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Ofcom is seeking opinions on what to do with 8MHz of prime spectrum, with everything from selling to the highest bidder to allowing unlicensed usage on the agenda.

The spectrum is in two blocks of 4MHz; one starting at 872MHz and the other at 917MHz. These are perilously close to the spectrum used by Vodafone and O2 for their GSM services, and capable of interfering with those networks if high-power use is permitted. This is what's tempting Ofcom down the unlicensed-but-restricted route though the regulator still needs convincing that such an approach yields the greatest value.

Ideally the regulator would like to sell off the blocks to the highest bidder in the normal way, but the fact that the buyer will have to negotiate with O2 and Vodafone to avoid interference reduces the value of the spectrum considerably, perhaps enough to make the spectrum more valuable if it's given away.

To understand this argument you have to understand how Ofcom thinks: the regulator doesn't use auctions to raise revenue, it genuinely believes that doing so incentivises the buyer into making maximum use of the spectrum, and making maximum use of the spectrum is what Ofcom is charged with doing.

In this instance there is an argument that no-one is going to roll out a national network dancing around the incumbents, especially as they start pushing 3G technology (and beyond) into their spectrum, so maximum use may be better achieved by setting some caps on transmission power and allowing free use.

Ofcom reckons that could mean short-range radios, and RFID tags, but wants to know if anyone thinks unmanned aircraft might usefully be deployed in the space, or remote meter reading, or anything else you can think of.

Another possibility is another wireless broadband provider, but they'd have to pay the existing operators to fit better filters (at an estimated cost of £5.4m, not including fitting), or run their network at very low power. The Ministry Of Defence owns some adjacent blocks, which may come up for auction during 2012: that would make the spectrum much more attractive for broadband but few companies will gamble on the MOD keeping to schedule.

Ofcom does lean in the direction of an auction (pdf) - noting that spectrum that is licensed can thereafter been thrown to the commons if the situation changes. But spectrum that is thrown open cannot easily be reclaimed. If you disagree, or feel the risk is worth taking, then Ofcom is open for comments until 3rd November. ®

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