BT is threatening to stall the award of third generation (3G) mobile licences in a row over how the auction - which...
started this week - is being conducted.
The threat, if carried out, could mean the UK falling behind other countries in the race to introduce the Internet and e-commerce to mobile handsets, and put companies at a disadvantage.
BT is unhappy that both Vodafone and Orange will be able to bid separately for one of the five spectrum licences up for grabs, despite the fact that Vodafone now owns Orange after its acquisition of German giant Mannes-mann.
BT claims the two could collude during the bidding process, to the detriment of its own contender BT Cellnet.
A BT spokesman confirmed the company was considering legal action at the end of the auction. Vodafone has dismissed BT's claims.
The company said it accepted from the outset that it would have to sell Orange once the Mannes-mann takeover is completed.
A Vodafone spokesman said, "The Government has set the rules and we will abide by them. If BT has a problem, it's between them and the Government, not us."
David Tripp, chairman of the Telecommunications Managers' Association (TMA) mobile telephony special interest group, said, "Users want to know who they will be dealing with, before seriously adopting the technology."