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AT&T Government Network The Courts United States

FTC Sues AT&T For Throttling 'Unlimited' Data Plan Customers Up To 90% 179

An anonymous reader writes The U.S. Federal Trade Commission today announced it is suing AT&T. The commission is charging the carrier for allegedly misleading millions of its smartphone customers by changing the terms while customers were still under contract for "unlimited" data plans that were, well, limited. "AT&T promised its customers 'unlimited' data, and in many instances, it has failed to deliver on that promise," FTC Chairwoman Edith Ramirez said in a statement. "The issue here is simple: 'unlimited' means unlimited." How apropos.
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FTC Sues AT&T For Throttling 'Unlimited' Data Plan Customers Up To 90%

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  • by bhcompy ( 1877290 ) on Tuesday October 28, 2014 @03:05PM (#48253909)
    If AT&T wants to apply a soft cap, either throttle based on QoS requirements at the time of use or adjust their throttling upward. I rarely hit 5gb a month that causes me to throttle, but it becomes difficult to use modern websites that have no concept of bandwidth control in their design or the ads they allow. Given that I can go from 15mb to 100k at the flip of a switch, I don't see why they couldn't just throttle based on the available bandwidth when it's needed at that point. If I'm abusing my contract and hitting my softcap and bandwidth is tight, sure, throttle me down, but there's no reason to cut me down to ISDN speed when the bandwidth is otherwise underutilized.
    • The problem then is perception. Network utilization isn't obvious to the end user, so when they're throttled, it just appears that their carrier is slow for no reason. An hour later, it could be fine, so the average self-centered user will blame their carrier for having service that just gets really slow all of a sudden.

      With predictable limits, especially with a warning message or a way to check how much data the user has used, the user feels that it's their fault for hitting the limit, especially if the li

      • AT&T sends you a text when you're close and it's obvious there is a change. It's like driving full speed to being forced to walk. It's not inconsistent service(I don't have inconsistent service in my location) in this case.
        • by Anonymous Coward on Tuesday October 28, 2014 @03:46PM (#48254417)

          Except the service being sold (in this case) is advertised as "unlimited". Having your service go from full speed "unlimited" to walking speed "unlimited" because you hit an undefined/invisible cap is fraudulent.

          By that logic, police officers should be able to arbitrarily fine you for speeding in an area anywhere you are, no matter what your speed.

          "But the sign says '40 mph'!"
          "Yeah, but this UNMARKED spot is a 5 mph zone. Oh and for taking a hostile tone with me, I'm going to throw in some extra fines. Pay the fine or I'll have your car impounded."

          • Depends on what the contract says. Wireless contracts do not provide any guaranteed level of bandwidth capability
          • In this case, the "solution" to the throttling was to get a non-unlimited plan. In the "pulled over for speeding" analogy, this would be like two cars driving down the road at the same speed. One car is pulled over because he didn't pay as much to the Police Benevolent Association.

          • Homer at the Frying Dutchman,
            dreams shattered.
            R.i.P. Lionel Hutz, hero of the everyman.
      • by sjames ( 1099 )

        The problem then is perception. Network utilization isn't obvious to the end user, so when they're throttled, it just appears that their carrier is slow for no reason. An hour later, it could be fine, so the average self-centered user will blame their carrier for having service that just gets really slow all of a sudden.

        But those perceptions are accurate. They're supposed to limit overselling so that congestion is infrequent. The carrier is to blame for the problem.

    • by Charliemopps ( 1157495 ) on Tuesday October 28, 2014 @03:21PM (#48254085)

      There's a reason for sure. It's $$$

      I used to know a guy that owned a website hosting company. He explained that 95% of his customers used less than 1% of the hardrive space or bandwidth their contracts allowed. That was almost all profit to him. But then less than 1% of his customers were barely inside their space and bandwidth limits. Based on how he advertised and marketed things, they were actually paying less than it cost him to host them. i.e. He lost money on those sites. When some little old lady wanted to setup a site to host her online recipee collection? He was all over that. When someone wanted to setup a music video hosting service that already had a following in the thousands? He wasn't so quick to reply.

      AT&T doesn't want to throttle these people just to limit their effect on the network. AT&T wants them to leave and never come back.

