The House of Lords Communications Committee said the government was preoccupied with faster broadband speeds rather than improving access for residents.
The committee issued its report, Broadband for All – an alternative vision, on Monday (30 July). The full document can be downloaded here.
It criticises the government's broadband strategy for its preoccupation with speed rather than focusing on access and the imperative of creating a 'future proof' national network.
The committee also voices concern that the government's investment in this area could be a tremendous missed opportunity, albeit that it is not too late to change course.
Peers argue that the government should be doing more to arrest and ultimately eliminate the digital divide – rather than deliver better services for those who already have good connections.
The creation of a robust and resilient national network should bring open access fibre-optic hubs within reach of every community, says the document.
Open access to these fibre-optic hubs would provide a platform for local communities and businesses to access better broadband provision and upgrade that access over time.
Barely an aspect of people's lives remained untouched by the internet, and developments looked set to continue apace in the future, warned committee chairman Lord Inglewood.
"A whole host of services will increasingly be delivered via the internet – including critical public services – and without better provision for everyone in the UK this will mean that people are marginalised or excluded altogether.
Britain's communications network should be regarded as a strategic, national asset, said Lord Inglewood.
But he added: "The government's strategy lacks just that – strategy."
Complex issues were not thought through from first principle and it was far from clear that the government's policy would deliver the broadband infrastructure needed.
The report calls on the government to pay urgent attention to the way public funds are being distributed, particularly the operation of the Rural Community Broadband Fund (RCBF).
It also urges the government and industry to consider the long term possibility of switching terrestrial broadcast from spectrum to the internet.
Rural leaders welcomed the document.
David Collier, chief rural affairs adviser for the National Farmers' Union, said the report chimes in with what the NFU had been saying about priorities for rural broadband.
"The starting point should be the speeds required by rural businesses and then the task is to find a way of getting those speeds to all," he said.
"We think it is more important to get all rural businesses on to 'reasonably fast' broadband of about 10 megabytes per second than to get a small number in rural areas on to 'superfast' broadband."
It would be wrong to have a small number of rural people benefiting from connections as quick as 24Mbps or faster which the rest languished pitifully low speeds.
"Defra needs to consider whether the RCBF is going to make a real impact in remoter rural areas, and if necessary go back to the drawing board.
"As the report says, the danger is that the digital divide gets wider rather than narrower, with rural businesses increasingly left behind."