Ofcom has warned Openreach that it could be censured for missing Minimum Service Level (MSL) targets.
According to ISPreview.co.uk, the infrastructure body is in danger of missing two MSL targets that had been agreed with Ofcom in 2016.
Although positive progress has been made in some areas, the report states it is falling short of its goals concerning high bandwidth Ethernet products.
Speaking to ISPreview.co.uk, an Ofcom spokesperson said the targets it has set are "important safeguards" and that it expects Openreach to achieve them.
"We closely monitor its performance, and Openreach has until March 2019 to improve its performance to the levels we have set," the watchdog said.
"If it fails to meet these standards, it could face penalties."
Openreach is already under close scrutiny from Ofcom after BT agreed to the watchdog's demand for its infrastructure subsidiary to become a distinct and legally separate company.
As part of this agreement, Openreach must have its own distinctive branding, with any traces of BT's imagery removed to reflect its greater independence.
The deal with Ofcom also means that Openreach is being run by a newly-established board, the majority of which consists of directors independent of BT.