Telecoms regulator Ofcom has released details of its plans for awarding the spectrum that will be freed up by the switch to digital TV in 2012.
Operators will be given flexibility in what they do with the spectrum and by allowing them to decide what services to offer and giving them the freedom to change their use of it over time as technologies and marketplace needs evolve, Ofcom said the release of the digital dividend will help drive tech innovation.
It should also lead to more competition in wireless services which may help bring prices down.
Ed Richards, CEO of Ofcom, said in a statement: "The digital dividend will be one of the most significant and valuable spectrum releases in the UK for 20 years. Our approach is designed to maximise these considerable benefits for UK citizens and consumers as a whole.
"We can expect the benefits of the digital dividend to include more choice, fresh competition and technological innovation."
The UHF band digital dividend spectrum, which lies in the frequencies 470MHz to 862MHz, is coveted by operators because transmissions can cover large geographical areas with relatively few transmitters -- meaning networks are cheaper to build.
Transmissions can also penetrate buildings well -- and better indoor coverage is something mobile operators are keen to achieve, at the right price, to give a boost to 3G services and the multimedia offerings such as mobile TV.
Mobile users increasingly want to use their mobile handsets in the home for viewing and downloading content, despite the fact there is likely to be a TV and broadband-connected PC there too, according to analysts.
Mark Heath, director of research at telecoms consultancy Sound Partners Research, told silicon.com: "People are increasingly using their mobile phones at home -- surprisingly the research shows that people actually want to use mobile TV in a significant way at home… Why do people use a mobile phone at home when they could use a fixed one and it could be a lot cheaper? They're carrying their mobile around with them, it's personal and can access services when out and about and at home… It is very much a convenience thing and a personalisation thing."
Spectrum lust doesn't just affect mobile operators -- superpowered wireless internet tech WiMax has needs too, if it is to make it big in the UK.
Dr Terrence Norman, senior consultant at Mason Communications, recently told silicon.com the need to acquire spectrum is a hurdle for WiMax but added: "Spectrum is becoming available and if there is a business case, potential operators will put their hands in their pockets and buy the spectrum."
Demand for spectrum is growing continually, according to Ofcom, which calculates its use underpins three per cent of national GDP.
The regulator said it has identified several potential uses for the latest spectrum windfall -- which it believes will add £5bn to £10bn to the UK economy over a 20-year period -- including high-speed mobile broadband, mobile TV and local TV stations.
Ofcom is also proposing to allow a wireless technology known as cognitive radio to use part of the digital dividend known as interleaved spectrum, which is the white space that exists between transmitters to prevent interference between them. Cognitive radio devices are able to share spectrum with other services as they can detect when it's not being used and change their transmission or reception path to avoid interference.
Dr Windsor Holden, principal analyst at Juniper Research, said: "I think they [Ofcom] are absolutely right in that you shouldn't buttonhole it [spectrum] for specific technologies. Given the speed at which technology moves it is much more sensible to offer it to a number of different technologies and on the basis of business plans that are put forward and the opportunity that those different technologies offer… It's offering a number of different technologies the opportunity to become established."
But he warned that a highest bidder strategy could make the building of a dedicated network for mobile TV uneconomic. "The initial outlay for mobile TV if you were forced into a bidding war probably makes a DVB-H network uneconomic. £100m for example -- that would significantly negatively impact on the probability of mobile TV becoming a success," he told silicon.com
Holden added: "At the end of the day there will be an immense amount of politics and an intense amount of lobbying and in leaving it open it could be argued that the best lobbyists stand the best chance. It all boils down to those particular factions making the best business case."
Ofcom said it will make the spectrum allocation "as soon as possible" so citizens and consumers can benefit from new services with minimum delay. Some portions could be awarded as early as the end of next year but the bulk of the auctions are likely to take place in 2009.
The regulator will publish further consultations in spring 2008 on the detailed design of the digital dividend awards.