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Cable companies attracting home security customers


By Liana B. Baker

Reuters

Consumers are increasingly turning to an unlikely source to secure their homes — the cable company.

Lower prices for critical components such as cameras and wireless technology have been lowering barriers to entering 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 help rebuild margins whittled away by rising programming costs and declining numbers of video subscribers. 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 years.

And home security subscribers tend to stick around for an average of seven or eight years, according to industry estimates, unlike the 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 Sandy.

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.

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.

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. market.

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.

“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,” Kessler said.

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 company.


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