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by: Daniel Gelinas - Monday, April 5, 2010
I've been following the POTS Sunset news as it's occurred, blogging and writing stories when the FCC asked for public comment, and when AT&T proposed POTS be phased out by 2014, and again when the FCC released its National Broadband Plan, which proposes a way to deliver broadband services to every American... Maybe the FCC should work on national health care, too... I've gotten a lot of comments on the blog and have had some really good phone interviews with some industry folks. Now those folks may not agree on who's got the best technology to solve the POTS Sunset problem, but they DO all agree that the time to act is now. I spoke with Lance Dean at 2GIG back when the FCC first sought public comment on the nascent Broadband Plan. He pointed out that the infrastructure, the PSTN and the POTS service it makes possible, was going away whether the industry wanted it to or not. "“There’s 700,000 lines going down a month. If you do the math, that’s 8 million a year," Dean said. "In a few more years there won’t be any more landlines.” I also spoke at length recently with Mike Sherman president and CEO of AES IntelliNet and Tom Reed VP of sales at NextAlarm. Both men seemed to feel the sunset of POTS was not only inevitable, but was also an opportunity to fix what has been wrong with the industry and take control. Sherman was emphatic that the big problem with which the industry has dealt from day one is the fact that it hasn't owned or controled the communications pathways upon which it relies for the delivery of it's alarms. Of course, his company provides a solution to that, providing an AES IntelliNet dealer with his or her own network of radio relays--an IntelliNet mesh system--that Sherman claims is the way to go.
I think the bottom line on this is that the alarm industry has maybe four alternatives. One is POTS. We know it’s going away, we don’t know when, but it is going away, and that has always been reliable. You have the Internet, which has incredible problems, incredible delays. Try pinging a central station in Boston. Try it several times a day. The ping time will vary all over the place. That's not security-grade reliability. It's the same thing with GSM--which is cellular radio--it's patchy. The networks 'busy-out' ... Smartphones are sucking the life out of the GSM system because they use so much data. So the GSM system, like broadband, has finite bandwidth. Then there's IntelliNet. This is the dealer's network. The dealer owns it and controls it ... With IntelliNet, finally, the dealer owns and controls the communications piece. It’s always been owned by the phone company or the cellular company or the cable company. It’s the communications piece that makes the dealers’ service possible ... The other thing is that you can’t surf the web on it, you can't play games on it, you can’t shop on it, you can’t download stuff on it. It’s been designed specifically for the security industry. It's been optimized for security monitoring, so it meets the five nines reliability that the security industry relied on way back when it created itself and relied on POTS.
Sherman, in speaking about the "busy-out" problem GSM has, cited an article from BusinessWeek. Interesting read... Reed claimed NextAlarm's answer utilized the system the end-users were flocking to, the system in which the government is already heavily investing--broadband--and made that system more reliable.
We actually recognized four years ago as people started to move from POTS to VoIP and that's when we started developing our product... We've got one patent issued and a second patent granted ... Obviously, we believe that IP is the way to go. Our solution is agnostic to panel and agnostic to central station. We think that for legacy panels, that's the way to go. Many companies are looking to GSM, and there’s a couple challenges with that. One of them, obviously is congestion. If you’re in a congested downtown, urban area, it’s getting harder and harder to get a reliable GSM signal, particularly here in the US--you don't see it in Europe or Asia--we have such a good wired infrastructure that telcos have not put in as many towers. The problem is that the instant someone needs help--whether it's PERS or some other alarm--they need help. You can't hope and cross your fingers that you get a GSM signal. Another challenge is that most of GSM is metered. If you want something that's cost-effective for a customer who wants to do open/close reporting, wants to have two-way voice and those kinds of things, GSM can get very expensive. Most of the plans only have six or seven metered signals a month. If you're doing open/close you could have as many as 60 a month ... And finally, the GSM expense to add to a panel is pretty expensive. The device we're providing today is available for dealer purchase from ADI for $99. What are the advantages of IP? Very low cost for bandwidth. We've got a small fee per signal, but there's no metering, so you have the ability to do open/close, you have the ability to do two-way voice.
