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HomeMy WebLinkAboutTR-104-94 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON REPORT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE File# Date: MONDAY, DECEMBER 12, 1994 Res. #L20 SOS- 99 Report#:_ TR-104-9*ile#: By-Law# Subject: TELEPHONE SYSTEM UPGRADE Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1 . THAT Report TR-104-94 be received; 2 . THAT the single payment proposal with the voice processing option offered by Bell Canada for a total approximate bid price of $25, 500 . 00 (plus taxes) plus options if required, be accepted; 3 . THAT the required funds be provided for in the 1995 Administration Capital Budget; and 4 . THAT pre-budget authorization for this expenditure be approved. BACKGROUND AND COMMENT Effective January 1, 1995, our current telephone system will not support the upcoming changes in the North American Numbering Plan. The format for both area codes and central office codes (first three digits of a local telephone number) will be changing such that our telephone system will no longer be able to distinguish between a local and a long distance call by examining the first three digits that are dialled. i The current Mitel telephone system was acquired in 1986 and represents an approximate initial investment of $94, 000 . 00 . I This acquisition was through a fixed lease contract at the single payment option, which is basically a prepaid lease agreement . Consequently, we do not own the equipment . Upon expiry of our 54 PAPER t mss is reweu e»r pecvecco pnrcn REPORT NO. : TR-104-94 PAGE 2 TELEPHONE SYSTEM UPGRADE lease which is August 1996, we would either have to return the equipment or exercise the buy out option at 150 of the original purchase price . The prepaid lease agreement is beneficial in that interest charges are avoided as well as 150 of the cost (buy out option) is usually never paid as by the time the lease has expired the equipment is obsolete . This system has been operating at capacity for the past couple of years and had previously been under consideration for upgrade. However, due to budget restraints any proposed changes were postponed. In consideration for the lack of notice provided to existing Mitel customers, Bell Canada has offered a substantial discount for the upgrading of the telephone system compared to the prices quoted in 1992 . Their proposal provides for most of the existing equipment to be utilized with the exception of the software and the main console (switchboard) which will need to be replaced. The proposal, which is open for acceptance until December 31, 1994, provides for 2 options which are summarized as follows : SINGLE PAYMENT OPTION STANDARD LEASE PREPAID LEASE AGREEMENT 43 mo. term) I 1994 Approx. 1994 1992 OPTION 1 SX200 Digital Upgrade $15, 616 . 35 $22 , 000 . 00 $420 . 86/mo Maintenance - per month 40 . 15 86 . 00 40 . 15 OPTION 2 SX200 Digital Upgrade with $25, 500 . 00 $43 , 000 . 00 $756 . 08/mo Voice Processing System Maintenance - per month 40 . 30 168 . 00 40 . 30 Programming costs - approx. $4 . 00 per extension * Taxes extra to the above REPORT NO. : TR-104-94 PAGE 3 TELEPHONE SYSTEM UPGRADE Acceptance of the standard 43 month lease agreement would bring the total expenditure for the upgrade to the SX200 with voice processing to $32, 511 .44 and without voice processing to $18, 096 . 98 . The buy out factor is applicable upon expiry of the agreement regardless of the type of lease chosen. For comparison purposes two other firms were also requested to quote on an upgrade that would utilize as much of the existing equipment as possible . Tel-e Connect Systems have declined to quote as they were only able to meet our requirements by replacing the entire system and therefore would not be competitive . A proposal was received from Advantage Telecommunications Systems I Inc . , as follows : System Upgrade $41, 000 . 00 System Upgrade with Voice $51, 000 . 00 Processing * Taxes and monthly maintenance extra to the above The system from Advantage Telecommunications Systems operates on local business lines as compared to the Bell Canada System which operates on PBX lines . The use of local business lines over PBX lines would result in an approximate monthly savings of $600 . 00 . However, government regulations with respect to billing will be implemented in the first quarter of 1996, which will make the charges for both PBX lines and local lines the same . In addition, difficulty occurs with the management of off premises extensions when local business lines are utilized. I As Council may be aware, the Region of Durham have recently upgraded their telephone system at their Social Services Department . Their upgrade, which was provided by Bell Canada, included the installation of fibre optic cables which can also % 56 REPORT NO. : TR-104-94 PAGE 4 TELEPHONE SYSTEM UPGRADE result in monthly savings for the use of lines . However, fibre optic lines are currently not available in Bowmanville, nor are they planned for at least the next two years . In addition, fibre optic lines are only cost effective if there are at least 25-30 different telephone lines operating from the system. The telecommunications industry and regulations are changing so rapidly that it is difficult to project what other changes may occur. However, Bell Canada have projected that the upgraded system will provide us with sufficient capacity for approximately the next 5 years . In addition, by acceptance of this proposal, any applicable cancellation charges of our original agreement are waived, and support of our original system is extended by an additional 5 years at no extra cost . This proposal also provides the municipality with the opportunity to install a "voice processing" system at a greatly reduced cost, which can be installed in many configurations to suite the needs of the user. For example, after hours information on hours of operations and emergency numbers, notice that switchboard lines are currently busy, and in situations to take a message for absent individuals to avoid the phone ringing continuously with no answer. In order to take advantage of the pricing offered by Bell Canada, a commitment for the equipment must be made no later than December 31, 1994 . Therefore, it is recommended that the required funds be provided in the 1995 Capital Budget and that pre-budget authorization for the expenditure of these funds be provided. After further review and analysis by Purchasing of the bids i submitted, staff recommend that the proposal by Bell Canada for the single payment plan with the voice processing option be accepted. �l f REPORT NO. : TR-104-94 PAGE 5 TELEPHONE SYSTEM UPGRADE As voice processing may be designed to the individual users needs, the specifications may change slightly once the actual order is placed due to optional features that may be required. Therefore, the total funds requested in the recommendation are noted as approximate and may vary slightly once the order is placed. Respectfully submitted, Reviewed by, arano, H.BSc . ,AMCT. , W.H. Stockwell, Treasurer Chief Administrative Officer MM*LB*ld ! r i i i i I i