Everything Everywhere has backed down from its legal challenge to the coming government auction of 800MHz radio spectrum.
The broadband provider, set up this year as the parent company for Orange and T-Mobile in the UK, had been actively campaigning against the sale, which is set to take place in 2011-12.
It has been concerned that the auction could enable rival mobile broadband providers to establish an unfair advantage in the dongle market.
However, Everything Everywhere is now believed to have reached some form of agreement with the government to ensure this does not materialise.
"We have decided to withdraw our threatened legal action and are content to take our chances when it comes to influencing the rules for future spectrum auctions," the company told the Financial Times.
Orange and T-Mobile customers can now use each others' networks to make calls in the UK, and it is hoped that 2011 will see the same privilege rolled out to their respective mobile broadband customers.