Can Cable Companies Compete with Home Alarm Companies?

Posted by , , at 12:00 am

Here’s a question that has come up repeatedly in the twenty-plus years I’ve been in the alarm industry.

It has not happened so far – in fact, the ground is littered with utility company ventures (cable companies, phone companies, and power companies) that targeted the alarm services sector. Looks as if they are trying again, so let’s see if things are different now.

People Expect Better Home Security

Plenty of us security industry veterans remember the forays made by Western Resources/Westar, Ameritech/ SBC, Southern Power, Adelphia, SNET in CT, and even Southern California Edison into home alarms. None ended well, largely because these companies were never able to capitalize on the much-anticipated potential benefits of “bundling” services to their customers.

Plus (as we alarm folks know), it’s a different world when you are protecting homes and families. Service delivery metrics that might be acceptable for cable companies (to pick on just one utility) really don’t cut it for life safety. People expect better, faster service, with real peace of mind, and they deserve it.

Can Cable go Cellular?

So, when I see an article like this, Rogers Set to Break into Home Security (about the Canadian telecommunications giant) launching a home security offering, it’s hard to forget the many failures of the past.

Yes, things have changed.

For instance, Rogers is also a cellular provider – and the demonstrated trend is for people to cancel copper phone lines, in favor of VoIP (Voice over Internet Protocol) or cell-only service.  I only believe in cellular monitoring for home security, and have long considered it the one truly reliable method. But this excerpt speaks volumes:

With the telecommunications market increasingly focused on “bundling” a variety of services together for customers, the wireless and cable giant is set to break into the home security services market in the coming months, Rogers president and CEO Nadir Mohamed said in a speech on Wednesday.

Because bundled customers are less likely to switch providers for lower prices at a competitor, this is another example of communications providers trying to be all things to every household.

So that’s their strategy – use home security as one of several services to hang onto customers longer, and make some money in the process.

And Rogers is not alone. From the same article:

U.S. cable giant Comcast Corp. already offers an Xfinity home security service and other Canadian cable companies have discussed getting into home security. BCE Inc.’s Bell Canada offered a wireless security service, but has sold that business.

Ah, there’s a mention of one that did not turn out so well…

Of the many reasons that spring to the minds of alarm professionals as to how history may be repeating itself, here are three of my favorites:

1. Some companies are pursuing a broadband strategy for alarm communication, vs. a cellular strategy

Bad idea: here why Internet service just isn’t reliable enough. Even Vonage will tell you that – on their web site! As a matter of fact, Vonage recommends Alarm.com, the same cellular monitoring solution found in every FrontPoint system.

2. Service satisfaction rules in electronic security

A four (or eight!) hour window two or three weeks from now just doesn’t get it done when your alarm system is not working. People want fast, efficient service that utilities are challenged to provide. The safety and security of my home and family are too important for me to wait that long.

3. Technicians are not interchangeable

There are licensing issues, inventory issues, training issues, and even union work rule issues. It’s just not that easy – and if the new entrant companies have to develop a separate work force to handle alarm systems, their bottom lines will suffer.

Another blurb from the article shows the problems –

Traditionally, communications companies have stayed away from security services because even if they had a network in place to rig up a household to a monitored grid, they lacked the capacity to actually dispatch people who could race to rescue, says Greg MacDonald, an analyst with National Bank Financial Inc.

Adding the infrastructure and personnel to allow them to offer security services, however, usually meant a new line of services and sacrificing the great profit margins of the traditional cable, he added, noting that Rogers has likely found an agreeable balance.

We Love the Competition

You may surprised to hear that FrontPoint looks forward to these huge companies allocating some portion of their immense advertising budgets on driving more consumer demand for interactive, wireless home security.

Since we already lead the pack with systems that are safer, smarter, simpler, and more affordable, we’re well positioned to take advantage of those marketing programs.

And we are ready today, all across the US and Canada.

At FrontPoint, we don’t bundle, so you benefit.

Comments (8)

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  1. R

    A 4 to 8 hour time frame is just not true in the Chicago region. Comcast has a two hour time frame. If the tech is late the customer is given a twenty dollar credit. Plus the numbers show that on time percentage for a tech to arrive a customers house on time is over 99.% Also, Home technicians are on call 24/7 7 days a week. There is not a 2 or 3 week wait, not even a day wait.

    • Peter M. Rogers

      Thanks for your comment, and I’m glad to hear that Comcast is doing a better job in the Chicagoland market. That being said, I don’t think a $20 credit means that much to the subscriber when the tech is late, since you already have the inconvenience of waiting at home for that period of time, and when the tech is late, it just makes people more upset at the cable company. There is a reason why Comcast and Time Warner are both among the most disliked companies in the US -and it’s not good service. It’s no wonder that Comcast has only signed up a fraction of the home security customers they were expecting by now: peace of mind from protecting your home and family has to come from a service provider you trust and respect.

  2. R

    A 4 to 8 hour time frame is just not true in the Chicago region. Comcast has a two hour time frame. If the tech is late the customer is given a twenty dollar credit. Plus the numbers show that on time percentage for a tech to arrive a customers house on time is over 99.% Also, Home technicians are on call 24/7 7 days a week. There is not a 2 or 3 week wait, not even a day wait.

    • Peter M. Rogers

      Thanks for your comment, and I’m glad to hear that Comcast is doing a better job in the Chicagoland market. That being said, I don’t think a $20 credit means that much to the subscriber when the tech is late, since you already have the inconvenience of waiting at home for that period of time, and when the tech is late, it just makes people more upset at the cable company. There is a reason why Comcast and Time Warner are both among the most disliked companies in the US -and it’s not good service. It’s no wonder that Comcast has only signed up a fraction of the home security customers they were expecting by now: peace of mind from protecting your home and family has to come from a service provider you trust and respect.

  3. Alan

    Very interesting analysis, Peter.

    Interesting insight on riding on the backs of their big marketing spending. I think you guys are positioned to at least hold your own, and as you mention, are likely to even benefit handsomely.

    I bet you guys have about the lowest churn rate in the industry, so it’s for darn sure you wont be losing many current customers to these lumbering telecoms who I have little respect for. They are among the biggest political contributors around, and their money is definitely buying them regulatory favors / sheltering them from REAL competition. I digress.

    In short, I agree, you guys have NOTHING to worry about.

  4. Alan

    Very interesting analysis, Peter.

    Interesting insight on riding on the backs of their big marketing spending. I think you guys are positioned to at least hold your own, and as you mention, are likely to even benefit handsomely.

    I bet you guys have about the lowest churn rate in the industry, so it’s for darn sure you wont be losing many current customers to these lumbering telecoms who I have little respect for. They are among the biggest political contributors around, and their money is definitely buying them regulatory favors / sheltering them from REAL competition. I digress.

    In short, I agree, you guys have NOTHING to worry about.

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