Alarm Communications Lou Fiore January 19, 2012 Dallas, Texas

2. Alarm Communications Lou Fiore January 19, 2012 Dallas, Texas

4. AICC Members AES Intellinet Alarm.com Axis Communications Bosch DMP DSC Honeywell Interlogix Inovonics Linear Corp LogicMark Napco Security Numerex (Uplink) RSI Videofied Telular Visonic FM Approvals Intertek Testing Underwriters Laboratories CSAA ESA SIA ADT AFA Protective Systems Alarm Detection Systems Bay Alarm COPS Monitoring DGA Security Protection One Security Network of America Security Networks Select Security Stanley Convergent United Central Control Universal Atlantic Systems Vector Security Vivint

5. AICC’s Current Topics • Nationwide Monitoring License • Telecommunications Service Priority • Frequency Auctions – HR 607, S911, HR 3116, HR 3630, etc. • Sprint and Verizon as presenters re CDMA • Next Generation 911

6. Today’s Topics

7. The Current Status and Future of POTS • National Broadband Plan • Digital Cellular • Cable • IP • Private Radio • “D” Block • NFPA 72 • Government Intervention • Summary

9. State of Affairs • POTS is leaving us. • Cellular will continue to change. • Competitors from outside are leveraging their communications advantages.

10. Today’s Communications Environment • Undeniable shift from wired to wireless services • Decreased demand and availability of PSTN service • Quality of service issues with VoIP as the service spreads • Cellular changes as carriers migrate to faster service • The ability to acquire wireless spectrum – at any price – is a formidable barrier to continued expansion for the wireless carriers. • The FCC has declared a “spectrum crisis” due to lack of new spectrum needed to address exploding demand.

11. What’s Happening to Plain Old Telephone Service?

12. Impact of Cellular on POTS Notice the “bubble” at age 22 to 26. Source: CDC

14. New Generation of Customer • Comfortable with the Internet • Vast majority have portable devices Many have multiple portable devices • This generation will not be tethered • Demand new applications for their devices • Device life: Typically 18 to 24 months

16. Data Voice Video Convergence of Voice, Video and Data

17. There are more wireless accounts than people in the USA! • 35% of adults in the USA own smartphone. • Mobile phones are a main source of Internet access for 25% of the smartphone population. • 25% of smartphone users mostly use their phone instead of a computer to access the Internet. *The Pew Internet & Life Project

22. The National Broadband Plan 1. Design policies to ensure robust competition, innovation and investment. 2. Ensure efficient allocation and management of spectrum, poles, and rights-of-way, to encourage network upgrades and competitive entry. 3. Reform current universal service mechanisms to support deployment of broadband and voice in high-cost areas; and ensure that low-income Americans can afford broadband. 4. Reform laws, policies, standards and incentives to maximize the benefits of broadband in public education, health care and government operations.

24. Quantifying the PSTN Legacy Transition • Cord cutting is happening in a rapid pace, especially the younger segments. However, PSTN lines (overall) are also dropping organically. • As of May 2010, 23% of respondents in a study lived in a mobile-only household. • The same study also found that 37% of adults in the 18-24 and 30-34 age groups lived in a Mobile-only household. Source: FCC

25. Quantifying the PSTN Legacy Transition • Recommendations: • The FCC should take steps to prepare for the inevitable transition from the PSTN 2. The FCC should take steps to expedite the transition, with a target date of 2018 3. Provide incentives for operators to provide broadband services (that can support Voice) to rural areas and underserved America 4. Fund PSAPs so they can accelerate integration with IP/Packet network (so E911 can work with IP) 5. Realign regulatory requirements to emerging technologies 6. Assist Broadband and OTT providers by working with Security and Emergency Alarms industry associations to push for IP adoption e.g. NFPA 72 7. Bring the National Broadband Plan in alignment with the PSTN Sunset timetable and assure that adequate broadband/mobile capability is available everywhere that the PSTN is today Source: FCC

26. After the PSTN: Non-carrier stranded assets Recommendations: 1.Target 2018 as the end of the PSTN. 2.Develop timeline to ensure smooth transition which addresses stranded assets 3.Assure that mobile and/or broadband replacements are available everywhere PSTN is currently provided. The need will be greatest in rural areas. Source: FCC

