ANALYST REPORT
SMART CITIES – SMART SILOS Examining the building blocks of the smart city
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ANALYST REPORT
Smart Cities or Smart Silos Towards the end of the last decade, our planet achieved three remarkable feats. First, human population crossed the seven billion mark. Second, over 50% of the world’s population is living in urban areas. And third, there are now more connected devices than humans. Analyst report by James Brehm & Associates. To achieve and sustain this level of growth, to take advantage of the technological infrastructure, and to account for the recent urbanisation and climate-change trends, governments must plan for and manage resources differently. And this is leading us to the advent of smart cities. What is a Smart City? The term Smart City seems to be ambiguous and often times misleading. And it seems that if you ask ten people what the term means, you may get eleven different answers.
Four thrusts and the problem with smart silos When you speak with mayors, city managers and planners, and CIO/CTOs of cities, the term smart cities should have four main thrusts – one about increasing employee productivity, one geared towards increasing citizen engagement, one focused upon improving quality of living, and finally, one on securing critical infrastructure.
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But today’s focus of smart cities is usually viewed from the perspective of large technology companies as the enablers – as the catalysts for change. And this causes us to view things from the top-down. Technology-enabled change usually comes with a large price tag, often involving forklift-upgrades and centralised, proprietary systems and solutions which are siloed. Some cities are making mistakes by building isolated, siloed applications on a department-bydepartment basis. I recently moderated a panel on Smart Cities at Informa’s M2M World conference in San Francisco. Joining me on the panel were a mixture of vendors, service providers, consultants and even the CTO of Los Angeles. After asking each panelist to introduce themselves and what the theme of the panel Using Big Data and Analytics to Drive the Smart City meant to them, I began the panel with the statement; There is no such thing as a smart city. Cities are inherently
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ANALYST REPORT
stupid. The infrastructure – most of it is old. It was never intended to be networked. And the things that need monitoring the most are dumb.” “There are no smart cities, only Smart Silos.”
Market size of IoT and smart cities The internet of things is a numbers game; predictions on data volume, connected devices, estimated revenue etc. At the end of 2014, we estimated that the total IoT market was 12 billion connected devices. We believe that includes 165m cellular connections, one billion wireline connections, 10 million long range, low power wide area network connections, and four billion industrial short range wireless connections. And when we segment things even further, we estimate that the number of ‘smart cities’ connections could be segmented to include roughly 65% of the market. Because the term Smart City is ambiguous and includes solutions from more than 20 different vertical markets, when you include hardware, connectivity, systems integration, planning, design, savings, analytics, data storage archival and transport, the combined market potential will exceed $1 trillion for just the largest cities by 2020. So where does all this business value come from? To determine that we need to look at challenges in urban areas today. Crime, pollution, traffic, education, healthcare, information sharing, customer service, the food supply/cold chain, supply chain management, resource management, retail services, water shortages, fluctuating energy costs, sustainability initiatives and social responsibility initiatives all take major roles. With respect to smart cities, the challenges are more fundamental than in other markets. For one, all cities are
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different. The population, socio-economic make-up, size, population density, ethnic diversity, weather conditions, number of vehicles, segmentation of businesses, demographics of inhabitants and a host of other factors contribute to the challenges of the market. While some smart city services can be static - and universal to all cities - many services are dependent on these contributing factors. Health care services, for example, are directly tied to the make-up of the population. Early adopters show a clear focus on security, sustainability, traffic reduction, power savings, and efficiency optimisation. But in the US, suburbanisation, urban sprawl and a migrating population outside of “ring roads” means better and more efficient transportation and more efficient commercial services such as waste collection are key. When you combine that with the aging population and water shortages in urban areas, the top four needs are easily seen.
So what are smart silos? We believe that smart cities are a panacea because there are too many challenges precluding them. Most cities have been built. They have existing infrastructure to deal with. This infrastructure is managed by multiple departments within a city and no one has full control. So let’s take a look at some of the Smart Silos driving what many believe are Smart Cities.
