"We're in the throes of deploying a Session Initiation Protocol (SIP) layer," NEC's executive general manager John Norton told ZDNet Australia. SIP is the leading signalling protocol used for VoIP and lies at the heart of the convergence of voice and data onto one network.
The executive said the upgrade was being driven by its customers, who were demanding more from broadband services than basic Internet data carriage. NEXTEP, which owns ADSL infrastructure in around 95 telephone exchanges nationwide, wholesales services to primarily business-focused Internet service providers (ISPs) such as Pacific Internet.
Norton said the upgrade involved deploying of new network equipment to manage VoIP traffic and where required, distribute that traffic back into the public switched telephony network. In addition, he said, upgraded quality of service features were needed to ensure voice was prioritised ahead of data in the network.
NEXTEP's moves represented the wider trend of ISPs seeking to upgrade their offerings to customers, according to Shara Evans, managing director of telecomms analysis firm Telsyte.
"Service providers around the world are looking to add services, and VoIP is a natural add-on service," she said.
"There are good economic reasons for it," added Evans. "If you can sell two or more services to a customer, then your average revenue per user (ARPU) goes up. Secondly, it becomes less likely that users will churn away from your service easily.
But the analyst said such bundling of services was nothing new for the telco market. "Certainly fixed voice and mobile have been bundled by a number of carriers for many years now, and packages like pay TV, home and mobile are becoming more popular as well," she said.
Wireless, ADSL2+, or both?
After the SIP upgrade, NEXTEP is likely to focus on a wireless VoIP product, according to Norton.
"As soon as we complete this complete this major program of work on the SIP," he said, the next major drive is "to extend it into the wireless environment."
Norton said his company was likely to utilise wholesale wireless broadband offerings already in the market, which NEXTEP can "buy and package up with our service offering."
The company is also known to be upgrading its ADSL infrastructure to the high-speed ADSL2+ standard, which will allow NEXTEP to sell services at up to 24Mbit/s. But Norton played down the importance of what he acknowledged was a market demand for higher speeds.
Drawing on NEC's extensive experience as an infrastructure provider in Japan, he said customers would initially be seduced by the higher speeds, but would soon learn to measure the quality of their broadband service by the performance of bandwidth-dependent applications on their desktop.
"Japan is a very mature broadband market, so it's a good benchmark as to where things go," he said. "The most recent discussions we've had with people in Japan, is that people very much look at quality of service and are no longer seduced by the hype of speed."