Many manners of monitoring

Third-party, proprietary, cloud: What’s the difference?
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Wednesday, August 5, 2015

YARMOUTH, Maine—Central station monitoring comes in a variety of flavors. What’s the difference between an installing company that does its own monitoring and a proprietary central station? Are third party and wholesale synonymous? What about new cloud technology that some say will usher in new categories of central station monitoring? In an effort to sort out the differences, Security Systems News turned to CSAA president Jay Hauhn.

The following is an overview of the basics of monitoring nomenclature. Hauhn said there are three basic types of monitoring companies: traditional, proprietary and contract.

Traditional: “These are full-service alarm companies that do everything from installation and service, and, of course, they do monitoring,” Hauhn said. This category includes the widest variety of sizes and would include companies like ADT, to ADS in Chicago, American Alarm in Boston and large regional providers like Vector Security in Pittsburgh who all have UL-listed central stations.

But ADT has a dealer program. Doesn't that mean it does third party monitoring too? No, says Hauhn. ADT buys the accounts from its dealers and then services and monitors the account. ADT also has a large direct sales organization, which fits the full-service term—it sells, installs, services and monitors accounts—and everything is done under the ADT name.

Proprietary: This is the easiest to define. These are the end users, businesses or entities that set up their own monitoring centers and monitor alarms within their businesses or campuses. “Companies that do that are large banks, insurance companies, large retailers and a lot in the military and government,” Hauhn said.

“Many have proprietary monitoring centers that are UL-listed, but they only exist to monitor [that end user’s] alarm systems, so they do not have to use an outside company—an ADT or local competitor—to do monitoring for them,” he said.

Contract: This term, Hauhn said, is synonymous with “third party” or “wholesale” monitoring. “These are the Affiliated or COPS out there.” The differentiator here is that these monitoring companies typically do not do their own installation. They have dealers who do the installation.

And this is the way that many independent security companies do their own monitoring: They contract their monitoring out to Rapid Response or others.

While most third party monitoring companies are fine with the term, some do not like it. Why? According to CSAA VP of membership and programs Becky Lane, that comes from the thought that a third party monitoring station didn’t have proper credentials. But “now with industry standards in place, third party monitoring companies have to have credentials in place,” she said.

Contract monitoring companies do not typically own the accounts they monitor. The dealer maintains ownership of its customers.

Hauhn said that “there are some hybrids out there” but, for the most part, monitoring companies fall into one of the three categories listed above.

Cloud: Cloud is a term that Hauhn predicts we’ll be hearing more of in connection with monitoring. Several software companies including DICE, IBS and Security Global, are creating monitoring center software that will enable the central station infrastructure to sit in the cloud. These three manufacturers will likely have UL approval for their cloud solutions, Hauhn said.

How will that affect those three categories of monitoring stations listed above? Hauhn said it will make it easier for end users to set up proprietary monitoring stations.

It will also “reduce the cost of entry for new monitoring companies to start up,” Hauhn said, which will drive competition. Lane pointed out that it’s also good news for existing monitoring companies that want more redundancy.

Experts expound: Benefits of traditional, third party and cloud monitoring

Jim McMullen, COPS Monitoring, president and COO, on the benefits of third party monitoring

“There are many dealer benefits from third party central stations. We allow them to focus on their core business of growing their company—which adds greater stability, value, and net worth. Behind the scenes, we deliver friendly yet professional service under the dealer's name; this upholds their reputation and helps generate referral sales like a silent sales force.

By choosing a third party central, independent dealers of all sizes are able to focus on what they do best and still provide their customers with reliable, high quality alarm monitoring services at price points that allow them to compete on a level playing field against even the largest industry players.

When dealers concentrate on growing their businesses instead of worrying about staffing complications or keeping up with technology and competition, everybody wins … dealers, centrals, and end-users. At the value and price points offered by third party centrals, a dealer would lose a crucial competitive advantage if they elected to provide monitoring themselves.”

Michael J. Hackett, Hackett Security, president and CEO, on benefits of the traditional monitoring model

“Our customers like that we do our own monitoring because of the experience. It’s that one call from the guy who owns 10 Chicken Lickin’ Restaurants or the one call from the LP manager who has 64 stores. The benefit was summed up to me at a lunch meeting with one of our largest customers. He said, ‘Thank you for making my job so much easier.’ That’s really why we have our own central station and we do our own monitoring. It’s that LP person or the owner of the Chicken Lickin’ Restaurants. They want to make one call to us when [they need a credential added or deleted. When they have a problem they make one call. Our business model] is an integrated offering for the customer.”

Cliff Dice, CEO of DICE, on the benefits of moving central station infrastructure to the cloud

"Moving to the cloud is not restricted by technology today, it’s here, and growing rapidly in 2015. Our cloud center removes the issues of VoIP plaguing the alarm industry and provides a capital-cost-free way to run an alarm center. It removes the need to have PBXs, receivers, phone lines, automation software, servers. Even desk phones are removed. All that is needed is redundant Internet carriers and a PC capable of running a web browser. The center also provides full video monitoring for verification along with traditional alarm monitoring.

The alarm center also identifies every alarm panel client telecom provider and graphically keeps track of which carriers are healthy and who isn't allowing us to correct the issues of communication failures. This cannot be done in traditionally installed alarm centers.

Our cloud center reduces the cost of running an alarm monitoring center by as much as 80 percent. The cloud center provides receiver engineers who troubleshoot signal flow and programing. Only large dealer alarm centers have these types of people, now anyone hosting has access to these talented people.”