Upgrading to video verification

Upgrade to Video Verification

Classic burglar alarms fail to meet growing consumer expectations

upgrade to video verificationMost of the 30 million classic burglar alarms installed since 1970 fail to meet growing consumer expectations of what a modern burglar alarm should be. To illustrate the concept, consider a Ford F150 pickup truck from the same era. Assuming it is in pristine condition, it may be a “classic,” but does a 1970 Ford meet today’s expectations? The answer is a confident no.

While the older model certainly provides basic transportation, consumer expectations now demand more than that. A new Ford F150 also provides basic transportation, as well as cruise control, heated seats, push-button fourwheel drive, CD player and sound system, powered seats, satellite radio, rear video camera, digital displays and interacts with a smartphone. In the same way, “classic” alarms provide basic security, but modern alarm systems go beyond that and interact with smartphones to deliver greater value and exceed consumer expectations.

Upgrading 30 million classic alarm systems with interactivity to meet growing consumer expectations is a huge opportunity for alarm dealers to grow their recurring monthly revenue (RMR) and make their companies more valuable.

Although the “upgrade concept” is not new, it has been limited to telephone lines. Most of the 30 million alarm systems installed use wired telephone lines to communicate to the central station, and consumers are replacing phone lines with internet, VoIP and cell networks. Once the phone lines go away, these systems are obsolete unless dealers upgrade them to IP or cell communications.

Basic Security Only

A phone line upgrade only allows the classic alarm to continue providing basic security. If all the upgrade does is deliver the identical service over IP or cell network, the dealer is not meeting consumer expectations and has failed to maximize his RMR. Consumers expect more from an alarm now than they did in 1970. They expect interactivity that did not exist when classic burglar alarms were installed. Consumers are looking for increased convenience and want to arm/disarm their alarm with their smartphone and receive status reports from the system on demand.

An alarm dealer who upgrades communications for an identical alarm feature set misses the point, like “upgrading” a 1970 Ford from gas to ethanol and only maintaining basic transportation. The real RMR opportunity goes beyond telephone wires with smartphone interactivity and a modern feature set. The ability to remotely arm/disarm the burglar alarm from a cell phone is the single, most popular feature in new modern alarm systems, and dealers can offer this to the existing installed base as a real upgrade for greater value and less attrition. But remote arm/disarm is only the first step.

Dealers also can move beyond basic interactivity and also offer greater security. While remote arm/disarm from a smartphone is an upgrade targeting user convenience, video verification is a security upgrade that actually delivers faster police response. At the most basic level, consumers purchase burglar alarms so police respond when their property is broken into. As municipal budgets shrink and police resources are cut, police response to alarms has been decreasing and this has an effect on consumer expectations. Some police departments now only respond to video-verified alarms and will not send an officer to an unverified alarm. In many other municipalities, police response is voluntary to unverified alarms.

Classic alarms only receive a Level 3 response, while a video-verified alarm is a Level 1 and treated as a crime in progress. In many jurisdictions, a Level 1 response is less than five minutes and a Level 3 is more than 20 minutes.

Consumers paying for monitored alarm systems want the fastest police response available, and a video-verification upgrade is an obvious value to eliminate 15 to 20 minutes of police response time.

What it Looks Like

What does a monitored video verification upgrade look like? The easiest and most basic upgrade is a Videofied upgrade kit as a “slave” on an existing “host” alarm panel. The upgrade panel follows the arming/disarming of the host and provides video verification without any changes necessary from the consumer’s perspective. The host alarm keypad—or other arming devices and user codes—does not change. Consumers simply continue to arm/disarm their burglar alarm as they have always done and the video verification panel arms and disarms as well.

The specifics of this concept from the installer’s perspective can be illustrated with a Honeywell Vista 20 panel—a common classic alarm panel. The alarm dealer simply wires a Honeywell 4204 relay module to the Vista 20 host panel, then wires the relay to the arming terminals on the Videofied upgrade panel. Once the upgrade panel is connected to the host, the dealer installs the wireless-battery-powered MotionViewers as needed throughout the property. When the consumer arms the Vista 20 alarm panel, the 4204 relay signals the Videofied to arm the wireless MotionViewers; the same thing happens on disarm. From the user’s perspective, there are no changes in terms of alarm operation. Everything is handled by the existing host system.

This upgrade approach maximizes the value of the Honeywell host system because all of the zones of the host—wired contacts, PIR and/or wireless devices— are still monitored by the central station as before. The trip from a Honeywell door contact will generate the same “classic” alarm signal from the Vista 20 and the same standard dispatch from the central station as before. At the same time, if the intruder trips a Videofied PIR/camera, the video of the intrusion is immediately sent to the central station by the Videofied upgrade panel for review and dispatch as a video-verified alarm.

The central station brings the signals from both the host panel and the upgrade panel into the same account, and central station operators treat the alarm signals from both panels as a unified system. This means that an alarm from an upgraded Vista 20 system can be video-verified and/or “classic” at the central station, depending upon which sensors are tripped by the intruder. A classic sensor, like a door contact, would generate a “classic” alarm and standard response. Video-verified alarms occur only when the intruder trips a MotionViewer PIR/camera, so there is an obvious incentive to install sufficient PIR/cameras to maximize the impact of video verification.

A mobile app enables smartphone interactivity with the Videofied upgrade panel that brings interactivity to the entire system. The Videofied upgrade panel uses the IP and/or cell networks to communicate to the central station and can be configured to deliver smartphone interactivity to the consumer. A smartphone app uses these same IP/cell networks to allow the consumer to arm/disarm their alarm system from their cell phone.

In this scenario, the upgrade panel actually arms the host. The output of the panel is connected to the key-switch arming terminals on the host panel to enable the remote arm/disarm by cell phone. The smartphone app also allows the consumer to remotely “look-in” through the PIR/camera and makes a real-time request for a video clip or a photo from any MotionViewer in the system. This convenience feature is in addition to the greater security provided by a monitored video alarm, but the look-in feature is only available to the consumer and not the central station. The central station monitoring is limited to the alarm signals/videos.

What It’s Worth

What is an upgrade worth in terms of RMR? As stated earlier, classic alarms provide basic security, but modern alarm systems, in addition to providing basic security, also interact with smartphones to deliver greater value and exceed consumer expectations. An upgrade transforms the classic system into a modern alarm with interactivity, video verification and remote look-in to the cameras.

The average RMR for new alarm systems with this kind of feature set is more than $50 per month. The average RMR for most of the classic alarm systems in the field is closer to $30 or even $20. Why this difference? Consumers have developed higher expectations for a modern alarm system and are willing to pay more for interactivity, greater security and the expanded feature set. The goal of the upgrade is not to continue with basic security after the phone wires have disappeared. The reality is that the millions of alarm systems already installed are a massive market for alarm dealers to collect an additional $20 of RMR as they move their classic accounts to an upgraded system.

The incremental RMR is only part of the benefit to the alarm dealer. The industry has proven that accounts with interactive alarms and expanded feature sets are much more “sticky” and have far lower attrition than classic accounts. Lower attrition because of interactivity and feature sets is making a difference in company valuations. The financial markets that fund the alarm industry have already made the decision that the multiples paid for classic accounts are less than the multiples paid for accounts with the new alarm systems. The incremental value in company valuations exists because exceeding customer expectations means lower attrition. The bottom line is that upgrading classic burglar alarms to interactivity, video verification and look-in means greater value to the consumer and greater valuations for the alarm company.

This article originally appeared in the June 2013 issue of Security Today.

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