Ofcom to auction spectrum freed by digital switchover

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Ed Richards, the chief executive of Ofcom, has hailed the regulator's decision to auction off spectrum freed up by the digital TV switchover as being one of the most important it has ever made as it expects the sale to benefit the UK economy by up to 10bn.

The switchover to digital TV, due to complete in 2012, will free up about a third of the spectrum currently used by broadcasters. The spectrum which Ofcom has described as being the highest quality that will be released over the next decade will appeal to mobile phone companies and other telecom players looking to boost their capacity to improve coverage and launch new services like ultra-fast wireless broadband and mobile TV. It could also be appropriate for broadcasting local TV and boosting capacity for broadcasting HD services.

Ofcom launched a consultation a year ago to consider how best to apportion the spectrum and has received input from 750 companies, proving that there is strong demand for the asset. It has decided to auction off the spectrum in 2009 after deciding that the companies that pay the most to secure rights to use the frequencies are most likely to use it most efficiently.

The decision to launch an auction to crystallise "the digital dividend" has been bogged down by a spat between the regulator and the free-to-air broadcasters over the launch of HD-TV services. The TV groups argued Ofcom should set aside a slice of spectrum for HD TV despite the regulator's argument they could use their existing spectrum more efficiently for the new service before backing down last month.

Mr Richards said: "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 last 40 years and likely to be the most important spectrum release in the UK in the next 20 years."

Chris Williams, media and telecoms partner at Deloitte, said: "Ofcom's proposals to undertake HD on the existing multiplex capacity entail significant commercial, technical and financial risks, which will need to be fully appraised before the impact of Ofcom's market-led approach to spectrum allocation on the vibrancy of the communications market can be fully understood."