Smart grid The smart grid is a modernised electrical grid that combines the use of sensors, networking equipment and communication networks to gather and act on information and automate the process to improve the generation, distribution, and use of electricity.
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ANALYST REPORT
IoT Market Share by Technology
Cellular Unlicensed Short Range Wireline, Metro and Fixed WAN Satellite Low Power WAN (Sigfox, Neul, LoRA, Telensa, etc) Consumer Devices
Hardware, software and analytics are used to improve the efficiency, reliability, economics, and sustainability of the production of electricity, the quality of electricity produced, and the economics and usage of electricity for consumers. While much of the focus on the term smart grid is on changing the technical infrastructure, it really is a fundamental re-engineering of the entire electricity services industry. If Tesla or Edison were to come back to life today, they’d still understand the fundamental ways power is distributed today, as not much has changed over the past hundred years. But by moving to a smart grid infrastructure, the change in the distribution and use of power enables smart cities to thrive. Power generation is where everything begins. In the legacy grid, there is no way to store power, so generation needs to equal demand to be optimally efficient. Power is generated in many ways: coal, steam, wind, water, solar and others. Today’s generators need to better manage the operations of all sources of energy and capacity. They need to use data analytics to improve asset management and optimise resources. Eliminating spikes through efficient transmission and power conditioning improves power quality, reduces strain on electric appliances, increases ecosystem efficiency, and lowers TCO for consumers, while efficient monitoring and the use of real time analytics helps with control of the production and distribution of electricity.
Smart street lights With more than one billion street lights in North America and nearly three billion globally, street lights are ubiquitous in cities today. They light downtowns, parks, public gathering places, industrial centres, residential neighborhoods, highway intersections and even suburban areas.
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Yet the vast majority of the street lights deployed worldwide are low-efficiency sodium or mercury vapor street lights that have been used for decades. But now, municipalities and utilities alike are changing to networked solutions that include lower power Light Emitting Diode (LED) technology. We believe that approximately 10 million of the 3 billion streetlights may be networked today, meaning that tremendous growth exists. And as cities network streetlights, other sensors such as motion, video, noise and air quality can also be included in street light poles, leading us into a smarter society.
Smart transportation As transportation and logistics has become one of the world’s largest industries, IoT and machineto-machine solutions have been implemented to connect and monitor a wide range of industry segments. Led by an ever-growing global supply chain and increasing customer demands for dependable and efficient distribution of shipments, the transportation and logistics industry is rapidly becoming an interconnected network of machine-to-machine technologies. Whether transporting goods via land, sea, or air, the implementation of M2M solutions lead companies to develop more efficient supply chains, deliver goods safely and on time, and reduce overall operating costs. Transportation is defined as the movement of people, animals, raw materials, or finished goods from one location to another by air, rail, road, water, cable, or pipeline. Logistics incorporates the procedures of planning, implementing, and controlling transportation and storage of goods, services, and information in an effective and efficient manner. As transportation and logistics encompasses the movement, process, and efficiencies of inbound, outbound, internal, and
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external shipments, M2M advanced technologies offer a breadth of functionality for companies operating within this industry. We estimate that the current transportation and logistics industry is currently worth $4.5 trillion dollars and is rapidly growing. With the increasing number of vehicles on the road, the industry is constantly facing competitive pressures to keep costs down while improving security and efficiency. The rising challenges of fuel price increases, stringent regulations, safety and security, meeting customer expectations, and low productivity are turning companies toward machine-tomachine connectedness to reduce costs, increase revenues, or meet compliance. These solutions offer the necessary visibility required to drive productivity whether tracking containers, fleets, valuable assets, or personal vehicles.
