BT could be forced to spin off its Openreach wholesale arm, after a committee of MPs accused it of "significantly underinvesting" to the tune of hundreds of millions of pounds.
Fears of a split had been put to bed after UK regulator Ofcom ruled against a separation earlier this year, albeit at the cost of greater regulation.
However, the UK's government's Culture, Media and Sport committee accused BT of sacrificing shareholder value and customer benefit in favour of its own interests.
It said: "Capital investment in Openreach has been broadly flat since 2009 until this year, and quality of service remains poor."
In a strongly worded statement, the committee said more money needed to be plunged into Openreach, warning Ofcom should enforce a full separation if it does not follow the recommended reforms.
It said a lack of transparency in Openreach's costs and plans had damaged competition and hindered the network planning of other operators.
The cost of expansion into the likes of media properties was coming at the cost of under investing in Openreach, the committee continued. It said service quality levels remained low in recent years and accused Ofcom of being slow to impose minimum service standards.
The committee said: "BT Group is exploiting the position of vertical integration to make strategic decisions that favour the Group’s priorities and interests, at the expense of its access infrastructure business.
"Its current structure allows it to use Openreach’s utility-type assets to cross-subsidise riskier activities elsewhere in the Group, while significantly under-investing in the access infrastructure and services on which a large part of the public rely."
A BT spokesman warned a separation of Openreach from BT would lead to "less investment, not more", adding it was keen to improve service levels.
He said: “We are disappointed to be criticised for having invested more than £1bn a year in infrastructure when the UK was emerging from recession and rival companies invested little. As the report acknowledges BT’s investment has made the UK a broadband leader among the major economies in Europe.
“Openreach investment is 30 percent higher than it was two years ago and it will grow again this year. We are already pumping in hundreds of millions of pounds of extra money and we have also committed to invest a further six billion pounds over the next three years."