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  CommServ > Reference > Background > Replacement Telephone System Cost Estimates

Replacement Telephone System Cost Estimates

Presented to the Telephone Advisory Committee at the 1/26/96 Meeting

Assumptions for the Estimates

  1. The expenses listed in the spreadsheets are estimates and should be used only for the relative comparison between options. Actual expenses are expected to vary from these estimates as a result of competitive procurement of the replacement telephone system.
  2. All prices for switching systems or services are today's costs. These costs could vary considerably if the procurement occurs several years in the future.
  3. The replacement of the existing GTD4600 would occur in the third quarter of 1997, after the capital costs for equipment associated with the current telephone system are fully amortized.
  4. The costs for the Monolithic Telephone System were provided in writing by (company name deleted). The acquisition cost of the system was amortized over 10 years. The annual maintenance cost was estimated at 80% of the Distributed System cost because (company name deleted) did not provide a maintenance quote.
  5. The costs for the Distributed Telephone System were provided verbally by (company name deleted), including a specific quote for annual maintenance. The acquisition cost of the system was amortized over 10 years.
  6. Both the replacement PBX systems were sized at 5,600 lines in order to provide initial growth capacity for 3 years.
  7. The costs for Centrex were provided in writing by GTE, and are based upon a minimum quantity of 100 lines for three (3) years.
  8. Because the PBX price quotations did not separately list the cost of labor and materials, the sales tax has been estimated as applicable to 70% of the installed purchase price.
  9. The cost of a new switch room (for the Monolithic System) was estimated at $1,500,000 and financed for 10 years at 7.75% APR. Both the principal and interest loan repayment costs are the average annual expense over the 10 year life of the loan.
  10. The cost of remote switch room preparation and outside plant cable rearrangements (for the Distributed System) was estimated at $1,500,000 and financed for 10 years at 7.75% APR. Both the principal and interest loan repayment costs are the average annual expense over the 10 year life of the loan.
  11. For the Distributed System, 2.0 FTE switch room personnel were estimated because of the requirement to perform work at 10 remote sites instead of one main site.
  12. For the Centrex system, 0.5 FTE was retained because of the continuing requirement to extend new GTE service into the campus, and to perform moves and changes on existing telephone lines.

Cost Estimates

														 GTD-4600  Monolithic  Distributed     GTE
														 (current)   System      System      Centrex
						Estimated purchase cost of         
						  replacement telephone system          $0 $2,588,816  $2,937,221          $0 
						Estimated one-time charges        
						  for installation                      $0 $1,500,000  $1,500,000    $144,385 
								
						Annual Expenses        
								
						Personnel salaries & benefits      $44,605    $44,605     $89,209     $22,302 
						Average annual principal for        
						  switch purchase loan            $722,099   $258,882    $293,722          $0 
						GTE Basic  Services        
						  (PBX trunks & DID numbers)      $213,480   $213,480    $213,480  $1,169,974 
						Vendor Maintenance                $321,702   $403,737    $457,898    $187,094 
						Average annual interest for        
						  switch purchase loan             $85,955   $122,589    $139,087          $0 
						Annual finance charges for        
						  one-time charges                      $0   $221,030    $221,030     $55,774 
								
						Total Annual Expenses           $1,387,841 $1,264,323  $1,414,427  $1,435,144 
								
						Average monthly total expense     $115,653   $105,360    $117,869    $119,595 
						Average number of phone lines        
						  installed in 1995/96               4,402      4,402       4,402       4,402
								
						Average expense/line/month          $26.27     $23.93      $26.78      $27.17 
								
						Estimated change from        
						  current system                     $0.00    ($2.34)       $0.50       $0.90 
						Percent change from        
						  current system                     0.00%     -8.90%       1.92%        3.41%

						

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