What about Sherman's critique of unreliable signal transmission with broadband? Reed provided a brief description of the NextAlarm solution. From Reed's info:
VoIPAlarm by was built to solve these problems. VoIPAlarm allows customers to enjoy the benefits and cost savings of Voice-over-IP service, while still allowing their alarm systems to accurately communicate with their monitoring centers. VoIPAlarm operates over your standard Cable Modem, DSL, or Terrestrial Wireless Broadband Internet connection, and works with any alarm system capable of sending signals using the Contact ID format (including the Abbra Professional Series by VoIPAlarm requires no changes to your existing alarm system, other than a one-time purchase of a Broadband Alarm Adapter from Simply plug the Broadband Alarm Adapter into your home network, and plug your alarm panel into the Adapter (rather than into your regular telephone line), and will immediately begin to monitor your security system over Broadband. VoIPAlarm even offers Line Security, a new security measure not available with standard telephone line hookups. Our servers are in constant communication with our Adapter installed at your home or business. If we should lose contact with the device, our E-Notify service can alert you in a matter of minutes. This extra security measure is only possible through the always-on, always-connected nature of VoIPAlarm.
Regardless of which technology you go with, it seems pretty clear that the time to make changes and talk with your customers is now. Sherman warned of potential consequences if the communications path is not made a top priority:
The industry is based on a recurring revenue business model, and if the communication is not there, or not reliable that threatens our business model. The security industry cannot—cannot—afford to sustain any newsworthy, bad releases. We have to deal with the reliability of the communications because if we don’t we’ll all be punished. You need to understand the importance of the decision when you opt for a technology—whether it’s IntelliNet or something else. Know what you’re getting. Look past the glossy brochure that the purveyor provides you.
Reed said there were definite, necessary steps ahead, and those steps would not get easier with time:
You've got start this conversation today--and it's not going to be an easy conversation ... It’s like with the kids who hide their bad grades, and forge mom's signature and pretend nothing's wrong for three months and then it’s worse when the truth comes out. The industry can’t hide from this. It's like a ticking time bomb. We need to go out now and talk with our customers and give them a communication solution that works. That’s what we’ve been pounding the drum for. With the POTS Sunset on the horizon, it makes the drum beat that much louder and faster. We can try and hold back the flood, but the industry’s not big enough to hold it back. We have to say, 'It’s going to happen, we may as well get ready for it.' We’ve got maybe a seven or eight year window.
by: Daniel Gelinas - Friday, April 2, 2010
You won't want to miss SSN's upcoming PERS webinar, taking place through the magic of the Internet on April 8 at 1 p.m. EST. Where else can you have a cybernetic "sit down" with industry legal expert Eric Pritchard and learn all about the legal ins and outs of building an exciting new line of RMR through a growing market? Where else can you get valuable knowledge, have your questions answered and learn how to start making more money? I've been following the PERS since I started at Security Systems News almost two years ago. At the time, I didn't know SIA from SIAC or CSAA from NBFAA... I mean, ESA. When I wrote my first PERS story--a PERS prose chestnut on a partnership between Eastern Distributing and SafetyCare-- people were beginning to talk about PERS as an exciting and untapped new market into which a typical security guy could pretty easily migrate. That story had some hopeful financial news from Nick Scarane EVP at Eastern Distributing:
"[SafetyCare's] focus is on the PERS part of the business," he said. "This is a product that over the next five or six years is going to be an extremely large growth market. We wanted a partner with a central station that is focusing primarily on that channel, and not being all over the place ... This partnership adds another channel of RMR to the residential market. SafetyCare is a great tool to help dealers close sales."
I've written all kinds of stories on PERS legislation, and industry standbys like SafetyCare, and PERS newcomers with innovations like Vaica Medical and Medical Alarm Concepts. I've written stories about Acadian and American Two-Way and Visonic, and Bay Alarm Medical and GE... I've written a LOT of PERS stories. I'm sure I've forgotten to mention a lot of them by name, but you get the picture. If you've been thinking about making some more money... and who hasn't, now may be the time to check out how to get into PERS. Register today for SSN's PERS webinar and expand your possibilities.
