1. One security firm per city or region, in which case, you only have one choice.
Although, ideally in a free market, there will be multiple competitors, there's definitely a possibility that in rural towns only one option exists. But if that one runs amok, there's no reason another security firm couldn't start competing & take its place.
2. Multiple security firms per region, but at reduced density per firm. That of course means a slower response time.
In your example, we have ~20% the density. That would be a slower response time, as the location of events to respond to is random and unpredictable.
Let's say in the police right now there are 100 people for every police officer. If that were to ever move to the free market w/ 5 companies, there would still probably be 100 people to a security guard. But those security guards would be divided into 5 different companies. You make it sound like if you were to call the police, the entire police force would show up. And depends on the service you pay for (if you pay at all). Some people may pay more & get a security guard for every 20 members (increasing response time). Others may get minimum coverage and get a security guard for every 200 members (reducing response time). Some may think their shotgun, safe room, dog, or electric fence is enough.
