*Originally published on SecuritySales.com*
Lost for some amid the COVID-19 lockdowns is the looming shutdown of 3G cellular networks. Without upgrades this will cripple security and fire/life-safety systems. A half-dozen solution providers discuss the challenge, outlook and remedies.
If the pandemic has taught us anything it’s to expect the unexpected and, from a business perspective, to do everything possible to be best prepared for any imaginable set of circumstances. Given that, security alarm company managers ought to be thankful for having had years of advance notice on the impending termination of 3G cellular communications.
Yet procrastination, mismanagement and, to be fair, legitimate challenges (including manifestations of the pandemic) have many security dealers feverishly scrambling to get thousands of customers’ alarm panels upgraded ahead of February’s AT&T 3G sunset.
“The last year-and-a-half was good for dealers addressing commercial upgrades, as it was easy to get into those businesses, but no one wanted a dealer in their residence and so that created a lag in upgrading residential systems,” says Napco Senior Vice President Dave Sheffey, who points to labor issues as another challenge. “It has been difficult if not impossible for dealers to hire employees to perform daily installations and service, not to mention the necessity to do the required sunset replacements.”
Security, fire and personal medical alert systems have all long relied upon 3G communications to function. In the absence of upgrading to modern wireless technology, the looming shutdown of AT&T’s 3G network threatens to leave scores of alarm systems inoperable.
In addition, an unsupervised shutdown of 3G systems by major carriers nationwide puts the phone service of millions of Americans — many of them elderly or low-income — at risk.
As organizations like the Alarm Industry Communications Committee (AICC) continue to lobby the FCC for an 11th-hour extension, Sheffey recommends prioritizing AT&T upgrades ahead of Verizon devices since the latter is supporting 3G through December 2022. “More important accounts like fire or commercial accounts should also have a higher priority,” he adds.
The good news is there’s still a few months left to complete customer upgrades, and it’s a bit reassuring to realize the industry emerged relatively unscathed from the AMPS 2008 and 2G 2016 sunsets.
There’s more guidance ahead as Sheffey is joined by five other experts. They are Alula Senior Vice President of Product and Marketing Dave Mayne; DMP Vice President of Marketing Mark Hillenburg; Johnson Controls Global Director of Marketing Jeremy McLerran; Resideo Sales Director, Security Mike Maher; and Telguard President George Brody.
What is your sense of where most alarm dealers and the industry at large sit today regarding the 3G sunset?
Dave Sheffey: We are still finding dealers that have not begun to replace radios. In the past, AT&T started shutting down towers well in advance of the sunset date and continued to do so well past the end date. Many dealers believe they have more time than may truly be available, as AT&T is claiming a hard date on the end of 3G. If that were to actually happen, I believe there would be a lot of accounts that would no longer have a communication path. Keep in mind there are a lot more 3G radios installed now than there were 2G radios.
George Brody: It is really a mixed bag. Some dealers started early in upgrading customers to LTE technology and are ahead in the game, but others are lagging to meet the February 2022 date. Certainly, COVID-19 has been a big part of delays in upgrades since it was very difficult to get into homes and businesses for a good part of 2020. And currently, chip shortages affecting just about every industry is compounding the issue of getting all the security and life-safety systems changed out of 3G.
There is a tremendous amount at stake for the security and life-safety industry and their customers that may be extremely harmful and even deadly. Unless equipment is upgraded on time, the 3G sunset will have an impact on tens of millions of people in millions of homes, businesses and government installations due to a loss of central station alarm protection service.
Mike Maher: Based on what we’re hearing from our security dealers, many have fallen behind, in large part due to the pandemic, which kept dealers from getting access to their customers’ homes. Based on the past radio sunsets, many expected to be behind at this point — but they are just much farther behind. In addition, dealers are focused on new account growth and new business, which can take the attention off other areas, such as radio swaps. For some dealers, radio swaps are performed at a financial loss and bring no additional recurring revenue, which can further push this project down the list of importance.
What is at stake here is critically important, first and foremost: these are life-safety systems, and there is the possibility of bad outcomes if they stop operating. Secondly, our industry’s lifeblood is the revenue generated for delivering monitoring services that could be disrupted as the 3G technology sunsets. Dealers will see higher attrition levels over the next two years, during the AT&T and Verizon sunsets, if they don’t have a plan.
In what specific ways has the pandemic impacted progress, and what are other top dealer impediments?
Mark Hillenburg: The pandemic seems to have slowed some dealers down, with less access to customers’ premises. Yet others have used the time to make great gains toward the project. It’s hard to say what has caused this other than just the local situation or the attitude of the dealer themselves.
Other factors that have come into play include the availability of labor and components, the effectiveness of the marketing upgrade message, and the automation or software the dealer has applied to the project. Are they dedicating people? Are they opening a ticket for every site that needs it, and replacing radios when trucks are nearby?
