A £70m flagship government project to provide fast broadband internet connections is six months behind schedule and £1.6m over budget.
Broadband connections will be at least eight times faster
Telecoms company Thus plc has run into problems accessing hilltop sites for radio masts to deliver the service in the Highlands.
The delay and higher costs concern Highland Council's area.
Pathfinder North is also being rolled out in Argyll and Bute, Moray, Orkney, Shetland and the Western Isles.
The problems were highlighted to councillors on Highland's resources committee.
The previous Scottish Executive administration committed more than £60m to the project.
Five local authorities joined forces to contribute £9m, but Highland Council will now have to find an extra £1.6m.
A report to the resources committee also revealed significantly low numbers of sites connected to allow the roll out of broadband.
Contractors were invited to bid for the Pathfinder North project in 2005
Pupils at Crown Primary School in Inverness were the first to use high speed broadband installed through the project
A report released in January claimed broadband could be worth £3.4bn to the Scottish economy by 2015
Twenty-eight were scheduled to be connected by June, however, only six were, and only 21 of the 67 expected by September.
By 2009, a total of 452 sites are scheduled to be connected.
Officials said in the report that the majority of those still to be installed this year would be by the end of November.
A number of councillors said the delays could seriously disadvantage remote areas where existing telecom connections were substandard.
In 2005, a similar project was also launched in the South of Scotland in a partnership between Scottish Borders Council and Dumfries and Galloway Council.
For the Highlands and Islands, a key priority was to have 72 secondary and 379 primary schools connected to the internet at a minimum speed of four megabits - eight times faster than current connections.
Highland Council officials said the educational benefits included linking up to the Scottish Schools Digital Network Intranet.