Does AT&T’s purchase of T-Mobile threaten the industry?
YARMOUTH, Maine—Ever since rumblings of a POTS sunset began last year, the security industry has been concerned with where a dependable communications pathway would come from. Most eyes have turned to broadband and GSM as two alternatives. With the March 20 announcement of AT&T’s agreement to buy competitor T-Mobile for $39 billion, a new wrinkle to the communications pathway has been introduced with which the security industry must contend, assuming the acquisition passes muster with the SEC.
Wireless communications right now come in two flavors: CDMA (Sprint and Verizon) and GSM (AT&T and T-Mobile). Both have a voice side and a data side (EVDO for CDMA and GPRS for GSM). GSM is the most widely adopted platform on a global level and for that reason, is the one security solution manufacturers use for wireless communications devices.
The T-Mobile deal will give AT&T a GSM monopoly. How will this affect the security industry? According to some, it’s nothing but bad news.
“Ultimately this is going to affect everyone in the industry. If you look at today’s GSM offerings, the vast majority of security guys are going with AT&T as a carrier because they’ve had the best coverage traditionally, but as AT&T’s coverage has started to slip, especially on the low end 2.0 and 2.5 G devices, you’re starting to see more and more people use T-Mobile as an alternative,” Mace CSSS’ Morgan Hertel told Security Systems News. “It’s not that coverage is going to go away or get worse or better, it’s that we don’t have a choice anymore. We’ve got nothing to keep the wolves at bay, nothing to keep the pricing in line.”
Others are not so sure.
“The sole source issue is a moot point. Virtually the entire industry is using AT&T and the cost of completely changing carriers based on what we have installed today would amount to swapping SIMs throughout the entire install base: a cost prohibitive exercise,” said Shawn Welsh, VP of marketing for Telular, a manufacturer of wireless solutions.
“New entrants to this space may find a less flexible AT&T, but the alarm industry’s hardware and service providers ... already have strong, stable carrier relationships. Our prices won’t change.”
DMP executive director of marketing Mark Hillenburg feels the merger is more about the robustness of the network going forward rather than about any lack of competition.
“The fact is if AT&T decides that they’re going to pass along a 50-percent price increase, then Verizon will come into play, because we’ll develop it,” Hillenburg said. “Regardless, if for some reason it doesn’t go through, the two companies are now contractually bound to have reciprocal roaming agreements, which they’ve never had before. Basically it means the networks will be merged together one way or another. Either way it goes, it’s a net plus.”
Hertel also pointed out that since multiple communications pathways are the best option for any alarm solution, removing one of the two wireless provider options essentially removes one of the possible pathways alarm installers had at their disposal.
“You have no redundancies now. We have many dealers, for example, who don’t want to trust one carrier for communications—none of the carriers are without problems—so they have dual-communicating systems that will use AT&T and if that fails, it will switch over to T-Mobile,” Hertel said. “That’s going away. It would be like only having one long distance carrier in the U.S. It’s not a good thing.”
So is there an answer?
“This has been going on for the last hundred years, since alarms have been around—every time we rely on others to handle our traffic we get disappointed,” Hertel said. “Today the technology exists—whether it’s by satellite or by standardizing on IP or with products like AES—for the industry to create its own communications pathway. But it’s going to take manufacturer support and, at the end of the day, I don’t know if you’re going to get Honeywell and DMP and Bosch into a room to talk about, ‘How do we build out this infrastructure?’”
Welsh feels the industry’s best option is always going to be to leverage the infrastructure others have already built.
“I don’t think we will ever see an alarm-industry-specific wide area radio technology that remotely approaches the convenience and operating costs of ubiquitously deployed cellular technologies. The costs to develop it would be too great even with the complete support of the industry.”