The home security market has been a rapidly changing environment over the past several years, with self-monitored offerings cropping up everywhere as well as a host of large, national cable companies coming into the picture with connected lifestyle services that include energy monitoring and home security. There have been moves from outsiders into the home security space before, with national and regional telecom and cable providers entering (and exiting) the marketplace, but the current market seems ripe for newcomers who can tap into their large, existing customer base and add on security, entertainment and energy management options to their customers’ existing bills.

The cable and wireless giants — AT&T, Verizon, Comcast, Time Warner and Rogers — have all entered the home monitoring market with some kind of offering. A host of other cable companies also have entered the market, including Cox Communications, Comporium, Frontier Communications, New Wave Communications and Massillon Cable TV Inc. The effect that this penetration into the home security market will have on the larger security industry is yet to be seen, but with close to 78 million broadband service subscribers in the United States, it would appear that the cable companies have a wide network of existing customers to sell these additional services to. Exactly what each of these companies is selling and for how much differs widely, but one thing is for sure: new technologies and a changing consumer base have made it possible for each of them to enter the marketplace with a bang.

Comcast launched Xfinity Home Security in June 2010. In 2011 Verizon came out with its Verizon Home Monitoring and Control, and Time Warner unveiled its IntelligentHome offering. AT&T has been in the game since 2006 with its home monitoring service for small businesses and homeowners. AT&T’s acquisition of Xanboo in late 2010 and its subsequent termination of all Xanboo dealer agreements in mid-2011, suggests that the company is gearing up to integrate the platform more fully into its remote home monitoring offering in the future.

Many of these large cable companies have had their eye on the home security and monitoring marketplace for a few years. Some have actually had their hand in the space for many years (three decades in Time Warner’s case), selling traditional, hard-wired security systems. However, home security and monitoring was not something broadband service providers could feasibly deploy on a large scale until new technology allowed them to piggyback off their existing infrastructure and offer customers cost-effective systems.

Technology Eases Marketplace Entry

One such development in technology, which is the backbone for the Time Warner, Comcast, Rogers and other cable companies’ home monitoring offerings is from iControl. The company’s software platform is used in ADT’s Pulse and DSC’s Connect24. However, the platform used in ADT and DSC’s systems connects to existing home security panels and uses Z-Wave technology. The iControl OpenHome Software Platform used by the cable companies is the Converged solution and it is the control panel.

“The Converged solution includes an all-in-one touchscreen and control panel that operates off of ZigBee technology in addition to Wi-Fi in the home and cellular backup,” describes Greg Roberts, vice president of marketing, iControl Networks, Redwood City, Calif. The ZigBee-enabled system allows the iControl touchscreen to talk to security devices, as well as other home automation and management devices, such as lighting modules and thermostats.

According to Roberts, this technology platform made it possible for cable companies to leverage their existing businesses and offer an easy-to-install, manageable system. “The cable industry has taken a very strategic approach to getting into the security space. They looked at this market very closely,” Roberts says. “Each individual company wanted to enter the security industry in a mass market fashion with a solution that provides more than just a traditional home security system.” The company recently announced international communications and IT company Swisscom as one of its latest partners to deploy the platform. Some of iControl’s hardware manufacturing partners include Visonic, Technicolor and NetGear, according to Roberts.

COMPORIUM

“We’ve seen security tried many times in the past, but consumers are different and technologies are different; it seems to be a perfect storm,” says Dan Lehman, director and general manager of Comporium, Rockhill, S.C., a diversified communications company that offers voice, video, data, wireless and security to its customers. In the summer of 2011, Comporium, which has its own central station, began offering connected lifestyle services including security to its customer base with the iControl platform. The company also is a reseller of the iControl platform to its tier 2 and tier 3 telecom and cable providers as part of its dealer program, according to Lehman.

TIME WARNER

These new developments in technology allowed Time Warner, New York, to deploy its security and home automation offering (IntelligentHome) on a national basis — something that was not possible previously. “We have been in the security business for a long time in the Syracuse [New York] area with a traditional hard-wired service, but the reason we hadn’t launched it beyond a few markets was because of the technology involved and the amount of time for an install. It just wasn’t scalable for us,” explains Justin Venech, spokesperson at the company.

“Now, what we are finding is that with the growth of our HSD [high-speed data] network and the new technologies available, the equipment is a lot easier, we can make installs a lot easier, and the price is more appealing. It just makes it a good time to start doing this on a larger scale,” Venech describes. In addition to monitoring from Time Warner’s own Five Diamond central station, the IntelligentHome service also offers customers remote monitoring of their cameras and sensors, as well as energy management and lighting control.