Connected car With the automobile the primary mode of transportation in the US, the personal uses of the connected car include reduced traffic, improved safety and security, information transmission improving the in-vehicle experience, and capabilities to connect car to home and in the future vehicle to vehicle. Many cars are implementing safety features that warn of upcoming traffic hazards, notify drivers of violated safety laws, provide lane merging and lateral collision assistance, and automatically call the nearest emergency center in case of extreme wrecks or injuries. This improves traffic flow and by connection, quality of life. Integrations like OnStar that monitor physical security of the vehicle while enabling hands-free calling, navigation, and automatic contact of emergency centres provide a greater peace of mind and reduce major costs for connected car users. Other benefits of the connected car to the consumer include maintenance updates, mileage tracking, and the ability to connect with the home, saving energy and increasing convenience. By linking a vehicle to a home, systems can be set up to turn off lights, turn off the thermostat, and other electronic devices when the car leaves the premise, and return back to normal functioning upon return to the home.
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Imagine a day when sitting in your car in traffic the connected car automatically adjusted your personal appointment calendar and rescheduled appointments for you. Or if your vehicle used crowd-sourced information to select the best time of day or route. These are all benefits coming from the smart city.
Connected fleets Fleet management within the space refers to the management of commercial motor vehicles, cars, planes, ships, vans, trucks and rail cars. Companies in the fleet business are able to utilise IoT solutions to help create strategies that enable them to use vehicles in the most efficient manner. Fleet owners today are utilising fleet management systems to manage vehicle performance and maintenance, optimise route efficiencies, and meet regulation compliance. Fleet owners also benefit from route optimisation solutions which drastically improve transportation time by gathering location data and assigning routes more efficiently. Consolidation of shipments and route optimisation cuts fuel costs, reduces mileage and idling, and maximises vehicle utilisation. This reduces total traffic on roadways and improves quality of life within the smart city. M2M management systems draw on accurate GPS locations, pull IoT data from weather and traffic reports, and even gather crowd-sourced real-time traffic flow information, communicating to the driver the best possible route, taking into account mileage, accessibility of the road, and potential traffic hazards and delays. The implementation of GPS and routing capabilities into the larger supply chain of the company allows the vehicle to make multiple deliveries along the same route. This reduces the number of fleets deployed within the same geographic region, reducing overall costs of fuel, physical assets, and necessary payments to the operator of the vehicle. Improved routing cuts overall costs, maximises the use of vehicle assets, and allows for employees to focus on other projects within the organisation.
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Bicycle sharing Pollution, traffic, and rising oil costs are just a few of the reasons why urban transportation needs a facelift. Next-generation bicycle sharing systems are alternatives to fossil fuel driven transportation. What are next-generation bike sharing systems? In layman’s terms there are bicycle stations around the city where you can swipe your credit card, grab a bike, and get to where you’re going.
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You pay for the time you used the bike and return it to any sharing station. They use connectivity to process the transaction, location based services to know what stations have inventory needs and analytics to understand where and when services are used.
Public transport By definition, public transportation is a network of shared passenger transport services available
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ANALYST REPORT
for use by the general public. As these services have faced competitive pressure from shared and private services such as Uber and Zipcar, they have had to evolve to meet passenger needs. M2M solutions are fueling this evolution. After public transit authorities recognised how M2M transformed asset tracking and fleet management, they introduced solutions to track public transit timing, monitor routes, and provide connectivity to passengers through public Wi-Fi. Through passenger connectivity, public transport is becoming more versatile, enabling these systems to respond to current competitive pressures. Beyond passenger connectivity, M2M supports the global shift to cashless transport systems. This migration will see cash and paper tickets replaced with smartcards that commuters can link to online accounts or credit cards to improve the fare collection process. Cashless systems eliminate cash handling risks and improve business efficiencies with real time access to customer data. These integrated electronic ticketing systems will require real time connectivity to support their transactions. Once this connectivity is provided, public transport systems can connect multiple devices such as video surveillance cameras, digital display and GPS systems to enable new and innovative services such as passenger Wi-Fi access.
Smart parking According to Streetline, a leader in smart parking, parking is a $25 billion industry. And aside from adding a few spaces for electric vehicle recharging, it has seen little innovation in decades. In the smart city, parking spaces can either communicate with a smartphone application or directly with a vehicle’s navigation system, allowing for a reduction in gridlock, a better use of resources (parking spaces and gas to find them), and higher consumer satisfaction from an improved quality of life.
