Residents of Lyddington in Rutland raised £37,000 to set up their own super-fast broadband network after BT and other ISPs said it wasn't viable.
Rutland Telecom, which is a joint venture between the residents of the village and a local ISP that was using BT's network, is offering speeds of up to 40Mbps.
Rutland Telecom asked BT Openreach to lay fibre to the cabinet cables, and then set about connecting the homes in the village to the fibre network.
"For the first time in UK telecommunications history the telephone lines of customers are completely cut off from the local BT exchange," added Mark Melluish from Rutland Telecom.
BT Group Strategy Director Olivia Garfield said the ISP had been "delighted to help Rutland Telecom" but wants Rutland Telecom to open its network to other ISPs in a bid to stop "the risk of a local monopoly developing".
Rutland Telecom is set to launch a similar service in villages in Leicestershire and Wales, as well as helping other villages discover whether the same scheme might work in their area.
Last year, residents in Alston Moor in Cumbria revealed they had begun installing their own fibre broadband network because BT said it was "unviable" to provide even basic broadband to the area.
It is thought that around 2.5 million homes can't get access to 2Mbps or above internet access, with many of these homes being located in rural areas of the country.
Private companies such as BT and Virgin Media claim it is not economical to install fibre-optic networks in these locations.
The government had planned to come to the rescue of broadband have-nots with a proposed 'broadband tax' that would see Brits with a telephone line forking out £6 per year. The funds raised from the tax would have been used to fund the roll-out of fibre networks across the UK.
However, the tax, which faced opposition from the Conservatives, was dumped from the Finance Bill last week, in a bid to ensure the bill became law before parliament closed in preparation for the general election on May 6.
Just how the government plans to fund its proposals to ensure every Brits has access to 2Mbps internet access remains to be seen.