Public sector given chance to sell £20bn of radio spectrum

Ofcom has established a new set of guidelines that will allow government agencies such as the Ministry of Defence to cash in on valuable spectrum worth up to £20bn by selling it on to telecoms companies looking to beef up mobile coverage.

Ofcom, the telecoms and media regulator, is working to sell off large chunks of spectrum - the frequencies that carry mobile phone signals as well as other data services delivered wirelessly - over the coming year. The newly released spectrum will allow telecoms companies to launch a wide array of new services including mobile television and wireless broadband services, as well as boosting the quality of mobile coverage.

The regulator said that public sector organisations, including the Ministry of Defence, the Civil Aviation Authority, the Maritime and Coastguard Agency and the UK's emergency services, hold around half of all radio spectrum below the 15 gigahertz band. That band of spectrum is the most sought after and congested frequency according to the regulator, suggesting the interest in securing the asset for commercial usage could be very high.

Ofcom said that the spectrum owned by public sector organisations could be worth between £3bn and £20bn according to an independent survey compiled by Professor Martin Cave. The value of the spectrum will be determined by how much is put up for sale and the level of interest from telecoms companies.

The public sector was in effect gifted large amounts of spectrum in the past to operate secure communications networks across the country. However technical advances in the field of secure networks means that it is no longer effective for government agencies to hold onto frequencies that are no longer needed. Ofcom said its proposals would allow public sector organisations to trade spectrum with commercial companies while also ensuring that national security and public safety remain paramount.

Ed Richards, head of Ofcom, said: "Spectrum is a valuable resource and demand for it is increasing all the time. Giving public organisations new opportunities and incentives to make the most efficient use of this resource is just one part of a wide set of measures introduced by Ofcom to make sure that the UK's spectrum is used to the maximum."

Last year, Ofcom unveiled plans for the largest release of spectrum ever conducted in the UK which includes valuable frequencies that are currently used for analogue television. Despite the size of the auction, the total raised is unlikely to approach the £23bn that mobile operators shelled out at the turn of the century to secure licences to launch 3G services. The auction also raises the prospect of new companies entering the UK mobile telecoms market as multiple licenses will be available.

Companies that successfully bid for the spectrum will not be tied to offering specific technologies over the frequency. That contrasts with the 3G licences that were sold with specific conditions about use of the spectrum. Mobile operators like Vodafone have started lobbying Ofcom to allow a relaxation of initial license conditions to use existing spectrum for a variety of services.

Ofcom has previously said that re-using the spectrum currently used for analogue television could benefit the overall UK economy to the tune of up to £10bn over a 20-year period. The regulator calculates that companies reliant on spectrum that is currently available contribute around £37bn a year to the UK economy, equating to 3 per cent of GDP.

Ofcom will detail its final proposals for public sector spectrum trading in October. The move follows a Treasury-backed review of spectrum in the UK published in 2005 that detailed the amount of available spectrum owned by the public sector and how it could be used to launch innovative new services.