False alarms among factors contributing to decline in monitoring revenues

Thursday, July 17, 2003

July 17, 2003

SAN JOSE, Calif. - According to analysts from Frost & Sullivan, security monitoring remains a highly sensitive segment of the industry, and may be suffering from the effects of false alarm policies around the country.

Jim Hawkins, strategic account manager for Frost & Sullivan’s Industrial Group, cited numbers from the National Burglar and Fire Alarm Association that show consumers are responsible for 76 percent of all false alarms. Despite this, he said, the onus for false alarm prevention often falls on the monitoring company, which must then incur expenses to verify alarms and, in some cases, ensure that subscribers have valid alarm permits.

Analyst Prianka Chopra, who co-authored Frost & Sullivan’s U.S. Security Services Market report, said while these ordinances, as well as increased competition and decreasing prices, have contributed to lower monitoring revenues, there is no cause for alarm just yet.

"There has been some decline in monitoring revenues, especially when you compare the 2002 revenues versus 2001 revenues," Chopra said. "However, monitoring continues to be high profit margin business."

Chopra’s co-author, Deepak Shetty, said the industry is headed in the right direction to reverse the trend of false alarm ordinances.

"The industry has several efforts to reduce the incidence of false alarms, and the Central Station Alarm Association is formulating a verification standard that will reduce false alarms," he said.