Before I circulate the comments I have had some additional thoughts.  There is probably a way for municipalities to compete with alarm monitoring companies and still retain the police power sovereign immunity.  If a municipality claims - and I think most will - that the alarm monitoring is in furtherance of the police-fire powers, providing those governmental services, then the immunity attaches.  Instead of charging competitive fees the municipalites should probably charge permit fees or registration fees.  Those fees are already beyong challenge.  Of course the thought I have as I write this is why bother to actually do the monitoring when you can already charge the permit or registration fee?  As you can see from the comments below, this topic is hot and developing.

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Ken,

 Under Florida Statutes 489.503 (17) municipalities in Florida may monitor as long as they charge no fee. With declining revenues over the last couple of years several have examined the possibility of instituting their own monitoring centers. As you predicted once they faced the daunting costs of operating the centers through budget projections, they have universally declined to do so.

 Additionally because of your second issue of special relationships encountered, their liability escalates. Another large issue was the cost of establishing and maintaining the monitoring centers under third party certification, placating and the like, to compete with private industry.  With those added in to the equation it became financially toxic to their budgets.

Bob Neely

Executive Director

Alarm Association of Florida, Inc.

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Ken:

 Not long ago, some nearby cities in cost-saving action, ceased the alarm monitoring of fire and police alarms reducing their insurance premium proportionately.  Others also realized, call takers and dispatchers had become too busy with alarm operations tending to stray away from their normal operations.

Brian HAMON,

Alarm Specialists, Inc;

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Ken,

    I enjoy your readings and your regular doses of reality.  In regard to municipalities being in the monitoring business, here in the San Francisco Bay Area there are a couple tony communities that provide their citizens with monitoring that is paid through their taxes.  For years when we have gained a client in these cities we’ve explained the differences between our own central station and the monitoring capabilities at their city.  Many have chosen to utilize their own cities capabilities.

    A few weeks ago all our clients in one of these cities (Hillsborough) had their keypads start beeping.  The weekly phone tests were failing.  Upon visiting the sites we confirmed that the control panels were no longer able to communicate with the receiver at the city’s police department.  Further investigation revealed that the newer Contact ID format had apparently been de prioritized in the receiver to the point where the brand of panels we use are unable to communicate.  The old receiver is apparently prioritizing the older formats to such a degree that the panels utilizing the Contact ID format time out before communication can be established.  Any alarm signals created by these account will not get through to the police department!!!

    Here’s the scary part.  Upon determining this we immediately called the city to inform and discuss the issue with them.  At that time nobody there was equipped to have such a discussion.  Only the Chief could help and he wasn’t available.  Multiple messages have been left with him and others who we later learned may be technically equipped to deal with the situation.  After two weeks there have been no call backs and to date the problem still remains.   I wonder how many systems in that city that are programmed with Contact ID format and without weekly test signals are just waiting for an alarm to occur that won’t be heard from by the city’s central station.  All this in a city that probably ranks in the top ten of per capita income in the country.  It’s amazing!

Gene Jordan

Advanced Security Engineering

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Hi Ken;

    The idea of municipalities entering into the alarm monitoring

business is not new.  For those who have been in the trade for more than

25 years, you may remember that years ago, people could lease a phone

line to the PD for about $8.00 per month and they referred to the

customer as a "direct connect."    That fee was paid directly to Ma

Bell.  Inside the PD there was an alarm board on the wall, and every

direct connect customer had a little box attached to the front of the

board.  The box was called a Modularm.  When the alarm would sound, the

box would buzz, a small light would come on and there was an analog

meter configuration and the needle would swing over to the "alarm" side

when activated.  Installers got creative and even attached a pulsed

output to the reversing relay that was installed at the premise.  If the

fire alarm went off, the modularm would buzz and the needle would swing

back and forth to indicate a fire alarm.

    Now, here's the problem.  In a town next to where I live, there was

a family who was having a problem with their alarm system.  This goes

back to the days prior to alarm ordinances, so there was no penalty for

your alarm being activated frequently.  It was also a time before most

PD's in NJ  had dispatchers.  One of the police officers who was

dispatching that day heard and saw the modularm sound for the residence

that had a faulty system.  He got up and pressed the reset button.  It

tripped again, he hit the reset button.  The alarm came in over six

times, and all he did was reset the button.  In fact it was so annoying

to him that he wedged a paperclip inside the housing of the modularm, so

that it would keep the reset button depressed.  And he never once

dispatched a radio car to the address.  He was in the middle of typing

up a note to the home owner telling him to get his alarm fixed when the

family returned home and found the place trashed.  Over $20,000.00 in

jewelry was stolen during the burglary, in addition to some small

electronics, etc.  The homeowner drove over to the PD to report the

crime and as he walked in, the PO started yelling at him to get his

alarm fixed.  The homeowner then saw the paperclip wedged into the

modularm frame, keeping the reset button depressed.  Needless to say,

the man was more than just a little annoyed.

    End result, the homeowner successfully sued the police department

for all damage to his home, the value of his wife's jewelry and whatever

else was taken.  The police officer who at that time was less than a

month away from getting promoted to the rank of Sergeant, retired some

years later as a patrolman.  I guess he was lucky that he wasn't charged

with criminal negligence.  Today, between all of the taped telephone

lines and radio frequencies, etc. I'm sure this guy would have lost his

job.  Most police administrators take courses today on vicarious

liability.  Why any town would want to take on that liability is beyond

my comprehension.

