The federal government stands to reap millions of dollars from an auction of wireless broadband spectrum to be held in late 2012, says the Sydney Morning Herald today.

The auction of the 126 megahertz spectrum will allow telecommunication providers to expand wireless and mobile broadband services, and provide the capacity to meet Australia's future needs.

Telcos are expected to bid millions of dollars because the size of their allocation determines the volume of data their network can carry. The auction is needed to establish the next generation of mobile broadband technology in Australia, known as long-term evolution (LTE) technology.

Telstra will be able to bid for a share of the spectrum only if its shareholders agree to the $11 billion deal with the government announced on Sunday.

Telstra agreed to share its fixed infrastructure and to migrate fixed customers onto the government's proposed new fibre optic network.

The chief executive of Telstra, David Thodey, said ''gaining access to the … spectrum is critical to building on this success [of the Next G network] to the benefit of Australian consumers, businesses and the wider community''.

The spectrum will become available as the government switches off analog television signals in December 2013. All television will then be carried over digital signals, which use less spectrum. The money that the government earns from auctioning this spectrum has been dubbed the ''digital dividend''.

The 694MHz to 820MHz range in the ultra-high frequency band will then be ''restacked'' to provide one of the largest spectrum auctions in the world. The Indian government reaped nearly $20 billion from recent third-generation mobile and wireless broadband spectrum auctions.

''This is a critical decision and a positive step in providing industry with the certainty, the director of Optus products and delivery, Henry Calvert, said yesterday.

He confirmed that Optus would participate in the auction and awaited details on when spectrum would become available.

The chief executive of the industry-funded Australian Mobile Telecommunications Association, Chris Althaus, said the larger mobile broadband capacity could boost economic efficiencies by more than $10 billion.