QUESTION: CLOUD BASED SERVICES - POTENTIAL PROBLEM FOR THE ALARM DEALER
I am a supporter of Cloud based services but they need to be used in a smart way. There are multiple issues. First is the cessation of services for any reason, failure of the company, Sale of the company. But they just could discontinue service because of low acceptance, they may not be able to provide the service because a service they rely on may become unavailable for a period of time or permanently. What if there is a data loss by the provider who is responsible? How does the alarm company protect themselves?
A good example of this is Xanboo, purchased by ATT. http://www.securitysystemsnews.com/article/att-terminates-xanboo-dealer-agreement
Other cloud based services commonly used by dealers are Honeywell, Total Connect, Napco's iSee Video, and iBridge services,and Alarm.com.
As more and more "Cloud based" services to alarm companies are provided either directly or through central stations, there is going to be a fall out of those that survive and those that either fail or merge. The alarm companies need to be protected in the contracts if those services should become unavailable. I think there is a very high level of importance here since a end user could very likely argue that the reason the system / company was selected was because of that particular aspect of the service. Another aspect is should those types of services be listed on a sales contract, monitoring contract, or possibly a separate rider to better protect the alarm company?
Mark S. Fischer
An interesting challenge, but one that the alarm dealer has faced for a long time now. A cloud based service may provide and support the bells and whistles of a system, but central stations have been providing essential services to dealers for a long time now, and I think, reliably. I don't recall a central station failing and just terminating monitoring services.
Cloud based alarm services, and I include video and interactive services, invest heavily in their software and in providing their services. You would think that just shutting down would be a last resort. But other less drastic events could be just as disruptive to alarm dealers, and they are possible. The cloud based service can increase its charges, perhaps charging more than the dealer has agreed to charge the subscriber. A cloud based service can decide to service only its franchisees or authorized dealers, or only those dealers with significant subscribers using the service.
Alarm dealers do indeed need to be mindful of their relationship with the cloud based service provider, just as the dealer needs to be aware of its deal with the central station and other vendors whom the dealer relies upon. Some cloud based vendors have strict and imposing contractual terms that dealers are forced to agree to if they want to use the service. Too many dealers are not aware of what they have agreed to in order to use the cloud based service. Alarm.com for example insists on indemnity from the dealer and also that the dealer require its subscribers to agree to Alarm.com terms and conditions. Other cloud based vendors may have similar requirements.
I think the important issue for the alarm dealer to be mindful of is that the relationship with its vendors is most likely going to be dictated by terms and conditions created by the vendor. Since dealers have options with whom they do business with they should understand what they are being asked to agree to, and they should understand that they are going to be expected to comply with the terms and conditions and will be held accountable if they don't comply. It would be prudent to have alarm counsel advice you on these agreements to ensure that you understand them.
As far as dealers agreeing to provide services that may no longer be offered or available I don't think the Standard All in One Agreements will need modification. Obviously you won't be able to continue getting RMR for a service that you can no longer provide. Some equipment may end up being obsolete if a vendor no longer supports the product or service. The dealer is not likely to be legally responsible to the subscriber under those circumstances, though a dealer that continues to sell and install equipment that the dealer knows is no longer going to be supported will face exposure.