Sincerely,

John from NJ

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Ken,

    Thank you for sending me your newsletter. I do read them and often get a helpful message for my business. Regarding the above subject; as a tax payer I am concerned that the municipalities that I serve will use public money to open a central station and compete with me. Can you comment on how this is even allowed?

Thank you,

Walter Conrad

Sonitrol of North Central Florida

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Hi Ken,

    Keltron Corporation has been selling wireless networks to municipalities in the greater Chicago metropolitan area since 1999.  I have attached a current list.  Our business model, to date, has only been for the monitoring of ordinance mandated fire alarm systems.  We have created a network of alarm dealers who have are factory trained and supported both by the factory in Waltham, MA and a dedicated local representative.

    There has been substantial documentation by a number of municipalities, especially the City of Naperville,  that direct connection of fire alarm system using a 2 way, supervised radio network provides the fire department with the ability to respond considerably faster than a connection to a central station.  Additionally, there have been a significant number of documented cases where central stations have provided inaccurate or incomplete subscriber information causing considerable delays in authority response.

    I am aware that one of our Chicago dealers (Mr. John Fisher) has recently contacted you about municipality owned networks hoping to get an opinion that could be used to defend dealer owned systems.  That is where the equipment in the dispatch is owned by the dealer rather than owned by the municipality.  Over the last nine years this liability issue has been debated over and over.  The consensus of the attorneys from Naperville as well as from several other cities and fire protection districts has been of the opinion that equipment ownership is not a determining factor in the assignment of liability.

    In every situation, equipment is installed, serviced and maintained by alarm companies who are licensed by the State of Illinois Department of Professional Regulation and, in the case of Keltron dealers, approved by us to perform all installation and service work on equipment in dispatch and Subscriber locations.

    In the cases where municipalities own equipment a contract is executed between the installing and servicing dealer and the municipality.  Additionally, contracts are executed between the municipality and the Subscriber.  All contracts are typical alarm industry standard agreements containing limits of liability and liquidated damages clauses.  Municipalities are also under the protection of the Illinois Tort Immunity Act which provides immunity from litigation in all but cases of criminal neglect.

    To date, only 2 communities using Keltron Wireless Networks are monitoring burglar alarms and there seems to be little interest among the others to provide this service.  As you may be aware, the Chicago area is unique in the USA with regards to municipal alarm monitoring.  This practice has been going on for over 40 years and there is no sense whatsoever that this will be changing in the foreseeable future.

    Yes, monitoring alarms does create a revenue stream for a municipality but this revenue comes nowhere near covering the costs associated with monitoring and dispatching services performed.  Although, in most parts of the country, alarm monitoring is left completely to the private sector, this area is committed to a higher degree of municipal involvement in requiring alarms and in determining how those systems are installed, maintained and monitored.

JUSTICE GEIGER delivered the opinion of the court:

The plaintiff, Alarm Detention Systems, Inc. (ADS), appeals from the August 29, 2000, order of the circuit court of Du Page County entering summary judgment on behalf of the defendant, the Village of Hinsdale (the Village), on ADS's complaint for injunctive relief. In its complaint, ADS sought the entry of a permanent injunction preventing the Village from enforcing an ordinance that required all owners of commercial buildings to connect their fire alarm systems directly to the Village's fire board for monitoring. In granting summary judgment, the trial court found that the Village had the authority to enact the ordinance under the provisions of the Illinois Municipal Code (the Code) (65 ILCS 5/1--1--1 et seq. (West 1998)). We affirm.

 

 (See complete document at http://www.state.il.us/court/opinions/appellatecourt/2001/2nddistrict/December/HTML/2001393.htm )

 

    I owned an alarm company and central station in the northern suburbs of Chicago from 1974 until 1988 at which time I sold my business to ADS.  Thereafter I worked with Bill Larrabee at Larrabee Ventures doing mergers, acquisitions and MRM funding until 1992 when I became National Sales Manager for SafeCom division of Senses International.  From 1995 to 1999 I worked with AES Corporation in Peabody, MA thereafter joining Keltron Corporation to create and manage the municipal wireless business in the Chicago metropolitan market.  To date, we have 45 wireless networks protecting 77 communities and fire protection districts with just over 20,000 subscribers converted from direct wire phone line connections to Keltron Wireless radios.

    I wanted to provide you with this information so that you understood all the relevant facts and would be in a position to better address any future inquiries regarding the municipal monitoring of fire alarm systems in northeast Illinois.

Best regards,

Jeffrey D. Binninger

Manufacturer's Representative

Keltron Corporation

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Q&A -discounting monitoring charges

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QUESTION:

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Ken,

 I have a fairly large customer base here in Oklahoma and I was told if I discounted monitoring for one customer, then I had to give all of my subscribers the same discount…..For instance if my normal burglar alarm monitoring is $20.00 per month for everyone, but occasionally I may have a customer that has several systems and I discount them to maybe $14.95 per month. Do you know if this is accurate?

Thanks

RG

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ANSWER:

    You can charge customers different rates and give discounts.  You cannot of course base your discount on unlawful discriminatory practices, and you and your competitors cannot conspire to price fix within your area.  You can certainly give favorable prices to a large customer. 

    Maybe some of the lawyers who read this may have different opinion or some input - let's hear from them.

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