by: Daniel Gelinas - Wednesday, March 31, 2010
I'm currently working on a few different stories that all have to do with verification. I'm speaking with COPS' own superstar Maria Malice who is the president of the AzAA. They're currently attempting to work with the town of Goodyear Arizona to come up with a solution to the false alarm problem they're facing other than non response unless the alarm is verified. I spoke with Goodyear PD chief Mark Brown as well. He told me that Goodyear was only the first of least 10 other Greater Phoenix municipalities that were flirting with verified response or no response. "We just happened to go first," Brown said. Brown told me Goodyear was at its wit's end dealing with a worsening false alarm problem and needed to do something to ensure the public was safe, officers weren't getting complacent and alarm companies were being held accountable. Goodyear has had an ordinance in place for 13 years, but Brown said the town still suffered from a false alarm rate of 98 percent. "We’re finding that the biggest issue is operator error ... Fines aren’t a deterrent, the educational component we have doesn't seem to be working and we really need to make a change," Brown said. "We’re wanting to put some more emphasis and focus on the alarm companies to take care of maintenance and education and do a better customer service job in educating customers ... We’re looking at removing the alarm user from the whole fee process and putting the responsibility on the alarm companies, as well." Brown said they had not yet contacted SIAC for input, but they did have plans to meet with Maria and the AzAA on April 1. Come on SIAC, these guys need some options. I also spoke with Videofied's Keith Jentoft yesterday and today. He's become sort of the de facto spokesman for a new website and (and attendant movement) called Enhanced Video Alarm. He's actually written a lengthy piece piece on why enhanced alarms (verified alarms) are better than their run-of-the-mill "blind" intrusion alarm cousins. The piece will appear in the May/June issue of Sheriff, which is read by 20,000 Sheriffs nationwide. Jentoft has also been invited to give a talk at the National Sheriffs Association Convention held in Anaheim, Calif. in June. From a press release on Keith's upcoming presentation at the convention:
National Sheriffs Convention Holds Workshop on 'Priority Response' The National Sheriffs Association June convention, attracting more than 4,000 sheriffs from across the United States, will include a workshop on Priority Response to Enhanced Video Alarms. The Priority Response concept avoids the negativity of local false alarm battles with fines/ordinances and instead focuses on a positive message, asking Law Enforcement, 'Would you give higher priority to Enhanced Video Alarms?' Instead of ordinances, the goals of priority response are simply a dispatch policy change: 1. Adoption of a special code by Dispatch Centers designating a higher priority response for Enhanced Video Alarms than standard alarms. 2. An email address in dispatch centers where participating central stations can send video clips of intruders for possible review by the dispatch operators. Example:” Keith Jentoft, a spokesman for the Priority Response initiative, and president of RSI Video Technologies Inc, explains that Enhanced Video Alarm is a generic category where the alarm system also delivers a short video clip to the central station who confirms the presence of an intruder. This is not surveillance, but an incremental step in the detect/notify process that alarm companies have been doing for decades. In addition to a standard alarm signal, central station operators view a video of what caused the alarm and dispatch accordingly. Jentoft states, 'These alarms can be delivered by at least three different technologies available from many manufacturers; the key is that Priority Response is a win for all security stakeholders. Law Enforcement gets more arrests, greater officer safety and more efficiency. Consumers have greater protection and life-safety and the industry is able to provide services that have greater value than "blind” systems. Adding two-way voice makes the concept even stronger.'
Sonitrol's always tweeting out news blurbs of how their audio-verified alarms bring the cops quickly and result in an apprehension... I wrote a story on the developing verification trend last year. Looks like this issue might be heating up. Keith had a valid point when he said, "rather than try and minimize a negative by dealing with the false alarms after they happen, why not try and maximize a positive" by embracing enhanced alarms to begin with and ensuring higher-priority police response? Is it time to get verified? Again from the NSA press release:
The Priority Response concept which has been embraced by Law Enforcement in Iowa, Illinois, Indiana, Alabama, Massachusetts and Texas has already had a positive impact on budgets and apprehensions.
Keith's missive in Sheriff includes the following quote from an open letter from Calhoun County, Ala. Sheriff Larry Amerson (who is third Vice President of the NSA).
While Calhoun County Sheriff’s Deputies will continue our current policy of responding immediately to all intrusion alarms, we believe that enhanced video alarms offer enhanced protection to you and help us in our efforts to keep Calhoun County citizens safe and protect their property. We believe that the delivery of a video of the specific event that triggered the alarm is a tremendous improvement in alarm technology that will lead to a reduction in false alarms saving valuable budget dollars. While we are not endorsing a specific provider or brand of product, we support the efforts of the security industry to provide their customers with the best protection possible and we look forward to being able to use enhanced video alarms to improve the life safety of our county.”
I'd love to hear what you all think about adding video or audio for verification. Chime in and let me know if you see a trend developing in your municipalities of police pushing for verification or no-response. Are municipalities around you charging alarm companies instead of the end user for false alarms?
by: Daniel Gelinas - Friday, March 26, 2010
The Federal Communications Commission on March 16 unveiled it's 300-page National Broadband Plan. The plan was originally due to be delivered to Congress by Feb. 17. I wrote about the impending POTS sunset back in January, and at the time, the big concern was over the time table for phasing out POTS and PSTN. The alarm industry depends on the proven ability of POTS to reliably deliver communications services for alarm signal transmission. IP is new and patchy, due to idiosyncrasies like throttling and packet dropping. Understandably, the industry does not feel good about entrusting its life safety protection duties to what is really still a young technology. Not to mention one that has increased costs over tried-and-true POTS. According to a recent release from ESA, the deadline for a sunset of the old infrastructure is still up in the air, but the transition will be addressed over the next decade. ESA assures industry folks that it will be there, along with the Alarm Industry Communications Committee to work with the FCC in bringing about a workable solution. From the ESA release:
The plan calls for several actions over the next decade, including the transition from a circuit-switched telephone network to an IP-based network. Section 4.5 of the plan suggests the FCC start a proceeding on the transition that asks for comment on a number of questions, including whether the FCC should set a timeline for a transition. The Section concedes that such a transition will take “a number of years.”
