Big news for the alarm industry has just been released, and it comes from AT&T – arguably the “mother of all new entrants” to the alarm industry. Just after it seemed AT&T was having trouble figuring out its long-awaited offer of monitoring and home automation capability, now we have some hard facts on the Digital Life suite of products and services: like what they cost! AT&T hopes that Digital Life will propel the company into the forefront of the growing market for interactive monitoring and smart home technology.
The scale of the AT&T press release surpassed anything put out by Comcast, Verizon, or other cable/telco entities entering our space – and that’s not surprising, considering AT&T’s size, and the relative importance of this new initiative. This article provides a thumbnail overview of the Digital Life offer.
After successful trials of Digital Life last year in Dallas and Atlanta, AT&T today launched the home security/home automation service in 15 additional major markets nationwide, ranging from San Francisco to Miami. AT&T, which is based here, has said it plans to reach up to 50 markets by the end of 2013. The company also announced that it intends “to build Digital Life out nationally in 2014.” In addition to being available online and from AT&T call centers, Digital Life also now can be purchased at 450 AT&T stores in the 15 markets.
The company offers two packages with what it termed “very competitive pricing out of the gate because we offer an all IP-based platform.” Simple Security “includes 24/7 home monitoring, 24-hour battery backup, a wireless keypad, keychain remote, recessed sensors and an indoor siren for $29.99 a month plus $149.99 for equipment and installation.” Smart Security includes all the benefits of Simple Security “plus a choice of three of the following features: motion sensor, carbon monoxide sensor, glass break sensor, smoke sensor or takeover kit. Smart Security begins at $39.99 a month plus $249.99 for equipment and installation.” Customers can also add other automation features, such as cameras and thermostat control, for additional monthly charges that range from $4.99 to $9.99.
We’ll be performing a detailed comparison as we get more information – but at first blush the offer appears competitive with other new entrant packages and services. It’s important to note that the interactive services available with Digital Life are IP-based, meaning they depend on a vulnerable Internet connect – and are therefore inherently less robust and less reliable than FrontPoint’s cellular communication platform. Plus, Digital Life does not offer the simplicity and convenience of easy setup by the homeowner – including the ability to expand or move your wireless alarm system at will.
Industry reaction has been muted so far, as folks digest the details, but we have seen one good piece looking at the big picture. If you are interested in the topic, this whole article is worth a read.
As AT&T continues its foray into security, it seems they have upped the ante, forging quickly into new geographic markets. But the real effect probably hasn’t been felt, or has yet to have been perceived by alarm dealers in these key markets. The question is whether they will have the level of service that independents in our industry thrive and survive on—or whether they will simply create new awareness of the value-add solutions available in the marketplace.
On industry observer is quoted in the article, and had this to say:
“AT&T has $127 billion in revenue! Keep in mind that ADT is the largest company in our industry and it has $3 billion in revenue. A large company like AT&T essentially needs to set up a company that is larger than the largest company in our entire industry, and it needs to do this quickly to make it worthwhile. If AT&T launches in 50 markets and gets 20,000 subscribers per market for 1,000,000 subscribers per year, that is 3,000,000 subscribers in three years (assuming no attrition). These are huge numbers for a new player! If they charge $40 per month per account, after three years, they have only increased the company’s total revenue by less than 1 percent.”
“Furthermore, given traditional creation costs, AT&T will lose money for that three-year period. Losing money for three years on every customer to get1 percent revenue growth is a pretty big gamble. As an industry, our security system creation costs tend to be worse than the wireless industry, so I think that will be a bigger challenge than they realize as well.”
Already there are those questioning AT&T’s ability to provide peace of mind in protecting lives and property of homeowners, when their customer service is regarded by so many as lacking: here’s an example of one early critic, cutting AT&T little slack.
From AT&T’s point of view, the move makes sense. It has a huge investment in its wireless network, at a time when the market for smartphones and data services is leveling off. So anything it can do to squeeze more revenue out of its network will make shareholders happy. Consumers, on the other hand, will likely be a tough sell. After all, AT&T is known for having the worst wireless network of any major carrier, and even more to the point, is notoriously inept at customer service. I’ve had a number of go rounds with this company over the years, but fortunately none involved a life or death matter. I simply can’t imagine trusting them to get this right.
AT&T’s entry into home security and home automation should not to be taken lightly, as they have committed serious resources and talent to a nationwide product launch. However, home security is pretty much totally unrelated to their current business. AT&T may prove to be one more company out of its depth in trying to provide true peace of mind. For example, the Digital Life platform will not provide Crash & Smash protection, since only Alarm.com’s technology platform offers that patented technology. This is the feature that makes a FrontPoint system virtually undefeatable.
Of course, the benefits of Digital Life are exactly what FrontPoint has been offering for years – and we’ve clearly been doing it very well. As a “real” alarm company that is focused on protecting homes and families, FrontPoint welcomes AT&T’s huge advertising budget to increase public awareness of interactive monitoring services – exactly the advanced features that FrontPoint has offered since our inception in 2007. FrontPoint may well be the net beneficiary of their labors, and we’ll be watching closely – but we think it’s a great time to be known for offering the best technology, combined with the best service reputation in the alarm industry.
We also expect that the more people research their options, the more they’ll choose FrontPoint. As the leader in wireless home security, we specialize in the best protection: that’s why we’re the #1 ranked alarm company in the US. FrontPoint systems are safer, smarter, simpler, more affordable, and virtually impossible to defeat – and when you compare us to these other companies entering our industry, we promise that you’ll be thrilled with our service. Just read the reviews!