AT&T’s impact on the residential security market

Dealers say telco’s entry could benefit entire industry

Telecommunications giant AT&T earlier this week formally announced that it is entering the home security and automation market with its "Digital Life" services. In addition to offering traditional alarm system features -window and door sensors, smoke detection, and motion and glass break sensors - the Digital Life portfolio also includes the integration of modern home automation technology including thermostats, moisture detection and appliance power controls.

According to Kevin Petersen, senior vice president of Digital Life for AT&T mobility, the company has been looking at getting into home security for a while and believes that the industry is ripe with opportunity given the evolution of wireless technology and the ability to control systems remotely with mobile devices.  

"We felt that advancements in technology had progressed enough in terms of stability, reliability and cost-effectiveness. If you look at the adoption of smartphones and tablets and consumers’ attitudes and willingness to use these in their everyday lives, we felt the timing was right," explained Petersen.

Petersen said that AT&T also conducted research and found that many companies in the industry were relying upon old technology and that consumers were unsatisfied with the current set of features and functionality available in the marketplace.

"People wanted to be able to use their system to do more than what they’re able to today. They also wanted choice, value and transparency and a solutions orientation that, at least from our research, they weren’t finding," he said. "And then lastly, our brand played well. It really played well with consumers in terms of them seeing us as a likely choice for this type of service. In terms of a natural fit, we just felt like it was a real extension to what we do."

AT&T has built two all-digital monitoring centers in Atlanta and Dallas where the company plans to begin trials of the service this summer. Petersen said that the company will have "dedicated partners" that are licensed install the systems and their associated components to ensure that they are installed right the first time.

Additionally, Petersen said that AT&T would be using a "first-of-its-kind" integrated controller in homes containing a 3G module that can communicate with their monitoring center wirelessly, as well as through a wired broadband connection. The controller will also operate on Wi-Fi and control home devices that utilize the Z-Wave communications protocol.

"We think it’s going to be a game changer," he said. "We think it really does give value choice and peace of mind and control to the consumer, which we think will not only allow us to compete effectively for customers that buy the product today, but will hopefully will help us expand the market."

While the alarm industry successfully lobbied against the entry of telecommunications companies into the market in the 1980s, Bob McVeigh, chairman of the Electronic Security Association’s industry affairs committee and vice president of Norwalk, Conn.-based Security Solutions Inc., said that the industry is much different today than it was then.

"This is not something new to AT&T. They have tried (home security) one or two times before… but I think they’re of the ilk if first you don’t succeed, try, try again and I believe the climate now is considerably different from what they’ve tried in the past," McVeigh said. "They’ve got a real shot at making this one successful for them and their business and I believe they’re going to be successful in this effort."

According to Jeff Kessler, long-time security industry analyst and managing director of Imperial Capital, LLC, many of the telcos initially attempted to make a foray into just the home security market about 10 years ago, but they didn’t generate a lot of earnings and most of them eventually sold off their security assets. Over the last two to three years, however, Kessler said that much has changed in the market, including a willingness by consumers to start adding things besides security to their home security systems including cellular backups, personal emergency response system (PERS) capabilities and video surveillance.

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