Many in the industry to whom I spoke felt the time was now to begin moving away from POTS dependence. I wrote about a new solutions from IP Alarms and Honeywell earlier this year. And this pic snapped on the ISC West show floor by my editor, Sam, sure shows that many are ready to move away from POTS and IP and move toward radio. picture-2 From Section 4.5 of the Broadband Plan:
Increasingly, broadband is not a discrete, complementary communications service. Instead, it is a platform over which multiple IP-based services—including voice, data and video—converge. As this plan outlines, convergence in communications services and technologies creates extraordinary opportunities to improve American life and benefit consumers. At the same time, convergence has a significant impact on the legacy Public Switched Telephone Network (PSTN), a system that has provided, and continues to provide, essential services to the American people. Convergence raises a number of critical issues. Consumers benefit from the options that broadband provides, such as Voice over Internet Protocol. But as customers leave the PSTN, the typical cost per line for Plain Old Telephone Service (POTS) increases, given the high fixed costs of providing such service. Between 2003 and 2009, the average cost per line increased almost 20 percent. Regulations require certain carriers to maintain POTS—a requirement that is not sustainable—and lead to investments in assets that could be stranded. These regulations can have a number of unintended consequences, including siphoning investments away from new networks and services. The challenge for the country is to ensure that as IP-based services replace circuit-switched services, there is a smooth transition for Americans who use traditional phone service and for the businesses that provide it.
It's really not any wonder that AT&T is pushing for POTS requirements to be dropped. It gets more and more expensive to maintain that infrastructure that fewer and fewer people are using. In a January interview with me, Lance Dean, co-founder of 2GIG Technologies spelled it out pretty clearly: "There’s 700,000 lines going down a month. If you do the math, that’s 8 million a year. In a few more years there won’t be any more landlines." I've got emails out to folks at AICC and ESA for further comment and will continue to report on this story.
by: Daniel Gelinas - Wednesday, March 24, 2010
Time is running out for the CSAA's Central Station Excellence Awards. Monday, March 29 is the deadline for nominations, so get going if you feel your central station should be honored. There are several categories in which to nominate the hard working security professionals in your life. The Central Station of the Year Award, The Central Station Manager of the Year Award, The Central Station Operator of the Year Award, and The Central Station Support Person of the Year Award. CSAA added the support person award this year. From their site:
The Award program added an additional Award this year, the Central Station Support Person of the Year Excellence Award. Is there an exceptional person in your organization other than the central station manager or operator, who makes your central station a better place--perhaps a data entry staff member, a trainer, the IT guru, the tech that fixes everything, the employee that keeps morale high? This Award recognizes the exceptional contributions of that person to the successful operation of the central station.
The CSAA Excellence Awards recognize UL-listed central stations and their personnel who significantly contribute to the alarm profession while providing exceptional service to their customers and community. Judged by a blue-ribbon panel, the awards were established to honor those who have made the most significant contributions to the industry and promote the distinctive level of professionalism attained by UL-listed central stations. I wrote about last year's big winners, DGA Security last November. During the CSAA Excellence Awards ceremony at last year's ESX show in Baltimore, DGA was honored three times, including taking the Central Station of the Year award and the Central Station Manager of the Year award (awarded to DGA central station manager James Riti) as well as receiving an honorable mention for Central Station Operator of the Year (for DGA dispatcher Charles Balletto). Applications for specific awards must be sent to the CSAA by mail and your company's info spreadsheet can be emailed.
