John Anderson, head of BT in Yorkshire, said he was "hurt" by charges that BT was trying to sabotage the South Yorkshire Digital Region project because it offered competition to BT's own fledgling superfast internet service.
He said he was "fully supportive" of the scheme, and suggested failings in Digital Region's business model may be the real reason it has floundered.
Millions of pounds of taxpayer-funded loans are propping up the ground-breaking Digital Region scheme, which was launched last year by Sheffield, Barnsley, Rotherham and Doncaster Councils along with regional development agency Yorkshire Forward.
The public bodies are laying hundreds of miles of fibre-optic cables beneath the streets of South Yorkshire in order to give almost every home and business the opportunity to access superfast broadband by 2012.
They hope to recover their multi-million pound investment through profits as people sign up for the service.
But with roll-out of the network now more than half-way through, it has so far failed to attract any major internet firms on board to sell the 25-40Mbs-speed packages – leaving question marks over the scheme's long-term viability.
Bosses say they have struggled to make the wholesale network competitive due to the prices they are being charged by BT's Openreach arm to connect the fibre-optic cables to Britain's existing telephone network.
BT Openreach is rolling out its own fibre-optic network in those parts of the country where it is deemed most profitable, and internet firms using that network – including BT's own commercial arm – are able to sell the next-generation service without paying for expensive connection charges.
Digital Region bosses have complained the pricing regime is therefore unfair, and are set to make a formal complaint to Ofcom within weeks. Barnsley Council chief executive Phil Coppard said last week he feels BT is trying to kill the project.
But in a robust defence of his firm, Mr Anderson said Digital Region has always known how much it would cost to connect to the telephone network and that this should have been allowed for at the project's planning stages.
He said: "Our pricing has not changed – I would expect (Digital Region's) commercial model to have reflected this pricing. If they got their model wrong I don't know, but this price should not be a surprise to them.
"They needed to have built that cost into it at the beginning. You have to go into this with your eyes open. If two years on things haven't worked out yet, it rankles with me to go back and say 'life's not fair'.
"It begs the question, how good are they at building fibre networks? BT has been building networks for years and I would say is pretty good at it.
"(For someone else) to suddenly start digging trenches and laying fibre is an expensive past-time. Maybe people do catch a cold and find it's more expensive than they had thought."
Digital Region bosses have also complained of being forced to wait months for access to databases from BT Openreach revealing which home premises are connected to which on-street telephone cabinets – vital for telling potential customers whether they can connect to the network. BT has now agreed to provide the data after months of wrangling.
Mr Anderson said: "I understand that in this moment there is no outstanding data request from Digital Region.
If there have been delays in the past I'm not aware of that. (But) they should have everything they need now."
He said charges of anti-competitive behaviour by BT were "completely unsubstantiated" and that the firm was in fact supportive of the Digital Region scheme.
"It's in all our interests that Digital Region is a success. I'm not in any shape or form trying to halt its progress."