Both the firms have objected to the use of £10m from the total fund for laying broadband infrastructure in Birmingham
UK-based telecom firms Virgin Media and BT have sued Birmingham City Council's plans to put down high-speed fibre optic cables in the city by using public funds.
Set up by UK Chancellor George Osborne to offer £150m in funds to enhance the country's broadband infrastructure in 20 cities, both the firms have objected to the use of £10m from the total fund for laying broadband infrastructure in Birmingham.
Virgin Media spokesman said that the firm supports the Urban Broadband Fund and government's aim to bring superfast broadband to areas not currently served by current fibre networks.
"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," spokesman said.
Despite European Commission's approval to move ahead with the implementation, both the firms claim that the network will overlap with their own networks and believe that the deployment involved an inefficient use of public money.
Birmingham city council member James McKay said that the city is extremely disappointed by the decision to appeal this landmark ruling.
"The city has worked in a very positive and collaborative way 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," McKay said.
The legal action is also anticipated to obstruct British government's ambitions to deploy the fastest broadband in Europe by 2015.