by: Daniel Gelinas - Monday, March 22, 2010
I was talking with my editor Sam the other day and we were trying to decide how we could take the unfortunate loss at Eli Lilly and use the incident as the spring board for a valuable discussion on how the industry should handle such matters. This is certainly not the first time a loss has occurred and nor will it be the last. We wanted to try and produce something beneficial to SSN's readers. We came to the realization that really the Eli Lilly heist was an unfortunate event that could have happened to anyone. The real point is not who did or didn't do what--Did the security system fail? Were the criminals just brilliant and Ocean's Eleven-good? Did someone at the monitoring company drop the ball? Was it an inside job (which is actually the way opinion online seems to be trending now)?--but now that the loss has occurred, what can or should the industry do to address apprehension, anxiety and consumer doubt? Regardless of what happened, does someone in the industry have an obligation to address the end users out there who may be asking "What good is my security system if it can be circumvented? I'm interested in any comments readers have. I've spoken with one industry association leader so far who pointed out that until all the facts are known, it may be best to remain silent. This leader also pointed out the heist is an opportunity for security companies to go to their clients and review the protection that's in place. Is it enough? We also discussed the recent Rutgers University School of Criminal Justice study for AIREF, a comprehensive study of five years of statistics by researchers at the Rutgers University School of Criminal Justice (SCJ) in Newark that found that residential burglar alarm systems deter crime. The executive summary of that study is a good place to start in reassuring end users. The executive summary spells it all out. My real question, though is, should someone film a PSA to air right after one of those Broadview adds that SNL just spoofed and let the public know, "Hey, all kidding aside, and despite this latest unfortunate incident, security is still valuable!"? I'd love to hear your thoughts. Call me at 207-846-0600 extension 254 or drop me an email. Or just post a comment on this blog.
by: Daniel Gelinas - Thursday, March 18, 2010
Start EDIT 2 (added 4:45 p.m. 3/18/2010) I heard back from a couple earlier vmails and emails from ADT spokeswoman Ann Lindstrom. "As a matter of policy, ADT does not comment on active police investigations involving the security industry," Lindstrom said in an email. SSN will continue to follow this story. end EDIT 2 Start EDIT (added 2:30 p.m. 3/18/2010) So I heard it through the grapevine that there's a possibility the police weren't dispatched to this break in. I followed up with a call to the Enfield PD. Here's what happened: I was asked by the call taker to confirm where I worked and what I wanted and was put on hold. I was then transferred to the deputy chief on duty who wished to remain anonymous. The deputy chief checked their records and confirmed they did not respond to the Eli Lilly warehouse overnight between Saturday and Sunday of last week. I asked if they did, in fact, receive a call on the alarm. "We did not respond to Eli Lilly for a burglar alarm or anything else," the deputy chief said. "If they call us to report an alarm, it generates an assignment to which we would respond, and we did not respond, so from that I have to assume we did not get a call." Well, that's not good. end EDIT Wow, this just isn't pretty. It was apparently just like a scene out of a really, really good heist movie--except at the end of the day Eli Lilly is out a lot more than a $9 ticket and $7 tub of corn. Someone was supposedly monitoring this facility and must have gotten an alarm. There must not have been any verification--video or audio--in place. Now, I called the Enfield PD as well as the corporate office of Eli Lilly and couldn't get anyone to share with me who the alarm company was. I guess that's not surprising. However, while I'm not one to kick anyone in the shins, the Wall Street Journal's coverage ran with a somewhat telling pic of an ADT van parked out front the morning after the theft: ob-hw507_0316he_g_20100316194501

Here's how it apparently went down: In the early hours of March 14, an unknown number of thieves scaled the exterior walls of Eli Lilly & Co.'s Enfield, Conn. drug warehouse, cut a hole through the roof (how long must that have taken?), and repelled using climbing gear down into the stockpiles of antidepressants and antipsychotics therein. According to published reports, including stories from the WSJ, the Courant, the Associated Press and USA Today, the history-making thieves took at least a couple hours to locate at least a dozen wooden pallets of desired drugs, painstakingly hoist them up through the hole, load them into a waiting truck and calmly drive away. With $75 million in prescription drugs. That's not only the largest drug heist of its kind, it's also just the latest in a growing trend in recent years, according to an AP report. Far be it from me to blame anyone here, but one has to wonder how this could have happened. How long must it have taken to get this job done? These perps had to have been breaking in, and hoisting those pallets and loading that truck for at least a few hours. None of the published reports says how the in-place security system was circumvented, just that it was. Several reports mention lenses of security cameras being blacked out with spray paint (shouldn't there be tamper alarms on those?) and discs being removed from DVRs (oh, so it wasn't live surveillance but CCTV). I don't want to come off as a commercial, but in this particular situation, the in-place system was blind and deaf (and basically useless). I have to believe that a Sonitrol system would have picked up the sawing through the roof. I also have to believe that a 10-second video clip sent to the central station from a Videofied system would have been cause for dispatch. The point is--and I wrote about this back in October last year--if the alarm had been verified, things might have worked out differently. I'd love to hear from all of you on how this could have or should have turned out differently. And it's not just the drug company that's going to come out a loser here. Their