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This paper describes a new solution for integrating substation sensing, signal processing and decision making for more efficient monitoring, control and protection applications. The paper points out deficiencies of the existing approach and sets the requirements for the new approach. Once an architecture of the new solution is defined, further description of each of the elements of the new solution, namely optical sensor multiplexed network, distributed signal processing, and neural network based decision making are discussed. At the end, a concept of how all the mentioned components of the solution can be integrated is given.