Communications regulator Ofcom has confirmed that companies will be able to begin buying and selling radio spectrum from the end of this year.
Supporters of spectrum-trading claim that it will ensure that radio spectrum is used more efficiently, because there's only so much to go around and it makes sense to enable a market to distribute it more effectively.
At present, a very wide range of organisations use parts of the spectrum, from taxi firms and broadcasters to mobile phone networks and the military. Each uses a small chunk of the spectrum.
Ofcom says that allowing users to trade their stakes will bring more freedom and flexibility into spectrum management.
"Access to a flexible and transparent market coupled with the ability to explore innovative new uses for existing spectrum will maximise the effective use of a finite national resource," said Stephen Carter, chief executive of Ofcom, in a statement.
A timetable for spectrum trading was first proposed in November last year. This was subject to industry consultation, and Ofcom said on Friday that it had received "strong support" for its plans.
However, it will take several years before spectrum trading is fully implemented. The first stage, beginning at the end of this year, will only cover spectrum used for analogue public-access mobile radio, national paging, data networks, private business radio, common base stations, fixed wireless access, scanning telemetry and fixed terrestrial links.
The parts of the spectrum used for mobile and wireless broadband services such as 3G, though, probably won't be tradable until 2007, although there's a slight possibility it could happen earlier. It's understood that Ofcom and the government want to allow time for the 3G and wireless broadband markets to develop further.
A draft roadmap for these parts of the spectrum will be published in December 2004.
Spectrum trading does have its critics, though, who don't believe that giving the market control of the use of the radio spectrum is advisable.
Advocates of the "spectrum commons" approach believe that spectrum should not be treated as a piece of property but as a public space that is subject only to minimal restrictions.