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PROTECTION
ONE, INC.

PROTECTION ONE ALARM MONITORING, INC.

May 27, 2005

VIA EDGAR AND FACSIMILE

Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, N.W.

Washington, D.C. 20549

Attention:                 Larry
Spirgel

Kathryn Jacobson

Re:                             Comment Letter Dated April 29,
2005 Regarding Protection One, Inc. and Protection One Alarm Monitoring, Inc.

Form 10-K and Form 10-K/A for the Fiscal Year Ended December 31,
2004 (SEC File Nos. 1-12181-01 and 1-12181)

Dear Mr. Spirgel
and Ms. Jacobson:

On behalf of Protection
One, Inc. and Protection One Alarm Monitoring, Inc. (collectively,
the “Company” or “Protection One”), this letter responds to the letter, dated April 29,
2005 (the “Comment Letter”), from the staff of the Securities and Exchange
Commission (the “Staff”) regarding the Company’s Annual Report on Form 10-K
and Form 10-K/A for the fiscal year ended December 31,
2004.  The numbered paragraphs below set
forth the Staff’s comments together with the Company’s responses and correspond
to the numbered paragraphs in the Comment Letter.

Form 10-K
for the year ended December 31, 2004

Item
1. Business, page 10

1.                                      Provide us with more details of your agreement with BellSouth. Tell us how
you account for the upfront royalties and recurring royalties and where they
are classified in the income statement.
Refer to your basis in the accounting literature.

Response: In October 2001,
Protection One entered into a Joint Marketing Agreement (as amended, the “Agreement”)
with BellSouth Telecommunications (“BellSouth”) and BellSouth Intellectual
Property Marketing Corporation (“BIPMARK”). The Agreement was subsequently
amended on December 1, 2002, April 22, 2003 and November 1,
2004.  Pursuant to the Agreement, BIPMARK has provided the Company a non-exclusive
license to operate its security monitoring business under the name BellSouth® Security Services from Protection One
in the nine state region served by BellSouth.
Protection One operates in the BellSouth region exclusively under this
co-branded name.

All parties to the Agreement are obligated to promote the sale of
security monitoring services using that brand through various internal and
external sales and distribution channels.

The co-branded security alarm monitoring contracts are owned by
Protection One. Bellsouth has no ownership interest in the customer
contracts.  Protection One pays BIPMARK a
one-time nonrefundable fee for each co-branded contract, and, in addition, for
so long as a customer remains active and the Agreement remains in force, a
monthly royalty that is a percentage of the recurring monthly revenue
Protection One earns from the customer.

Because the up-front royalty is a direct and
incremental cost of acquiring the customer contract, the Company defers this
amount as a customer acquisition cost and amortizes these costs over the term
of the contract.  See the Company’s
response to Comment No. 7 for further discussion regarding the deferral of
commissions directly related to the origination of a contract.  The recurring royalty is charged to expense
as incurred and is included in the cost of monitoring and related services
revenues.

Attrition,
page 32

2.                                      Tell us what you mean by “our wholesale base and for accounts, which are
covered under a purchase price holdback and are “put” back to the seller. We
reduce the gross accounts lost...by the amount of the guarantee provided for in
the purchase agreements with sellers.” Tell us how your calculated attrition
rates impact your various accounting policies.

Response: Protection
One defines “purchase price holdback,” in the dealer context (or “dealer
holdback”), as the portion of the purchase price payable by Protection One to a
dealer for alarm monitoring accounts, the payment of which is deferred (or “held
back”) by Protection One as

security for the dealer’s guarantee during a
specified guarantee period of a minimum level of recurring monthly revenue (“RMR”)
from the purchased accounts. Protection One’s typical dealer agreements
provided that Protection One would agree to pay the dealer a multiple of RMR
for a portfolio of accounts (for example, 30X) and hold back a portion of the
purchase price (for example, 3X). At the end of the defined guarantee period
(typically one year), Protection One would examine its records from the
purchased account portfolio and determine the number of accounts and associated
RMR that had canceled service or failed to pay for service within the terms of
the contract (“Lost RMR”).  Protection
One would return or “put” back these accounts and contracts to the selling
dealer and reduce the amount of the purchase price holdback by the product of (i) Lost
RMR from these accounts and (ii) the original RMR purchase multiple.

