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The proposals include liberalisation of the 2G spectrum, which will enable major improvements to be made to the capacity and coverage of 3G networks. Ofcom estimates the benefits to the UK of liberalising the 2G spectrum could be in the order of £6bn.

The UK telecoms regulator says there are now 70 million active mobile subscriptions in the UK - in a population of 60 million - and an increasing number of people are using their mobile to access the internet.

The new proposals are designed to introduce greater flexibility in spectrum usage, in order to greatly improve rural coverage and the quality of indoor signals. They will also provide faster web browsing and music and video downloads, and reduce prices, according to Ofcom.

"We can't see it, touch it or hear it, but radio spectrum is central to our lives and we are using mobile devices more than ever before," says Ed Richards, Ofcom chief executive. "Our proposals are designed to make more spectrum available for high-speed mobile broadband services across the whole of the UK and to ensure that the UK mobile market continues to be one of the most competitive and innovative in the world."

The proposals cover the spectrum used by Vodafone, O2, T-Mobile and Orange for their 2G networks. In line with the existing European GSM Directive, the licences

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for this spectrum presently limit its use to 2G, which supports voice calls, text messaging and low-speed internet services.

Ofcom wants to remove this restriction. This will be required by a forthcoming European Commission Decision that 2G spectrum should be freed-up for a much wider range of uses, including high-speed mobile broadband services using 3G.

Almost all of these benefits are likely to come from use of the 900MHz band, currently shared between Vodafone and O2 (all four operators use the other, 1800MHz 2G band). This 900MHz band's lower frequency means it is particularly suited to providing 3G services in rural areas and inside buildings, and will require far fewer mobile phone masts than if higher frequencies were used.

Also, equipment using 900MHz for 3G services is now starting to be manufactured. Ofcom says that it would be possible to build a high quality mobile broadband network covering 99% of population using around 10,000 fewer sites per operator.

Given that the 900MHz band is likely to be so important, Ofcom is also proposing that some spectrum currently used by Vodafone and O2 for 2G services should be released for use by others in future. The amount of spectrum released should be enough to allow three additional operators to access the band.

The released spectrum will be awarded by Ofcom, probably via an auction, with the winners potentially able to use the spectrum from 2010.

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