Installation and service will be done by the company itself. “Because it works so well with our existing HSD product, it’s easy to educate our installation technicians on the skills required for this,” Venech says. The IntelligentHome service is currently available in central New York, the Carolinas and Los Angeles, with more markets to come, according to Venech. A kit for $99 includes a touchscreen, modem router, two wireless window/door sensors, one motion detector and security signs. SerComm cameras and other add-on devices are an additional cost. Currently, Time Warner is requiring an 18-month contract, Venech says, and the monthly service fee of $39.99 is lowered to $33.99 for customers bundling services such as HSD and voice.

In addition to being able to build off their existing infrastructure, the opportunity to bundle these new offerings with a customer’s existing bill each month is another reason home security and monitoring makes sense for the cable companies. The bundle factor is an enticing one for subscribers, whether enabling them to get a discount on services such as home monitoring and control, voice, television and Internet, or just allowing them to receive one bill for all of their lifestyle services.

COMCAST

While Comcast is not offering a bundle discount on Xfinity Home Security currently, bundling services is still an attractive feature to consumers, because it’s simple and allows consumers to work with a company that they are already familiar with, according to Jamila Patton, senior manager of corporate communications at Comcast, Philadelphia.

Comcast has partnered with C.O.P.S. to provide monitoring services to its customers, but the cable giant will go it alone when it comes to installation and servicing. “We really wanted to keep things within the company, since all our products are very similar. Our specially trained team of people is familiar with the product, our network and platform,” Patton says.

Xfinity Home Security is a broadband-based security and home control solution available in two packages: its Basic ($29.95 per month) and Preferred ($39.95 per month) solutions. The Preferred solution has the added benefit of complete access via the Web for consumers to view and manage their systems, while the Basic package allows Web access for glanceable status and arming/disarming only. Video monitoring is available for an extra $4.95 per month and installation for both packages is $199. The initial system includes four window/door sensors, one motion detector, a wireless keypad, keychain remote and touchscreen. Cellular and battery backup is included with the installation. SerComm cameras and fire and home automation modules can be added on. As with most of the cable companies at this time, you must be an Xfinity Internet customer to buy the security system.

“Home security is really a natural extension for us,” Patton explains. “We are already in customers’ homes and it’s a company that customers are familiar with and we are able to leverage our existing network.” Currently, Comcast’s security offering, which requires a three-year contract, is available in parts of Texas, Pennsylvania, Florida, Tennessee, New Jersey, Indianapolis, New Hampshire and Minnesota, with continued launches scheduled throughout the year, according to Patton. In addition, Patton says that Comcast is “evaluating other opportunities rather than just residential.”

COX COMMUNICATIONS

While many of the cable companies are requiring that customers be current Internet subscribers of that company, some are extending their services beyond their own customers. Cox Communications, which debuted its Cox Home Security offering last year in Arizona, does not require customers to be current subscribers to the company’s broadband service, though the customer must have broadband service. The system, which includes energy and lighting control, is reportedly professionally installed and monitored. The company will be unveiling new markets in 2012, though they have not announced specifics as of press time.

Cox Home Security offers three packages: the Starter package for $29.99 per month with $99 installation; the Preferred for $39.99 per month with $249 installation (as long as the customer has a three-product bundle); and Premier for $39.99 per month with $449 installation (with a three-product bundle). The upper tier package includes more door/window sensors and live video monitoring, as well as lighting controls and fire/smoke sensors. And, on par with many of the other cable companies, the prices require a three-year contract commitment.

VERIZON

Although its current Verizon Home Monitoring and Control solution is only available to its customers, Karen Handy, home monitoring and control strategy and roadmap manager says that the company plans to roll out the offering nationwide by the third quarter of 2012. “You have to be a Verizon broadband customer right now, but we are looking to roll out the product to any customer with any broadband service,” Handy reveals.

Verizon’s solution is different from some of the other telecom/cable companies’ offerings in other ways, too. For example, the company is not requiring a contract commitment and there is no third-party monitoring available right now, though Handy says that they will not rule out the possibility for it in the future. The system is marketed as a do-it-yourself home monitoring and control solution, however, the company has partnered with InstallerNet in the event that a customer does not want to install the product himself.

When Verizon launched its Home Monitoring and Control offering last fall, it did so in its entire footprint at once, covering Texas, California, New York, Florida, Pennsylvania, New Jersey, Virginia, Massachusetts, Maryland, Rhode Island, Delaware and D.C. “After our 60-day trial period in New Jersey, we wanted to give all our states an opportunity to have the offering at the same time,” Handy says.