In determining the number of
lost accounts for attrition calculation purposes, the Company excludes accounts
returned to the selling dealers under these holdback arrangements.  The Company believes this is appropriate
because, by reducing the amount of the purchase price holdback paid to the dealer
and by returning the contracts, the Company ultimately did not purchase the
accounts and therefore should not reflect them as lost accounts.

In the calculation of customer attrition on a consolidated basis, the
Company also makes adjustments to lost accounts equal to the net change in its
wholesale base of accounts during the specified period.  The Company’s consolidated customer attrition
does not impact its various accounting policies because the Company’s
amortization rates are based on lifing studies of account attrition by customer
pool and excludes wholesale accounts.

The Company periodically evaluates the
appropriateness of its estimate of the average customer life of each of its
customer pools, the Protection One Monitoring pool and the Network Multifamily
pool.  See the Company’s response to
Comment No. 10 regarding the Company’s determination of the expected life
of its customers.  As part of this
evaluation, the Company tracks the appropriate attrition rates of each of its
customer pools to determine whether the actual attrition experience is aligned
with the Company’s expectations when last evaluating the average customer
life.  The Company believes that,
although its Protection One Monitoring pool customer attrition rates have been
improving, the current amortization periods and methods remain appropriate.

Results
of Operations

Protection One
Consolidated, page 39

3.                                      Tell us how you were able to reduce insurance costs despite various claims
and matters of litigation, including certain settlements with participation by
your insurance carriers.

Response: The
difference in insurance costs between fiscal years 2004 and 2003 arises
principally from a change in the cost of Directors’ and Officers’ (“D&O”)
liability insurance, resulting from a lower coverage limit as well as reduced
cost per dollar of insurance.  The
Company’s D&O policy year until February 17, 2004 was August 1 – July 31.  Effective February 17, 2004, the Company’s
D&O policy year changed to February 17 – February 16.

During 2002 and 2003, the Company was an 87%
owned subsidiary of Westar Energy, Inc. (“Westar”) and participated with
its parent in the purchase of D&O coverage with $155 million of  limits for the policy year 8/1/02 – 7/31/03
and $120 million of limits for the policy year 8/1/03 – 7/31/04.  During this time period, prices for D&O
insurance increased tremendously in the wake of various corporate
scandals.  The Company’s premium per $1
million of limits for the

policy year ended 7/31/03 was more than four
times the premium per $1 million of limits for the policy year ended
7/31/02.  The Company’s cost per $1
million of limits for the policy year ended 7/31/04 was more than two times
higher than for the policy year ended 7/31/03.
According to the Company’s insurance advisors, the average rate per $1
million limit of D&O public placements from January 2003 to April 2003
(when the Company was in the market for insurance) increased by 221% from the
prior year.

In February 2004, Westar sold its
interests in the Company to affiliates of Quadrangle Group LLC (“Quadrangle”),
a private equity firm.  In connection
with the sale, the Company’s coverage under the policy owned by its former
parent, Westar, ended.  For the new
policy year February 17, 2004 – February 16, 2005, the Company
purchased $35 million of limits that reflected, in part, the reduced value of
its public equity.  The cost per $1
million of the new policy was also less, by almost 50%, than the cost per $1
million for the policy in effect through February 16, 2004.

The cost of the Company’s policy for the
policy year ending February 17, 2005 did not appear to be affected by its
settlement, in late 2002, of a class action litigation involving purchasers of
the Company’s stock during the period February 10, 1998 - February 2,
2001.  Nor was it materially affected by
other pending claims, the most significant of which pre-dated the Company’s
current management.

The combination of these factors resulted in
lower expense for D&O insurance in fiscal 2004.

Form 10-K/A
for the year ended December 31, 2004

Consolidated Statements of Operations and
Comprehensive Loss, page 5

4.                                      As required by SAB Topic 11:B, revise your presentation to either 1)
reclassify the depreciation and amortization applicable to cost of revenues, or
2) remove the caption gross profit and indicate the amount of applicable
depreciation and amortization that is excluded from cost of revenue.

Response:  In
its Form 10-Q for the quarterly period ended March 31, 2005,
the Company removed the caption gross profit and indicated in the line item for
total cost of revenues that the total cost of revenues is exclusive of
amortization and depreciation expense shown separately in operating
expenses.  The Company intends to follow
this presentation in its future filings with the Securities and Exchange
Commission.