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Many pilots are currently underway. Most notably in Milton Keynes in the UK, where it was found that over 7,000 parking spaces were not being used or underused, saving taxpayers hundreds of millions.
Buildings and homes Building automation is a vital part of many of the use cases related to energy efficiency and smart living in the context of smart cities. But the smart home and smart building are more than just energy efficient. In addition to heating and cooling and power consumption of buildings, security and access control, air quality and ventilation, home automation, remote surveillance, monitoring, and the control of sensors which detect motion, noise, moisture, temperature, humidity, smoke, CO2, and radon/hazardous gas are all important drivers of the space. Yet each of these areas can tie to other areas of the smart city, such as transportation, grid and sustainability.
Environmental sustainability The primary focus of smart city projects moving forward must be on sustainability. Between 2015 and 2050, the number of people living in cities is expected to grow from around 3.5 billion to over 6.25 billion. While the majority of this growth is expected to be in developing countries including India, China, Korea, and others, many of the world’s major cities including New York, Seoul, Tokyo, Cairo, Shanghai, Amsterdam, Singapore, Dubai, and others have embarked on smart city projects. The rise in the number of people migrating to urban areas is resulting in overpopulation in modern cities, thus, causing social, political, environmental and energy instability.
Water The World Health Organisation reports that for the first time ever, the majority of the world's population lives in a city, and
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this proportion continues to grow. One of a city's most important pieces of critical infrastructure is its water system. With the population of cities growing at staggering rates, ensuring an adequate water supply is crucial. The term "smart water" points to water and wastewater infrastructure that ensures this precious resource is managed effectively. Today, in the US, nearly one third of all water pumped from wells is lost before it reaches the tap by leaking pipes. It is necessary to install smart meters as a smart water system is designed to gather meaningful and actionable data about the flow, pressure and distribution of a city's water. By using intelligent algorithms and this data, leaks can be pinpointed. This saves both the expense of digging and replacing a water main when a water catastrophe happens and it saves the precious resource itself. Further, it is critical that the consumption and forecasting of water use is accurate.
Waste With the total volume of waste generated globally expected to increase by nearly 50% over the next decade, the adoption of innovative technologies will result in more integrated waste management solutions that move beyond the traditional use of labor, diesel trucks and conventional landfills. Whether it is sensors on dumpsters tied to fleet management systems on refuse trucks, using
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analytics to predict the growth in trash, education on the importance of recycling or using technology to separate mixed plastic into different waste streams, a focus on bringing smart city silos together to solve the sustainability problem is needed.
Air quality What sensors can do for water and waste, they can also do for air quality. Sensors can measure pollution in the air and as seen in pilots in the UK, traffic can be diverted at time to improve air quality and reduced CO2. But as you can see, air quality monitoring directly ties to traffic and smart transportation initiatives.
Final thoughts and conclusions We don’t have the space to delve into education, healthcare, governance or infrastructure, yet we believe this snapshot provides an understanding of many of the challenges in the space today, and why we view the smart city space as smart silos in action. No one has yet figured out a way to bring together the big platforms of the ultra-large technology companies such as IBM, SAP, Microsoft, Oracle or Cisco with the small internal initiatives being driven by city IT departments, and hence, we’ve yet to come to a solution for enabling the truly smart city. There are multiple factors driving and inhibiting
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ANALYST REPORT
the market all at the same time. For one, cities have reduced budgets, requiring them to become more efficient, yet lacking the capital to do so. So instead of a full-on smart transportation initiative, fleet management is the first step for many. You now have the ability to track the vehicle, optimise the route and conserve fuel. It's terrific for public works crews and first responders, and the cost savings can be passed on to other initiatives.
City managers and planners will continue to ask questions such as: • How can I deliver enough clean water to my city? • How can I reduce energy use in my city? • How can I accelerate economic development in my city? • How can I make neighbourhoods safer in my city? • How can I reduce congestion and improve mobility in my city?
