging on the computer, from growing up with it. Older people would rather call up and talk."

According to a recent survey by the Pew Internet and American Life Project, 38 percent of all teenagers who use the Internet have sent a text message using a cellphone. "Text messaging is a way to take instant messaging on the road," said Amanda Lenhart, a Pew research specialist. "It's definitely growing."

Verizon Wireless, with 42 million customers, reported a fivefold increase in the number of text messages sent and received monthly, to almost one billion in the fall from 200 million in early 2003. A Verizon spokesman, Howard Waterman, said that people aged 16 to 24 represented the "leading customer segment." (He said he could not break out exact figures, for "competitive reasons.")

Even some young sophisticates who scoffed at the text-messaging craze have caught the bug - and been stung. "Before I started using it, it seemed like a really ridiculous way to communicate," said Emily Seife, a junior at Wesleyan University in Connecticut. "But then it became a way to send a funny one-liner to a friend."

Ms. Seife is on the family's cellular plan, and two months ago, her father did a double take when the bill arrived. The text-messaging feature had jacked it up - Ms. Seife would not say how much - and she was asked to contribute $100 and told to either curb her text-messaging enthusiasm or get a different plan. "I knew it was 10 cents a message," she said, "but I didn't really realize how much that would add up."

Some parents are sympathetic, saying young people are simply taking their cues from grown-ups. "It's hard to be critical, because of the way we use e-mail and BlackBerries and Palm Pilots," said Karen Engelemann, a freelance book designer and mother in Dobbs Ferry.

"I would have loved it when I was her age, so I have to put myself in that situation," Ms. Engelmann said, referring to the enthusiasm that her 12-year-old daughter, Lilly Ulfers, developed for text messaging.

But that did not stop Ms. Engelmann from reprimanding Lilly when a recent cellphone bill arrived with a $40 text-messaging charge.

High schools and colleges have struggled with cellphone use in general and text messaging in particular, with many insisting that phones be stowed away during class or banned altogether. But students manage to send text messages anyway, pressing buttons discreetly (or not so) behind books and under desks. "Everyone does it in class," said Meredith Negri, 18, a freshman at the University of Hartford.

School officials also know firsthand the widespread financial duress caused by cellphones. At Mission High School in San Francisco, where three-quarters of the 975 students qualify for free or reduced-price lunches, the principal, Kevin Truitt, says that many students were blindsided by costs associated with text-messaging and other features, like customized ring tones.

"It's causing family fights; the kids are broke, and a lot are graduating with debt because of cellphones," he said. "The carriers just seem to be adding new features that cost more and more and more. The students are not reading the fine print. No one understands the contract until they get the first bill and it's $800."

Clay Owen, a spokesman for Cingular Wireless, the nation's largest carrier with 46 million customers, said that "in an ideal world" the sales staff would explain the text-messaging feature and its cost. "They are trained to go through the packages with the customers," he said. "Does it happen every time? Obviously, with various salespeople and depending on the situation, there could be times it does not happen."

Mr. Waterman of Verizon Wireless advised young people to explore cost-effective packages and to track their messaging activity during the billing cycle by reviewing accounts online. The company also has a new service that allows customers to dial their cellphones for an up-to-date tally - delivered by a free text message.

Cingular customers can monitor how many phone minutes they have used in the middle of a billing period, but cannot track their text messages, Mr. Owen said.

For some young people, the cellphone ordeals, though painful, have proved valuable. What is left, it seems, after the bills are paid and the family tensions subside is the emergence of a new maturity when it comes to money.

Brian Colas, a student at City as School in Brooklyn, said he reined in his habit after his mother stopped paying his bill. "When you start paying, then you don't have money to spend on other things," he said. Mr. Albert's stepbrother, Judan Lynk, a junior at Mercy College, decided to cancel his text-messaging service after receiving a $400 bill in August. (His monthly plan, before taxes and surcharges, was $50, and he had no text-messaging package.) He paid the bill in installments, working extra hours as a sales clerk at Restoration Hardware. "At the end of this month, I'll be cut off," he said with a swish of his hand.

