More Government competition - fire monitoring in Illinois
The following is courtesy of Kevin Lehan, Executive Director of Illinois Electronic Security Assoc. Kevin does a great job for his association.
On August 23, Schaumburg, IL, passed ordinance 16-078 that deems a government entity - Northwest Central Dispatch System - as the only provider of commercial fire-alarm system monitoring in the community. State-licensed private alarm contractors must surrender their customers to Northwest Central Dispatch System once their contracts expire and all new installation must go directly to the 911 center for monitoring.
LINK TO ORDINANCE LANGUAGE HERE:
This is virtually the same ordinance that is being litigated in federal court now, specifically Alarm Detection Systems, Inc. v. Bloomingdale Fire Protection District et al.
As it stands, they are litigating claims for violation of the federal Civil Rights Act and antitrust claims under the Sherman Act.
There is recent precedent that favors the private alarm industry, in particular, Lisle-Woodridge Fire Protection District, which paid several million in legal fees to the plaintiffs. The linked story below only cites the $2.13M paid to one of the plaintiffs; another plaintiff, Tyco, reportedly received a similar size award, but they are not sharing the amount.
Not only is it a reckless decision to “create a municipal monopoly” in the face of those facts, it’s a terrible decision for Schaumburg’s business community that will not have to ability to keep their current service provider, use advanced technologies or shop for the best price.
• THIS ORDINANCE IS NOT ABOUT PUBLIC SAFETY. Communities currently have the authority to adopt and enforce rules consistent with the national fire codes (such as the National Fire Protection Association) that provide comprehensive coverage of alarm monitoring (e.g., what technologies are allowed, what is required for alarm monitoring). This legislation is designed to allow government entities to monopolize alarm monitoring and arbitrarily exclude viable technologies in direct opposition of the national fire codes.
• THIS ORDINANCE TAKES AWAY SMALL BUSINESS JOBS. Instead of 20 small businesses competing in a market, the government claims the monitoring revenue, which is a significant percentage of income for alarm dealers. As such, many businesses will close (loss of tax base) and private sector jobs will be lost.
• THIS ORDINANCE STRIPS SMALL BUSINESSES OF REVENUE AND VALUE. Alarm monitoring contracts are the most valuable asset a small or large alarm company has. Confiscating 100 accounts can cripple the ability of an alarm company to borrow money and maintain employment levels. If a company has 100 accounts generating a monthly income of $65, losing those customers strips that company of approximately $230,000 in capital value in addition to the loss of monthly revenue.
• THE ORDINANCE IS COSTLY AND HURTS EVERY BUSINESS OWNER. By eliminating competitors that apply market pressure to raise the standards of service while keeping prices in check, there is no incentive to strive for improvement to public safety. As seen with a number of fire districts currently (and illegally) operating exclusive fire-alarm monitoring facilities, these service fees are in far excess of those charged by private alarm companies, costing the average business hundreds or even thousands of unnecessary dollars every year.
• THE ORDINANCE ENCOURAGES ABUSE OF POWER. This ordinance forces every business in the jurisdiction to enter into alarm monitoring contracts with a government entity. If a business refuses to accept the terms of the contracts, fire officials have the authority to fine or penalize the business. The business community is entitled to free choice and the ability to negotiate with service providers.
CONCLUSION: This type ordinance is anti-competitive, dangerous, and that has been declared illegal by a federal court. The primary motivation of the proposed bill is to take over an area of private business that took more than a hundred years for private industry to build. It is a revenue grab by communities. It does not, however, improve response time or increase firefighter safety. As such, the ordinance should be overturned.
My best regards,
Kevin Lehan, Executive Director