The Northern Territory government plans to introduce IP telephony as part of an all-departmental communications and network overhaul valued at around $140 million over five years.

The contract includes all voice, data, and Internet services for about 16,000 users with 15,000 TDM phones on a PABX network and 3200 mobile phones.

Brad Irvine, NT Department of Corporate and Information Services director of IT services management, said the successful vendor will provide a range of data service capacities to 250 sites and 180 schools within the Northern Territory and the remote sites may be fully integrated into the voice and data network.

"We feel we've picked a good time to go to market with VoIP which is maturing and is a leading option for delivering more value for money in services," Irvine said.

"Also, our consultants advise us that this is the way of the future."

Irvine believes this is a unique installation opportunity and hopes the result will yield new benefits in the flexibility of the NT government's communications infrastructure.

"It's a five-year contract valued at about $28 million a year," he said. "We are uncertain of the cost model with regard to capital and operation costs but we will go with the best deal. Hopefully people will be creative and propose a number of options."

Irvine said cost reduction is a driving factor for the move to VoIP as call routing is attractive for getting away from carrier charges, especially over long distances. An existing contract with Optus which expires on June 1, 2005 is also providing impetus for the move.

"The new contract applies across all 19 agencies of government including large departments like education, health, and the Police and will include fixed and mobile telephony," he said.

Existing communications infrastructure consists of PABXs ranging from one to eight years old and the department has looked at IP telephony in the past, but believes now is the right time as the technology has matured.

When asked about the timeframe for the overhaul, Irvine said it is reasonable to expect IP telephony to be phased in over time and will have to be a realistic change but "change for change's sake won't happen".

"There are mixed views about IP telephony but the average user is unlikely to give it a second thought," he said. "One of the key challenges will be user acceptance as managing settings can be daunting. Users just want a telephone that works."

Irvine said it is also important to make sure the new technology is accounted for as there may be a cost increase for total bandwidth requirements.

IP soft phones may also be implemented but that is seen as a small component of the rollout. The department does not have a preferred supplier for the contract and expects to decide this by late February next year.