UK telecoms operator Vtesse Networks has appealed against the European Commission's decision to approve a state-aided broadband scheme in Cornwall.
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The appeal will focus on the process by which BT was chosen as the preferred bidder.
Cornwall Council has budgeted £5m over the next five years to improve broadband coverage in the county. Carolyn Rule, the council's cabinet member for the economy, said the investment could generate £250m for Cornwall and the Isles of Scilly's economy over the next 15 years.
The money will come partly from the European Commission via the European Regional Development Fund, which requires matched funding from local sources.
Vtesse argues that BT is failing to provide equivalent access to the network segment between the street cabinet and the local exchange on the same terms that it charges itself.
Vtesse says this is essential for third parties to compete using high-speed VDSL broadband technology. Without it, BT can undercut its competitors on price.
Vtesse CEO Aidan Paul has complained about this practice directly to communications minister Ed Vaizey, who has promised to look into the matter.
Vtesse says BT's wholesale network access unit Openreach provides access to the sub-loop on an equivalent basis to BT and its rivals, but the following network segment, between the cabinet and local exchange, is offered only as a bundle with other components that make up the Openreach wholesale VDSL product.
Vtesse says this prevents rivals such as itself from building their own VDSL product on cost-based terms.
A BT spokesman said, "It is regrettable that Vtesse is trying to stop the people of Cornwall benefiting from such an important project. BT will continue to invest in Cornwall despite its efforts."
In August BT announced faster broadband to 90,000 homes and businesses in the south-western towns of St Budeaux, St Ives and Dawlish. This brought the total of upgraded lines in the region to 1.2 million, 56% of premises, in less than a year, BT said.
The case was lodged before the European General Court on 27 August 2010, under reference T-362/10.