SIC 7382 Security Systems Services

SIC 7382

This classification includes establishments primarily engaged in monitoring and maintaining security systems devices, such as burglar and fire alarms. Establishments of this industry may sell or lease and install the security systems that they monitor and maintain. Establishments primarily engaged in the sales and installation, or installation only, of such devices are classified in SIC 1731: Electrical Work.

NAICS CODE(S)

561621

Security Systems Services (except Locksmiths)

INDUSTRY SNAPSHOT

Simple on-site burglar alarms, which may deter an intruder with their noise and attract the attention of a passerby, are usually insufficient for the higher security needs of many businesses and some residences. Security systems services provide added security by continuously monitoring property alarms for multiple clients through their own off-site central station. Accordingly, these companies often are referred to as central stations.

Central station-monitored alarms, when triggered, send a silent alarm signal to the station through a leased telephone line, a coaxial cable (television) line, or a reserved radio frequency. Unless contacted by the subscriber within a few minutes to cancel a false alarm, the station then calls the police, possibly dispatches its own guard, and notifies the client. The monitoring agreement may involve keeping the central station notified of the business's regular hours and when the alarm is turned on or off, thus sharing the responsibility for and the control of operating the alarm system.

Most of the commercial alarm monitoring businesses deal with burglar alarms. Only a small number of police stations are willing to directly monitor alarm systems themselves because of the high incidence of false alarms and limited police resources. Alarm systems connected directly to police stations usually only exist when no private central station is operating within a particular area. Private monitoring companies are considered to have greater security advantages than police station monitoring systems. Fire alarm systems, on the other hand, generally are monitored directly by fire departments, because false alarms occur less frequently.

Burglar alarm systems typically include both door and window trip switches to detect break-ins and sensors to detect motion. Both kinds of devices are linked by wires or short-range radio transmitters to a central console, where the system is switched on or off. Different detection systems provide varying levels of security. Alarm systems are rated by Underwriters Laboratories (UL), an independent product testing organization that serves insurance underwriters.

UL not only tests alarm equipment but also inspects and rates the firms installing and monitoring the equipment. In addition, UL certifies alarm service companies upon approval. Central stations are graded according to the length of time they take to dispatch a guard to the property and whether the line that runs from the property to the central station is protected from electronic tampering. Other than UL's services, the industry is relatively self-regulated. Not every state requires the licensing of alarm installers.

Central stations often install the alarm systems, a service the manufacturer of the system usually does not perform. As for the maintenance of alarm systems, installers typically provide a one-year warranty on parts and labor. Thereafter, annual maintenance contracts usually cost around 10 percent of the original installation price.

ORGANIZATION AND STRUCTURE

There are approximately 2,000 establishments in the United States engaged in security systems services. These include both private and publicly held companies and a number of unincorporated individual proprietorships or partnerships. The majority of firms concentrate on the monitoring of burglar alarms. Most provide only local service, although several are national in scope. Central stations serve both residential and business clients and occasionally specialize in particular types of clients. Many central stations are specialized in the business of security service monitoring, but some companies also offer on-site security guard services, other electrical equipment installation contracting, and other building maintenance activities, such as janitorial services.

BACKGROUND AND DEVELOPMENT

In the 1920s, crime increased significantly in the United States, and burglar alarm systems were devised as a response. Originally, most alarms were monitored directly by the police, but police stations gradually...