Mobile phone operators have begun bidding for 4G mobile broadband licences, in a process expected to introduce competition to the airwaves by summer.
Currently only EE offers superfast mobile broadband services commercially. Yesterday it announced a 20GB data plan that costs £46 per month on a SIM-only basis and £61 with a 4G handset on a 24-month contract.
Prices are expected to fall once rivals O2, Vodafone and 3 are able to introduce their new networks.
Ed Richards, the chief executive of the communications regulator Ofcom, which is running the auction over the next few weeks, said the start of the process today was a "very significant milestone".
"It will release the essential raw material for the next wave of mobile digital services," he said.
"This will change the way we consume digital media in both our personal and working lives and deliver significant benefits to millions of consumers and businesses across the country.”
The winners are expected to be announced by early March.
The bidding firms, which as well as the consumer mobile operators include firms who want to use 4G technology for transmitting data within communications networks, will compete for 28 chunks of spectrum in the 800MHz and 2.6Ghz bands.
The auction will be conducted in secrecy online. Bidders will first tell regulators what combination of chunks of spectrum they are interested in owning and how much they would be willing to pay for it. Through a series of rounds, the price will rise in increments of at least five per cent. The winner will pay the lowest price that is greater than any other bid, in similar style to an eBay auction.
A second process will then give them the chance to bid on other lots in the hope they can still win a useful combination of spectrum chunks. To run a national 4G mobile broadband network, operators will ideally want licences for both 800MHz, which is best for covering wide areas, and 2.6GHz which is useful in densely populated areas as it offers more capacity.
Mr Richards said last month he was concerned the auction had become a "political football," as the parties argue over how to spend the multibillion-pound windfall it is expected to generate for the Exchequer.
£46 p/m for 20GB is stupid.
Do you think we'll ever get an unlimited data plan for 4G? If so, I could maybe see myself using it over a traditional fixed line connection as my line will never get upgraded. Only concern would be ping response timing.