In line with the existing European GSM Directive, the licences for the 2G spectrum presently limit its use to 2G technology, which supports voice calls, text messaging and low-speed internet services.
Ofcom proposes to liberalise the use of this spectrum, by removing the restriction to 2G. This will be required by a forthcoming European Commission decision, which states that 2G spectrum should be freed up for a much wider range of uses, including high-speed mobile broadband services using 3G.
Most benefits are likely to flow from the wider use of the 900MHz band. This is because it has a lower frequency than the other band used for mobile services, making it particularly good for providing 3G services in rural areas and delivering such services inside buildings.
In addition, equipment using 900MHz for 3G services is now starting to be manufactured.
And in particular, said Ofcom, future 3G services rolled out using 900MHz would require far fewer mobile phone masts than if higher frequencies were used.
It would be possible to build a high-quality mobile broadband network covering 99% of the population using around 10,000 fewer sites per operator, said the regulator.
For these reasons, Ofcom is proposing that some of the spectrum currently used by Vodafone and O2 for 2G services should be released for use by others in future.
An auction for this spectrum could be held as soon as 2009, with the winners potentially able to use the spectrum from 2010.
Ed Richards, Ofcom Chief Executive, said, "Our proposals are designed to make more spectrum available for high-speed mobile broadband services across the whole of the UK, and to ensure that the UK mobile market continues to be one of the most competitive and innovative in the world."