Member Discussion

Should You Use Wholesale Monitoring Or Self Monitor?

There has been a debate going on in Kirschenbaum's newsletter. Commenting on a discussion about monitoring, Lee Jones said:

    We see trouble ahead.  Wholesale monitoring firms, aka Third Party Monitoring, must be able to operate seamlessly across thousands of zip codes and municipalities.  Most local munis have already, or will soon adopt legislation that will require monitoring sources to operate under a multitude of different, and often conflicting, local rules and regulations. Non-compliance will severely penalize the local security providers. Yes there are solutions to the problem, but it requires much cost and operational changes, a different business model… negating the current reasons to switch to wholesale.  Those who switch now should have a well defined plan to take back local control if necessary….”

Bart Didden sent a blistering reply. The relevant section reads:

...any Stages central station can overnight adapt to any jurisdiction’s Law’s, Rule’s or other demands as to how they want us to communicate with them, 2 call, etc. If there is any complication its comes from the very dealers that Mr. Jones is attempting to warn. 

Would you recommend self-monitoring your burglar alarms, or would you recommend third party wholesale monitoring? How about DIY monitoring like Teleguard or Alarm.com? Is there anybody out there who still runs their own central? Honeywell still sells MX8000s, after all, so somebody must be buying them.

 

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IMO if you've got more than 10,000 accounts go ahead and monitor them yourself IF you're consistent in the product line you sell. If you use all DMP or all honeywell or all Bosch it will be more simple to run your own central station and allow you greater control over quality. If you've got a hodgepodge of systems or less than 10,000 with no real growth in the  foreseeable future 3rd party monitoring is the way to go. Even if you do monitor your own accounts the installing and monitoring companines should be independently operated. 

We have clients who run their own central with less than 1,000 accounts and frankly they're in way over their heads. Just because you know how to install an alarm system doesn't mean you've got what it takes to monitor a system. It's a totally different ball game. People's lives are at risk, better to leave it to professionals (not that all 3rd party monitoring stations or even 5 diamond stations are all good). 

Choose your monitoring station wisely. 

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I dont know too much about central station back ends, and I would need to know more about what specifically Ken is talking about, but AlarmWatch seems very flexible in how they handle our alarms. We have a few customers with fairly customized rules on how they are called, I dont know why they cant just adapt to these issues as they come. 

Self monitoring is a terrible idea on a small scale

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Lots of different issues here.

1. The Lee Jones comments gave a problem, but didn't really show how a local monitoring station would be able to solve the issue any better than a 3rd party monitoring station. It comes down to training and automation software. Having multiple dealers asking for contradictory action plans in the same municipality is the bane of 3rd party monitoring.

2. We left 3rd party monitoring partly because of quality issues. It sounds silly writing this, when the industry average has a false alarm rate of 98% - and industry seems okay with that.

3. The DIY monitoring businesses that are popping up (like Simplysafe) who sub out their monitoring could have a rough road ahead of them. Seems like the worst of all choices if quality was a concern. All though, I have heard from one 3rd party monitoring station that monitors both dealers and DIY - their statistics indicate less false alarms with DIY. Wouldn't that be a surprise? 

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didn't really show how a local monitoring station would be able to solve the issue any better than a 3rd party monitoring station

Robert, the implication I took from his statement was that a local monitoring station would, by its nature, better know the local regulations and would not have to deal with myriad regulations across the nation. This is not my area of expertise but does that make sense?

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John,

I think the problem has a few facets to it:

1. In the US there are 8500 police jurisdictions, some as small as a single officer, as large as 40,000 (NYC) police officers. I would think even a local monitoring station is dealing with multiple jurisdictions (unless in a large monolithic jurisdiction).

2. The difference between ordinances of adjacent police jurisdictions can be significant. (example: fine is levied to end user vs. monitoring station, or no fines at all).

3. For large monitoring stations (with more police jurisdictions) with many people on different shifts the execution of these differences maybe trivial because they have already had to solve responding differently to different end users for same dealer in the same jurisdiction.

4. A small monitoring station will likely skimp on the training of their operators.

5. How does the turnover of staff differ between large and small monitoring stations. This will multiply the impacts of inadequate training.

6. I asked Michael Barnes, what % of monitored alarms are NOT represented by companies in the SDM list he thought it was 50%. I asked CSAA executives what % of monitoring stations in the US are members, they thought 1/10. Seems to me, there is a lot of unknowns out there.  

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Robert, thanks, very informative!

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I definitely see the concerns and as long as the industry as a whole is unregulated and refuses to properly self regulate, we'll continue to see a grab for monitoring by municipalities and regulation forced on the industry.  98% false alarms is horrible, but welcome to the lick and stick alarm industry where most companies can't make enough on the install to do it right or just don't care.  The American consumer is their own worst enemy and we follow right along like.  I wouldn't even consider a station with under 10,000 or more likely 20,000 accounts.  You just cant' generate enough revenue to do it right and the comment about being a different business is correct.  A completely different business.

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We operate our own central and are an integrator. We've had our own UL central for decades and are just under the 10k mark for active customers. I do not agree with the training statement because at our size we go over and above to train our operators because we simply do not want to deal with employee churn and have had many 30+ year operators working in our central that have recently retired. I think the break even for a lot of central stations is probably around the 4k account mark. As you scale higher, 10k-- 20k--30k accounts there is a business case for operating your own central vs paying fees out to a wholesaler. That being said, there are a lot of headaches, staff, and resources you need to pour into running your own central and the value prop of being a smaller central has sort of been lost on a lot of the newer dealers who have grown up activating accounts on alarm.com or any other third party web platform.

I think the mass market is fine with self monitoring and you'll see a lot of the RMR for the industry go that way until Nest and the likes realize that on all these "smart" devices they'll need to get a recurring payment somehow or their unicorn businesses are worthless. The commercial market is a completely different story. Small businesses might go DIY like they already do with cameras, but commercial fire alarm and burg in larger buildings will never go self-monitoring or DIY with the exception of a Fortune 500 self monitoring in their own staff central or data center. If anything commercial monitoring is going to grow with digital guard tours and video alarm.

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