The Independent Networks Co-operative Association (INCA) has criticised the government's £20 million Rural Community Broadband Fund (RCBF).
It has released a statement after learning two schemes - Cotswolds Broadband in Oxfordshire and Trailways in Dorset - have been rejected by their respective local authorities.
These projects would have used community and private investment to improve connections in the final ten per cent of areas that do not stand to benefit from the government's Broadband Delivery UK (BDUK) initiative and INCA said such schemes are what the RCBF was designed to support.
However, the fact the proposals were rejected by councils shows the system is flawed, the organisation claimed. It said one of the schemes was dismissed by a committee that included a representative from BT and suggested the company, which is exclusively carrying out the BDUK project, does not want alternative developments to be completed.
"It is obvious why BT doesn't want projects like this to go ahead; they don't want lower subsidy schemes to be supported," INCA stated.
The organisation said BT demands state aid of 90 per cent to carry out broadband improvements in harder-to-reach areas, whereas the schemes that were rejected would only require 35 per cent government funding.
It claimed the situation surrounding the RCBF is "becoming increasingly untenable" and said BT "seems intent on using its state funding to kill off any competition and seize even more subsidy".
INCA acknowledged BT has an important role to play in improving the nation's broadband, but warned they are "not the only game in town, nor are they always the most cost effective". It called on the government to demonstrate it is in favour of a strong competitive environment.
While INCA's statement is worrying, BT and RCBF-funded projects are not the only way to improve internet access in hard-to-reach areas. Individuals who need a better service now could benefit from switching to satellite broadband, which is available immediately and offers a fast and reliable connection.