VOIP/POTS - CANASA 2010
Sharing industry issues and ideas: The future of POTS and what it may mean for security alarm organizations
More than 30 years ago, CANASA was created to provide a platform for industry organizations to share information and learn from other members. While knowledge exchange is still one of our Association’s key objectives today, the issues that face our industry have undeniably changed.
One issue that has been receiving a lot of buzz lately is the potential demise of POTS (Plain Old Telephone Service) and the potential effects this will have on the Security Alarm Industry. While the conventional copper land lines were the telephone service of choice when our Association originated, recent developments stateside suggest to some its days may now be numbered.
In December 2009, AT&T submitted comments to the American Federal Communications Commission (FCC) asking that it eliminate regulatory requirements to support the landline network and provide a deadline to phase traditional phone lines out in its entirety. More recently, the FCC revealed a National Broadband Plan on March 16, 2010.
Some industry experts believe that Canada may soon follow the U.S. in potentially eliminating traditional landlines.
The downfall of POTS would have considerable consequences on the security industry and raises some serious questions for Canadian alarm companies. Dave Currie, President of Damar Security Systems in Sarnia, Ontario, and Chair of CANASA’s Telecommunications Committee, shared his thoughts on the “end of POTS” in a recent issue of our newsletter, and offers insight on this hot topic.
Q. 1 Opinions vary regarding the time it will take to transition from POTS to broadband in the U.S. What are your thoughts regarding the projected timeframe for the switch in Canada?
At this point in time, there have been no submissions [to end POTS] made to the regulator in Canada, the CRTC (Canadian Radio-television and Telecommunications Commission). So consequently it’s going to be somewhat longer than 2014; 2014 has been bandied about as the time [for POTS’s termination in the U.S.] but no decision has been rendered yet by the FCC ... I would suggest that we probably aren’t going to see the drop dead date for a total phase out of POTS lines in Canada anytime before 2025.
Q. 2 In the meantime, what should security alarm companies be doing to get ready for the switch?
In addition to having some concern about the ultimate demise of POTS lines, I think alarm dealers in Canada have to realize that many customers are transitioning their phone services to other alternative methods, such as VOIP and cable TV phone services. Also, alarm dealers need to be cognizant that many customers are not employing any kind of landline services in their homes, instead relying specifically on their cell phones for their primary communication.
It’s imperative that dealers be aware of the new communication methods available to them and, in many cases, presenting these alternative communication methods to customers as standard offerings when they sell new services. Consequently, the addition of the cellular back-up radio is an excellent addition to the customer protection package.
Q. 3 If Canadian consumers switch to VOIP, what will the impact be on alarm companies?
At the minimum, the effect is going to be confusion and in the worst case situation loss of the ability to transmit signals, without switching to some alternative technology. Another problem with VOIP is that there are no enforced standards for the provision of phone service. And although, we as an alarm company may go and make the dialers work with VOIP today, if the customer should change his internet service provider, his phone service provider, or even his router or modem, every possibility exists that although it did work today, it may not work after those changes are made.
So one rule for any new installations is alarm dealers should always program an automatic test report from the alarm panel. A test report should be done no less than weekly but daily is preferred. Any third party station that charges extra for weekly tests should rethink their position and start taking them at no additional cost to the dealer.
Q. 4 Should alarm dealers change their contracts with customers in regards to new technology?
They should definitely have something in writing to the customer with regards to customers changing phone services. Newsletters are one way to communicate to the consumer. New contracts should require customers to provide a conventional telephone line defined as a copper-pair dial-tone telephone line. Customers should be obligated to report any changes that they make in their phone system to the alarm company.
Q. 5 What are the issues of running on VOIP?
Part of the problem with VOIP, as mentioned, is there are no standards. We’ve been so used to the fact that every time we’ve hooked up to a dial-tone line and sent a signal, 99.99 per cent of the time that signal goes through first attempt without any problem. With VOIP and even some of the cable modems and the other technology coming down the pipeline, we don’t have that same reliability. So the first issue is the reliability involved in communications getting signals through. The second issue is standby power. That’s why the cellular radio becomes the product of choice for back-up delivery of communications because we, the alarm companies, can provide standby power through the cellular radio.