But there was still time to check his phone for the latest text message. It was from a friend in Ohio, telling him to answer his cellphone.
In my day it was long distance charges resulting from connecting to out-of-area BBSes. Plus, everyone in college when I was there knew someone who had racked of thousands in credit card debts they were in no position to pay back. Often times, they got the CCs from stands set up on campus by the CC companies who gave free stuff away just for applying for the CC.
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Old 01-10-05, 09:41 AM
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The text-messaging feature had jacked it up - Ms. Seife would not say how much - and she was asked to contribute $100 and told to either curb her text-messaging enthusiasm or get a different plan.





Who's the clown now?





In my day we didn't have cell phones or computers, just regular phones.


I wil be sure to inform my children of the hidden costs of modern "conveniences".
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Old 01-10-05, 10:07 AM
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Pay per message? What kind of stupid cell phone plan would that be? I've had unlimited text messaging on every cell phone I've had for the last 4 years. Not that I use it much, but I thought this was pretty much standard nowadays. Certainly I wouldn't pay per message.
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Old 01-10-05, 10:40 AM
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Ah, the joys of laissez-faire capitalism. Where the price of a service has nothing to do with how much it costs to provide it, but solely what consumers (especially young, naive consumers) can be conned into paying.

This pricing scheme is completely wacky. Consider:
  • A thirty-second phone call: even with using crappy cellphone sound quality (i.e., high compression), this probably requires 100,000 bytes of data transfer. And it has significant technology demands, like full duplex communication and reduced lag.
  • A text message something like 100 bytes of ASCII text. You don't have to connect to both the sender and the receiver at the same time. And lag isn't an issue - the message needs to make the trip in a two-minute window, maybe.
Now, why is the former essentially free, and the latter costly (especially in the aggregate?) You'd think cellphone companies would do the opposite, since encouraging the use of text messages could hugely reduce network strain.

Normally, competition would squash any kind of foolishness like this: each company would think, "Gee, I could get a lot of customers to switch to my service if I offer text messaging at a less obnoxious price." And then you'd have a price war, and the market would stabilize at a reasonable price - something at least marginally related to the cost of providing the service.

Why isn't this occurring? It's pretty obvious: cellphone companies are colluding to maintain a grossly inflated price on the service. If no one offers a better deal, they all make more money.

That is exactly the kind of scenario our antitrust laws were designed to break up. Unfortunately, modern antitrust enforcement lies somewhere between toothless and nonexistent. Some day, people will refer to scenarios like this as case studies in economic foolishness - as symptoms of an afflicted and stagnant economy.

- David Stein
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Old 01-10-05, 10:49 AM
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Originally Posted by Otto
Pay per message? What kind of stupid cell phone plan would that be? I've had unlimited text messaging on every cell phone I've had for the last 4 years. Not that I use it much, but I thought this was pretty much standard nowadays.
Here are the plans offered by AT&T/Cingular:
Pay per use - Just pay for the messages you send, only $.25 per message.
20 messages per month - Send up to 20 messages a month for $2.99 per month. Additional messages are $.25 per message.
75 messages per month - Send up to 75 messages a month for $9.99 per month. Additional messages are $.20 per message.
And by Verizon:
TXT Messaging (100 messages) $2.99/month
TXT Messaging (250 messages) $4.99/month
TXT Messaging (1000 messages) $9.99/month
TXT Messaging (2500 messages) $19.99/month
While the costs are low, I assert that they're primarily designed to lure the customer into over-use charges. It's a Blockbuster scheme - some huge supermajority of Blockbuster's income came from late fees.

- David Stein
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Old 01-10-05, 11:18 AM
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im too lazy to text...

i'd rather call up and talk.
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Old 01-10-05, 11:24 AM
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I agree, those are clearly designed to cause extra usage charges. Fair enough though.

However, now that they have things like that T-Mobile Sidekick offering unlimited Text and AOL instant messaging and such with a nice little keyboard even, competition might drive this practice away.
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Old 01-10-05, 11:28 AM
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Why the hell would you want to type when you have a cell phone right there? I mean, c'mon, this is just retarded! JUST FRIGGIN TALK TO EM! AHHH!!! I HATE CELL PHONES!!! DEMON BE GONE!
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Old 01-10-05, 11:29 AM
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Kids in class can't hold a phone to their ear. It's the modern way of passing notes to kids not even in your class.
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Old 01-10-05, 11:32 AM
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Originally Posted by sfsdfd
Ah, the joys of laissez-faire capitalism. Where the price of a service has nothing to do with how much it costs to provide it, but solely what consumers (especially young, naive consumers) can be conned into paying.
Some say "conned" into paying, other say "willing." Are you arguing that everything should be priced according to how much it costs to provide?


