Analysts have locked horns over the need for Telstra's dark fibre to be integrated into the government's $10 billion National Broadband Network (NBN).

Telstra, which was locked-out of the NBN tender process late last year, has long claimed it is the only telco capable of deploying the network adequately.

Dark fibre is a reference to optic cables that are deployed but not yet switched on by service providers.

Local telecommunications analyst Paul Budde said the government will need to cleave Telstra into separate wholesale and retail entities, despite its ejection from the NBN process, to make the fibre available to competitors. “They have 5000 fibre exchanges even in rural areas – somewhere between 50 to 80 percent is unavailable because there is no incentive to make it available on wholesale,” Budde said.

“It is more profitable to leave them unavailable or under-utilised &mdash I'm 80 percent sure the government will functionally separate Telstra to make use of the [dark] fibre because it does not make sense to overbuild, especially in the tight economic times.

“Separation will likely be slowed in parliament and through the courts by Telstra and [shadow communications minister] Nick Minchin will oppose separation but we are doing something for the next 25 years, so we now can't rush into a half-baked solution.”

Budde said the last-mile copper network will be sufficient for the next decade as fibre is pushed deeper into networks.

A prominent Sydney-based telecommunications analyst, who requested anonymity, labelled the comments hype and said many network operators have large amounts of idle fibre.

“It may well be that an operator will only [activate] fibre in a trench as it is needed,” he said.

“Telcos will put in enough fibre in trenches as they will need in the foreseeable future. Dark fibre isn't necessarily dark to lock-out competition, because it is expensive to activate it.”

“Telcos try not to break into fibre, so it is reasonable that it may bypass towns.”

He said it is unlikely that the idle capacity will be used for the NBN because dark fibre is excluded from wholesale regulations.

NBN bidders refused to comment whether Telstra's idle capacity should be used for the network, citing the government's gag order.

A Telstra spokesman said the size and locations of its dark fibre network is commercially sensitive and could not be disclosed.

CEO Sol Trujillo said last week in a presentation made at the Citigroup Entertainment, Media and Telecommunications conference in Phoenix Arizona, structural separation and sub-loop unbundling will create problems for the NBN operator.

“It imposes fragmentation of a network so that it creates all kinds of national security issues, it creates customer service issues where nobody has full line of site visibility to end problems and being able to resolve problems,” Trujillo said.

“Building Fibre-to-the-Node within the current RFP process was... a marginal case, and we're not prepared to destroy shareholder value by committing to potentially onerous conditions.”

Trujillo estimated Telstra's exclusion from the NBN will cost the company lose $1-$2 billion in future revenue.