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QUESTION:

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Ken

        There is a proposal before the FCC to sunset POTS lines in 4 years. When the FCC announced the Sunset of analogue cell service and ADT continued to sell the service knowing that subscribers would be required to pay for upgrades they were sued.  Even if the proposal is not approved at the current rate of switch over I believe 90% of POTs lines will be gone with 10 years.

         What liability do alarm companies face if they are installing alarm systems knowing that the technology they are based on is being phased out?

    The loss of POTS lines will be a major issue for the industry.

There are a few issues that come into play:

    The VoIP rider is only good for subs that have signed it.  Many if not most have not.

    The contracts as I recall require the sub to provide standard pots lines. However they will not be able to comply even if they want to.  Does that mean the alarm companies are required to update the systems for free?

    Remember the transmitter is the property of the alarm company, so why should the sub have to pay to make it compatible?  If the alarm company chooses not to update does that release the sub from the contract?

        Fire alarms are another issue.

    Right now VoIP lines are not an acceptable.  However there is a committee introducing standards for the service so that they will be able to be used.  But aside from the technical issues involved with the transmission of the alarm signal over VoIP there is also the issue of power.  One of the problems with both IP and VoIP, and in fact most non-POTS services, is that they require power on the subscribers side.      POTs power is supplied from the phone company.

Most residential and commercial system do not have backup power for any considerable length of time.  Minutes are typical, not 8, 12 or 24 hrs.

    This seriously affects reliability and the ability to transmit an alarm in emergency situations and meet industry standards.

        There are also other factors that may affect our contracts.  Many companies have been doing remote management Burglar, Fire, Video and of systems.  In many cases the alarm company will lose the ability to remote program the system.  Resulting in not only increasing service costs both to the consumer and the alarm Company, but possibly making fulfillment of contractual obligations impossible without the installation of additional equipment.

Mark S. Fischer  VP/CTO

New York Merchants Protective Co., Inc.

(516) 561-5210 X 133

(516) 223-0767  Fax

http://www.nympc.com

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ANSWER:

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    We know that there is risk of deceptive business practices if alarm companies continue to install systems that they know will quickly become unusable because technology is no longer going to be available.  It's one thing for such changes to come about after systems are sold, and another to continue selling the systems when you know that the law has already changed, soon to become effective.

    The standard alarm contracts now call for POTS as the preferred communication mode.  In fact the Disclaimer Notice warns subscribers that VOIP may not work and shifts the risk entirely on the subscriber if they still chose to use VOIP. 

    Changes in technology, and loss of POTS will certainly be a major change, will cause contract revisions.  The standard forms do however have a catch all provision that requires the subscriber to pay for additional equipment or services imposed on the subscriber by change in law, so at changes in the systems will not be free.  I don't know how soon or if ever the POTS issue will become relevant.  Keep us posted.  In the  mean time, use the standard alarm contract forms and protect your company.