By Liana B. Baker
Oct 10 Consumers are increasingly turning to an
unlikely source for home security - the cable company.
A decline in prices for critical components such as cameras
and wireless technology has lowered entrance barriers to the $13
billion home security market, traditionally the territory of
players like ADT Corp.
For cable companies such as Comcast Corp and Time
Warner Cable Inc, home security is another revenue
stream to rebuild margins whittled away by rising programming
costs and declining video subscriber numbers. It is also a way
to put to work the billions of dollars that cable companies have
invested to create high-speed video and data services over the
And home security subscribers tend to stick around for an
average of seven or eight years, according to industry
estimates, unlike fickle cable TV subscribers who can be lured
away by enticing deals from satellite and telecom rivals.
Cable companies "are under pressure on their traditional
lines of business so there's some urgency added to add more
revenue," said Jim Johnson, executive vice president of
iControl, the main home security vendor for Comcast, Time Warner
Cable and Cox Communications.
Among the recent converts is Bruce Bird, 58, who did not
think he needed a home security system until his New Jersey
beach house was robbed last December. The culprits ripped out
cabinets and made off with his flat screen TV just after he
spent thousands of dollars to repair damages from Hurricane
Bird, a pharmaceutical consultant, decided against a
traditional security provider like ADT and chose Comcast,
already his cable TV company, to safeguard his vacation home on
Long Beach Island, New Jersey.
"I kept getting fliers in the mail saying that I had the
technology, so I just called Comcast," he said.
The service was not cheap. Bird said he spent about $700
setting up Comcast's Xfinity home product at his beach house for
cameras and sensors, as well as other features that allow him to
control the thermostat and lights when he is away.
Bird pays about $49 a month for the security service as part
of a $209 bill that includes cable TV, phone and Internet. Using
his smartphone, he is now able to check the four cameras on the
premises and is emailed photos of whoever enters the house.
TAKING ON THE INCUMBENTS
Comcast, the largest U.S. cable operator with 22 million
video subscribers, entered the security market in 2010 and has
not revealed subscriber numbers.
Time Warner Cable, which serves 12 million video customers,
has 30,000 subscribers for its security business, incoming Chief
Executive Rob Marcus said at a recent investor conference.
Consumers can now "watch what your dog or cat or nanny are doing
during the day," he told investors.
The company this week started selling the service in New
York City, its last big untapped market for home security. Adam
Mayer, vice president of Time Warner Cable's "Intelligent Home"
unit, said the company may create special packages for
apartments to crack into wider parts of the New York market.
Privately held Cox, which does not say how many subscribers
takes its product, said it plans to take a "healthy percentage"
of a potential $1 billion market in the areas in which it
operates, a spokesman said.
Cable operators will have to outmaneuver incumbents that
include ADT, Protection 1, Ascent's Monitronics, with
years of experience, infrastructure and name identification. ADT
alone has 6.5 million customers, about a quarter of the U.S.
Price is emerging as a key battlefield, with Comcast, Cox
and Time Warner Cable offering discounts if customers combine
home security with other services. That puts the prices for home
security at $30-$50 per month, slightly below what ADT charges
for its new "Pulse" product.
Even with the price difference, Imperial Capital analyst
Jeff Kessler said it could take years for cable companies to
gain consumers' trust in a market where security providers
contact authorities in the event of an emergency.
"People's perception of a cable company is that they'll be
there between the hours of 8 and 5 next week. You can't have
that if you are expecting the police to come in 5 or 6 minutes,"
Still, Kessler estimates cable will add 25 million homes
while traditional security companies will get 5 to 6 million
homes in the next few years. He said the larger security players
will weather the new competition since there will always be
customers who prefer a product from a dedicated security
Comcast Xfinity Home executive Mitch Bowling said that half
of its security customers are new to the company, that 96
percent of Xfinity home customers buy at least two other Comcast
services and two-thirds of these customers have never bought
home security before.
Bank of America Merrill Lynch analyst Jessica Reif Cohen
said adding a home security business could boost Time Warner
Cable's stock by $20 and Comcast's by $5.
Cable companies also see opportunities in expanding such
services to small businesses. They also hope to increase their
home automation services, which tap their broadband networks to
let customers control lights, appliances and thermostats
Wireless carrier AT&T Inc, which rolled out its home
security and automation service in 2011, is planning to offer
services in more than 50 markets by the end of 2013, ahead of
their original plan, and go national in 2014. Glenn Lurie, the
head of AT&T's emerging devices business, said such services
could eventually reap $1 billion a year.
Verizon Communications Inc has a product, but it does
not connect consumers to the police or other authorities in an
DirecTV acquired a home security company called
LifeShield in June. It will begin trials for the service in the
fourth quarter and release it nationally in the first quarter,
DirecTV Chief Revenue and Marketing Officer Paul Guyardo said.
Home security and automation is a low-churn, high-margin
business that compliments DirecTV's video business, he noted.
Not every cable company is charging into the market. Charter
, Cablevision and Dish Network do not
have products. Dish said it is "constantly evaluating
opportunities" while Charter said it is focusing on its core
ADT CEO Naren Gursahaney said in an interview that he is in
discussions with every pay TV company about potential
"For the most part, they've decided to try the market on
their own," Gursahaney said. "If there's a desire on their part
to offer a best of breed bundle including ADT ... we'd be open
to those kind of discussions."