Susan Brady: Our discussion this month is on how state by state licensing requirements affect the central station. Please explain what you have to go through, and the cost, time or anything else involved in being licensed to monitor accounts in different states in the U.S.
N.E. “Corky” McClellan, Vice President, Loss Prevention Services Inc.: The state-by-state licensing system has a negative impact on central stations through trade limitations for legitimate companies. The regulations are developed primarily for installation companies who usually will not provide service in a large number of states. There’s definitely a need for confirmation to the consumer that a monitoring service will be able to perform through all kinds of circumstances and that the people who are providing or want to provide these services can be held accountable for their actions. The standards companies like Underwriters Laboratories and Factory Mutual do a great job of assuring that everything is in place for a central station to be able to provide a reliable service. But the people providing the service must be regulated as well.
Dera DeRoche-Jolet, Alarm Monitoring Services, Inc.: Licensing is a daily business consideration. Every time we discuss business with a prospective dealer, hire a new operator, or renew our insurance policies, we have to consider the licensing implications. We also regularly schedule internal audits of operations and dealer records to ensure continued compliance.
Joseph M. Miskulin, Superintendent, Central Monitoring Services, State Farm Insurance, Central Monitoring Services: We have a full time employee who is dedicated to keeping up with city, county and state licensing requirements for nearly half of her time at work. Since we are a proprietary central station, and only monitor our buildings, we can not pass the cost of licenses and permits on to our customers. All costs to be licensed affects our parent company’s bottom line.
Robert Few, Vice President, Criticom International and Michael Fields, Executive Vice President, Criticom International: State licensing is an expensive aspect of providing monitoring services on a National basis. Criticom monitors accounts in every state. We need two staff members dedicated to ensuring that we remain in compliance with not only state licensing regulations but municipal as well. Regulations vary greatly between states and even more so in local governments, but in almost every circumstance, there are redundant requirements.
For instance, many states require individual licensing, fingerprinting and background checks of our employees. Unfortunately, many states do not have reciprocity and require us to repeat these efforts over and over again. This means that Criticom and all other monitoring companies have to incur redundant labor costs to procure fingerprint cards, administrative processing coupled with a fresh fee for each particular jurisdiction. From an order of magnitude, licensing represents a substantial line item on our income statement.
As a monitoring center, we’re not the only one that suffers. The dealer has to get licensed and oftentimes incur substantial costs in administrating their own licensing requirements. We should also not forget about the subscriber who at times has to register as well.
Morgan Hertel, VP of Operations, The Command Center Inc.: As an example, we have to be able to monitor burglar alarm systems in the state of Oregon, so here is what Oregon requires.
I fly to Salem, OR, to take a 1 day class (which is offered only a few times a year). I have to pass a test, get fingerprinted and a picture taken and go through a background investigation. My application must be notarized and I pay $300 for an Executive Managers (EM) license, which allows me to operate the business and certify that the dispatchers meet the Oregon requirements. Then each dispatcher must be trained, pass a test, go through a background check, pay $100 so that they can dispatch alarms in Oregon, etc.
We have almost the same identical set of rules and requirements in California. So why should I have to do this for every state? I am not even apposed to sending in an application to the state, paying a few dollars to register our company and even our employees; but don’t make us actually have to go there and go through the same thing we have already gone though in California.