Britain unveiled plans to cap ownership of the digital radio spectrum among mobile phone companies, aiming to settle a long-running dispute and fulfill the government's target of providing universal broadband.
The government is trying to give all five mobile operators a fair chance to further roll out broadband under its plans for a Digital Britain future.
The country's five main operators have been in dispute since the telecoms regulator Ofcom said in 2007 it could take radio spectrum away from the top two operators O2, owned by Telefonica, and Vodafone.
Ofcom said at the time the 900 Megahertz spectrum could then be auctioned off to the three remaining operators -- Orange, T-Mobile and 3 -- which could lead to billions of pounds in network rollout savings.
Ofcom wanted to lift regulatory restrictions on the use of spectrum so that third-generation (3G) mobile phone services such as surfing the Internet and using gaming services could also be offered over older second generation (2G) networks.
They said it was cheaper to provide 3G-type services over the 900 MHz band in rural areas than its rival 2G frequency, the 1800 MHz, as the lower frequency travels further and needs fewer base stations and masts.
But O2 and Vodafone protested against the plans and the dispute was seen as a potential barrier to the government's plans to roll out universal broadband, which would need cooperation from the mobile companies.
Britain is working on a plan to roll out Internet access to the whole country through a mixture of fixed and wireless connections by 2012.
Under the proposals outlined by the Independent Spectrum Broker on Wednesday, mobile companies would be given a spectrum cap, meaning they could hold on to the spectrum they own but would need to sell it before buying any more.
The holders of the 800 MHz spectrum could also be given coverage and access obligations to ensure there is nationwide coverage for new generation mobile services.
More spectrum is set to be released in the next few years as part of the switchover between analog to digital television and that could also be used to boost rural coverage.
Kip Meek, who compiled the proposals, said the auctions for 2.6 GHz spectrum should be held at the same time as the 800 MHz auction, in mid 2010.
He said the proposals had been submitted to the government and all interested parties.
Orange is owned by France Telecom, Deutsche Telekom owns T-Mobile and 3 is owned by Hutchison Whampoa.
(Reporting by Kate Holton)