Industry experts say the impact of Comcast's acquisition of Time Warner Cable on the alarm industry is too soon to tell at this point.
Photo credit: (Photo courtesy Wikimedia Commons/Dave Winer)
Electronic Security Association President John Knox said he was surprised by the deal when it was announced and called it a “sign of the times.”
Last week, cable giant Comcast announced plans to buy rival Time Warner Cable in a deal worth more than $45 billion. If approved by shareholders and federal regulators, the deal would give the newly combined company about 30 million subscribers across the nation. The merger between the companies could have ramifications for the alarm industry as well, as both Comcast and Time Warner Cable have been among the recent entrants to the home security and automation space. However, industry experts believe that it’s still too early to speculate on what this deal will mean for the companies’ respective security offerings or how it may impact their share of the market.
At the recently held Barnes Buchanan Conference, Michael Barnes, founder of M&A advisory and consulting firm Barnes Associates, estimated that all of the new players combined only had a one to two percent share of the market in 2013.
“At a minimum, if the deal happens, Comcast is just that much bigger...with more customers and deeper reach in to most of the country,” Barnes told SIW when reached via email last week. “They were already huge, so I am not sure this really would make that much difference in their success (current or pending) with their alarm offering.”
With that being said, if the companies do merge, Barnes said that there will also be a number of internal issues that they will have to deal with.
“Albeit a minor/temporary point, merging companies is tough. (There is) lots of sorting out to be done with respect to how and what to combine,” said Barnes. “Often, in the short-run, efforts are stalled and/or unfocused while everything is decided and any combining that is going to be done is executed. It would fair to assume this effect would impact the alarm effort, as well as the rest of the organization.”
Electronic Security Association President John Knox, who also serves as president of Knoxville, Tenn.-based Life & Property Security Systems, said he was surprised by the deal when it was announced and called it a “sign of the times.”
“Comcast is primarily a cable company, but they see that to compete with some of the other communication companies going forward they’re going to have to have a bundle of products and services that they can provide and I think that’s driving change more so than anything,” said Knox. “I know what my cable bill is every month and I know what our monitoring charges are every month and I’d much rather have their check than mine, so (security) is definitely not their core focus but something they feel like they need to do.”
Knox believes the larger issue with cable and telecommunications providers coming into the market, especially now with the potential of having an even larger conglomerate as part of that equation, is not necessarily the creation of a more competitive landscape, but a monopolization of the nation’s communication infrastructure that could squeeze out traditional alarm dealers.
“There’s no doubt that there is a push going on in Washington, D.C. and across the United States to (deregulate) communications. The Internet has never been regulated by the FCC, so (in my opinion) the communications giants of the world would very much like to convince the politicians that it’s a new age, a new world and the Internet doesn’t need to be regulated,” said Knox. “At that point, when I look at the way we get communications to our customers, yes it would have a big impact on us because even though a lot people think it’s wireless or going across the Internet, it is still a wire line issue that I feel should be regulated by somebody or else we’re going to be back to the monopoly situation we were in with the regional Bell companies. To me, the communications side of it is far bigger than just the (cable and telco) giants getting into the alarm industry; it’s much bigger than that. When you start limiting the providers of communications is when little guys like me can get stepped on pretty easily.”
Despite the large marketing budgets of some of these companies entering the market, Knox believes that traditional alarm dealers won’t necessarily have a problem competing against them as long as they hold true to their core values and embrace new technology as it comes along.
“You’re not going to be able to operate your company in the next 10 years the way you did in the last 10 years, so don’t be scared of new technology but hold onto your core values of customer service, answering your phone, being honest and doing what you’re say you’re going to do,” added Knox. “Definitely don’t lose sight that you’re protecting people’s lives and property… we’re still in the life safety and security side. As far as my company, the lifestyle enhancement stuff is just gravy.”