insurance premiums are going to go up, which means drug prices might go up for consumers. The stolen drugs could be tampered with or stored improperly and resold and end up back in the marketplace and bought by unsuspecting consumers. And of course, the security industry in general is a big loser here... I love this line from a Hartford Courant story: "Police were dispatched to the warehouse Sunday about 1:50 p.m., when the theft was discovered, according to a police report. A state police dog was called in to search for suspects, but none was found." Really? That's because thieves (and especially ones as organized as these ones appear to have been) don't stick around till 1:50 p.m. and wait for you to realize the disc has been stolen from your DVR and that the only thing you can do is dispatch a dog to try and follow the scent trail of the criminals... which in this case ascends through the air and up through the ceiling where the dog can't follow. Maybe that sounds sarcastic. Maybe it is. I don't think this is a case where the powers that be should be congratulated for doing all they can. More should have been done by those charged with protecting the premises and assets beforehand. It does very little good to investigate a loss after the loss occurs. So far there are no suspects and no leads, just a whole bunch of people standing around scratching their heads. The WSJ piece also mentions the previous record holder for a drug heist was a $44 million job carried out when the drugs were in transit. My colleague Leischen has covered this growing trend, as well. The WSJ talks with Bob Furtado of Lojack's Supply Chain Integrity unit. I spoke with Bob last year about their move into more traditional security. Perhaps the message here is that good enough just isn't good enough any more. Perhaps it's time to verify all alarms. Perhaps it's time to stop protecting perimeters and locations and begin protecting individual people and assets. It's the security industry's job to see the need before the curve and before the loss occurs.

by: Daniel Gelinas - Wednesday, March 17, 2010
One of the really good things about SSN's new Top5 email blasts is that they give our readers a chance to review important news stories and discussions on timely and topical issues and get up to date on what they may have missed. It also allows them to add their voice by adding comments, or, if they have a lot to say (a posted comment on a story can only be 500 characters, after all), sending an email. I got a comment yesterday on a story I wrote recently on the future of the small, mom-and-pop-type central station. It's turned into a real discussion, now with contributions from Severin Sorensen, president and CEO of Rockville, Md.-based security adviser company Sikyur, Michael Barnes, a partner in investment banking firm Barnes Associates, which specializes in the security alarm industry, and co-sponsors the Barnes Buchanan Conference, Ed Bonifas, who is vice president of Alarm Detection Systems (and president of CSAA, by the way) and now Rob Livingston who is owner/president of Alaska Automation Center, an Anchorage-based monitoring center. Originally, my boss Sam tweeted a comment about central stations becoming redundant from the the floor of the TechSec Solutions show. I picked right up on that and blogged about it. As soon as I got more info, I followed up with interviews and reporting and the 'Death of the mom-and-pop central imminent' story was born. Rob's comments fall in line with those of Michael and Ed, agreeing with some of what Sorensen said, but also voicing gentle dissent. Rob addressed changing technology, as did all the other contributors to this discussion.
I agree with some of this, but DEATH is a little harsh. Sure there is new technology to make central stations more advanced and automated, but finding people to run these is getting shallower. I find that the alarm industry may still be lagging behind technology about ten years. Our company has already put traditional alarm systems as a third option and video and automation up front. With these two technologies (video & automation) the IT world is far more advanced than the traditional alarm industry. Our IT, costs less to run and costs less to maintain. With this said, the Mom & Pops can afford to maintain and their costs are minimal compared to the giants with their proprietary systems and slow growing technologies of traditional security systems.
Michael said that the economies of scale available to larger players really didn't translate into huge savings and that the technology boom making consolidation possible was available to smaller, mom-and-pop outfits, meaning everyone could possibly win.
There is no question that these changes will affect how monitoring is done. The ability to have alarm information become so portable that it can be routed, processed, and stored anywhere in the world, in whatever is the most efficient manner, is exciting. I don't think, however, it is transformative in terms of its effect on the construct of the industry. First, an improvement in monitoring costs of something like 20 percent, while significant, doesn't translate into that big of a difference in the overall costs of handling the ongoing customer relationship. The majority of costs are, and probably always will be associated with field service, customer service, billing and collecting, and overheads. On a typical account, broadly speaking, a 20 percent improvement translates into something like $1 per month in lower costs...often times less. Larger players in the industry have had this type of cost advantage in their monitoring operations for many years. The offset, in many instances, is that smaller players can have a comparable cost advantage in their field service operations, and/or other aspects of their operations. Second, it seems clear that any improvements of this nature will be equally available to wholesale monitoring companies, many of whom appear to be well above the minimum size required to realize the largest gains in economies of scale, and have access to these technologies. This likely means that the smaller dealers will similarly be able to realize the benefits these improvements offer. Overall, I think the effect is evolutionary, rather than revolutionary when contemplating the impact on the overall competitiveness of the industry and its various players.