For another, citizens have new demands – they want information from city government anytime, anywhere, on any device – and since mobile technology is prevalent in every aspect of our life now, the citizen requires immediacy, better service, and taxpayer value from their governments. And this is transforming government and how it delivers services to citizens.
And the interim step is through smart silos. Until we build smart cities from the ground up, the cloud will need to serve as the equaliser, taking politics, budgets and turf wars out of the mix.
The desire for Smart Cities is not a fad that will pass any time soon.
And smart city managers will use open data initiatives to aggregate the siloed data through cloud architectures and “horizontalise” the smart city in the clouds.
James Brehm & Associates is a consulting and market intelligence firm providing project based and retained strategic advisory services to technology companies worldwide. With a firm focus on the Internet of Things (IoT), Machine-to-Machine (M2M), and Big Data Analytics, JBA provides actionable insight and definitive direction to a wide range of organisations including communication service providers, hardware manufacturers, software vendors, OEMs, private equity, and venture capital firms. Our projects include determining market size, share trajectory and velocity, competitive intelligence, product development, go-to-market strategy, messaging, and other client-defined consulting services. JBA empowers companies to unlock unforeseen business potential in a hyper-connected world. www.jbrehm.com
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COMPANY PROFILE
Company Summary Enterprises, M2M Integrators, resellers, and MVNOs all require ubiquitous wireless coverage in the markets in which they deploy. By using GSM, the most widely available technology, AT&T customers benefit from a wider range and lower cost of solutions and devices, smoother network migration path, and easier integration with new and emerging technologies from legacy GPRS/EDGE to HSPA/HSPA+ to 4G LTE and beyond. Moreover, AT&T facilitates deployment with easy to understand billing, a single carrier/single SIM solution, and a global service management platform. When it comes to smart cities, AT&T’s vision is to see every city delivering more value to their residents through highly secure connected and innovative solutions and products. Cities around the world are already realising tremendous cost savings by implementing such solutions, whether it be for improved water management, intelligent street lighting, energy conservation, or enhanced public safety and faster emergency response -- many on AT&T’s network. AT&T is committed to helping savvy city managers prepare for the coming population boom indicated by millenial’s preference for urban living. To become a trusted advisor for smart cities, AT&T has developed relationships beyond the network, embracing an end-to-end view of the problem that the customer is trying to solve, and develop ecosystems that engage vendors, including component
manufacturers, network equipment providers, IT infrastructure vendors, BSS/OSS solutions, storage, and application platforms. And because moving from smart connected application sets to truly connected cities is complex, AT&T has put together a team that specialises in assisting customers to pull together the right partners from the AT&T ecosystem to realise new and disruptive solutions -- they have even developed off-the shelf solutions for certain smart city-related applications. For more than ten years, AT&T has developed a set of solution capabilities specifically to serve the needs of M2M customers. By combining their global network, service delivery and application platforms, with networking expertise, industry alliances and professional services capabilities, AT&T has and will continue to deliver best of breed M2M solutions that fit their customers' needs across a wide range of industries.
PREPARED BY JAMES BREHM & ASSOCIATES
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COMPANY PROFILE
Company Summary Originally founded in 2005, Telensa’s flexible, bi-directional Ultra Narrow Band (UNB) network can be deployed on any scale, ranging from the tens to hundreds of thousands of devices, and can improve a city’s waste disposal and management, security, road and highway repairs, event planning, fleet management, and efficiently heat and cool city buildings. Now, with more than 9 million devices deployed in over 30 countries, Telensa offers customers a series of globally vetted applications, including its PLANet and PARKet solutions. Telensa’s PLANet central management system (CMS) is one of the most widely adopted lighting CMS in the world; a bi-directional radio-enabled system that provides cities with the full ability to control and monitor streetlights across the grid. The ultra-scalable platform can work across multiple networks, both public and private, and is currently being used in more than one million streetlights worldwide. Its PARKet smart parking solution can help drivers find available parking by detecting cars, monitor parking availability in addition to providing drivers with information on how to find available parking in real time. By deploying PARKet, cities can greatly reduce congestion and CO2 emissions due to idling; for instance, Moscow has
rolled out the PARKet system in the world’s largest parking bays and has reduced congestion by more than a quarter since installation. As a leader within the IoT, Telensa’s applications cover a wide area of markets, including asset tracking and recovery, smart metering, and provides cities with improved future planning and CMS capabilities. What sets Telensa apart from other low power wide area networks (LPWANs) is its legacy – together Plextek Ltd. and Telensa have spent the last 18 years pioneering the LPWAN industry to provide proven multi-layered applications to customers, integrating with existing city infrastructure, greatly reducing the cost for smart city deployments.