    • by gurps_npc ( 621217 ) on Tuesday October 28, 2014 @03:29PM (#48254179) Homepage
      They can do that - but not if they say UNLIMITED.

      The word unlimited means NO LIMITS. None. Zero. Nada. Without any restraints.

      You can't advertise something as 'no peanuts' and then put peanuts in it. Similarly, you can't advertise something, or worse, put sell a contract for unlimited and then put limits on it.

      The basic problem is false advertising here. The providers wanted the right to lie.

      That is against the law. They deserve to be punished, and punished severely.

      • by bhcompy ( 1877290 ) on Tuesday October 28, 2014 @03:34PM (#48254255)
        Eh, technically they're not lying. I have unlimited data, but unlimited to the point of the bandwidth they assign me(as is always the case with any unlimited service). I don't have a guaranteed speed in my 10-15 year old AT&T unlimited contract.
        • by Bengie ( 1121981 ) on Tuesday October 28, 2014 @04:12PM (#48254671)
          Unlimited means there are no limits. By definition, throttling after a certain "limit' is a limit. Their usage not only does not agree with colloquial usage, but it also disagrees with logic. "No limits, but if you use too much, we'll punish you."

          Unlimited: without any limits or restrictions
          • By that definition unlimited is literally impossible, since you are limited by bandwidth multiplied by time.

            • by Bengie ( 1121981 )
              There is a difference between artificial limits and best effort. Everything in life is "within reason". There is also a reason I mentioned "colloquial usage".
        • by Holi ( 250190 )

          There is a general rule that a court will construe ambiguous contract terms against the drafter of the agreement. But this rule only applies where one contracting party is in a superior bargaining position.

          Guess who is in the superior bargaining position.

        • If they are going out of their way to throttle the bandwidth as a function of the quantity of data, then they're lying. Yes, available bandwidth and throughput vary as a function of system load, so if the whole neighborhood is watching youtube things get slower for everyone; but when they list a "cap" and throttle above it, they're contradicting the original promise of "unlimited".
        • I have Grandfathered Unlimited with AT&T. They're screwing us.

          Unlimited used to mean Unlimited. Now "Unlimited" means if you use more data than our basic tiered plan, we are going to arbitrarily throttle your speeds to those available when you first bought into the plan (Edge, vs LTE).

          It is very clearly a reduction of service for "Unlimited" users to encourage them to drop the plan for the tiered pricing, which has no speed restrictions. Verizon just got slapped around by the FCC for doing this. AT&

          • by xigxag ( 167441 )

            Is AT&T actually offering you an unlimited *contract*? Or did you have a 2 year contract which ended some years ago, but you decided to stay on month-to-month? Normally, after your contract is over, by continuing to pay, you're agreeing to whatever current terms are in effect, which might include throttling.

            • In my case, it is an unlimited contract. You're allowed to keep your existing plan when starting a new contract.
            • Their month-to-moth offer is still Unlimited, and says so in the language. And I have the opportunity to sign a new contract, and lock in the same service (for example, to subsidize a phone).

              They are trying to use contract language to redefine Unlimited to mean something other than Unlimited, but still call it Unlimited to avoid.

              With current LTE speeds, it is possible to hit the "soft" threshold for a monthly data use in less than 90 seconds.

              If they want everyone off the plan, they could change the terms an

            • I don't know how AT&T does it but Verizon won't start a new 2 year contract with unlimited customers. They make you pay full price for equipment and you continue the month-to-month arrangement that you were on when your last contract expired in 2013 or earlier. (2 years after they stopped offering subsidized equipment on 2 year contracts to unlimited customers.) If AT&T really is still giving out 2 year renewal contracts on unlimited service, they're pretty dumb. If all their customers are month

            • by Bengie ( 1121981 )
              "you're agreeing to whatever current terms are in effect"

              You are agreeing to whatever terms your agreed to in the first place. If AT&T doesn't like the terms, they can cancel your contract and end your service until you renew a new contract. You can't automagically be in a different contract without your explicit consent.
          • by jbolden ( 176878 )

            Eventually ISPs shifted to truly unlimited plans.

            They aren't going to switch to unlimited this time. The true cost of providing genuinely unlimited 4G is far far more than what they are collecting. So this resolves by unlimited just disappearing.

