1. City Hall Telephone System ProposalCity of Kalispell
Post Office Box 1997 W Kalispell, Montana 59903-1997 - Telephone (406)758--770€1 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 22, 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 met the City's needs appropriately in the past, but has
since become unsuited. The City has an opportunity to tape advantage of a technology called
Internet Protocol Telephony to replace the existing Centrex phones and lines. The goal of the IP
Telephony system. would be to provide a cost saving to the City of Kalispell once the equipment
is paid off.
It is important to note the City of Kalispell is looping to purchase an IP Telephone
system. Century Tel proposed a Nortel solution and Cerium Networks proposed a Cisco
solution; both solutions would use circuits that will be referenced as services from the Telco
provider, Century Tel.
Cerium Networks Inc. with Cisco Systems Inc. equipment was 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 current 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. The
average monthly cost does not include any charges the City would incur to facilitate moving all
the departments to the new City Hall.
The proposed Cisco phone system will be contracted under a 4-year lease with a
recurring monthly cost of $9188 for the first three years and $8200 for the fourth year. The 4-
year lease includes equipment, warranty, service costs to connect the four City locations, and
recurring charges from the telephone lines that would not yet move to the new phone system.
After the lease is paid off in 4 years, we would purchase the equipment with a $1 buy out
option. When the City owns the Cisco proposed system the recurring monthly charges
would be reduced to $4,763, saving the City almost $4,000 a month from our current monthly
phone costs.
The City Shops, Wastewater Treatment Plant, and all the lift station phone lines would
not be moved to the IP Telephony System. The amount the City would pay changes because the
City adds new lift stations and will open new fire stations. The intention Would be to bring the
Wastewater Treatment Plant onto the IP Telephony system at a later date.
The comparison between the Nortel and Cisco systems will be presented during the work
session. Requested information was not returned with enough time to review in time for the
Council packets.
The City of Bozeman moved to a Cisco VoIP solution in 2001 and the original equipment
is still being used today. As Bozeman grew over time, additional phones were 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. Cerium Networks has
experience with other municipalities and has setup Cisco VoIP solutions for the cities of Walla
Walla and Richland, Washington.
RECOMMENDATION,* Staff recommends The City Council contract with Cerium
Networks, Inc. using Cisco Systems Inc. products to implement an IP Telephony System.
FISCAL EFFECTS; The cost of the Cisco IP Telephony System is $184,268; however this
amount does not include the financing charges. The monthly costs of the IP Telephony system
are higher than the current phone costs. The cost of moving all the current Centrex lines would
only add to the monthly costs. The Return on Investment may not be seen in year one, but after
the four year lease is paid in full, we are looking at a 50% price reduction in phone system costs.
Respectively submitted,
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Erika Hess
Information Technology Administrator
James H. Patrick
City Manager