1.  The Company, page 8

5.                                      Provide us with an update of your analysis of SAB Topic 5:J.

Response:
The
Company submitted a “pre-clearance” letter, dated April 22, 2005 (attached
hereto as Exhibit I), to the Office of the Chief Accountant, and on May 10,
2005, submitted a

“confirming” letter (attached
hereto as Exhibit II) to the Office of the Chief Accountant confirming the
Company’s understanding that the Staff would not object to (1) the Company
applying the push down basis of accounting as of February 8, 2005, the
date on which Quadrangle acquired “substantially all” of the Company’s common
stock, and (2) the Company’s reporting on such new basis of accounting on
a prospective basis.

(b) Revenue
Recognition, page 9

6.                                      Tell us your basis in the accounting literature for deferring revenues
from system installation and equipment upgrades in connection with residential
monitoring service contracts.  Provide us
with your detailed analysis of EITF 00-21.

Response:  The Company believes arrangements with its
residential customers contain multiple revenue-generating activities.  As suggested in SAB Topic 13.A.1, the Company
first looked to the guidance provided in EITF 00-21 to determine if the
multiple revenue-generating activities consist of more than one unit of
accounting.

The Company evaluated the revenue generating
activities in its arrangements with its residential customers in conjunction
with the guidance in EITF 00-21 and determined that none of them should
be considered a separate unit of accounting.

The Company identified the following three
revenue generating activities in arrangements with its residential customers:

1)              A
nonrefundable initial fee to install and activate the basic system at the
customer’s residence. The Company retains title to the basic system.

2)              A
three year monitoring service contract.

3)              In
most cases, the customer purchases additional security system components (such
as an additional key pad, for example) to be installed in addition to the basic
package for an additional fee.  The
Company does not retain title to the additional components and only sells the
additional security system components to active customers under an existing
monitoring contract.

To determine whether the arrangement consists
of more than one unit of accounting, the Company evaluated paragraph 9 of

EITF 00-21, which states:

“In an arrangement with multiple
deliverables, the delivered item(s) should be considered a separate unit of
accounting if all of the following criteria are met:

a. The delivered item(s) has value to the
customer on a standalone basis. That item(s) has value on a standalone basis if
it is sold separately by any vendor or the customer could resell the delivered
item(s) on a standalone basis. In the context of a customer’s ability to

resell the delivered item(s), the Task Force
observed that this criterion does not require the existence of an observable
market for that deliverable(s).

b. There is objective and reliable evidence
of the fair value of the undelivered item(s).

c. If the arrangement includes a general
right of return relative to the delivered item, delivery or performance of the
undelivered item(s) is considered probable and substantially in the control of
the vendor.”

The Company considers the initial fee
described in (1), above, to be an “installation and activation fee” which is
additional arrangement consideration to be allocated.  The installation and activation of the basic
system and the sale of additional security system components, if any, are
delivered first, followed by the monitoring service (which is provided over the
three-year period of the arrangement).

The Company does not believe that the sale of
additional security system components meets the criteria of paragraph 9(a) of
EITF 00-21, because the Company only sells the additional components to
customers with active monitoring contracts and believes the same to be true of
its competitors.  Further, the Company
does not believe there is any resale value in the additional components because
these components have no utility to the customer other than when installed in
the residence and connected to the installed security system.  Furthermore, the Company would not install
residential system components other than those sold to a customer in
conjunction with a monitoring contract.

The Company believes deferral of revenue is
appropriate with recognition of revenue over the periods that the fees are
earned because it believes the arrangement with its residential customers is
analogous to the following example detailed in Question 1 of SAB Topic
13.A.3(f):

“A registrant requires a customer to pay a
nonrefundable “activation fee” when entering into an arrangement to provide
telecommunication services.  The terms of
the arrangement require the customer to pay a monthly usage fee that is
adequate to recover the registrant’s operating costs.  The costs incurred to activate the
telecommunication service are nominal.”

The Staff’s Interpretative Response states,
in part:

“Unless the up-front fee is in exchange for
products delivered or services performed that represent the culmination of a
separate earnings process, the deferral of revenue is appropriate…The terms,
conditions and amounts of these fees typically are negotiated in conjunction
with the pricing of all the elements in the arrangement, and the customer would
ascribe a significantly lower, and perhaps no, value to elements ostensibly
associated with the up-front fee in the absence of the registrant’s performance
of other contractual elements.  The fact
that the registrants do not sell the initial rights