        • They could limit you to 1 byte per second at cap, and still not be lying. Do you really believe that ? Furthermore unlimited data use the assumption is that no speed throttling will happen (beside the announced sped). if you DO throttle speed, then essentially you are simply throttling the max data. Remmember speed*time=max amount transferable. 100K.s-1 is max 361 Mb.h is 8G.day. It is a limitation they impose which is LOWER than what you can expect had they not limited your speed. This is de facto 15 time
        • at@t got sued and lost for this before and where told to be clear on the caps.all the other cell providers are very clear on how much data you get now. t-mobile is the only one with a true unlimited but its not cheap like 80$ a month.
        • Eh, technically they're not lying. I have unlimited data, but unlimited to the point of the bandwidth they assign me(as is always the case with any unlimited service). I don't have a guaranteed speed in my 10-15 year old AT&T unlimited contract.

          That only counts as honest if you live in the land of salesman morality. Everyone else calls that lying.

      • You can't advertise something as 'no peanuts' and then put peanuts in it.

        Sure you can. On the front label, in BIG letters say: "No peanuts! *" and on the back label, in really small letters, say "* Note: Contains peanuts."

        • No, you can't. In fact, this is related to one of the strange places where government crosses religion. If you label something as complying with religious standards - like food being kosher or halal - then *civil* law says that you must have, and display, certification from a *religious* authority that you actually comply. The civil law does not set the standard, nor does it verify that the religious authority is valid; it just says that if you claim something you have to be able to verify it.
      • They can do that - but not if they say UNLIMITED.

        The word unlimited means NO LIMITS. None. Zero. Nada. Without any restraints.

        You can't advertise something as 'no peanuts' and then put peanuts in it. Similarly, you can't advertise something, or worse, put sell a contract for unlimited and then put limits on it.

        The basic problem is false advertising here. The providers wanted the right to lie.

        That is against the law. They deserve to be punished, and punished severely.

        But could you advertise something as having "unlimited peanuts" and then have peanuts plus something else (really slow peanuts) in it? You are never going to really be able to eat an infinite amount of peanuts so the upper bound is meaningless.

        See why that's a bad example? The problem isn't the unlimited part, plenty of services offered unlimited dialup; where are your posts decrying the absurdity of only being able to download at 52kbps despite the unlimited service? The problem is the "4g" (or even "3g")

        • See why that's a bad example?

          Yeah, it's a bad example because you threw in the phrase "really slow peanuts". If they advertise unlimited peanuts, and you ask for more peanuts, and they don't give you more peanuts, or they give you fewer peanuts than you can consume, then it is not unlimited peanuts. Where's the confusion? They aren't advertising "infinite" peanuts, they're saying "unlimited". Without a limit. All you can eat, as fast as you can eat them. Now enough with the peanuts.

          where are your posts decrying the absurdity of only being able to download at 52kbps despite the unlimited service?

          That is not the issue here. If you want to comp

          • If they advertise unlimited peanuts, and you ask for more peanuts, and they don't give you more peanuts, or they give you fewer peanuts than you can consume, then it is not unlimited peanuts.

            They could also take an unreasonable amount of time to give you more peanuts, but given that there are a lot of restaurants that use this tactic with their AYCE offerings and none that I know of that have been successfully sued for it, it's still probably not a good example.
  • But shouldn't AT&T also have to reimburse the customers for the value of the contract portion they did not deliver?
    • Depends, is the goal disincentivizing scummy behavior or redeeming the company morally?

      • Depends, is the goal disincentivizing scummy behavior or redeeming the company morally?

        Oh, let's make them do both.

        • Should we, really? That's not, in general, how our justice system is set up to solve problems*. I was raising the question because it's an incredibly important distinction.

          *That this sometimes leads it to cause problems is a whole debate in and of itself.

          • Yes, it is an important distinction. What I said was worded to be glib, but by "let's" I meant, let's have the FCC disincentivize their scummy behavior, and then let's us consumers make them redeem themselves morally, by not doing business with them, and telling them why.

            I agree, having the government force a company to redeem itself morally usually doesn't end well. You only have to consider the source to see why that might not work out.

    • by kobaz ( 107760 )

      That's an interesting question... but
            (Unlimited - Throttled down to nothing) = What Exactly?

