The auctions are one of a range of options under consideration by the Department of Trade and Industry.
The DTI will also consider increasing charges for using the spectrum, which could affect companies including BT, Mercury, Cellnet, Vodafone and the BBC. Other proposals, set out yesterday in a DTI consultative document, include privatising the management of the spectrum, currently the responsibility of the Government's Radiocommunications Agency.
The DTI report says explosive growth in telecommunications services and local and national radio have relied on availability of radio frequencies but demand is now outstripping supply.
Michael Heseltine, the President of the Board of Trade, said that licence fees paid by users of radio frequencies, which cover the Radiocommunications Agency costs, give little incentive to use the spectrum efficiently. Ministers believe an overhaul of pricing would force companies to relinquish frequencies they do not really need and encourage them to adopt new technologies that maximise use of the frequencies they retain.
Jim Norton, chief executive of the Radiocommunications Agency, said: 'To be blunt, the way we licence people (to use the spectrum) and the way we charge fees, does not reflect the level of congestion or demand. As a result of this consultation undoubtedly some people will pay more.
'People like Cellnet and Vodafone make demands on the spectrum and make a reasonable return and I would have thought would expect to pay a commensurate amount,' he said.
The DTI said that whatever the outcome of the consultation on management of the spectrum, it would not penalise the military, emergency services, scientists or hobbyists. The department wants responses to its consultative document by 22 July.Reuse content