Media regulator Ofcom has announced plans for a year-long debate over how best to allocate the analogue spectrum after the terrestrial channels switch to digital TV.
The watchdog is considering a process similar to the windfall auction for 3G licences, or allocating the spectrum to its existing users.
The analogue TV signal is due to be switched off between 2008 and 2012, effectively releasing highly sought after spectrum.
It is seen as valuable because it occupies the versatile UHF band, offering a range of ultra high frequencies.
Ofcom has said that it will not define what the spectrum can be used for, and will open up the possibility of bids from mobile operators, broadband providers, new local television services and other wireless services.
Stephen Carter, chief executive at Ofcom, said: "This is a particularly large and valuable piece of spectrum. The benefits of a digital switchover, in terms of efficient use of spectrum and subsequent innovation, are becoming clearer."
Existing broadcast platforms such as Freeview are likely to bid for the spectrum to allow channels to launch next-generation high definition services.
Ofcom said that it will abandon the existing system of allocating a specific use for each part of the spectrum so that bidders can propose how the so-called "digital dividend" should be used.
The cleared spectrum will become available on a region-by-region basis as analogue television is switched off.
The 3G auction raised £22.5bn for the Treasury, but the analogue spectrum auction is expected to raise a far smaller amount.
Experts predict that the spectrum will be used for mobile services, wireless broadband, high-definition Freeview channels, interactive TV channels, local television, and high-speed wireless for rural areas.
The government could benefit from being able to sell the spectrum years in advance of it actually being used.
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