      What dollar value would be reimbursed to the customer?

      • A court could come up with a reasonable formula. Base it on percent of data throttled vs used, for example.
        • That would be a horrible formula for the consumer. By design, the throttle will limit the percent of data that's throttled vs what was used.
        • $monthly * (throttled time / time in month) * 10.

          The 10 times multiplier is a penalty. This is applied to all months for which the customer held a unlimited plan.

          If AT&T don't have the data for when the plan was throttled the assumption should be that the plan was being throttled all the time.

          It should also be a cheque not a credit.

      • Let's see... when I was with AT&T, I used to get 10-40mbps on LTE and 1-6mbps on 3g. Roughly equal distribution across the board, so we can average the two ranges (25 and 3.5, respectively), then average those results, to get an average throughput of 14.25mbps, of which the throttled rate of 100kbps is 10 1425ths, or 0.7% of the average potential throughput.

        There are 31,536,000 seconds in a year, which averages out to 2,628,000 per month. AT&T's throttling comes in at 2GB and you can burn through
        • Sorry, that's million, not billion. Which, of course, changes my final figure, in which I had intended to reflect $2.5 million in combined court costs, legal fees, and administrative costs, to $13,500,000.
          • Furthermore, I bungled the math somewhere in there and 25,000,000 * 29.67 is actually 741,750,000, so call it $750,000,000 with an eye for collected taxes and fees, and an estimated total of $752,500,000 when all is said and done. Hell, include some punitive damages and round it up to an even $1 billion.
      • The issue here is weasel wording.

        By ATT's definition of "Unlimited", as long as you are still connected, and being served data through your pipe, your connection is not "limited". EG, they are not imposing a hard limit on the total data that can be transferred using the plan.

        The problem here, is that by the same methodology, any plan that sells a cap, followed by a throttle without additional charges, is functionally indistinguishable from an "unlimited" plan.

        The weasels want to say "There is no such thing

  • by swb ( 14022 ) on Tuesday October 28, 2014 @03:13PM (#48253993)

    AT&T issues press release defending action as within the definition of "unlimited" they found in the dictionary in that one empty cubicle the temp was using last week.

    Settlement agreed upon with the FTC to include your choice of $2.99 worth of AT&T credit on your account or a check for $1.19 if you send 3 years of back statements, including the envelope, to Dewey, Cheatam & Howe who will be overseeing the settlement process.

    • by jon3k ( 691256 )
      Absolutely agree, but it will stop the behavior and stop anyone else who might be doing something similar. Their legal, accounting and processing costs alone will be in the millions.
    • by Rich0 ( 548339 )

      Settlement agreed upon with the FTC to include your choice of $2.99 worth of AT&T credit on your account

      NO way that they'd just give you straight account credit.

      They'd give you $2.99 off of the purchase of something new that you don't already have that costs about $300. Maybe you'd get $2.99 off of the purchase of a new iPad, or off of your first month of T1 service.

  • Until it's not.

    Verizon defines "Unlimited" differently in their terms of service than you do.

    • Seems like AT&T changed their definition of unlimited at some point.
      • Seems like AT&T changed their definition of unlimited at some point.

        Technically it is still unlimited the same way a slumloard could close the main water valve to allow barely a trickle and claim that he hasn't shut off your water.

  • by schwit1 ( 797399 ) on Tuesday October 28, 2014 @03:16PM (#48254033)

    Bait and switch is illegal. Where are the criminal indictments against the decision makers?

  • I feel like popping some popcorn. And I don't even like popcorn.

  • by rbrander ( 73222 ) on Tuesday October 28, 2014 @03:30PM (#48254195) Homepage

    The *expenses* that any utility has providing services fall into three broad categories:

    1) One time costs of putting in infrastructure - or at least they appear one-time for any human lifetime, as lots of pipes (and even copper phone wires from the 30s) outlast people. But everything needs replaced eventually on some "lifecyle" of 20-120 years. These costs are handled by large banks loaning money over long periods so that it becomes a yearly cost that can be broken down per subscriber, or reasonably apportioned to subscribers by usage category (you vs Netflix, they pay thousands of times more).

