AT&T: Home Security and Automation Foray

Industry comments on AT&T new Digital Living segment


Telecommunications giant AT&T formally announced its entrance into the home security and automation market with its “Digital Life” services and operating segment. 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.

 

2 monitoring centers

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.

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, a 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.

 

Industry comments on competition

“Given that the incremental cost for a cable or broadband operator like AT&T to add new services to what they already have in turning the triple play into the quintuple play, the types of financial blocks that they ran into 10 years ago have been mitigated dramatically,” Kessler said. “And, in turn, the value proposition to the customer is also much greater now because they can do a lot of things with their home security services or systems to make it a worthwhile system rather than a negative sale. Now, people are being marketed differently, whether it is from ADT, their competitors in the industry or whether it’s from the big carriers and they’re saying that it isn’t just a matter of security anymore.”

Jim Callahan, president of Atlanta-based Ackerman Security Systems, said that he’s seen a number of companies enter and exit the security industry during his 32 years in the business and that how AT&T will fair in the space remains to be seen.

“In my opinion, at the end of the day, it’s going to come down to execution and that’s where these types of companies have failed. That’s been their Achilles’ heel,” Callahan said. “I mean let’s face it, the consumer’s general perception of phone companies or cable companies is pretty low. I don’t think the security industry is doomed. I believe we are all going to benefit from what’s going on. What I think will be an interesting thing and what we need to watch is what level of success these companies can generate in the short term.”

For more about how AT&T could impact the security market, visit http://www.securityinfowatch.com/article/10712598.