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POLICY Hl 7/28/04 ITEM: Consideration of an IP Telephony System SUBMITTED BY: Heather Worthington, City Administrator REVIEWED BY: Roland Olson, Finance Director Mary Shea Kodluboy, Deputy Clerk Roger Knutson, City Attorney EXPLANATION: Summary: In 1997, the city purchased the current phone system, manufactured by Inter-Tel. This system has begun to show signs of its age, and has become increasingly expensive to maintain. Staff began discussions with the City of Roseville last year regarding the installation of a new IP Telephony system, which would operate over the fiber network that has been installed between most of the communities in Northern Ramsey County. Because this system does not rely on land-lines for communication, it costs approximately $5,000 less to operate each year. • Staff has prepared an analysis of the IP Telephony system, and found that the capital costs associated with this installation could be recovered in approximately 24 months of service due to the savings represented in toll charges on the existing phone system. In the 2004 CIP Budget, $8,000 was allocated for the replacement of the city's phone system. The total capital cost of this installation is estimated at $9,980, with an estimated cost of $7,500 per year in operating costs. The current system cost the city $16,790, and costs an estimated $11,199 per year to operate. Since we will begin saving money immediately on this change- over, staff estimates that the additional $1,980 over the budgeted amount can be recouped on toll charges, which would amount to approximately $3,300 over afour-month period. ATTACHMENT: • IP Telephony Analysis on pages • IT Services Addendum on pages ACTION REQUESTED: • Discussion • Consideration of IP Telephony Proposal • Motion to approve Service Addendum and installation of IP Telephony system. •