Australia's NBN Co on Thursday announced that it will run a pilot fibre-to-the-node (FTTN) project in eastern Australia using Telstra's copper network for the last mile.

NBN Co, which is rolling out Australia's ever-controversial national broadband network, said it will work with the incumbent telco to deploy 1,000 FTTN nodes in areas of Queensland and New South Wales.

In a carefully-worded statement, the company said that "the announcement comes ahead of the anticipated large-scale integration of FTTN technology into the NBN."

It is as yet unclear how extensive a role Telstra will play in that.

Under the previous administration Telstra brokered an A$11 billion deal to disconnect much of its copper and cable infrastructure and transfer customers to NBN Co's fibre network, which at the time was planned to be primarily fibre-to-the-premises (FTTP). Amongst other things, the deal also granted NBN Co access to Telstra's dark fibre, ducts and rack space.

That deal is currently being renegotiated in light of the change in government last year. Following a strategic review of the NBN project, the new government plans to lower costs by adopting a mixture of broadband technologies, rather than attempting to reach the vast majority of premises directly with fibre.

The renegotiation of that A$11 billion deal – known as the Definitive Agreements – will take into account the need for access to Telstra's copper network to support FTTN-based services. Talks between the pair are "ongoing and progressing well," NBN Co said on Thursday.

The pilot FTTN project "shows we are determined to get on with the job of delivering fast and reliable broadband to Australians while wider negotiations with Telstra continue," said NBN Co CEO Bill Morrow, in a statement.

"The extensive pilot programme we're announcing today will deliver valuable insights into how to build a sustainable and consistent programme of work that allows the industry to ramp up and deploy the FTTN element of the NBN at scale," he added.

The agreement with Telstra marks the second phase of FTTN build for NBN Co. It previously built small-scale FTTN sites in New South Wales and in the northern suburbs of Melbourne.

The pilot project will be funded "from within NBN Co's peak funding envelope," approved by the government, the company said.