Talk at Barnes Buchanan: Cable companies' motivation for entering security

I am just back this week from our TechSec new technology conference.

Unable to make it? There's lots of coverage of on the site about the various the educational sessions--Mobile Apps; Ensuring your cloud provider is secure; the keynote; Video analytics; and, Emerging technology.

TechSec took place in Delray Beach, Fla. on Feb. 7 & 8, after which I headed up Route 1A to The Breakers in Palm Beach for the Barnes Buchanan Security Alarm conference which took place Feb. 9 and 10.

You may wonder how a hardy New Englander such as myself can stand so much warm weather. It's not easy, but I've toughed out these back-to-back conferences for a few years running.

It's at Barnes Buchanan that I get an overview of the capital and debt markets, hear from lenders, and attend panel discussions (often remarkably candid) featuring leaders of some of the industry's� major alarm companies.

The focus of the conference tends to be more residential and small business, but as more and more integrators get into the RMR business, there's more information about these companies at� Barnes Buchanan. According to Barnes, overall monitoring and service revenue was up 5 percent in 2011 to $18 billion from $17.2 billion in 2010 and $16.3 billion in 2009. There's been a notable increase in the number of integrators who have an RMR component (not just maintenance contracts) in the past three years.� That sounds like good news to me.

That last tidbit is from Michael Barnes' annual Industry and Market Overview--which features a feast of numbers on monitoring revenue, M&A activity sliced and diced and served up in a lively presentation.

Mike's two-hour overview always includes a lot of back and forth with the audience and this year. This year,� there was a lot of talk about new entrants.

Many, many questions started out this way: “If Comcast acquires ADT ...” Barnes himself said he expects cable companies to do some acquiring soon and “ADT's likely the first one to get picked off.”

The cable company that picks off ADT would instantly get 28 percent of the resi market share. Tied for No. 2, with 2 percent apiece are Monitronics, Vivint, Pro1 and Stanley.

But Barnes asked an interesting question: Will big cable companies really be motivated by the economics of the security industry? The security industry, he said, is just not that big in comparison to the giant telco and cable industry.

He talked about visiting Comcast--a major enterprise—and noted that a cable company that decides to go into security has a lot of barriers to overcome.

But, say for argument's sake, a cable company does a truly bang-up job and starts creating a large number of accounts. Say that cable company grows like Vivint, Barnes posited.

Vivint has gone from no accounts in 2006 to 600,000 accounts today. Most would agree it's had remarkable growth and success in a short length of time in this industry. But, Barnes said, however impressive that is, will 600,000 accounts in five years really wow the board of a cable company that has 24 million subscribers?

One reason the Bell companies that got involved in security in the last decade left, he said, is “they can't make [the security piece] big enough.”

We're putting final touches on the March printed issue of SSN today, but I'll have more on the Barnes Buchanan conference later this week and next.