Normally, competition would squash any kind of foolishness like this: each company would think, "Gee, I could get a lot of customers to switch to my service if I offer text messaging at a less obnoxious price." And then you'd have a price war, and the market would stabilize at a reasonable price - something at least marginally related to the cost of providing the service.

Why isn't this occurring? It's pretty obvious: cellphone companies are colluding to maintain a grossly inflated price on the service. If no one offers a better deal, they all make more money.
Collusion? Considering how competitive the cell phone business seems to be, I doubt it. It's much more likely that they don't compete on text messaging service because the primary customers of their service don't give a rat's ass about it. Most of the people that care about text messaging are teenagers that are on someone else's plan. You don't attempt to compete on price on a feature your paying customers don't care about. That just causes you to lose money.

I can't understand the obsession with text messaging.
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Old 01-10-05, 11:34 AM
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I've been wonder about this alot last few days. My sister uses it to communicate with me to my email quite often. She just signed up for 9.99 1000 cingular one and they run out faster then I would thought possible. Thanks heavens we dont aim. I hear that is test message a line.
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Old 01-10-05, 11:47 AM
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Her friend Denise Lucero, 15, who has never owned a cellphone, surreptitiously used her father's phone for a while, she said, to text-message her friends. One month, those messages pushed his bill to $300.

Then her father started to hide his phone: on top of the refrigerator, under the sofa, behind the television set, in his pillow.
Nice parenting. Why don't you try telling your kid to stop texting. If they don't, make them pay the bill. If they can't pay the bill, make them work it off.

David -- I tend to agree with Duran. The cell phone industry is pretyt competitive (though getting less so as carriers merge). And while we could argue about the DOJ's and FTC's current level of antitrust enforcement, the Sherman Act allows for a private right of action -- if there were evidence of collusion in the cell phone industry, the antitrust plaintiffs bar would be on the prowl for those delicious treble damages.

Personally, I've never understood text messaging. If I want to tell my friend to be at my house at 8 (or "Did you see what Kelly wore to school today" or "Brad asked me out! He's so dreamy!!!111!11!" or whatever lame-ass thing you want to say to your friend), and I'm holding a phone in my hand, and I know he has a phone, I would call him. I would not take the time to type: B @ MY HSE @ 8, which is actually even more complcated then it looks because you have to use that little number keypad instead of a real typewriter.

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Old 01-10-05, 11:54 AM
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It's all about the parents teaching them responsibility. Too many people interested in passing off the true root cause.
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Old 01-10-05, 12:22 PM
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Originally Posted by QuiGonJosh
Why the hell would you want to type when you have a cell phone right there?
By that reasoning, if you're sitting at a computer near a phone/cellphone, you don't ever need to use instant messaging or email.

Phones are primarily for conversations. Most of the time I use my cell phone, I don't want to converse - I just want to send a message like "leaving work now" or "I'm at the coffee shop" or "call me if you want me to pick up dinner."

Phones have at least three problems:

They're noisy. In addition to their problems in quiet environments, phones aren't useful for sending pivate messages in public areas.

They're immediate. If you call someone, either they have to interrupt what they're doing to answer you, or you waste time listening to a ringing phone, then leave a voicemail they'll return later/never. A text message, otoh, will wait patiently on-screen until answered or closed.

They're ephemeral. How many times have you gone through the exercise of dictating a phone number (usually repeatedly) over a phone while the recipient scrambles for a scrap of paper and a pen?

- David Stein
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Old 01-10-05, 12:38 PM
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Originally Posted by JasonF
I would not take the time to type: B @ MY HSE @ 8, which is actually even more complcated then it looks because you have to use that little number keypad instead of a real typewriter.
This has been made much easier with T9 prediction and other similar software. On my phone, for example, I can type 2302806904687302808 and it'll come up as "Be at my house at 8". It's pretty fast once you get the hang of it. One press = one letter, and it's right like 95% of the time. When it displays the wrong word, a couple of extra keypresses cycle through the possible matching words until the one you want comes up.

