Network Funding Model Recommendation May 2012

Our Situation 12,000 IP phones 23,500 network connections 2,100 wireless access points (and still growing!) 125 miles of fiber connecting all 3 campuses 10 gig connection to Internet2 500 meg connection to Internet State-of-the-Art network for higher education 2

Our Situation (cont.) Converged networking blurs distinctions between voice, data, video, and wireless networks and services Funding models created over the past 30 years no longer support how technology is implemented today Mobility technologies continue to evolve rapidly, requiring substantial ongoing funding 3

Our Challenge Create a sustainable network funding model to: Maintain & replace communications infrastructure and equipment on a regular basis Invest in new technologies such as mobility solutions Provide adequate staffing to support the environment Extend and integrate off-campus networking Ensure affordable access to basic services for all and provide premium services to enable world-class research and instruction 4

Our Approach Formed team Analyzed current communications budget Identified “base” communications costs Examined core services Considered trends and best practices Researched university funding models Investigated budget impact for units and schools 5

Our Findings Communications budget and base costs 6

Our Findings (cont.) Core telecomm services identified: Wired and wireless data networking VoIP voice line Voice mail Basic VoIP telephone set Long distance services 7

Our Findings (cont.) Industry trend is to move away from per-port billing University Funding Models: Centrally Funded Consumption Headcount Network access fee Taxation Per-port Student technology fee 8

Conclusion Benchmark survey results and higher education research shows institutions are moving to the headcount model Advantages: Eliminates incentive to save by removing services Simplifies administration and delivery of services Positions funding model for long-term stability 9

Initial Recommendation Move to headcount model was presented to university administration Spring 2012 Implementation required budget reallocation to balance all general fund accounts With current budget climate, this model is not feasible at this time IT was asked to look for alternatives 10

Further Investigation Requirements: Maintain base infrastructure charges Eliminate incentive to remove services Alternative approaches, using hybrid FTE scenarios had significant flaws Cumbersome tracking constraints Annual FTE growth < 100 The flat fee approach, or base infrastructure charge, proved to be a viable alternative 11

Recommendation Implement flat fee funding model beginning July 2012 International long distance will continue to be usage based Base infrastructure charge will increase annually by an inflationary percentage Calling cards for international long distance Current voice, voicemail, data and domestic long distance services become the unit/school base infrastructure charge No credits for disconnect No recurring charges for new service One time cost will increase to $550 12

Impact on Departments and Auxiliaries Base infrastructure charges for 2012/2013 remain fixed as of June 30, 2012 Will enable more accurate budget planning and forecasting Annual billing calculations take into account the entire university’s base while looking at expenses and inflationary increases New facilities will require needs analysis to determine one-time and initial base infrastructure costs 13

Third Party Services External entities will continue to be billed on a per- port basis using a higher rate structure comparable to market service rates Third party services include: Wired and wireless data networking VoIP voice line, voice mail and long distance Basic VoIP telephone set 14

Third Party (cont.) Recurring monthly costs: High speed data Ethernet $45.61 Voice over IP telephone service $23.50 Voice mail $ 3.00 Wireless access point (Non-UofL bldg) $90.00 International long distance – usage based One time costs: Cable runs $100.00 Voice/data activation $150.00 In building moves $ 75.00 15

Benefits Sustainable funding model for core communication infrastructure services Supports move to wireless and mobile technologies Provides a fair and equitable rate structure for all Enables improved budget planning at the department level Simplifies administration and service delivery Positions us to revisit the headcount funding model 16

Next Steps Vet recommendation with appropriate stakeholders Identify and complete any necessary changes to IT billing processes Develop communication plan to inform the university community Continue to investigate other revenue generating options 17

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