PREPARED BY JAMES BREHM & ASSOCIATES
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COMPANY PROFILE
Company Summary Aeris Communications, Inc., works in the M2M market, seeing it as an integral part of the wider IoT vision, and is both a technology provider and a cellular network operator delivering comprehensive M2M/IoT services to leading brands on a global basis. Aeris connects M2M/IoT businesses around the world, currently supporting nearly four million devices which record more than eight billion events per day. Ranking in the top 10 worldwide M2M operators, Aeris customers include Hyundai, Acura, Rand McNally, Leica, and Sprint. The global headquarters of Aeris are in Santa Clara, California, while its European headquarters are near London, UK.
Company credentials As a specialist M2M provider, Aeris’ mobile core network is built exclusively for M2M applications. Whether supporting smart meters to distribute water and power more effectively within communities or smart parking solutions that mitigate city congestion, Aeris creates the IoT backbone for connected cities’ technology, using both CDMA and GSM technologies. Customised M2M solutions from Aeris delivers cost savings, improved efficiencies, flexibility, and increased reliability to utilities and business in a rapidly changing environment. Marc Jones, Aeris CEO, explains, “Our part of the industry – the platform and connectivity providers and enablers – has a vitally important role to play in trying to keep some kind of consistency and trust while the wider landscape continues to change. But ultimately, our customers don’t care whether connectivity is done by 2G, 3G, 4G, 5G, WiFi, or the newer long-range, low-power options that are now emerging – it could be carrier pigeon, as long as they get the actionable information that they need for their business ends.”
Key differentiators Aeris aims to deliver the lowest cost of ownership to its customers across the whole service lifecycle. This extends to making it easy for customer to integrate their own operations with M2M/IoT deployments, using the Aeris management portal to access and display in flexible ways real-time device information such as provisioning states, billing rate plans, network locations, and other data; plus traffic information on the number of SMSs sent, number of bytes used, and more. With a purpose-built infrastructure, Aeris claims its network provides greater than 99.999% uptime, while
avoiding network congestion and providing rapid alerts in the event of outages or device issues. Complementing this, the company provides 24/7 support on a global basis via its Infinity Support service program. Aeris products and solutions are packaged under a number of different brand names, such as AerConnect, AerCore, Aerport, AerCloud, AerVoyance, AerB/OSS, Aeris GSP, and the recently introduced Neo, a self-service online marketplace for SIMs and connectivity to simplify M2M/IoT adoption by smaller companies.
Competitive pressures According to Jones, “It still takes far too long and is far too difficult for many businesses to get to grips with the complexity of all the options open to them in what we might call first-generation IoT. Right across the value chain – from device enablement and integration issues through connectivity to the management and business process integration areas – these factors have, so far at least, stifled the truly widespread application of IoT innovation.” Combating these difficulties, Aeris is able to provide a complete solution for IoT programmes – from connectivity to application platform. In addition to CDMA, GSM, and LTE networks built for the unique needs of machines, Aeris offers an application enablement platform called AerCloud. The tight integration between AerCloud and the rest of the Aeris stack has proven to reduce development time by 70%. With custom rate plans suited to each business’s needs, Aeris customers report that, on average, their operational costs are $2,000/month less per 10,000 devices deployed. In total, an Aeris customer can realise a 2x reduction in the total cost of their IoT program compared to a similar solution from a mobile network operator.
PREPARED BY M2M NOW
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