Editorial: The consequences of false alarms for our industry

Why we're risking $6 billion in recurring revenue, and how to fix the problem


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 leessg@att.net or by phone at (949) 361-3300.