Dave Mayne: One thing the past 18 months has taught us, specifically about business operations, is not to procrastinate. We’ve known about the pending sunset of 3G/CDMA networks for quite some time now, but sometimes it’s easy to focus on business growth rather than how to sustain it. This is a situation that some alarm dealers have found themselves in. They weren’t dragging their feet on upgrading systems, per se, but they planned on having the time and resources to get the job done, closer to the sunset dates.
COVID changed that. It made it difficult to access homes and businesses to swap out equipment. It made it more difficult to find and train technicians who could do the work. These complications have significantly reduced the window of opportunity that many alarm dealers needed to complete their system upgrades prior to the sunset.
Inventory shortages, leading to higher prices on key components, are creating additional challenges for both system manufacturers and alarm dealers. Many of the components and devices needed to build communicators and panels are being consumed by products used in other industries. Product manufacturers in the security industry are working hard to find suppliers that have the needed components. However, in many cases they’re not to be found or, due to supply and demand economics, prices are sometimes at more than a 50% premium.
Jeremy McLerran: When quarantine started everyone assumed that the pro install industry would disappear, but it had the opposite effect. Between Zoom calls everyone had a list of honey-do’s they needed to complete, and “getting our security system working” was toward the top of the list. Add to that the social and political unrest that rippled across the nation and security dealers could hardly stay on top of the service requests. System upgrades shot to an all-time high and it hasn’t subsided.
The security industry experienced a wake-up call when it came to going digital. Having a great website, cheerful phone support, effective email/social media campaigns and remote connectivity to the products installed in the home all became table stakes. Customers know what technology can deliver and they are demanding effective, real-time, no-touch service.
Chat should be part of every support strategy. Remote access should be part of every installed system. Some of this requires an upgrade in the hardware and software you provide, and some requires additional training and services for your employees, especially those who work from home.
We also saw an interesting uptick in “social distance installs” where dealers would professionally configure a table stand-mounted system and deliver it to the doorstep, only to be plugged in and finished up by the end user themselves.
What do you recommend for those dealers reluctant to reach out to customers with what might be perceived as a problem?
Sheffey: Educate customers as to the pending 3G sunset and how it might affect them. Create customer incentives for customers who upgrade. We all know that when we get to the end date, there will be some customers that don’t want to pay for an upgrade and the dealer will be forced to decide to do the upgrade for free or lose the customer.
Dealers can offer a service package that includes such things as radio and battery replacement, and some service at a nominal charge to be rolled into the customer’s monthly bill. This increases the monthly and covers the cost of future upgrades. There is also, of course, the discounts associated with upgrades that occur as part of other required visits compared to those that may be extended to upgrade only visits.
Brody: Communicate and reach out to customers frequently and consistently with straight talk about the technology upgrades that are taking place in the cellular networks. Also, reward customers who act quickly with some type of promotion or discounts, such as a month of free monitoring service. Certainly, the financial impact on the upgrade needs to be considered.
Truck roll and time at the facility, in addition to the equipment change out, are all cost factors. All parties involved in the sunset upgrade play a role in the financial picture. Dealers should upsell or share the cost with customers who should be familiar with wireless carrier upgrades as they are common with cellphones.
Maher: Our dealers are very open to communicate with their customers as we’re not hearing they are reluctant, as maybe they were for the 2G sunset. They are seeing this as a profit-driving opportunity. Dealers have always-on marketing campaigns like social media that put them in front of their customers, so it makes these conversations more natural. This sunset is driven by the need for increased technology that will add value to customers’ lives. The key is to focus on benefits of the overall system, instead of positioning it as system maintenance. Make sure customers know how important this upgrade is to them and how important their health is to you.
The No. 1 thing we advise dealers to do is follow the math. We offer a calculator that helps them identify how many customers, per day, they need to upgrade to meet the deadline. By being proactive, they can reach out to the customer and sell additional services. For example, add new services or upgrade to all new technology that introduces a path to improved RMR for the dealer via smart home services, cameras, etc. The longer a dealer waits to contact customers, and once they are in a reactive situation, they will be less likely to be able to drive value-adds — and may need to give a device away.
About the Author
SCOTT GOLDFINE, Editor-in-Chief and Associate Publisher
Scott Goldfine is Editor-in-Chief and Associate Publisher of Security Sales & Integration. Well-versed in the technical and business aspects of electronic security (video surveillance, access control, systems integration, intrusion detection, fire/life safety), Goldfine is nationally recognized as an industry expert and speaker. Goldfine is involved in several security events and organizations, including the Electronic Security Association (ESA), Security Industry Association (SIA), Security Industry Alarm Coalition (SIAC), False Alarm Reduction Association (FARA), ASIS Int’l and more. Goldfine also serves on several boards, including the SIA Marketing Committee, CSAA Marketing and Communications Committee, PSA Cybersecurity Advisory Council and Robolliance. He is a certified alarm technician, former cable-TV tech, audio company entrepreneur, and lifelong electronics and computers enthusiast. Goldfine joined Security Sales & Integration in 1998.