Ofcom has launched a new project to examine the best use of the analogue terrestrial spectrum.

The so-called 'digital dividend' will arise from the shutdown of analogue channels on a region-by-region basis, a process which begins in Scotland in 2008.

Ofcom intends to auction off the space to "users who are likely to make the best use of it", a move which could hamper the BBC's plans to launch high definition channels via DTT.

The regulator suggests that the spectrum could be used for new 3G mobile services, wireless broadband, local TV, coverage of advanced services in rural areas or additional TV channels - HD or SD - via Freeview.

"The benefits of digital switchover, in terms of efficient use of spectrum and subsequent innovation, are becoming clearer," said Stephen Carter, Ofcom CEO. "This review is intended to maximise the digital dividend."

The review is expected to complete by the end of 2006.