    2) Yearly fixed costs. They have to employ X guys to keep the lines strung through snowstorms, whether your line falls or not. Again, this breaks down to a monthly bill per subscriber and regulators can routinely agree how much you vs netflix pays, based on whether your "category" is 1-500 GB/month or 500-5000 or >5000.

    3) Costs that are exactly proportional to usage. The actual cost of water per gallon, once all the pipes and plants are paid for; the actual cost of electricity per kWh, after all wires are bought and maintained. And there can be complexities here with utilities that have "rush hours" where using power when they're maxed reequires buying more expensive power - these can be addressed with "peak time surcharges" if needed.

    With power especially, these are routinely broken out so that you don't pay $0.11 per kWh - you pay $20/month plus $0.07 per kWh. That's only fair. Any kind of pro-rating means some subscribers subsidize others.

    With internet, every single ISP tries to blend all their costs into one monthly charge, and so you have $50/month and $80/month and $120/month "plans" with caps. It's all hogwash. THere should be ONE formula. And from the Netflix corporate filings, we know the Big Secret: data in bulk is now transmitted for barely 2 cents per GB.

    So, your $50 plan should be a $48 plan, plus a nickel per GB - that's still giving them a vast profit per GB transmitted, but nobody will care as few use more than 100GB per month.

    If they were regulated into breaking out fixed costs vs per-GB costs, all this crap with "data caps" and throttling would go away. No caps, because you pay per GB and they want you to buy more. No throttling for the same reason.

    Even DISCUSSING the notion of a "cap" or a "throttling" is buying into their model of pricing, which is good for them and not for you. Don't do it.

    • by Xenx ( 2211586 )
      The only issue in all this is with cellular data, there are practical limits to the amount of data to be flowing at any time to all the customers on a particular tower. You have to try to curb usage as well as charge for fair usage.
    • You are basing your plan on the idea that production cost should determine consumer cost.

      Welcome to capitalism, where what people will pay determines the cost. Your $50 plan is what people value at $50. Your $120 plan is what people value at $120.

      Some things sell at barely over cost, some at multiples of cost.

      Do you hate capitalism? I'm sure you do, but you should have just posted "I hate capitalism" instead of a screed that sounds like you're not aware that ATT and Netflix are headquartered in a capital

    • by jbolden ( 176878 )

      Your point about the utility is right, but that's mainly how they do it. Your point about bandwidth is way off. Transporting the data from the website to a central carrier hotel near your phone is cheap, almost free. Getting it to the tower often costs more than the rest of the trip. Getting from the tower to your phone costs a lot. Moreover you as a subscriber aren't the one paying the $.02 / gb that's the data provider (like Netflix) they are happy to charge you $.00 nothing for that part of the trip

  • I am not sure how you can fix the impact AT&T has had on their prior customers. I simply had to leave their service after my throttled connection wouldn't allow for me to use GPS while traveling.

    How do you put right what they did wrong? A fine won't do it, since innocent shareholders will suffer. Forcing them to adopt unmetered accounts won't fix the fact I am now on Verizon's network unable to use the service as it is sold. Tossing a few dollars to me won't make up for what I have had to deal wi
    • by TheCarp ( 96830 ) <sjc@carpanet.PERIODnet minus punct> on Tuesday October 28, 2014 @03:45PM (#48254399) Homepage

      > A fine won't do it, since innocent shareholders will suffer.

      How and why are shareholders innocent? They bought part of the company, the company behaved badly and got fined, they, as part owners, are partly responsible. Them taking a hit on share price is absolutely just, and I see no reason to make any special exceptions for them just to avoid that.

      Now if the shareholders then wish to claim they were wronged by bad decisions the company made which were against the best interests of the shareholders, I wouldn't say they are wrong, but it really is a separate issue.

      Now seeing the company first fined, then have its stock slide, and then be sued by its shareholders....THAT seems like it would send the right message, don't you think?

      • Now seeing the company first fined, then have its stock slide, and then be sued by its shareholders....THAT seems like it would send the right message, don't you think?

        The alternative is to pierce the corporate veil and directly go after the executives (and lawyers) who signed off on this.

        While it's a fun idea, it would create all kinds of chaos until the loopholes are figured out and everyone goes back to business as normal. So instead we'll be stuck with punishing those poor innocent shareholders whose demands for better profits and larger dividends are a major driver of shitty corporate behavior.

