Ofcom has prompted a battle for the airwaves, by launching a auction scramble for space on the radio spectrum for digital services.

The regulator has opted for an online, open auction approach, which means that providers of services including mobile TV, satellite digital radio and broadband wireless access or high speed internet on the move, will be able to bid.

The available spectrum has been packaged into key uses:
National digital terrestrial TV in high or standard definition; cognitive radio - a new wireless technology which can deliver broadband; high-speed mobile broadband and mobile TV and finally local television, which will include 25 new local TV stations across the UK.

Companies liable to get involved may include many of those who bid in the 3G spectrum auction in 2000, which brought in £22.5 billion.

The new sale - the so-called L-Band auction - is expected to bring in a tenth of the income of the 3G auction.

Once it is complete, winners can trade licenses should they wish to.

The auction, which is set for 2009, follows a lengthy public consultation, which is reported to have drawn 750 responses and a "lively debate".

Among those who have responded are the BBC, Channel 4 and ITV, leading a consortium called HD For All, who have petitioned for "ring-fenced" space for high definition TV over Freeview.

Ofcom predicts that the UK economy will gain between £5 and £10 billion over 20 years from services launched on the back of the freed-up spectrum.

Ed Richards, chief executive of the watchdog said: "The digital dividend will be one of the most significant and valuable releases [of broadcast spectrum] in the UK for 20 years".

"Our approach is designed to maximise these considerable benefits for UK citizens and consumers as a whole."

Further consultations are to published in the spring how the digital dividend auction will take place as well as how Ofcom is to ensure the auction "encourage[s] competition in downstream markets and guard against any anti-competitive behaviour such as hoarding".