In the wake of the recent news that AT&T is looking to phase out landline telephone services, the alarm industry is getting prepared for the transition to alternate forms of communication.
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With the news that telecom giant AT&T has asked the federal government for permission to stop providing landline telephone services, also referred to as “plain-old-telephone-service” or POTS, dealers and central stations must begin to focus on alternative communication platforms to use for alarm signal transmission.
The transition may prove difficult for companies that have relied heavily upon using POTS as a primary means of alarm communication, according to Tom Mechler, product marketing manager for Bosch Security Systems’ intrusion business unit.
“I think initially it’s going to be a big challenge for the industry. The industry as we know it really has been built around recurring revenue and for the most part, the use of that POTS line to build that recurring revenue through the means of alarm traffic going to a central station over a basically free and very reliable telephone network,” he said. “We’ve already started to see the effects of that on the industry with the advent of voice-over-IP (VoIP) and with the advent of customers that are just choosing to go to different types of phone service. They’re not using a wired phone anymore, they’re only using wireless, so the industry is already starting to see a shift towards other means of communications.”
In its request to the Federal Communications Commission, AT&T said that less than 20 percent of Americans exclusively rely on landlines for phone service and that 25 percent of the nation has abandoned them altogether. In fact, according to the Cellular Telephone Industries Association, a little more than 20 percent of all U.S. households are now wirelessly-only homes.
Mechler said that in the future, alarm communications will rely primarily on one of three solutions including VoIP, IP and cellular signals, however, VoIP may not be as reliable as cellular or other IP technologies.
“If the customer has a wired phone line, but it’s voice-over-IP, as long as it’s a facilities-based voice-over-IP service and it meets all the old requirements of the POTS lines then they may not see degradation in service,” he said. “But what we’re seeing is the opposite, that there is an effect of voice-over-IP on the alarm communication which causes the system to become unreliable.”
Despite the fact that it has proven to be reliable, Mechler says using cellular-based forms of alarm communications could prove costly and that end users will have to determine if it’s a price they can afford to pay. Mechler added that using a wired IP connection would basically be free for alarm traffic, but could present complexities to installers in the form of having to overcome various firewall issues.
“It really is a challenge for the alarm installer to make sure that their skills are up on these new technologies so that they can transition their customers in the best way and pick the right technology based on user needs,” he said. “And, it’s a challenge for the end user because his cost may be going up and he needs to be ready for that.”
One of the companies that saw the writing on the wall with POTS several years back is South Carolina-based dealer Blue Ridge Security Systems, a subsidiary of Blue Ridge Electric Cooperative. According to Dave Whittington, manager enterprise group for Blue Ridge Security Systems, one of the company’s goals has been to completely move off of POTS lines.
“We’ve seen this coming for quite sometime,” he said. “For us, to hear (about AT&T’s request), we’re probably not you’re average respondent in that, that’s fine because now at least the truth is truly going to be borne out.”
Whittington said that Blue Ridge already offers several alternatives to systems that use POTS including its BlueLink 24 solution, which use AES-Intellinet’s wireless mesh technology to create a wireless digital communication network for customer’s alarm transmission equipment. The company also offers security equipment from DMP and Videofied that uses cellular technology.
Whittington added that one of the benefits of moving away from landline-based solutions is faster transmission times.
“That’s actually a win-win for us. We used to battle the 90 second rule with the fire department when we sent (the signal) over POTS lines and you were always nervous if you were going to make your 90 seconds. With AES-Intellinet its just seconds and we’ve got the signal through,” he said. “We’ve not had confidence in POTS lines or telephone lines for some time.”
Whittington estimated that between 50 and 60 percent of the company’s customers are still using POTS line-based systems, but he indicated that they have converted quite a few.
Though it was costly in the beginning for their technicians to learn about newer communication technology, Whittington said that they have learned from their initial mistakes and have become more adept at installing mesh and cellular solutions.
Another company that has been preparing for the transition from POTS to digital is New York Merchants Protective Company. According to Vice President and Chief Technology Officer Mark Fischer, the company has taken steps in preparation for the move to digital communication.
“Our infrastructure that we’ve been investing in over the past couple years has been a lot of IP-based communications, coming up with solutions for transitioning older systems from POTS to IP communications so that our customer base and our dealer base doesn’t have to go out and replace equipment just based upon that fact someone has switched over to IP-based communication,” he said. “In the long run, there’s going to have to be a greater reliance on communications like GSM and things like that because the problem with IP communication compared to the old POTS line is the fact that IP communications, and voice-over-IP and any other terrestrial-based communication relies upon power at the subscriber side and unlike POTS lines where the (power) supply is from the phone company, generally there is no provision for long-term backup (for IP communication users).”
Fischer does expect to see some initial attrition from customers switching from POTS to digital communications, but indicated that companies that can offer alternative solutions will be able to curb that effect.
“One of the problems you have with subscribers transitioning to voice-over-IP is they see a savings,” he said. “They may be saving $50 a month on their phone bill, they’ve already spent that money somewhere else and when the alarm company goes to them and says we have to charge you $250 or $500 now to adapt their system, there is going to be a huge push back against the alarm company. There’s going to be attrition and people are going to drop monitoring because they don’t want to spend that money even though their payback is relatively quick. So by being able to offer inexpensive and effective means of communication on other platforms or adaptations for platforms, we’re giving our dealers a way of having a high retention rate.”
Fischer estimated that 20 percent of the company’s customers are already using VoIP or other communication technologies. He added that both residential and commercial customers are turning to alternate forms of communication as a cost savings measure.
The good news, according to Mechler, is that most companies in the industry have familiarized themselves with emerging alarm communication technologies in anticipation of the phasing out of POTS.
“We have a lot of experience. I don’t think you’re ever ready for a sea change like the main communication path just disappearing,” he said. “Though it’s going to be a challenge for us, it’s my opinion that as an industry and as manufacturers and installers, we’re ready and we’ll be able to adapt to it.”