Ed said there was probably no need to start a fire sale on your accounts and cash out before technology led to mega-consolidation.
There’s a huge ramp up time involved in any type of new technology, especially as it relates to the most regulated portion of our business and that’s fire alarms. Fire alarms--the 2010 code was just printed, the ink isn't even dry on the book and someone's already predicting the demise of the central station? Central stations are important facets in fire protection ... and they're on a three-year code revision and so I don‘t see any major changes coming any time soon. And once you have to have a central station for fire, security’s something very efficient to add, and video and access control are enhancing what the central station does, not replacing it.
Ed also talked in my original story about the importance of customer care from a smaller operation, a point Rob made in his email as well.
You still can’t beat the customer care from Mom & Pops. I see it all the time. Peace of mind isn’t a number in a world wide database; its familiarization with personnel of a company and the service provided. Mom & Pops provide this very well. I’m sure that most people would rather reach the same person every time they called a service they use. I know I do. When I reach someone new I think I’m starting all over again. With Mom & Pops even if you reach someone new you still can get to Mom or Pop for the peace of mind you need.
Thanks to all who chipped in on this discussion.
by: Daniel Gelinas - Monday, March 15, 2010
The CSAA is getting ready for its next free webinar, this one on the FTC's Red Flag Rules. CSAA has had two free webinars so far, both of which I attended and reported on. They've increased in attendance, complexity and positive feedback each time. Don't miss out on this opportunity to glean a little education on an important matter for free. If you're interested in attended the webinar, you can sign up here. Here's a little pitch from CSAA's last issue of Signals:
The Central Station Alarm Association (CSAA) invites you to a free webinar on Tuesday, March 30, 2010, 2:00 PM - 3:00 PM EDT on the subject of the Federal Trade Commission’s (FTC) 'Red Flag' Rules. The webinar will be conducted by Mary Sisak, partner at Blooston, Mordkofsky, Dickens, Duffy and Prendergast. Ms. Sisak is a co-author of a manual on Red Flag compliance.
Signals makes it clear that this webinar will NOT be taped, so if you don't attend, you've missed the boat, so to speak. The FTC's Red Flag Rules require any company that extends credit to consumers to have in place some sort of identity theft protection plan... Now, while security companies are not banks or lenders, they DO often times offer payment plans, and other financing which amounts to credit. That means that you need to pay attention to the Red Flag Rules, the new deadline for which is June 1. Again, from Signals:
These rules require companies to implement procedures to detect, prevent and mitigate identity theft with respect to new and existing 'covered accounts.' A 'covered account' is a continuing relationship: (a) that a creditor offers or maintains with a person to facilitate the person’s purchase of products or services primarily for personal, family or household purposes; and (b) that involves or is designed to permit multiple payments or transactions. In addition, a 'covered account' also includes any other continuing relationship that a creditor offers or maintains for which there is a reasonably foreseeable risk of injury (including risk of financial, operational, compliance, reputation and/or litigation injury) from identity theft: (a) to the customer of the account; or (b) to the safety and soundness of the creditor. The core of the program is the listing of various patterns, practices and specific activities (called 'Red Flags') which may indicate the possible theft of the identities of: (a) existing customers maintaining 'covered accounts' with the Company; and (b) new or purported new customers opening 'covered accounts' with the Company. The rules require companies to periodically conduct a risk assessment to determine whether it offers or maintains 'covered accounts.'
The previous webinars were international successes and helped inform attendees about important issues like differentiation through product offerings rather than price, a common problem in the security industry, battling attrition, and the value of social networking tools.