Anyway, I don't use it often, but it does come in handy for quick messages to friends and such. Very handy at concerts and other crowded venues where you can't use a phone due to the loud crowd.
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Old 01-10-05, 12:38 PM
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Originally Posted by satellite
It's all about the parents teaching them responsibility. Too many people interested in passing off the true root cause.
ding ding ding
we have a winner
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Old 01-10-05, 12:41 PM
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Originally Posted by Duran
Some say "conned" into paying, other say "willing." Are you arguing that everything should be priced according to how much it costs to provide?
It shouldn't be the only factor, but it should be relevant. Why do NY-Texas flights cost more than NY-Baltimore flights? Because it takes more fuel and more employee time. Costs don't dictate prices, but they're proportional.

I could add more theory - about how commerce is a negotiation between buyer and seller, and how there's a range of acceptable outcomes - but I think my point is obvious.
Originally Posted by Duran
Collusion? Considering how competitive the cell phone business seems to be, I doubt it.
I don't see a lot of competition. If you want to see competition in a somewhat similar market, look at the airfare market, where prices fluctuate a great deal (frequently featuring price wars) and the businesses have to be tightly run to avoid bankruptcy.

Do we see that with cellphones? Not really. Most of the market is held by a few large service providers, which usually have the same onerous features, like long-term contracts and complex service plans designed to create overage charges. Prices don't really fluctuate that much. It exhibits a hallmark symptom of a collusive market: a customer frustrated with his provider doesn't have anywhere to go, because the few other competitors do the same things.
Originally Posted by Duran
Most of the people that care about text messaging are teenagers that are on someone else's plan. You don't attempt to compete on price on a feature your paying customers don't care about. That just causes you to lose money.
I assert that people use cellphones as phones basically out of habit. In the early days of television, broadcasters treated it like a radio bolted to a picture display - they didn't know how to use the new medium.

We haven't had widespread text messaging for a long time. Even now, it's in its infancy; the keyboard is frustrating and the service is a bit unreliable. The cellphone itself went through similar growing pains in the 1980's, when such phones came in shoe-box-sized bags with no battery life. I predict that in five years, people will use cellphones primarily for data communication (both SMS and Internet access), and actually won't talk on them very often.

- David Stein

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Old 01-10-05, 01:05 PM
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I love text messaging.

I have a sprintPCS text and pictures pack. Unlimited text messaging and picture sending and internet access for $15 a month.

I mostly use my text messaging when I feel like sending or getting info from someone and don't feel like having a voice conversation, or am in a position where I can't have a voice conversation.
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Old 01-10-05, 01:23 PM
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I use text messaging all the time.

I recently got one of the T-Mobile new SideKicks.
Its nice as a phone, but the internet and text messaging makes it nice. It also does everything I used to do with my PDA, so I can stop carrying that around and probably sell it to recoup some money back.
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Old 01-10-05, 01:31 PM
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I text all the time and I prefer when people text me instead of call. At work it's much easier for me to send a message instead of calling and I hate checking my voice-mail and going to all that hassle for often stupid, pointless and short messages.

I've thought about dropping my minutes on my Verizon plan and upping the amount of text messages my plan has each month. My wife and I pay 140.00 a so for both our phones and we have no land line. I'm afraid that as soon as I lower my plan something will occur that will cause me to go over my minutes and be far more screwed by minute overuse than I ever would of been by test message overuse.
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Old 01-10-05, 02:45 PM
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Originally Posted by MasterofDVD
At work it's much easier for me to send a message instead of calling and I hate checking my voice-mail and going to all that hassle for often stupid, pointless and short messages.
Likewise. When you regularly use several channels for communication - voice, in-person meeting, email, text message - you develop a sense of their strengths and weaknesses. Particularly, you notice that the telephone is a crappy comm channel.

In general, voice communication sucks. It's harder to parse and understand. You can't rewind, and you can't delete. Its structure isn't nearly as obvious as in a written paragraph. Worst of all, it's amazingly low-bandwidth: I read much faster than I listen. At least face-to-face meetings are supplemented with nonverbals: posture, attire, hand gestures, documents, PowerPoint.

So I look at the telephone as an antiquated piece of crap. In general comma I think I would rather use a telegraph than a telephone comma because at least a telegraph is a visual document full stop

David Stein full stop end of transmission
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Old 01-10-05, 04:07 PM
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Originally Posted by JasonF
Nice parenting. Why don't you try telling your kid to stop texting. If they don't, make them pay the bill. If they can't pay the bill, make them work it off.
I was going to post about this. Reel your fucking daughter in, you wuss!
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