Recent advances in cable television channel capacity and increased competition among cable operators for franchise rights have encouraged many cable companies to expand into nonvideo services.
The operation of home surveillance systems either through a joint venture with a security firm or independently is one way many cable franchises hope to reduce some of the excess channel capacity and increase revenue. The added security service is also viewed favorably by many municipalities when granting cable contracts.
One company in the Washington area that is developing home security devices, designed to run through cable television wires with a backup through telephone lines, is Universal Security Instruments in Owings Mills, Md.
USI has completed engineering work on a system to be marketed in mid-1983 that will provide wireless protection of the home, a channel for reporting medical emergencies and fire monitoring capability.
The next step is reaching the customer, said Stanley W. Katz, chief financial officer for USI. "The key here is the initial resistance of the customer to security per se," he said.
USI plans to lease equipment to cable companies to install in homes. The company offers a variety of electronic devices ranging from a portable panic button to miniature radio transmitters, which emit a signal if there is an unauthorized opening of a door or window.
When an alarm is triggered, the signal is transmitted through the cable television wire or, if the cable is malfunctioning, through a backup system via telephone lines, to a central office that monitors all the incoming signals. Action taken depends on the signal received.
The prospect of the cable television industry moving into the home security market has sent a general alarm across the security industry. Although cable televison networks could provide the necessary linkage needed for mass-market security systems and increase the manufacture of alarm systems, the service segment of the security industry fears the cable operations will force them out of business.
Home surveillance service traditionally has been performed by the $4.6 billion a year security alarm industry. But because of the high cost of most alarm systems, the home security market has not been deeply penetrated. Public distrust of security firms and poor marketing are other reasons cited by industry analysts as to why the industry has only been able to wire 3 to 5 percent of the home market.
Of $4.6 billion in sales in 1980, $4 billion came from commercial, industrial and institutional markets. But home security analysts say the industry is growing at a 10 to 20 percent rate per year as more people worry that crime will hit them directly.
The potential market for home security dealers via cable television is huge, with about 25 percent of U.S. households with television sets now subscribing to a cable system, said John Mansell, editor of Cable TV Security, a weekly industry newsletter.
"Cable security is currently available to about 4.5 million franchise cable homes," Mansell said. At midyear, he said, there were about 18 to 20 million homes in franchises that promised to offer security services within a specified period of time. able franchise companies are not classified as common carriers and are not regulated by the Federal Communications Commission. Cable companies have the relatively inexpensive and increasingly reliable communications network the home security industry has always needed to prosper.
How the cable and security industries eventually interact may define the role cable televison plays in providing other nonvideo services such as banking and utility monitoring, said Mansell.
An antitrust suit filed last October in Fort Lauderdale, Fla., may provide a test of the rights of cable television operators to control access to the cable, said Mansell. In the case of Electronic Sentry Inc. vs. Selkirk Communications Inc., the security firm claims Selkirk has developed its own home security capability, subsidized the operation with funds from other profitable areas, and has offered it to its customers without allowing local alarm firms to compete via channels on the cable.
Selkirk denies the charges, saying it never limited access to the cable and couldn't transfer funds to subsidize the security service because it was not making a profit from the video side.
"The alarm companies in essence are really saying that if the cable companies are providing security services over their cable TV networks, then the alarm companies should be able to have access to that network in order to provide their services on an equal basis," said Norman Rubin, president of Supreme Burglar Corp. in New York City.
"With increasing channel capacity, cable franchises are looking to derive as much revenue as they possibly can," said Rubin. "We believe that they have a franchise secured for video services. It is not fair to monopolize all the services that can be provided through that wire that goes into the home."
In other regions of the country, cable franchises are giving local security alarm services open access to the cable to compete for customers.
The most common relationship emerging is a joint venture in which a security firm provides the equipment, installation and supervision of operation while the cable firm provides the wire linkage and uses its marketing power to sell the service.
"Cable operators may be approached by a number of alarm companies who want to have a joint venture with them," said Mansell.
"It has been fairly amiable in most markets," he said. "Most of the animosity seems to develop once the selection of a security firm is made. There really haven't been too many run-ins."
Competition among cable companies that are trying to land community wiring rights is another reason why many cable firms now include contract provisions calling for some type of home security system to be offered within a specified period of time, said Mansell.
Contract provisions requiring such added services as home surveillance are now common in the cable television industry, said Lorraine Foulds, director of community liaison for Media General Corp., the cable company awarded the Fairfax County franchise.
Foulds said recent technological advances have allowed many cable operators to offer more than 100 channels, opening up space for a variety of services such as home security systems.
"During the public hearing process. . . I would venture to guess half the audience there were security companies wanting to know how cable will affect their future," Foulds said. "They have participated in the process from the very beginning."
Last year, there were only 35,733 cable security customers spread over some 50 cable systems nationwide, said Mansell. The low number of homes currently using the system may be due to the "push button" type of equipment widely offered.
"Most security and cable television operators have been unsuccessful in marketing" the lower price range, panic button type systems, Mansell said.
Another area, which has persistently hurt the home security industry, is a lack of public exposure and a tarnished image created by unreputable dealers in the early years of the industry, said Tom D. Smith, division manager for energy and management and security products at Scientific Atlanta, one of the industry leaders in home security manufacturing.
"Some companies have a crediblity gap and people think they will disappear shortly after installing a system," Smith said. "For a cable-associated company, it will be much easier to overcome the image problems."
Media General is currently negotiating with several security firms to provide home surveillance systems for its cable subscribers, said Foulds. The cost for the "panic button" type service providing police, fire and medical alerts will be $9.95 per month plus a $49.95 installation fee, she said.