Late last year, AT&T petitioned the Federal Communications Commission to begin a process that would allow the telecommunications industry to transition away from traditional, landline telephone service to new services based on IP technology. Instead of continuing to invest in plain-old-telephone-service or POTS as it is often referred to, the company said that it wants to spend $14 billion over the next three years to expand wireless and broadband networks.
This news didn’t come as a great shock to many people in the alarm industry. According to Bob McVeigh, vice president and general manager of Norwalk, Conn.-based Security Solutions who also serves as chairman of the Electronic Security Association’s Industry Affairs Committee, this transition away from copper-line phone networks is going to impact dealers differently depending on their individual business models. For example, McVeigh said companies whose business models primarily revolve around a product line that uses cellular or some other type of communications technology are going to be well-positioned and the least impacted by this migration.
“Some companies are already making the shift. They are smart enough to know that this is a serious problem and they’re turning the ship to move towards an alternative product rather than POTS lines,” McVeigh said. “They are stopping the hemorrhage now, but there are still all of those existing clients that need to be taken care of and those are going to be the tough decisions.”
McVeigh believes that the most of the bumps in the road for dealers in making the switch will come in the form training customers.
“The cellular providers have done a fantastic job of training us so that we couldn’t imagine carrying a cell phone for more than two years before we get the latest and greatest and move on, so it’s very easy for them to migrate to a better of different technology,” said McVeigh. “For us, for some reason, 20 years for an alarm panel has become commonplace to let it last and it is just ridiculous to think that a technology will last that long. We, as a community, need to train our customers that things are different now and you need to migrate.”
Overall, the sentiment from security dealers and integrators is that the sunset of 2G and the demise of POTS is actually an opportunity—a chance for companies to go back to their customers and talk about new interactive services and automation in particular.
According to the recent 2013 ESA MegaTrends Survey, some 95 percent of respondents are currently involved in alternative alarm signal transmission, meaning cellular and other forms of wireless and radio-based communications.
“What’s really changed today is the advent of the communications channel,” said Patrick Egan, president of Select Security, as he spoke to his peers at the 2013 ESA Leadership Summit. “We are in a world that’s rapidly changing.”
Michael Pope, president of Safety Technologies Inc., said that with phone lines going away, there is going to be attrition. However, his company started to talk to customers about interactive services when they wanted to initially contact them about POTS going away. “Of those companies who called to cancel their service, because they were canceling a phone line, some 75 percent were converted to interactive services. It’s just so much easier to sell them on interactive services than have a conversation simply about POTS going away. POTS or GSM going away doesn’t mean that much to them, but interactive services does,” he said.
Pope said integrators and dealers should not wait for their customers’ contracts to expire to have the conversation on interactive services.
While the industry does see the positive side of touching the customer with new services as a lead in as they talk to them about the end of 2G and POTS, that doesn’t mean that there isn’t concern or that there isn’t a lack of work to be done to reach the thousands and thousands of current industry subscribers and get them to execute a changeover.