Challenging times

Victor Harding
Wednesday September 28, 2016
Written by
In the scheme of things, 20 years is not a long time.

However lots has changed. With alarm technology, there is no doubt that alarm panels have improved enormously. I see this as the biggest improvement of all in the industry. The alarm panel of today can do so much more than the alarm panel of yesterday. Twenty years, ago we were just being introduced to downloadable panels. Now we can communicate over IP or cellular; wireless is infinitely more reliable and more prevalent; you can have remote access to your system to turn the system on or off and control the locks, heat or lights. The alarm panel is also better looking and cheaper.  I firmly believe that competition in the equipment end of the industry will continue to give us better and better technology.

The next biggest change I see in the industry is the mix of business the average dealer is engaged in. There is much more time being spent by most dealers on selling and installing cameras than 20 years ago when the same dealers were likely engaged in selling and installing alarm systems. In terms of the long term viability of these dealers I am not sure that this is necessarily a good change as it means fewer dealers are building RMR.

One thing that has been made clear to me over the last 20 years is how very important and valuable RMR is. Forty years ago, RMR was not such a big deal. Twenty years ago, the industry, and many looking at the industry from outside for investment purposes, started to realize that they had something very valuable with RMR. It recurs every month, is high margin and very sticky.

On the plus side of the ledger, and again connected to technology, the technology applied to the monitoring of alarm systems has improved dramatically. Everything is so much more automated for the station operator, the dealers and the customer — all for the better.

Response to alarm signals from the authorities has certainly changed. While some will not like the recent move to “verified alarms,” I see it as being a reasonable reaction on the part of the response authorities and frankly inevitable. However I am not sure that monitoring stations across Canada have spent enough time, effort and money on the issue of video monitoring to be able to handle what is coming with verified response.

Another thing that I consider overall a positive change — although some of you may disagree — is some of the cablecos and telcos have come into the alarm Industry. It shows us that monitoring RMR is something valuable. These bigger companies advertise for us all, they generally use only the latest technology and in an attempt to make this new division material to the rest of their business they generally are very growth orientated.
There are however some other macro issues that in my opinion have not changed for the better over the last 20 years. Firstly I am not sure that the penetration of alarm systems into households has increased nearly as much as forecasted. In Canada my guess is that we are still in the 20-25% penetration range. When you compare this to high-speed Internet, alarm systems are a laggard.

Secondly, there is significantly less competition in Canada amongst the national players which may not seem important, but it is. There are fewer big buyers of accounts and fewer national dealer programs. Twenty years ago we had VOXCOM, Protectron, Microtec, ADT, SecurTek and Counterforce. Now there are just three left. We need more choice at this level.

Finally and most importantly in the last 20 years, there has been very little change in Canada in the whole area of the financing of alarm companies. Our banking system is an oligopoly controlled by five or six players who have shown little or no interest in looking at alarm RMR as a valuable asset to lend against. This is not the case in the U.S. This, quite frankly, is an embarrassment to me. In fact I am working with one of the big banks to change this.

So the alarm industry in Canada has shown great progress in some areas and perhaps has taken a step backwards in others.

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