Verizon’s home monitoring offering does not have any hardware or control panel. Management is done through a PC, mobile device or tablet, according to Handy. There are three kits available, an Energy Control kit, a Monitoring kit, and the Home Monitoring and Control kit, which combines the other two kits and includes a camera, lighting control and energy monitoring. The comprehensive package costs $219.99 and includes a gateway device, smart thermostat, appliance switch, one indoor camera, an indoor light module, an energy reader, one remote control, cords, wires and a welcome kit with installation guide. The Monitoring kit is $69.99 and includes a gateway device, indoor camera and one lighting module.

The company is charging a $9.99 per month service fee for any of the three packages, and customers can add on devices such as door locks, indoor or outdoor cameras and appliance modules. The company has announced partnerships with Schlage, 4Home, Sercomm, Trane, Aeon Labs and Action Tec; however, at the end of the first quarter of 2012, Verizon expects to roll out the capability of allowing customers to use any Z-Wave registered product with its system.

“We really want to be able to give our customers the ability to buy other products off the shelf. The cameras we offer are great but if a customer already has a Z-Wave camera that we recognize, they should be able to use that,” Handy explains.

A Question of HOW YOU VIEW COMPETITION

Now that specifics about many of these new home control offerings have emerged, a few questions remain: how large of a market share will these new players take up in the security space and how will this affect the rest of the industry?

“For broadband service providers, their main customer is their existing customer, because the broadband subscriber base is so large right now at 78 million households in the United States,” says Jonathan Gaw, research manager, IDC, Minneapolis. “The other services that consumers are adopting, like streaming video, take up a lot of bandwidth. In terms of additional capital cost or infrastructure cost, a home automation or home security system costs almost nothing. If they can sell one, that’s just icing on the cake.”

Gaw adds that, at some point, residential security companies moving toward home automation applications and broadband service providers moving toward security and monitoring services will eventually “bump heads” but he doesn’t see these newcomers putting everyone else out of business.

“The broadband service providers are doing exactly what the [large security companies] are doing. They are trying to boost RMR and they are trying to reduce churn. Home automation and monitoring is a way to deepen their relationship with their customers,” Gaw says.

George DeMarco, ESX chairman and former owner of Greater Alarm, Los Angeles, believes that there is plenty of available market share to be had in the security sector. “The total available market for home security systems is still very compelling, especially when you consider the market penetration has only reached 20 to 25 percent after decades of marketing by traditional players,” he comments.

It is unclear how many customers in the home automation and home security market cable companies have picked up at this point, though others in the security industry say they haven’t lost any customers to them yet.

“We have not lost any customers to [Comcast] that we know of and we haven’t had any customers calling and asking us how they compare, but I think their offer is strong,” admits Vince Raia, president of EMC Security, Suwanee, Ga. “It’s a threat because they can bundle all these pricings under something that is hard to separate and that’s attractive for consumers. Adding that fourth or fifth service may not seem all that expensive.”

Robert Bitton, CEO of Supreme Security Systems, Union, N.J., like Raia, hasn’t seen any changes in business as of yet, but he believes the cable companies will gain some market share, and if it comes down to it, Bitton says he will refocus his business model if necessary. “There is no doubt that they will take a share of the market, but I don’t think their reputation for providing service will help them and it will keep our customers loyal to us — just as the free install model didn’t hurt us that much,” Bitton says.

John Lombardi, president of CIA Security, Fishkill, N.Y., is in Verizon territory and says that, at this point, a do-it-yourself, low-cost system is another choice in the industry, but not in direct competition with his company. “The question is going to be, ‘What is the quality of the service these companies will deliver on?’” Lombardi poses. “There are already large, national companies offering very low-priced systems and that’s who they’re competing with. If the client is looking for a packaged system strictly on price, they are not competing with me anyway,” he adds.

But, with all the telecom/cable companies offering their customers different price points and system features, there are definitely more choices on the market — and more choices equals competition. Many security dealers are already operating in the same areas as these cable companies. Comcast has 49 million cable video, high-speed Internet and voice customers from which to target, according to its first quarter 2011 reports. Cox Communications reportedly has 3.5 million Internet customers alone and AT&T U-Verse high-speed Internet customers have reached 5.2 million, according to the company’s fourth quarter 2011 reports. With consumers more connected than ever, adding security or home automation on to their existing bill with little or no hassle is bound to be an attractive prospect.

“Certainly we see them as direct competition whether they have taken significant market share or not. If they are in our territory, offering similar services, that means they are direct competition,” says Michael Morton, sales manager at EMC Security about Comcast. EMC Security already has Comcast in the greater Atlanta area and Cox Communications is headquartered there, though Cox has not made any announcements as of press time about which markets it will continue its security offering into.

“Competition is competition,” DeMarco voices. “The industry needs to take note of new players, assessing their strengths and weaknesses, just like they are doing to you. Traditional alarm companies need to reassess their business models and operational expertise, allowing them to compete at a higher level, no matter who the competition is, today or tomorrow.”