Among the Treasury documents issued as part of the Pre-Budget Report was an indpendent audit of public sector radio and radar spectrum holdings, with recommendations on what to do with spare capacity.
Prepared by professor Martin Cave, director of the Centre for Management under Regulation at Warwick Business School, the study raises the possibility of a new market mechanism that would allow public bodies to trade frequencies with private sector mobile communications and media operators.
In an online statement, Professor Cave commented: "Spectrum demand is forecast to exceed supply in the medium term. This report recommends a flexible, responsive, market-based approach to meeting these needs through giving incentives to public sector spectrum users to make more efficient use of their holdings, by extending spectrum pricing, spectrum trading and admitting new sharers into public sector bands."
In 2002, Cave carried out a review of spectrum management for the government and in last year's Budget, the Chancellor asked him to carry out the latest audit.
Radio frequencies are a finite resource and the biggest users of the UK's radio frequencies are public sector bodies such as the Ministry of Defence and Civil Aviation Authority and emergency services.
In his report, Cave indicated that it was too early to put a value on the capacity, but the Chancellor will no doubt have fond memories of the £22bn the Exchequer reaped when it auctioned off third generation mobile phone operating licences in 2000.
Television broadcasters are in the process of moving to digital-only transmissions, which should free up more of the spectrum. According to a recent House of Lord's report, the redundant frequencies could bring in between £1.1bn and £2.2bn if they were sold off. Further trading under Cave's new market mechanism could prove to be a handy stand-by for cash-strapped Chancellors and public bodies in the next few years.
Cave's main recommendations included:
The Government indicated that it welcomed the conclusions of the audit and committed itself to work with Ofcom to implement professor Cave's recommendations.