A 4G phone made by Taiwan's HTC is already on sale in the US The telecoms regulator is to launch consultations later on how best to sell off the rights to the next generation of mobile wireless networks.
The auction of the so-called fourth generation, or 4G, spectrum will be the largest ever.
The last time Ofcom held an auction, for 3G in 2000, it raised a record £22.5bn for the Treasury - well before the rise of smartphones that are now so prevalent.
The auction itself will happen in 2012.
The additional spectrum to be sold off should mean faster speeds for downloading data - such as music and movies - to phones as more capacity is made spare for all the networks.
The actual parts of the spectrum being sold - at the 800MHz and 2.6GHz bandwidths - will be parts of the wireless spectrum historically used by analogue TV, which is being switched off as digital is rolled out.
Competition concerns
Smartphones such as the iPhone, Google Android and tablet devices are big users of bandwidth, which means there has been a squeeze on what is left.
Ofcom has even allowed mobile phone carriers like Vodafone and O2 to use parts of the old 2G network until more of the spectrum is made available.
The UK network Three has complained about that, and about its fears for the auction.
The country's smallest mobile phone operator is worried that its rivals will outbid it at auction, buying up larger slices of the available bandwidth and squeezing Three out of the market altogether.
Ofcom should respond to those concerns in the consultation.
3G auction
The dramatic growth of phones such as the iPhone means that mobile carriers need more bandwidth It will also hope to avoid the mistakes of the last auction in 2000.
Then, the biggest bid for 3G was from Vodafone, which paid £5.96bn.
BT Cellnet - which eventually became O2 - paid £4.03bn. Orange paid £4.1bn and One2One paid £4bn.
But most carriers and observers believe that operators overpaid for those licences and were not able to invest in the infrastructure as a result of paying those huge fees.
The German government raised 50bn euros (£71bn, £43.6bn) at its 3G auction in 2000, but managed to raise only 4.3bn euros at its 4G auction last year.
Already behind?
Japan and the US already have 4G networks - though these are often defined in slightly different ways by different countries.
The biggest mobile phone companies in the US - Verizon Wireless and AT&T - back a 4G network powered by Long Term Evolution (LTE) technology.
Verizon launched its LTE network in December, promising speeds up to 10 times faster than its current 3G network. It is planning full nationwide coverage by 2013.
AT&T this week bought T-Mobile USA from Deutsche Telekom for $39bn (£24bn), creating the largest US wireless network.
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Source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-12811122
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