Hot Seat: Not Tracking Gross and Net Attrition? You Should Be

What are your expectations for telecom and cable entrants reappearing in the channel?

No. 1, I think it is going to be very difficult for them to get enough traction to get the numbers that make a difference for those companies that are so large. The products are going to be better; they are using good products. But to get enough customer mass I think is going to be a little difficult for them. I don’t think they are going to service the customer as well the other 30 companies in the Yellow Pages in each particular community.

For all these big [telecom and cable operators], I think being able to respond with a service technician is going to be a challenge for them as well. Now they have a customer paying $149 for TV, $39 for Internet and $59 for interactive security; you have a $250 a month customer. Think about what that customer is going to say: “You convinced me I couldn’t be without this system to protect my family 24/7 and you are telling me I need to wait ‘48 to 72 hours’ for it to be fixed?”

The other services they provide — Internet and TV — they can service remotely most of the time. They don’t have to be onsite. Most of the time for security, not all the time, but the majority of them
you have to roll a truck and you better have a technician who knows what he’s doing. The cable guys all tried it in the ’90s using their cable technicians and it was a disaster.

Do you feel dealers that do not market an interactive services offering will be more susceptible to “lost to competition”?

That is a big issue. It is going to impact attrition. It is going to impact valuations. That is what I’m preaching these days.

I would say you are out of your mind if you haven’t gotten onboard with interactive services. Consumers are watching these advertisements, they are watching Mary sitting in her car at the red light looking on her smartphone and seeing that she forgot to arm the alarm system. So, she sets it right there in the car. Your customer is going to call you and say, “I can’t do that. I want to be able to do that.”

The other important point is we have a lot of customers, especially residentially, who are sitting on POTS lines and the other thing this interactive capability brings with it is a more modern signal-carrying technology. The mix between the interactive capabilities to the customer and getting to the newer signaling technologies is a critical aspect for every dealer. It’s coming awfully fast.

We spent 20 years on POTS lines and never had to deal with continual upgrading of the carrying technology. We are going to have to from now on. That is a concern about attrition as you have a lot of newer interactive capabilities and newer signal-carrying technologies, you have to start to become aware of and start to guard against complacency, “It won’t happen for a while; I’m OK.”

How are interactive service offerings beginning to affect valuations?

Buyers know they will have to deal with the signaling technologies issue. Just like the day when a panel would have download capability, you wouldn’t have to go out to the home. You could move it from one 800 number to another. If there are still dealers out there that don’t even have those, then the buyer will have to roll a service tech to change the panel phone number. That is $75. That is coming off the top on valuations.

What will start to happen is buyers will want to know how much of your base has interactive capability. How much of it is on 3G or 4G or 2G. 2G is going to go away. Other than T-Mobile, 2G is going away. Everyone who is on 2G who thought they were on leading-edge technology five years ago now have a big problem on their hands.

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About the Author


Although Bosch’s name is quite familiar to those in the security industry, his previous experience has been in daily newspaper journalism. Prior to joining SECURITY SALES & INTEGRATION in 2006, he spent 15 years with the Los Angeles Times, where he performed a wide assortment of editorial responsibilities, including feature and metro department assignments as well as content producing for Bosch is a graduate of California State University, Fresno with a degree in Mass Communication & Journalism. In 2007, he successfully completed the National Burglar and Fire Alarm Association’s National Training School coursework to become a Certified Level I Alarm Technician.

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