Cable companies branch out into home-security services

December 11, 2011 at 12:00a.m.

Los Angeles Times

LOS ANGELES

For decades, the only theft the cable industry worried about was people trying to get MTV and HBO without paying for them.

Now some of the biggest cable companies — including Comcast Corp. and Time Warner Cable Inc. — are looking to do more than just safeguard their signals from piracy. They want to use their broadband service to protect your big-screen television, the couch in front of it and even the family jewels with their own home-security systems.

They’re not just feeling altruistic. The cable industry is facing myriad challenges to its core businesses. The weak economy has led many consumers to cancel their pay-television service, while others are switching to competing video-delivery options, such as satellite operators, telephone companies and the online services Netflix Inc. and Hulu.

Finding new ways to keep subscribers hooked up is crucial. “The industry is increasingly looking to squeeze more juice out of their relationship with the customer,” said Rich Greenfield, a media analyst with financial services firm BTIG.

The domestic electronic-security industry generates $33.25 billion annually, according to the Gold Book, a publication produced by Security Sales & Integration magazine. About 1 in 5 homes nationwide has some sort of monitored security system, said Don Boerema, chief marketing officer of ADT, the industry leader in home security with 6 million customers, or 26 percent of the market.

Those numbers make home security attractive for cable companies.

“All of our research said it was a good business to go after,” said Keith Burkley, Time Warner Cable’s senior vice president responsible for the company’s Intelligent Home security system. “The market is 20 percent penetrated, and we really believe it is going to grow to over 30 percent.”

Cable companies already have a pipeline to a customer base. New wireless technology has made entry into the home-security business cheap.

“The beauty of that pipe they have into the home is that it can offer many services,” Greenfield said. “There are a number of ways to drive incremental revenue off the infrastructure that has already been built.”

In the past, even the most sophisticated home-security systems were clunky and costly, requiring lots of hard wire, typically connecting to a landline telephone.

Now wireless allows for video cameras, motion detectors and door sensors. Even lights and the thermostat can be controlled from a remote both inside and outside the home through wireless systems.

“It’s taking the best of security and marrying it with the cutting edge of technology,” said Mitch Bowling, Comcast’s senior vice president and general manager of new businesses.

At the same time, the price has dropped. A system that would have cost thousands of dollars to install less than a decade ago now runs only a couple of hundred bucks.

At first glance, the pairing of cable television and home security seems like a combination ripe for parody.

“If they can’t show up for an appointment, that doesn’t give you a lot of confidence that they’re going to let you know if a burglar shows up,” said Allen Adamson, a managing partner of Landor Associates, a firm that specializes in brand building.

But cable companies are not sending their own security teams to respond to burglaries. When something is amiss, they alert the owner and the police.