Internet service provider (ISP) O2 has expressed its dissatisfaction over the proposed terms of the upcoming 4G spectrum auction.
The broadband provider has slammed media regulator Ofcom for the way it plans to sell off additional spectrum, claiming that proposals are illegal under EU law.
O2, along with rival mobile broadband provider Vodafone, already owns some 900Mhz spectrum, which was auctioned off a decade ago.
And under Ofcom plans, these ISPs will not be permitted to bid for a yet-to-be-decided proportion of the newly released 800MHz space.
This is currently being used by terrestrial television services, however the ongoing digital TV switchover is freeing up spectrum for the use of 4G mobile services.
O2 said that while it supports the auction process and many of Ofcom's key points, the proposed spectrum floors are "a state aid" and therefore contravene European law.
"The spectrum floors would distort the auction process, allowing all bidders, except Vodafone and O2, to potentially acquire spectrum at discounted prices," the ISP stated.
Ofcom's own figures suggest this effect could cost taxpayers as much as £1 billion, the firm stated.
"The proposed floors, and the argument that Vodafone and ourselves already have enough sub-1GHz spectrum, are based on the mistaken belief that 800 MHz and 900 MHz are directly comparable spectrums. They are not," O2 added.
"Ultimately this auction is about new, next-generation services. It is not about 2G and 3G, but about the future."
As a result, O2 said it should be used as an opportunity to provide "fair, open and equal access" to newly available spectrum.
"So while we support the proposed auction structure and spectrum caps, Ofcom is faced with a difficult choice of either revisiting its spectrum floors proposal or discarding the floors and getting on with the process," the ISP stated.