There are two jurisdictions in Cincinnati that do their own municipal monitoring. They do it for free and that is what the end user likes about it. The problem I have seen with it is that for one client they would dispatch the police on trouble signals such as low battery and ground faults because they had no idea what it was. This was on a silent knight fire alarm panel. They wanted me to reprogram the system so it would only send in alarms and no test, trouble or restore signals which is not possible to do on the silent knight fire panel. 
    Ken might be able to comment on municipal liability that is somewhat limited when they make a mistake but, when a private business makes a mistake its a whole new ball game. Also, if there is a claim of liability for a system malfunction are the municipalities going to provide records? Could the name and address and passwords they have on file for a customer be part of a public records request? My company does not service those type of systems any longer. If they want me to service it then it must go through our central station. Just  FYI 
    Private information about citizens held by a municipality is not public information and would not be available through the Freedom of Information Act.  
    Municipalities that engage in business activities should expect to lose their governmental immunity.  I suppose legislation could specify that immunity from liability is not waived in the performance of the activity, but absent that it's doubtful that immunity would attach.  The reason for this is that even though a member of the public cannot sue for failure of police or fire to provide protection, that changes if there is a special relationship created whereby the expectation of assistance is reasonable.  It's reasonable to assume that if your police or fire department decides it will perform alarm monitoring services, perhaps precluding private companies from providing the service, then the governmental agency should be held to the same standards as the private company.  If the governmental agency is dumb enough to provide the service without contractual protection [or specific legislative protection] then it should brace for the claims that will certainly come.
    You mention that the jurisdictions doing monitoring in Cincinnati are providing the service for free.  It's possible that this free service will be deemed an extension of its governmental duties and purposes and thus covered by the immunity government enjoys.  I haven't read the legislation or terms of service and that is likely to make a difference in the risk analysis.  But, alarm companies are not governmental units and have no choice:  you need the alarm contract protection, so get the Standard Form Agreements now, even before you finish today's articles.
    If I went off on a tangent I apologize.  I don't believe government should replace the private central stations for too many reasons to bother expressing.  They won't do it as well and its not in the publics best interest.

                                                               Webinar Notice

We will be presenting a series of 4 webinars [3 are left].  These interactive webinars will be presented live and there will be time alloted to questions and answers.  Noted alarm/security/fire expert Jeffrey Zwirn will present these webinars.  There is no chargefor the webinars and I suggest you register as soon as we post the dates.  Might be good time to pick up Jeff's comprehensive Alarm Science Manual: click here to get the book All webinars will be from 12 noon to 1 PM EST

REGISTER TODAY FOR ALL THE WEBINARS [register for each one separately]: 

July 28: Connect to Existing System Installed by Others: What Are Your Duties? & Ambush, Panic and Holdup Systems-The Customers Lifeline to Safety and Security or Not?

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July 30: Residential Fire Alarm Systems-Life Safety or Fatal Flaws
To register click here: https://attendee.gotowebinar.com/register/8193706153431356161

August 4: Central and Remote Station Monitoring Instructions- Are your instructions safe or foreseeably dangerous?
To register click here:  https://attendee.gotowebinar.com/register/2477406773275103489