UNDERSTANDING THE ALARM INDUSTRY

Mergers and Acquisitions
In the early 1990’s large, multinational corporations began to take a keen interest in the security industry. They saw that the industry was on the verge of large scale growth due to improvements in alarm technology, the decreasing cost of components, and growing concerns in North America about crime and personal safety. They were particularly attracted by the re-occurring revenue generated through alarm monitoring service.

Up until this time most alarm companies in North America were small to mid-sized operations, privately owned, often by families. The new, large security corporations began to buy up every small alarm company and monitoring station that they could find. They would then close the local monitoring stations and move the accounts to large centralized monitoring centres (often with hundreds of thousands of accounts). In our city two major local alarm companies were purchased by much larger corporations.

Victoria Alarms was purchased in about 1990 by ADT. Their local monitoring station was subsequently shut down and moved to Alberta. ADT (the largest alarm company in the world) has since been acquired by Tyco (one of the largest companies in the world, period).

Alarmgard was purchased in 1998 by Voxcom after 30 years as a locally owned company. Alarmgard’s local monitoring station has also been shut down and moved to Alberta.

Luckily Victoria’s residents have always been very supportive of local business and other local alarm companies have continued to thrive in our city.

“Free” Alarms

In about 1993 alarm industry advertising began to appear that used the phrase “free alarm”. While the corporations behind this concept had no intention of providing the world with free security products and services, they did begin to change the industry in several ways;

1. The concept of the “basic alarm package” was established, usually consisting of 1 motion sensor, 2 door switches and 1 alarm keypad. Previously it had been normal for an alarm company representative to survey your premises and discuss your requirements before determining the type, and number of sensors required to secure your premises.
2. The cost (and size) of the average installation dropped dramatically, while monitoring rates were increased by about 30% (from $23 - $25 a month to $30 – $33 a month).
3. Long term alarm contracts (typically 3 years) became standard. Many of these contracts also included clauses that stated that no matter how long you paid for the monitoring service you would never actually own the alarm equipment. If you ever cancelled the service the alarm company would remove the equipment from your premises.

The power of the word “free” combined with large scale marketing campaigns resulted in literally millions of new customers across North America signing contracts for alarm services.

Our approach has stayed the same despite the changes in the industry in recent years. We are 100% locally owned and operated. We do not sell “alarm packages” preferring to treat each client as an individual with specific needs. We do not ask our clients to sign long term contracts and we work very hard to keep the cost of our monitoring services affordable while maintaining a high level of service

THE MYTH OF THE “FREE ALARM SYSTEM”

All “free alarms” come with a long term commitment to pay, normally 36 months at $29.95 per month plus GST. That’s $1,153.67. Keep in mind that this is for a system that typically includes 2 door or window switches and 1 motion sensor. There are very few buildings that can be adequately protected by such a system. This means that you will either be adding to the $1,153.67 you are already committing to, or paying all that money for a system that is providing very little protection.

In addition to this, many alarm companies who offer free alarms have hidden fees not mentioned at the time of the sale, such as connection fees, permits, licenses, or taxes that will be added to your bill. By the time most people have completed the financial commitment required by their “free alarm” system they have spent $1,500 to $2,000. In some parts of the United States ADT was taken to court by state officials in order to force them to stop using the word “free” in their advertising.

The next time you’re approached by a company telling you that you have been specially selected to receive a free alarm system (or better yet, you’ve “won” a free alarm), let them know that you’re not that gullible.

Companies that offer “free” alarm systems can only stay in business by adhering to two basic policies;

1. Make sure the client signs an air tight contract, for a minimum of 3 years. You won’t be let out of this contract no matter what the circumstances may be.
2. Charge the highest possible rates for alarm monitoring, repair service and system upgrades. It costs the alarm company a lot of money to install your alarm system and they will make sure to recoup every penny by the time your contract is complete. No company can provide something for nothing and stay in business.

So what is a “free alarm” really? It is simply a method of financing your purchase over a period of time. There is nothing wrong with this in principal, few of us pay cash for houses or cars. But you should consider that with any purchase, the less money you put down, the more you will pay in the long run. And when you purchase from a particular vendor because of an “easy financing” scheme you may be ignoring other important factors such as product features, quality of service and local support.

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Great Canadian Dollar Store

When I opened my fifth store at Admirals walk, I decided to give Quality Alarms the opportunity to monitor the alarm system. Over the course of the next year, I had them switch my other four locations to their monitoring station and have received friendly personal service with significant financial savings.

Ken R.