Ofcom agrees to public radio spectrum sell-off

Ofcom, the media and telecoms watchdog, has given the all-clear for public bodies to sell their radio spectrum through a market mechanism, with the Ministry of Defence set to be the big winner. The market for public sector spectrum is potentially worth more than £20bn.

Ofcom said it planned to implement proposals to allow the Government, its agencies and other public organisations to share, trade or release their radio spectrum holdings. It said it was using market mechanisms to improve how spectrum was managed.

Radio spectrum is needed for everything from mobile phones and television broadcasting to emergency service communications. The Independent Audit of Spectrum Holdings, led by Professor Martin Cave and published in December 2005, estimated that the spectrum held by the public sector could have a market value of between £3bn and £20bn.

Public bodies use up about half of the spectrum below 15GHz, the most sought-after frequencies. Ofcom said it expects the new arrangements "to free up some of the most valuable spectrum for new wireless services for the benefit of citizens and consumers".

Ed Richards, chief executive of Ofcom, said: "By working with these organisations we are enabling them to trade and release this spectrum which will create new opportunities for the development of wireless services for the whole country."

The dominant body in the public sector is the Ministry of Defence, which holds 75 per cent of public spectrum. The MoD has already committed to sharing and releasing a significant proportion of its holdings and will consult on proposals over the next three months.

The regulator launched a consultation for spectrum relating to public bodies in 2007 to consider how best to hand out the spectrum, eventually settling on an auction after input from 50 companies. It decided that companies that pay most to secure the rights will most likely use it more efficiently.

The exact mechanism for selling the spectrum is not yet in place. Ofcom will introduce public spectrum trading by issuing new regulations. It will consult on these in the summer. The regulator added that the Government will take responsibility to ensure that in trading and releasing public spectrum, defence, national security and public safety would remain paramount.

These proposals are part of a broader initiative run by the Government and Ofcom to secure the best use of radio spectrum through the application of market mechanisms. The regulator said spectrum underpins 3 per cent of UK gross domestic product and its value to the economy has grown by 50 per cent in real terms since 2002 to over £40bn a year.

In December, the regulator decided to auction the spectrum freed up by the digital TV switchover. Mr Richards said at the time: "This statement is one of the most important Ofcom has ever made... Radio spectrum is an essential but finite resource. Its use accounts for nearly one pound in every 30 in the UK economy and it delivers a plethora of services to UK citizens and consumers... this is the most important spectrum to be released in the past 40 years and likely to be the most important spectrum release in the UK in the next 20 years."