Mobile firms could pay £5bn in latest auction of airwaves

A new era of faster mobile internet access was signalled yesteray as the communications regulator, Ofcom, said it was ready to kick off the £5bn sale of another chunk of the nation's airwaves later this year.

Billed as the largest-ever auction of spectrum, it will be fiercely fought over by mobile phone operators, who have already held up the auction process for three years with the threat of legal challenges. The simmering row has meant Britain has fallen behind many other countries in installing high-speed fourth-generation (4G) mobile networks.

Ofcom is selling off the frequencies that until this year carried analogue TV signals. These can be converted for use by operators such as Vodafone and O2 to boost networks that are under pressure from the extra bandwidth consumed by smartphones such as iPhones and BlackBerries.

The auction will offer the equivalent of three-quarters of the mobile spectrum in use today. Ofcom has set a £1.4bn reserve price but is expected to raise closer to £5bn, making it the most valuable asset sold by the Government during this Parliament.

However, the price will still be dwarfed by the £22.5bn that poured into Treasury coffers from the 3G spectrum sale in 2000.