1. City Hall Telephone System ProposalCi*ty Kali*
spell
Post Office Box. 1997 - Kalispell, Montana 59903--1997 - Telephone (406) 758--70()0 Fax - (406.)
758-7758
REPORT TO: Honorable Mayor and City Council
FROM: Erika Hess, Information Technology Administrator
James H. Patrick, City Manager
SUBJECT: IP Telephony
MEETING DATE: October I, 2007
BACKGROUND:
The current Centrex system has been in place since the fall of 1994. The Centrex system
is maintained by the telephone company, with no additional equipment other than Centrex
phones at the City. The Centrex system provides call transfer, call pickup, three party
conference calling, last number redial, and four digit dialing. Voicemail is available for a fee for
each line and is accessed directly from the users' phone or calling a number to retrieve voicemail
from any phone. All maintenance and system adjustments are preformed by the telephone
company, resulting in service fees every time the City moves a department to a new location or
adds a new employee. The Centrex system has met the City's needs appropriately in the past,
but has since become unsuited. The City has an opportunity to take advantage of a technology
called Internet Protocol Telephony to replace the existing Centrex phones and lines.
An IP Telephony System carries the voice traffic on a circuit. A Voice over Internet
Protocol (Vol?) carries voice and data traffic on the same circuit with a direct connection to the
Internet. At this time, the City is asking to implement an IP Telephony System. The IP
Telephony System includes all the necessary hardware to operate the IP Telephony System at the
City locations. The calls are actually processed on new circuits used to carry the voice traffic
between the outside world and our different Kalispell locations. These circuits would incur a
recurring monthly charge.
The same basic functions that are available in the Centrex system would be available with
the IP Telephony system. Added functionality would be one key difference between the two.
Voicemail could be accessed via a computer instead of only a phone and would be available for
every phone line. If a phone needed to be moved to a new location in the City, the phone would
be unplugged, moved, and plugged in. The IT Administrator would configure all changes and
we would no longer incur service charges from the telephone company for adding or changing
features of the system.
Cerium Networks Inc. with Cisco Systems Inc. equipment is the selected proposal by the
City's RFP and selection process. The Cisco IP Telephony solution presented allows the City to
meet today's telephone requirements and build a solid foundation for future growth. The Cisco
solution is scalable and will allow changes to the phone system to be managed internally by
Erika.
The City of Bozeman moved to a Cisco VoIP solution seven years ago and has been
operating on the same hardware ever sense. As Bozeman grew over time, additional hardware
was purchased to support the new locations and services were added to support the growth. The
City of Missoula implemented a Cisco VoIP system in 2006. Montana State University in
Billings and the University of Montana in Missoula also operate Cisco VoIP solutions.
The cost of the Centrex system was the motivation behind reviewing the City's phones.
The average monthly cost of the Centrex lines in the 2007 Fiscal year was $8260. This average
monthly cost does not include any charges the City would incur to facilitate the building moves
we will experience. The new IP phone system includes a phased implementation schedule to
include the building moves. The new IP phone system includes all new phones, installation and
setup of the equipment, training on the new system, wireless access in the new City Hall, and
mobility for our users who demand it with wireless phones, similar to standard cordless phones
you may be used to.
The new phone system recurring monthly cost is $9219 for first three years and the
recurring monthly cost during the fourth year is $8321. This cost includes a four year lease of
equipment, warranty, and recurring charges from the telephone lines we'd leave unchanged at
this time. After the lease is paid off, we will purchase the equipment with a $1 buy out option.
Our recurring monthly charges will be reduced to $4097, saving the City $4,000 a month.
However, this amount could change because we are constantly adding new lift stations and the
intention would be to bring the Waste Water Treatment Plant onto the IP Telephony system.
RECOMMENDATION: The City Council considers contracting with Cerium Networks,
Inc. using Cisco Systems Inc. products to implement an IP Telephony System..
FISCAL EFFECTS: The cost of the IP Telephony System is $184,268. The monthly costs of
the IP Telephony system are higher than the current phone costs, but the current monthly costs
don't include the costs associated with all of the City's planned moves in the coming year. The
Return on Investment may not be seen in year one, but after the four year lease is paid off, we are
looking at a 50% price reduction in phone system costs.
Respectively submitted,
Erika Hess
Information Technology Administrator
mes atnck
City Manager