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The New Monitoring Market

Joe Freeman: Phone lines used by Regional Bell Operating Companies' (RBOCs) customers have dropped by almost 20 percent in the past four years, while Internet phone use tripled from 2003 to 2004 and is expected to continue to grow.




In the early 1980s, independent alarm companies enjoyed a growing industry and phone companies and power utilities started paying premium prices to get in on the high-margin monitoring business. A period of central station/alarm company consolidation ensued. Now, a 2004 monitoring revolution is unfolding to alter the market’s infrastructure and provide new growth opportunities.

A major element of the revolution is the aging of the telephone industry’s business model of using a particular wire to transmit and receive messages.

But as VoIP, wireless and IP video technologies continue to become more attractive to users, the telephone industry is now in the process of undergoing massive change, and this affects the alarm monitoring industry.

The small office/home office (SOHO) market in America grew strongly during the recent construction boom, and 21 percent of households now have broadband connections. By mid-2005 this is expected to grow to 33 percent and continue.

The Internet is in wide use. Corporations are hoarding cash and curtailing capital investment. In this environment, any cost reduction is welcome. This has also affected the IT industry.

Internet Dissolves Famous Brands
Microsoft™ is no longer a growth company. Intel’s business is flat, Cisco’s forward guidance is modest rather than strong, and the entire IT industry is now seeking new areas of opportunity. Cable TV companies, stung by the growth of satellite TV, have entered the fray. Cablevision now offers a monthly package of high-speed Internet access, cable TV and Internet phone service for $100. Lastly, AT&T bonds have junk status, and we may be witnessing the slow disappearance of what was once reputed to be the strongest brand name on the face of the earth.

These developments focus commercial users on higher levels of security, video monitoring evidence and the cost of telephonic communications. The residential user is looking for communications versatility in an active, two-working person lifestyle — and price deals.

You may have seen these two charts on page 22 of the October 2004 issue of SSI in the Aug. 25 Wall Street Journal. The first is the trend in phone lines used by the customers of the four Regional Bell Operating Companies (RBOC), and the other is a growth projection in Internet phone subscribers.

What can a central monitoring station offer in this emerging new marketplace of ideas? What does the homeowner need besides security alarms — and how about the business person? The ideas are there for sure, but they may be a bit vague for the moment. Anyone care to take a closer look at some of them? Is the digital dialer to be succeeded by the central station security/information center?

Joe Freeman is founder and president of J.P. Freeman Co., a company widely known for its security market reports and business consulting since 1983. In 1995, he founded J.P. Freeman Laboratories LLC, which provides technical services to clients worldwide. He can be reached via e-mail at secsales@bobit.com.

Article Topics
Video Surveillance · Central Stations · Features · Research · Residential · trends · All Topics

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Central Stations, Features, Research, Residential, trends


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