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This paper considers control and estimation problems where the sensor signals and the actuator signals are transmitted to various subsystems over a network. In contrast to traditional control and estimation problems, here the observation and control packets may be lost or delayed. The unreliability of the underlying communication network is modeled stochastically by assigning probabilities to the successful transmission of packets. This requires a novel theory which generalizes classical control/estimation paradigms. The paper offers the foundations of such a novel theory.