Q. 6 What kind of communications services would you recommend?
As mentioned, cellular is the way to go. But how long will the cellular carriers be supporting GSM and GPRS technology? They may at some point come to decide to phase out GSM and GPRS. The dealers need to position themselves as best they can. For example, one very prominent manufacturer of GSM and alarm radio communication devices have designed their product in such a way that the radio portion of it can be replaced with a new plug-in board. It’s relatively inexpensive. Whereas another manufacturer has based their entire product on the GSM and has anticipated that the GSM will be around for a long time.
Q. 7 What is it going to cost to keep customers in the switch over from POTS to broadband?
I think dealers need to be conscience of the fact that if it was to happen today, it would probably cost them upwards of $400-$500 for material, labor, and truck roll, to change a customer over to cellular or IP. At our own company, we have a product available to us that costs us about $150 to change a customer from conventional dial tone to IP. That’s pretty reasonable. I’m sure that the prices on those products are going to come down as the demand for them increases. But for an alarm company with 1000 accounts, they are probably looking to multiply that number by $200 for about $200,000 to make a changeover. That’s probably beyond the edge of capability for the smaller dealers in Canada. And how much is the customer prepared to pay? Or alternatively, if a dealer today goes to a customer and says, I would like to upgrade you to cellular and it’s going to cost you $400, the dealer may lose the account! So, there is a potential for established dealers to lose business because of new players in the marketplace. One major player coming to Canada just this year, their entire product offering is on cellular. That’s one of the reasons why I suggest when starting a new alarm service get right into the cellular straight away.
Q. 8 Are there some alternative phone services that just do not fit with alarm systems or requirements?
There are definitely some that do not fit with alarm systems. Phone services such as Skype will just not work with alarm communications we cannot connect with that from our conventional line adapters. Another issue, down the road, that alarm people in Canada are going to have to consider, is the installed base of legacy equipment. What are they going to do at some point in time in the future when copper pairs die and are no longer available? How are they going to maintain that customer and the recurring revenue base that they’ve worked all these years to build up? They are going to have to come up with some kind of alternative. We have to encourage alarm dealers in Canada not to wait until the last minute or even the last year. There’s just not enough time, or enough manpower, to go out make all these changes in the last year of the copper pair.
Q. 9 Any last words of advice or anything else that alarm companies may want to know regarding the potential termination of POTS?
Dealers should be planning the strategy for the future now. And here is something all dealers in Canada will have to consider. A few years ago, the Analogue Cellular Service was phased out. But alarm dealers in the States continued to sell analogue cellular to their customers knowing that the equipment would become useless in a few months. In Florida there is a class action law suit against a huge national alarm company based on implied consumer deception. Therefore, once dealers become aware of the end of POTS in Canada they should immediately stop offering conventional dialer service. The big thing is to keep the customer informed and remind them to report any changes in their phone service or phone system, so that we have a chance to make it right and keep it working for them.
August 2010
The Phase out of Plain Old Telephone Systems (POTS)
The following presentation was given by David Currie, President of Damar Security Systems and Security Response Center, at CANASA’s Conference and Mini-trade show on September 21, 2010 in Niagara Falls. Members learned about the trend towards the decreasing numbers of POTS and heard suggestions about how to prepare themselves and their businesses.
POTS Presentation - Sept 21, 2010
VOIP
The recent introduction of voice communication over high-speed Internet connections has raised many issues on the effects of this service to our industry. In an effort to address these effects, CANASA completed testing of this service in February 2004 and has published its findings in a detailed report.
The study involved the results of testing using the VoIP connection from, not only the best case scenario of a T1 Trunk with no traffic, but also from a residential cable modem at peak service time.
This report outlines the successes, failures, benefits and disadvantages of this service. The complete report is available in the member section of our website (www.canasa.org). A recommended sample letter is also available on the website designed to help CANASA Members communicate to clients the effects of this new service to their alarm system and personal safety.
CANASA will continue to endeavor to work with providers of this service and meet with company executives to address the liability and operational issues of this service. We will continue to publish information regarding this issue on a timely basis.
CANASA Alarm Technician Level 1 Education Course outlines the importance of periodic test signals to ensure alarm communicators can contact the monitoring station receiver, and identifies it as a crucial element for every alarm system installation.
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