High numbers of false alarms are affecting our industry's relationship with first responders and putting our revenues at risk, says guest columnist Lee Jones.
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The term "false alarm" has become almost meaningless, because it now has so many definitions and applications, each with different consequences. This also explains why it is so difficult to have constructive discussions among industry professionals about false alarms. Difficult or not, it's a topic we need to discuss. Furthermore, we need to discuss unnecessary police response stemming from false alarms.
Today, the traditional monitoring center is rapidly becoming "the bad guy" by default because 100 percent of all requests for police response come from a private monitoring center to fulfill a private contract. And in the United States we have roughly 20 million existing recurring revenue customer contracts for alarm monitoring. If we multiply those 20 million accounts by an estimated annual revenue of $300 per account, we find that upwards of $6 billion in recurring annual revenue is in play here, and that means $6 billion in recurring annual revenue is at risk from the consequences of false alarms.
Decades of documentation from the police themselves tell us that nearly all requests for help called in by alarm monitoring centers are unnecessary. The defensive reaction from our law enforcement partners has been to quietly downgrade the calls coming from monitoring centers to low priority courtesy response, from a prior status of high priority emergency response. Admittedly, it differs widely amongst the 10,000 police jurisdictions we have in the United States.
The root of the strained police relationship is obvious to some of us alarm industry old timers. The basic business model for traditional monitored alarm systems is still a process of elimination performed without meaningful analytics. A site inspection is part of that process of elimination, because alarm site sensors and controllers simply detect and announce abnormal movement, with zero analytics. Monitoring centers use the local police as an alarm response to determine IF an emergency exists, not BECAUSE there is a known emergency. Sure, we see a lot of excellent technology, but on the whole, I believe most of the technology supports the outdated business model.
Police now have a great deal of leverage to affect our industry. It is hard to justify historical un-verified alarm response. At one level, this can be interpreted as a "gifting of public funds." If an un-verified alarm response is seen from that perspective, then we have to consider that dedicated police response to a private interest group to fulfill a private contract is an unlawful activity, at least in most states. Consider also that an unverified alarm response could be interpreted as a "false police report", and requests for emergency services, when no known emergency exists, can be a misdemeanor.
Police departments are saying they are not in the alarm business and that they do not care what technologies or procedures are used by the alarm industry. The message is to not substitute police response for a private technician's response or a customer service response to fulfill your private contracts.
The overall problem and subsequent solution for unnecessary police response has become very complicated, however I think it can be easily explained. Monitoring centers are the key, but it means an overhaul of our way of thinking.
- The Problem: We assume that all incoming signals are real until confirmed false.
- The Solution: We assume that all incoming signals are false until confirmed real.
I believe the industry is floundering in the middle of the transition between the two conflicting business models. I believe the surviving business model will be to assume all incoming signals are false until confirmed real -- by next-generation analytics (or remote video access) at the site and monitoring center. Some monitoring centers try to do it now, while others are sloppy and irresponsible. With several hundred monitoring centers operating in the United States, the gap between good and sloppy is very wide. Historically, sloppy performance was rewarded. But in the new business model, sloppy performance would be severely penalized.
But changing the industry will not come easily. A quick review of industry trade journals and trade shows suggests the alarm industry is moving away from a solution due to the wild fragmentation of products and services without standards or standardization for the system at the customer site or the monitoring center.
Enhanced Call Verification (ECV) is receiving high visibility as a new source of monitoring center analytics. No operating procedure can be more basic and natural than ECV. Every monitoring center everywhere should already be applying ECV without being nudged by city ordinances. It should not even be a topic of conversation. It is almost embarrassing to see local and state legislation demanding the monitoring industry perform its most basic duties. Sure, cell phones have improved the success of ECV but it still does not answer the question of what to do with unknown signals.
Debates about false alarms should always include the customer perspective. Often the customer is perceived as the bad guy, causing all of the problems related to false alarms. Alarm companies and associations like to off-load all of the operational and financial responsibility to the RMR customer or the municipality, rather than the monitoring center. Even the "model ordinance" promoted by alarm associations has a recommendation for the police to finance and administer a training school to "re-educate" the private alarm customer. And the model ordinance promotes false alarm fines/fees to be paid by the alarm site, even though all analytics and the call to the police for help, is outside of the control of the customer site. That could be why a high percent of the fines and fees are going uncollected; it is because the wrong party is levied. Of course, nearly all false alarms originate from the customer site, but all unnecessary police response, evolving from false alarms, originates at the monitoring center.
Millions of RMR customers now receive security service that is unpredictable, with add-on fees, or no site response without costly confirmation of an emergency. This low priority site response has a separate list of consequences for security providers, including the specter of deceptive business practices, which could reset length of contract and market value to zero.
While the alarm industry is exploiting the police… and police are exploiting the alarm industry (as a source of revenue)…. the customer is getting squeezed in the middle by:
- Higher, unpredictable costs
- Lower priority, unreliable site response
- Unnecessary manpower workloads
- Industry related legislation
- Higher risk of personal injury
As a consequence of false alarms, the customer now has more leverage for rate negotiation and cancellation negotiation. When services rendered do not match services promised, the customer contract loses credibility. The danger to you as a dealer or a monitoring firm is that the market value of RMR contracts could parallel the credibility of the customer contract. If historical contract enforcement is weakened by false alarms, the net worth of hundreds of security suppliers is weakened too.
While this editorial highlights some of the very serious and time-sensitive consequences of false alarms, much of this writing is sadly old news about a recurring problem. It's my opinion that all the stakeholders in this business should research their individual participation and consequences, and seriously consider what to do about it.
About the author: Lee Jones is the founder of Support Services Group, specializing in the private security industry and now as industry analyst for investors. Jones' experience is street smart, spanning four decades, and is focused on building market value for local and national security providers. He can be reached at email@example.com or by phone at (949) 361-3300.