by: Daniel Gelinas - Wednesday, March 10, 2010
It's been a busy week so far with page design and layout for the April edition of Security Systems News. April is the issue that ships to ISC West coming up at the end of the month. It's a good looking issue! Because of the business of the last few days, I have been a little remiss in posting to this blog. I have had some interview material and pics from a March 5 visit I made to G4S' high-tech video monitoring and data center located in Burlington, Mass. I've been meaning to post. The following will highlight that visit. It was nice to finally meet G4S monitoring and data center VP of ops Jerry Cordasco in person. Jerry has become sort of a go-to guy for me who's always willing to chat about current trends in the industry. I found out on this visit that he's also an accomplished musician who rocks out pretty regularly. I wrote about the opening of the center way back and have written about their certifications, partnerships and other developments. The center is hard to find... not because it's actually all that difficult to locate when you have directions, but because when you type "G4S + Burlington, Mass." into Google Maps, you get the other G4S address in Burlington... the one for G4S Wackenhut, which--while nice and staffed with friendly and helpful people--was not what I was looking for. Here's a picture of the placard out front of their building. You'd think I'd of picked up the hint I was in the wrong place when I saw the Wackenhut appended to the G4S name... pict0002 Anyway, a phone call to Jerry later and I had sufficient directions to get me to the expansive G4S monitoring and data center campus. Jerry was nice enough to tell me it wasn't my fault--that the monitoring and data center address isn't really listed online (keeping a low profile and all that). pict0003 The monitoring and data center is nestled on a 450 acre campus complete with miles of hiking/biking trails. And Cordasco assured me they were used by the center's employees. While waiting for Jerry to come and get me from the lobby, I had time to admire the the center's CSAA Five Diamond plaque, and their specially built bike storage room. pict0014pict0006pict0004 "We knew that we wanted to build a video monitoring center--something that was unique, different from what other people had done and different from what G4S had done in the rest of the world, in that G4S has other monitoring centers, but they're traditional monitoring centers. We wanted to develop something that was more closely aligned with our manned guarding business here in the US, which is Wackenhut." I told Jerry I was quite familiar with Wackenhut... at least in Burlington. "I had the responsibility to figure out how to do that--how to build it, where to build it and what technology to deploy. In the middle of that we acquired a company here in Bedford called Touchcom. We bought Touchcom primarily for its software development capability, which is a product called OneFacility, which is a really interesting software-as-a-service model of a facility management system. They had pretty good market share in New York City in the high rise market and they were starting to spread the application out to other verticals." Jerry said G4S was a fan of the SaaS model and of the OneFacility product, specifically and so they bought the company and have been integrating operations ever since. Jerry said he was sent to Mass to scout locations for G4S' first US-based monitoring center. After a little shopping around, Jerry found the center's current location and said he couldn't be happier. "I found this facility and it's 30,000 square feet, and it's in this complex which is a 450 acre complex of all high-tech industries, so it's really kind of a neat area to be in. There's all kinds of hiking and biking trails, which is wonderful for our employees. And the landlord's wonderful. So I negotiated the lease, I went and found an architect and a contractor and we got to work." Jerry said one of the big deciding factors was the location's existing infrastructure. "The building had been previously occupied by a company called Dictaphone. It had been empty for about a year and a half. But it had certain things in place that were of value to me--it already had a generator, it already had a big UPS. They were in the technology and communications business so they had a lot of infrastructure here that lent itself to what we wanted to do. They already had huge chunks of fiber optic cable coming in. So we gutted the building and rebuilt the interior." Jerry said the center was complete and fully staffed and ready for 24/7/365 operation in April of 2009. pict0012 Jerry talked a little bit about the center's back up and disaster recovery as well. "Our primary network line is fiber optic cable--it's called DS3 Line--and our backup is wireless. We've got a big dish on the roof that's line of sight to a tower and we have a dedicated antenna on that tower and our own dedicated, licensed frequency from the FCC and that acts as our backup. And then the tower is line of sight to the John Hancock Building. And we're just completing work on our disaster recover sight which is in Marlborough, Mass.--about 20 or 30 miles from here." Jerry took me on a full tour of the facility and I could hear the pride in his voice. "This center is my baby," Jerry said. "And I don't like it when people don't like my baby." Jerry said the problem with that type of attachment, however, was that his people came to him with everything. "A toilet backs up--go find Jerry," Jerry said with a laugh. "Bulb burns out--where's Jerry?" Jerry said he stopped short of scrubbing the scuffs off the walls in the halls with Mr. Clean magic erasers... but only just. Jerry also talked a lot about ongoing efforts to rebrand the world's largest security company. When asked if there were any big announcements on the horizon, he demurred. "G4S is rebranding itself in many ways. We were Group 4 Securicor, and then there's G4S and there's G4S Wackenhut and G4 Technology--over the next year that's all going to be changing. Everything is going to be G4S. We've got a new website up. The individual companies within G4S will no longer have their own identity. They will just be part of G4S. The tagline now is 'G4S: Secure solutions.' The idea is to take all of the capability we have within G4S--guarding, technology, investigative services--and apply them to a customer and be able to provide them with a total solution. And that means being able analyze all these component parts. So in the background, we'll continue to work in this real business intelligence model." Those of you going to ISC West can look for Jerry in Vegas. If you stay an extra day, you can even hop on a rented Harley and ride out into the desert with Jerry as part of SIA's Ride for Education.