HomeMy WebLinkAboutBudget Impact AnalysisDetailed Explanation of Budget Impact Analysis
These services will be utilized to implement an alternative solution to the current leased lines from AT&T
that are utilized by the City for voice and data connectivity. There are two scenarios where this solution
will be utilized: (1) replacement of existing leased lines from AT&T or other carriers, and (2) new
connections for backup purposes or new facilities that the City brings online.
The worst case Return on Investment ("ROI") scenario compares a wireless point-to-point link with a
1.5Mb Frame Relay circuit from AT&T. The City currently pays $342.75 monthly for a Frame Relay
circuit from AT&T to a City facility. This circuit would be replaced with a point-to-point wireless
installation for a one-time cost of equipment ($1526.00 for two wireless radios), one-time cost for
installation and configuration ($2480.00 per this bid), and a yearly ongoing maintenance of $590.00.
With the current telecom set-up, the City spends $8226.00 in two year period for the leased line
service from AT&T. The wireless solution that will be provided by the recommended bidder will
require the City to spend the following: (1) $4006 in one-time costs; and (2) $1180 in ongoing
maintenance costs, for a total of $5186.00. The net savings in only two years for a single typical
location is $3040.00. After the first two years, the ongoing savings is $3523.00 per year. The City
currently has 51 of these existing circuits which could potentially be replaced with the wireless solution;
each will be individually evaluated for potential implementation of this alternative solution, although not
all of these will be good candidates. The comparison here is based on a 1.5Mb Frame Relay circuit vs. a
20Mb wireless point-to-point solution, which represents a 13x speed increase in the wireless as compared
to the existing Frame Relay circuit. This is the worst-case ROI scenario; when higher -speed links are
replaced the ROI breakeven point is less than one year as the cost for the higher speed circuits is
significantly higher.
In the case of higher speed l OMb links, the City currently pays $630.00 monthly for a l OMb Metro -E
circuit from AT&T. Again, this would be replaced (or in the case of a new install, we might opt for the
wireless solution instead) with the wireless solution for a one-time cost of $4006, plus ongoing
maintenance of $590 per year (the same solution as above). In one year, the leased solution from AT&T
would cost $7560, while the wireless solution would cost $4596, for a savings of $2964 in year one. The
ongoing yearly savings would be $6970 for each following year.
The following table illustrates the number of months after which the wireless solution generates a cost
savings vs. each of the various AT&T leased circuits it could possibly replace:
Leased Solution
Wireless Solution
MRC
Maintenance
ROI
Description (monthly)
One-time (yearly)
(months)
Frame Relay 1.5Mb
342.75
4,006.00
590.00
14
Metro -E 2Mb
360.00
4,006.00
590.00
13
Metro -E 4Mb
375.00
4,006.00
590.00
12
Metro -E 8Mb
510.00
4,006.00
590.00
9
Metro -E lOMb
630.00
4,006.00
590.00
7