Digital terrestrial channels, high-speed broadband services and a new national mobile network could be launched as part of Ofcom’s plan to use valuable spectrum freed up from the digital switch-over in 2012.

The communications regulator outlined plans for the auction of the spectrum today that could increase the take-up of technology in British homes.

Ed Richards, chief executive of Ofcom, said he had “absolutely no idea how much it [the auction] would raise”. However, industry analysts are expecting it to generate in the region of £2 billion.

Bidders are unlikely to pay anything close to the £22.48 billion raised from the auction of 3G spectrum in the height of the dotcom boom in 2000. Mr Richards claimed that the true benefit to the UK economy will come from services launched on the back of the freed-up spectrum, expected to generate up to £10 billion over the next 20 years.

Ofcom, which said interest has been great with 750 responses to its consultation, has identified “one compelling case” where spectrum will be reserved to avoid the risk of “market failure” in an auction. In the programme-making and special events sector, which will use the spectrum primarily for wireless microphones, there will be a “beauty contest” over who will be awarded bandwidth.

Spectrum could also be used for cognitive radio - a new wireless technology that shares with other services by detecting when spectrum is not being used. Ofcom has proposed to allow some of the spectrum to be used for cognitive radio providing it does not cause interference to other spectrum users.

Mr Richards said: “Cognitive radio will reduce spectrum use and lessen the need for spectrum management. We are currently undertaking work to ensure this system does not interfere with anything else.”

Plans for the auction come weeks after Ofcom said it would be setting aside spectrum for high definition Freeview television services, despite a concerted lobby by broadcasters including the BBC, ITV and Channel 4.

“The digital dividend will be one of the most significant and valuable releases [of broadcast spectrum] in the UK in the last 40 years and for the next 20 years or so,” said Mr Richards.

He added that Ofcom will conduct further consultation on the digital dividend in the spring of next year, which will involve addressing competition concerns. The auction itself is set to take place in the summer of 2009.

The digital dividend spectrum is in the sought-after UHF band currently used by the terrestrial television broadcasters. Transmissions in this band cover large geographical areas with few transmitters, which makes this the highest quality spectrum likely to be released in the UK in the next 10 or 20 years.

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