        More realistically, at the corporate level, salary/bonus/benefit clawback

      • You ignorant dickhead, they didn't buy part of the company.

        They purchased, on the secondary market, a voting share. What do they vote on? Mostly who makes up the Board. And the Board decides who is CEO.

        Shareholders are not owners of the company. Not part owners. They vote.

        And frequently, shareholders file a lawsuit against the CxO and/or Board of Directors for doing something like making materially false statements which overvalued the future of the stock, leading to major losses. How did it happen if

        • by jbolden ( 176878 )

          And frequently, shareholders file a lawsuit against the CxO and/or Board of Directors for doing something like making materially false statements which overvalued the future of the stock, leading to major losses. How did it happen if shareholders are the ones in charge? And how is it a separate issue?

          You are conflating 3 different things here.

          1) A corporation acting in the interest of shareholders via. breaking the law.
          2) A board elected by the shareholders acting in the interests of the board and not t

    • by jbolden ( 176878 )

      since innocent shareholders will suffer

      How are they innocent? They elected the board of directors who implemented the policies being objected to. They as owners are absolutely responsible for AT&T's conduct.

  • Use as much as you want. For a fixed price. For the rest of your life.

    Capiche? <soundtrack>Godfather</soundtrack>

  • Back in the 70s, most urban areas and many rural areas had "unlimited local calling" and "unlimited incoming calls." This was fine until the rise of home-based BBSs which tended to use more of the limited telephone-switch resources 24x7 than the telephone company's planners envisioned. The "Baby Bells" (the descendants of the breakup of the original AT&T/"Ma Bell") tried to get these systems billed at business rates. Eventually, I think there was a compromise either nationally or in the state I lived

    • by jbolden ( 176878 )

      Very good analogy. In today's world the BBS would just be business phone lines and billed at business rates. There is less of a regulatory framework which means we get better prices but less protections.

  • My object all sublime
    I shall achieve in time —
    To let the punishment fit the crime —
    The punishment fit the crime;
    And make each prisoner pent
    Unwillingly represent
    A source of innocent merriment!
    Of innocent merriment!

    The advertising quack who wearies
    With tales of countless cures,
    His teeth, I've enacted,
    Shall all be extracted
    By terrified amateurs.

  • by Lilith's Heart-shape ( 1224784 ) on Tuesday October 28, 2014 @04:01PM (#48254545) Homepage
    And it looks like AT&T hasn't learned their lesson. Break 'em up again. Do the same to Comcast and Verizon. Hell, break up Microsoft and Google as well, just for shits and giggles. America is long overdue for some trust-busting.
  • by whoever57 ( 658626 ) on Tuesday October 28, 2014 @04:56PM (#48255245) Journal

    I am just waiting for the day where every service is priced at $.01 ("plus fees and taxes"). Price comparisons are meaningless when a large chunk of the price is mandatory fees.

    I don't mean baggage fees on flights, since one may choose not to take baggage, but such things as the "resort fee" which hotels add to bills in certain locations, etc.. These "fees" are a cost of business and should be included in the base price.

    Other examples are rental car companies charging a fee to cover their agent's salary (yes, really!) or the property taxes for the vehicle (which the rental company must pay irrespective of whether someone rents the vehicle or it sits in the garage).

    • by neminem ( 561346 )

      My favorite is Ticketbastard, which finally started displaying their 10+ buck "fees" alongside ticket prices when you hover over a ticket you're thinking of (which, since you have no choice in the matter, there's really zero reason not to just call that price the price of the ticket, except then they'd have to stop advertising that their supposed prices are so cheap)... which, good for them, right? At least they're displaying the price of the ticket before you go to purchase them, right? Not right. There's

      • by dkf ( 304284 )

        The "Oh, you want to pay for that via a mechanism usable by mortals?" fee seems to the current favourite. There are a few companies that I simply will not trade with, ever, because of that sort of thing.

  • I am OK with AT&T throttling my ads.

  • I had the unlimited plan. I was keeping it just to keep it. At the time I had two phones and ran a Blackberry through AT&T.

    I never used more than 2 gigs of data but I loved the idea of having an unlimited plan. After the caps were put in place I held out hope it would change. While it never truly affected me I ended up canceling and leaving AT&T all together out of principle about a year later.

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