27. Demand for POTS • Demand for POTS is trending sharply downward. • Government is pushing RBOCs away from POTS • Government pushing a shift to Broadband

28. Actual Data • AT&T had 36 Million POTS lines in 2006 • Down to 20 Million POTS lines in 2011 • Declining industry-wide at about 5 to 7% per year

29. “EoIP” Everything is moving to IP Only 10% of the population still get their video “over the air.” The future is IP All media will be delivered by IP in the not too distant future. Google is reportedly readying an Internet-served pay television service that will roll out in Kansas City next year.

30. Cable’s Entry • Some success with “Digital Voice” due to “bundled services” • For every 2 wired systems lost, Cable picks up one • Tremendous growth in Broadband

31. VoIP

32. Issues for Alarms(as presented in 2007) • Pass alarm DACT signal formats in an undistorted fashion • Ensure Line Seizure is not compromised • The ability to provide for our control panels to "see” a telephone line equivalent (voltage and dialtone) • VoIP and cable/ISP hardware should have sufficient backup power.

33. MFVN in NFPA 72-2010 Manage and maintain their network to ensure service quality and reliability Provide a service that is functionally equivalent to traditional analog phone service (dialing, dial plan, and loop voltage treatment), Provide real-time transmission of voice signals that carry alarm system formats unchanged, Provide both professional installation and subscriber information …….which preserves primary line seizure for alarm system interconnection, and Have disaster recovery plans to address both individual customer outages and widespread events of a catastrophic nature, including network power restoration equivalent to traditional landline telephone services.

34. Recent Events with NFPA 72

35. NFPA 72 • The next edition (2013) will see DACT and a second technology (not two phone lines). • The current (and perhaps final) draft of NFPA 72-2013 requires a 6 hr DACT test rather than 24 hrs. • The 2016 Edition will probably “sunset” DACT altogether. • Digital Cellular, Two-Way radio, Private One-Way Radio and IP will survive as your only communications alternatives.

36. Radio

37. Spectral Efficiency “The number of conversations both voice and data” • This number has doubled every two-and-a-half years for the past 104 years. • CISCO: “Globally, mobile data traffic will double every year through 2014, increasing 39 times between 2009 and 2014.”

38. The Shannon-Hartley theorem • tells the maximum amount of error-free digital data that can be transmitted over a communications channel (e.g., a copper wire, radio channel or an optical fiber) with a specified bandwidth in the presence of noise.

39. Beyond 4G? Haken Eriksson, CTO of Ericsson, says 4G is at that limit. Talk of 5G about 2020 might just be a tweak to 4G The only possible real expansion is more spectrum or “Sub-dividing spectrum”

40. What’s needed? According to the FCC, 500 MHz of spectrum is required by 2014.

41. However, vast amounts of existing spectrum is underutilized or un-used. • The FCC and NTIA* are recovering bandwidth for new cellular applications. • The FCC has issued an “NOI” asking for creative ways to recover spectrum not efficiently being used. *National Telecommunications and Information Administration

42. Current and Future Alarm Industry Wireless Offerings • Digital Cellular • Honeywell AlarmNet • AES Intellinet • SDR and “cognitive radio” • “D” Block

43. Current Situation

44. Today’s Communications Choices • “Traditional” POTS • VoIP including MFVN • Digital Cellular • Private Radio • IP and the Internet

45. Dealer Decisions and Needs

46. Dealer Decisions and Needs • RMR (including stability of RMR) • Control of your business environment • Bandwidth requirements • Costs: Monthly v. Equipment costs • Stability with Technology Changes • Customer Retention • Reliability

47. Cellular Technology Used for Primary and Backup Communications Drop in solution for landline replacement

48. Benefits of Cellular Flexible installations Cost effective landline replacement Increasingly ubiquitous It can support enhanced services

49. Caveats to Using Cellular • Monthly fee • Unavoidable sunsets

50. Challenges to using Cellular • Competitive forces will move cellular to 4G • Current Digital Cellular will be squeezed out in 5, 7, 10 years • 10 years for 3G Then what: 4G,“5G,”……..