Comcast and Alarm.com reportedly in talks to acquire Icontrol

REDWOOD CITY, Calif.—Interactive services platform provider Alarm.com and cable giant Comcast are in talks to acquire platform provider Icontrol Networks, according to several sources who spoke to Security Systems News, and published reports.

The deal could bring “Big Blue”—ADT, which has about 30 percent market share—to Alarm.com.  

Contacted by SSN, Icontrol, Alarm.com and Comcast declined to comment.

Alarm.com, a direct competitor to Icontrol, would likely acquire Icontrol's Z-Wave platform, which is used by home security dealers, notably ADT. ADT and Protection 1 merged in a deal that closed in May. Alarm.com would also get some patents and Icontrol's DIY business, Piper.

Comcast is reportedly interested in certain patents and Icontrol's ZigBee home automation platform, which is used by Comcast and other cable companies such as Cox, Rogers and Time Warner. Essentially this is the former uControl business. Icontrol and uControl merged in 2010.

Rumors of the deal have been circulating for months; published reports appeared in the past week.

Tom Kerber, director of research for Parks Associates, who emphasized that he had no knowledge of whether the deal will actually come to pass, spoke to SSN about the potential impact of the deal.

Kerber believes the time is right for Icontrol to either sell or do an IPO. “Their growth rate is maxing out internally. They're at a hockey stick. This is the time for an exit,” he said.

How might the sale of Icontrol to Alarm.com affect the security industry? It could be a boon to Alarm.com if the sale translated into Alarm.com gaining ADT's interactive services business.

That is a distinct possibility, but it's not a given, Kerber and other observers say.

ADT dealers, including some of the largest dealers, are negotiating for more platform provider options, sources told SSN.

Currently ADT uses Alarm.com in Canada. In the U.S., ADT's Pulse product is powered by Icontrol. Protection 1, on the other hand, has been an Alarm.com shop.

Because Protection 1 is an Alarm.com shop, wouldn't ADT, which has about 30 percent market share, approve Alarm.com as a platform for its direct sales force and dealers?  

Perhaps, but Kerber points out that there's another alternative: ADT could develop its own platform. “ADT is big enough to [develop a platform] on its own … Vivint has proven that it can be done,” he said. It would take some work but a company like ADT has the resources including “new blood from Protection 1.” It has “good rationale to want to control all of the infrastructure to [better control] the user experience,” Kerber said.

Contacted by SSN, Protection 1 declined comment.  

There are more competitors for ADT's business as well including Honeywell, Tellular and others.

Kerber pointed out that “all Icontrol legacy customers have contractual obligations and Icontrol has to meet and through an acquisition those [obligations] do not go away.”

If the deal goes through, Comcast will have to decide whether it will continue to license the Icontrol technology to other cable providers. Kerber said that Comcast has developed additional proprietary capabilities on top of the Icontrol technology that other cable companies may be interested in. Comcast may be willing to sell the technology because cable companies have distinct footprints so they're not true competitors.

Kerber estimates that Comcast has about 600,000 smart home/security customers, Time Warner has 150,000, Cox has 75,000 and Rogers has 50,000. “If you add 1.6 million customers from ADT, our estimate is that Icontrol has 2.5 million subscribers across the entire customer base,” he said.

Alarm.com has publicly said that it had 2.6 million subscribers at the end of 2015.