November 1, 2010
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Question:
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Hello Mr. Kirschenbaum,
Thank you for sending the Newsletter.
I never thought I would be one to write into you, but just found something I find quite astounding. One of my subscribers came across to me with an offer he found from an Internet Security company. This company is providing monitoring of burglary and fire for $8.95 per month and condemning those of us in the industry who use wholesale central stations by saying no one should have to pay $30/ month.
Now the last thing I want to do is come across as the whinny guy complaining about what the competition is doing, but there are some things these guys are doing that really make me question the legality of their setup.
For starters, they offer security monitoring everywhere in the united states and Puerto Rico. Do they have licenses for every state or is there one license that allows you to monitor everywhere? Obviously, their website doesn't go as far as to cover the legality of what they are doing. I am a little appalled by their nonchalant strategy of advising consumers to just swap their accounts over.
Secondly, they provide an on line manual showing subscribers how to go into their alarm panel to change the wiring connections and install their VOIP box. They actually go as far as to show pictures of actual alarm panels with arrows showing people where to disconnect and reconnect wiring. I can almost see where you will write back telling me if the subscriber owns the panel, they can do whatever they want with it, but, once again, is it legal for a subscriber to tamper with wiring on a life safety or protective device? Is it legal for someone to freely distribute the information on how to do it?
I have read your Newsletter for almost a year now, and have read a lot of comments and complaints from my colleagues either bashing the industry or bashing each other. As I stated, I never thought I would join the gaggle of complainers (and here is my last "but"), BUT, what will our industry come to if this thing actually IS legal and does catch on? It is quite obvious this is not a service company, and I do have my own personal strategies for combating their brand of salesmanship, as we all should. I am a little shocked and concerned that there is a company out there using the "Magic Jack" strategy to get alarm subscribers. I welcome your thoughts, comments, and guidance.
Thank you,
Luis Cortes
Echo Workshop
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Response:
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It's not illegal for a wholesale monitoring company to provide direct monitoring services to the public. Perhaps a risky business move if the wholesale monitoring company depends upon alarm dealers continuing to place subscriber accounts on line for monitoring. Dealers most likely won't like competition from their central station, especially when the central is charging wholesale rather than retail monitoring charges.
Some jurisdictions do require a license to monitoring accounts in their jurisdiction. Most reputable central stations have the necessary licenses, and it is an enormous task keeping up with all those licenses, not to mention the fees for those licenses. A wholesale central station that doesn't have a license in a jurisdiction where it monitors risks losing not only the subscriber accounts in that jurisdiction, but the business from a dealer who has accounts in that jurisdiction as well as others, where the central might be licensed. That possibility tends to compel centrals to get licensed in all jurisdictions where they have dealers doing business.
A wholesale central that is doing direct retail business, at wholesale prices, risks only having to give up the subscribers in the unlicensed jurisdictions. Another unfair advantage, but not illegal, except for whatever penalty may be imposed for conducting the monitoring business without the license.
It shouldn't be too hard for dealers to figure out which centrals are competing by offering wholesale prices to retail customers. Dealers may want to reconsider doing business with those centrals. You do have many good choices.
By the way, I do not mean to criticize a central that also has a dealer side, as long as that the dealer side charges retail prices for monitoring.