Security Business

MAR 2014

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SECURITYWATCH 12 | SD&I | March 2014 By Joel Griffn, editor, Cable giant Comcast announced in February plans to buy rival Time Warner Cable in a deal worth more than $45 billion. If approved by shareholders and federal regulators, the deal would give the newly combined company about 30 million subscribers across the nation. The merger could have ramifications for the alarm industry, as both Comcast and Time Warner have been among the recent entrants to the home security and automation space. However, industry experts believe that it is still too early to speculate on what this deal will mean for the companies' respective security offerings, or how it may impact their share of the market. At the recent Barnes Buchanan Conference, Michael Barnes estimated that all of the new players combined only had a one to two percent share of the market in 2013. "At a minimum, if the deal happens, Comcast is just that much big- ger — with more customers and deeper reach in to most of the country," Barnes says. "They were already huge, so I am not sure this really would make that much difference in their success (cur- rent or pending) with their alarm offering." With that being said, if the companies do merge, Barnes adds that there will also be a number of internal issues that they will have to deal with. "Albeit a minor/temporary point, merging companies is tough," he says. "Often, in the short-run, efforts are stalled and/or unfo- cused while everything is decided. It would fair to assume this effect would impact the alarm effort, as well as the rest of the organization." Electronic Security Association President John Knox says he was surprised by the deal and calls it a sign of the times. "Comcast is primarily a cable company, but they see that to compete with some of the other communication companies going forward, they are going to need a bundle of products and services," he says. "I know what my cable bill is every month, and I know what our monitoring charges are every month, and I'd much rather have their check than mine — so (security) is definitely not their core focus, but something they feel like they need to do." Knox believes the larger issue with cable and telecommunications providers coming into the market — especially now with the potential of having an even larger conglomerate as part of that equation — is not necessarily the creation of a more competitive landscape, but a monopoliza- tion of the nation's communication infrastructure that could squeeze out traditional alarm dealers. "The Internet has never been regulated by the FCC, so (in my opinion) the communications giants would very much like to convince the politicians that the Internet doesn't need to be regulated," Knox says. "When I look at the way we get communications to our customers, that would have a big impact on us. To me, the communica- tions side of it is far bigger than just the (cable and telco) giants getting into the alarm industry." Despite the large marketing budgets of these companies, Knox believes traditional alarm deal- ers won't necessarily have a problem competing against them — as long as they hold true to their core values and embrace new technology. "You are not going to be able to operate your company in the next 10 years the way you did in the last 10, so hold onto your core values of cus- tomer service, answering your phone, being hon- est and doing what you say you are going to do," Knox says. "Definitely don't lose sight that you are protecting people's lives and property — we're still in the life safety and security side." ❚ Merger Worry The consolidation of Comcast and Time Warner could be a precursor to a much larger issue for our industry "To me, the communications side of it is far bigger than just the (cable and telco) giants getting into the alarm industry." — John Knox, ESA president SDI_10-17_0314 Security Watch.indd 12 3/5/14 1:25 PM

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