BT has urged the government to think very carefully about how it allocates the £830 million funding set aside for improving rural broadband coverage.
The internet service provider (ISPs) has previously called for minister to hand it a large share of the public fund to continue its infrastructure upgrade work.
However, the Financial Times reports that ministers are keen to provide capital for local, rural broadband consortia, as well as established ISPs.
Sally Davis, Head of BT Wholesale, claimed that creating a network of independent high-speed broadband projects could cause major difficulties.
She warned that the cost of connecting small, rural broadband networks to the main BT fibre infrastructure could prove unviable on cost grounds.
"It's like when the railways were built and you had all these different gauges and they didn't connect," Ms Davis told the news provider.
BT is currently investing £2.5 billion upgrading local telephone exchanges across the UK to support high-speed broadband.