Bentley said there is “no intent at this point” to change the monitoring agreements that LifeShield has with Protection 1.
Marinace agreed that acquiring an established security company will give DirecTV an advantage over their competitors, many of whom have tried to start from scratch. “Certainly, it will help them hit the ground and start running,” he says.
According to Kessler, history has proven that price cuts and marketing blitzes alone will not pry customers away from established alarm companies.
“We see this over and over again in polls that price by itself will only drive a small portion of customers from the security industry over to the cable and telco guys,” he said. “Clearly, a service component, a trust in having someone being able to verify and get police to your door within seven or eight minutes, or having someone with a medical certification in the monitoring station stay with you for 35 minutes until responders can arrive is a big reason why we believe it will take several years of very hard marketing and perception changing or branding, if you will, to get away from the notion that if a telco or cable operator is running a company that you’re going to get the same, ‘we’ll be here sometime between the hours of eight and five’ service.”
Another challenge that Marinace feels that many of these new players have not given a lot of thought to are the licensing requirements that home security systems installers have to meet, which vary depending on the state.
"Many states require licensing. There is not a national license as of yet, so it requires those subcontractors under the corporate name to be licensed with background checks, education requirements and proof of employment or how many years they’ve been in business," explained Marinace.
Kessler believes that the acquisition could also be a precursor to more partnerships and/or M&A (mergers and acquisitions) activity in the industry.
“DirecTV has short-circuited this by instead of going into the business own their own like Comcast and Rogers and everyone except AT&T, who is building their own monitoring stations, we believe that this is a sign or a shot across the bow that there will be more partnerships and potential M&A as more cable and telco companies realize that they need this service component and the trust of life safety services being done by a professional monitoring group of longstanding in order to take the type of market share that they want,” Kessler explained. “The long and short of this is that we do believe that people are going to look at this and say, ’this is a much more intelligent way for the cable and telco guys to come into the business,’ rather than just provide service through generic customer service centers that don’t have the long-term training in life safety, fire or health services that the security monitoring firms do. We really do have some suspicions over how well a carrier will be in keeping customers if they do not upgrade their service capability from what has been perceived. And who can help you do that? Well, a security company can.”
Kessler said that companies continue to gravitate toward the home security market because it is an important component in being able to offer a “full-blown” home services package.
“Security is an important and natural addition to a cable company’s triple play and they’ve tried this before,” he said. “Ten years ago, when we didn’t have the advantage of having a software platform like Alarm.com or iControl making the incremental costs very small for you, they tried to buy all of these security companies and they ran into all these problems with regards to accounting because all of these acquisitions were dilutive, the cultures were incredibility differently, and most important of all, trying to operate the monitoring side of this business is incredibly hard. It was just too much for the cable companies to deal with so they just got out of the business.”