Eagle to focus on security unit

New division to grow “rapidly” with dealer program
Friday, August 1, 2003

HOUSTON - In an effort to capitalize on the company’s recurring revenue model, broadband services company Eagle Broadband has formed a new security division that will streamline the company’s disparate security operations and pave the way for growth.

Through the formation of Eagle Broadband Security Home Division, the company has channeled the sales and installation of its more than 6,000 accounts from several Eagle Broadband companies into a new, single staff of about 20 employees, said Dean Cubley, chairman and chief executive officer of Eagle Broadband.

“We had been doing security in most of our other companies, but it had been a little fragmented and there wasn’t a central focus on security,” Cubley said.

While wiring, installation and sales were being handled by Eagle’s Atlantic Pacific subsidiary, the company’s DSS operations were also responsible for central station monitoring and sales. The company’s Fiber-to-the-home subsidiary was also providing sales, installation and billing of security that was included in Eagle’s flagship bundled digital offering.

Now, with the DSS central station as the backbone of Eagle’s home security offering, company officials expect to see the unit grow to anywhere between 10,000 to 50,000 accounts over the next two years, Cubley said. Eagle acquired DSS Security of Houston in early 2002 with about 2,000 accounts, which has already grown to more than 6,000 accounts a year later.

“This brings everything under one umbrella and helps us to focus on our growth,” said Ronnie Evans, president of Eagle Broadband Security Home Division, growth that will be aided by the launch of a new dealer program that will help Eagle “acquire accounts at a rapid pace,” he said.

The dealer program will initially target major Texas markets and will be offered nationally after additional staff is added, Evans said.

Staff of the new subsidiary, which was transferred from the other subsidiaries, is now housed in office space in San Antonio, while monitoring is done in the Houston central station, Evans said.

If the new home security subsidiary meets the goals of its corporate parent, the unit will be generating enough RMR to contribute about 25 percent of Eagle Broadband’s recurring revenue stream, Cubley said. The company has been moving toward that source of revenue in conjunction with its bundled digital services offering, and recently secured a letter of intent for a $10 million funding round, led by investor Aggregate Networks.

“One of the major focuses of our investor is recurring revenue and security sits squarely in the center of that mode,” Cubley said.

The funding is intended primarily for the expansion of Eagle’s Fiber-to-the-home offering, which is being offered in gated communities in Texas and also through contracts with municipalities that have constructed their own fiber infrastructure. Cubley said that anywhere between 15 to 70 percent of bundled subscribers in a municipality could elect for security services.

The company is also planning to launch a commercial security subsidiary sometime over the next year.