Virgin Media and BT are taking legal action against Birmingham city council over the use of public money to build a broadband network that directly competes with their own.
The complaint was filed last week and is expected to be raised by Labour peer Lord Howarth in a House of Lords debate on Monday. It is the latest in a series of rows that have dogged the government's programme for improving broadband in the UK.
Birmingham has raised £10m to lay high-speed fibre optic cables in areas including its historic Jewellery Quarter. The money would come from the "superconnected cities" fund announced last year by George Osborne, which is to plough £150m into wiring up 20 cities. The council said it was "extremely disappointed" that the case was being brought as it could prevent the creation of 1,000 jobs.
The European commission, which has to approve government infrastructure spending to ensure that public money is not used to compete with private companies, signed off Birmingham's plans over the summer.
This has infuriated Virgin and BT, which have extensive networks in Britain's second city capable of delivering 100 megabits a second to homes in Birmingham. They believe the city's project, which will offer speeds of more than 100 megabits, will significantly overlap with their own networks. "We believe it involves a significant overbuild with our network," said a Virgin spokesman. "It's a poor implementation of what is otherwise a sensible policy. It sets a bad precedent and sends a really bad signal to our investors."
Source: The Guardian
