The residential market is primed for growth and ripe for new competitors to join the industry — but are they really ‘joining’?

Look at what’s happening in the residential market! Housing production is on the rise, as is growth in remodeling spending — both necessary factors for expansion of home security.

Data from the U.S. Commerce Department showed nationwide housing starts rose 12.1 percent in December. This is the highest level of new home production since June 2008, according to the National Association of Home Builders (NAHB).

In addition, strong recovery in home improvement activity was acknowledged by a new report, Leading Indicator of Remodeling Activity (LIRA) released last month by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.  “…the LIRA projects annual homeowner improvement spending will see accelerating double-digit growth through the third quarter of 2013,” the report stated.

And at the Consumer Electronics Show (CES) held recently, much of the buzz was about the connected home, a place where security is often front-and-center.

Jay Kenny, vice president of marketing at Alarm.com, reported that there was “an explosion” in the number of companies at CES offering connected home services, ranging from security to energy management, lifestyle and entertainment. In his blog posted at www.SDMmag.com, Kenny espoused that the security system is “a great platform for the connected home, especially when energy management and home automation are integrated into the solution.

“The emergence of home security and automation technologies at venues such as CES reflect a significant opportunity for the market to reach beyond first adopters to the mass market,” Kenny believes.

Jay McLellan, chairman of the Executive Board of the Consumer Electronics Association and president of HAI by Leviton, also emphasized the sweet spot of security in automation. “In some cases home automation is successfully centered on the entertainment side of things, but it really is exploding where it is being connected with security systems,” McLellan told SDM.

Naturally, with this surge in market readiness comes a surge in competition. And who better to take the security/automation package to the mass market than a nationwide provider with a household name, right?

Bring ‘em on, say security dealers in response to the news about wireless and broadband giants entering the industry. This issue of SDM features Associate Editor Sabrina Gasulla’s report of the newest competitor to start up in the security/home automation market — AT&T (see page 17). AT&T’s Digital Life, which it describes as “an all-digital, wireless-based home security and automation service” will be available in eight markets starting next month.

Reactions to this and other like competitors joining the security industry range from respectful to skeptical.

“We think that the extra exposure will be good for the industry,” said Safe Systems’ Larry Halpern, based in Louisville, Colo. “That doesn’t mean that we are underestimating the threat to our customer base. We are making sure that we are prepared to offer our clients the best possible service and products as we would with any good competitor,” he said.

“I don’t see the utility companies having any affect on our market. History would tell us that utilities have an easy time initially making an impact, but the service and high-touch/high-service component of the business will ultimately be their undoing,” noted Bill Price of Sonitrol Security Services Inc., Charlotte, N.C.

Whether these larger competitors will be successful or not is just one question to ponder. A more crucial question is whether they are they operating on a level playing field? Is AT&T really “joining” the industry and supporting its existing regulations, or is it creating its own rules?

At press time, SDM received word from the Illinois Electronic Security Association (IESA) that new bills were signed into law in the state of Michigan in early January, which were “intentionally designed to weaken the current regulation of security alarm companies that operate in Michigan by allowing convicted felons to own, operate and monitor the security systems of Michigan’s homes and businesses.” The IESA said that the security alarm industry, law enforcement, and Michigan’s Department of Licensing and Regulation opposed the bills; the only support came from AT&T and the telecommunications industry, IESA noted.

Follow the continuing coverage by typing “AT&T Michigan” in the website search bar.

This article was previously published in the print magazine as "A Boost & A Blight for Home Security/Automation."