Reverse 911

This should be technically straight-forward to dial phones and send SMS. It could be a tough sales cycle for a start-up. A big name like Honeywell with an established sales force may be helpful to make the sale.

Honeywell (NYSE:HON - news) recently upgraded a system used by schools to meet the needs of universities in alerting students to potential danger. The Instant Alert Plus technology can make 100,000 30-second phone calls and send 125,000 text messages within 15 minutes.

While that may be more than enough to cover a campus from students to faculty, employees and parents, the system could eventually cover much larger communities or entire cities.

"The good thing is this a very scalable system," said Taylor. "I'm sure we could add capacity if we had the need to do one million (alerts) in 15 minutes."

Such mass communication methods can be used for anything from notifying chemical plant employees of a leak to mundane matters like informing parents about a school meeting.

"In a Michigan school district, it was used to make parents aware that a man was posing as a policeman with a badge and walking up to students and asking to rifle through their schoolbags," Taylor said.
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Instant Alert Plus product page.

This link from a county describes their use of Instant Alert Plus.
The document mentions:

2007 National Incident Management System (NIMS) requirements. As noted in the 2006 requirements under the Public Information System Section, localities are required to “Implement processes, procedures and/or plan to communicate timely, accurate information to the public during an incident through a joint Information System (JIC) and Joint Information Center (JIC)”.

FEMA paper on reverse 911.

Cost $35,000.
Cost depends on the size of the user's audience or citizen base. The system starts at $10K and goes up, based on the scope of the project.
Denver paid Qwest Communications International $57,000 for
installation of an emergency notification system and $13,000 per
month. They also pay 23 cents per call upon activation. The population
in Denver is 554,000. (Source: Cellular location system developed. By
Steve Calk. Rocky Mountain News. June 3, 2002.)
Code Red charges $15,000 to install its system.
The CityWatch system from Avtex for Osceola County cost $26,400.  CityWatch maintenance costs  the City of Waukegan $5,134.

"Market size, health and vendors in the "reverse 911" marketplace" on Google answers.

Private service that provides alerts to consumers for $99/year.

AlertFind - an employee emergency notification system.  Charges from $500 per month.