Virgin Media and BT have appealed a decision by the European Commission (EC) to allow Birmingham City Council to build its own city-wide fibre-optic broadband network.

This summer, Birmingham City Council successfully applied for £10 million of the £150 million the government is making available as part of its ‘Super-Connected Cities Project’, which is to be invested in increasing broadband speeds in 20 cities.

However, because the council secured the funding from the public sector to introduce services intended to compete with the private sector, it required approval from the European Commission under state-aid rules. 

As such, Virgin Media and BT appealed the European Commission’s decision last week. A BT spokesman said in a statement that the European Commission’s decision was “substantially flawed”.

“It would have discouraged commercial investment in high speed networks at precisely the time when such investment is required,” he said. “It would also have set a dangerous precedent. We hope an alternative solution can be found as soon as possible so that companies such as BT can invest further in Britain’s cities.”

"We fully support the Urban Broadband Fund and government ambitions to bring superfast broadband to areas not currently served by existing fibre networks,” said a Virgin Media spokesman. “So it’s disappointing that Birmingham City Council has put forward a scheme which is not in the interests of local people and we believe, as a result, the European Commission has made a decision based on inaccurate and misleading information which could waste public money.

“We’ve requested the EC revokes its decision as, in line with EC state aid guidelines, public funds have to be spent in areas not already served by existing infrastructure. We’re concerned that Birmingham City Council is planning to spend money in areas already served by fibre networks, therefore undermining ongoing private investment,” the spokesman said.

Birmingham city council member James McKay said the appeal could stall the creation of 1,000 new jobs.

“Birmingham is extremely disappointed in Virgin Media’s decision to appeal this landmark ruling,” he said. “The City has worked in a very positive and collaborative way with them over the last few years to help inform and develop our business case and we are surprised that they have now chosen to appeal at such a late stage.”

BT and Virgin Media, who submitted the appeal last week, expect a response from the European Commission regarding the outcome of the appeal over the next six weeks.