Cable and Telco Companies Hit Licensing Snags Entering Alarm Industry

Comcast and Verizon are newcomers to home security, and are already the subject of a lawsuit in Massachusetts that questions if they should be allowed to sidestep consumer protection laws in that state – as reported in this prior post. And now the stakes have been raised, with a proposed change to alarm licensing laws in Michigan that seeks to carve out a special licensing classification for new entrants – possibly including AT&T, who has also announced plans to offer home security. These providers, along with others trying to migrate into the business of providing peace of mind, are learning that it’s harder than they thought to “swim upstream” from telecommunications and entertainment into protecting homes and families. The Michigan situation is described in this news article.

The Electronic Security Association [ESA] announced late last week that it is supporting the Burglar and Fire Alarm Association of Michigan [BFAAM] in opposing proposed legislation that would establish a separate set of licensing requirements for installing IP-enabled security systems in the state. According to a statement, Senate bills 1291 and 1292, would also circumvent existing statutes followed by BFAAM members and other providers and potentially benefit the entry of telecommunications companies into the Michigan market.

As a reminder, most of these new entrants use the Internet for transmitting a majority of their signals from the home, which is why they are referred to as “IP-enabled.” And as regular readers of this blog know, the best home security systems rely on a safer and more robust cellular connection. Here’s more from the article.

            Specifically, the ESA and BFAAM say the legislation would:

• Create a new licensing structure with a definition of a security system as "IP-enabled," primarily because it sends signals via the internet.
• Require many current providers to obtain two licenses – one under the existing statute and a second one under the new classifications.
• Allow new entrants into the industry to circumvent existing requirements for criminal background checks.

Not the Way It Should Work

According to Dean Belisle, president of the BFAAM and president of ACT NOW Alarm Services Inc. in Clinton Township, Mich., the organization became aware of the proposed legislation the day after it was introduced on the Senate floor, and only "by a stroke of luck when our lobbyist ran into the senator's aide who was working on the issue. The Senator’s aide explained that they had been unable to find a contact or representative of the Security Industry to include in an upcoming Workshop on the topic."

That’s a little hard to believe, in my opinion. Ever hear of ADT? I am sure they would be happy to express an opinion in this matter, and I doubt it would be favorable to the proposed legislation. Alarm licensing laws are all about consumer protection, and Michigan has taken (at least up until now) a strong stance in this regard.

Suspicions Behavior

Belisle said subsequently association representatives were invited and attended the workshop but it was obvious it was a "late invitation" to the industry. He added that although they tried to have the proposed legislation changed, when it came to the senate floor very little had been altered in the bill. "What we are having trouble communicating to them is that any loophole they achieve for themselves has repercussions all throughout the industry," he said.

Not How Government Normally Operates

Both BFAAM and ESA were also troubled by the unusually fast track for the two bills. Unlike other legislation, which often takes weeks or months to wind its way through the approval process, the two bills were introduced on Sept. 19 and approved by the state Senate on Sept. 27 without adequate hearings or input from affected businesses or citizens. "After being approved by the Senate, the bills moved immediately for introduction in the House the same day," the ESA said in its statement issued on the bill.

AT&T and Verizon Named

John Chwat, Director of Government Relations for ESA said the association became aware of the bill the day it was introduced and "that's not how you work with an organization." Chwat said ESA will continue to support and assist the efforts of the BFAAM and has also asked for support from the Alarm Industry Communications Committee. "We'd like AT&T to work within the licensing regulations that already exist. I'm convinced that AT&T and Verizon will come back and expand their efforts in this direction," Chwat added.

Why Alarm Licensing Matters

Almost every state in the US has an alarm company licensing law – and Michigan’s statute dates back to 1968. These laws are written to protect the consumer, and the requirements vary from state to state. The real alarm companies (like FrontPoint) are licensed everywhere they are required to be, and pay close attention to following the rules. However, not all companies are compliant – as this prior post about a criminal conviction and a fine levied in Maryland demonstrates.

Of course, one might argue that the cable and telco companies face bigger challenges than obtaining an alarm license. There are already serious concerns about the level of service delivery and customer satisfaction these new entrants are capable of providing. And as for Verizon, it is facing questions on whether its technology platform even works, and if the company’s employees understand and can support these new features.

As a “real” alarm company that is focused on protecting homes and families, FrontPoint welcomes the increased consumer awareness of interactive monitoring services and home automation that new entrants like Comcast and Verizon bring to the general public – exactly the advanced features that FrontPoint has offered since our inception in 2007. We also expect that the more people research their options, the more they’ll choose FrontPoint. As the leader in wireless home security, we specialize in the best protection: that’s why we’re the #1 ranked alarm company in the US. FrontPoint systems are safer, smarter, simpler, more affordable, and virtually impossible to defeat. We are licensed in every state that requires it – including Michigan - and you’ll be thrilled with our service.