NEW YORK (CNN/Money) - A new competitor to cable and satellite television systems takes its first halting steps this week when the Federal Communications Commission starts accepting bids for licenses to beam video and high-speed Internet connections into the nation's homes using a ground-based wireless system similar to cell phones.

Experts in the field say that the new system could provide a lower-cost way to bring hundreds of channels of programming, including interactive and high definition television, as well as high speed Internet connections, into homes. That in turn could provide competition needed to put downward pressure on cable and satellite television rates.

"It's a tremendous opportunity," said Richard Doherty research director Envisioneering Group, a technology consulting firm which is not working with any of the bidders. "There's no lower cost, high bandwidth way to reach consumers."

There is not yet any easy name for the new service. The common name is terrestrial microwave service (insert joke about popping popcorn in the TV here). The FCC calls it Multichannel Video Distribution and Data Service (MVDDS). It is already in use in some countries without cable or satellite service, such as the United Arab Emirates.

The system will use towers, such as television antennas and cell phone towers, to send and receive signals with homes in about a 10-mile radius. Its close proximity eliminates the fraction of a second delay in Internet connections, video on demand or voice communication, which its advocates say make it superior to satellite services.

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It will use the same part of the spectrum used by satellite television. The FCC insists the system will not interfere with the service of satellite television customers, but the proposal has sparked complaints and a legal challenge from satellite television operators.

"We have serious concerns that the end result of this auction will be that terrestrial services will begin to operate in our frequency band and interfere with millions of satellite TV customers' television service," said DirecTV spokesman Robert Mercer.

But the nation's No. 2 satellite television operator, EchoStar Communications Corp. (DISH: Research, Estimates), and its founder Charlie Ergen are now among the leading bidders for the new licenses.

Doherty and others in the field say the new service requires much smaller antennas in customers' homes than a satellite dish. It also does not need to be precisely pointed at a satellite's coordinates, meaning the equipment can be self-installed by customer.

It also opens the possibility of far more affordable mobile systems, giving consumers the chance to have a full range of cable channels and high-speed Internet connections in their cars or even hand-held devices, perhaps by the end of the decade.

Stationary television and Internet service could start as soon as the end of this year, with close to national coverage within two or three years, according to some in the field.

The cost to build the systems would be relatively modest – about $500 million to provide national coverage, according to Kirk Kirkpatrick, CEO of MDS America, one of the bidders for licenses as well as a provider of the equipment expected to be used by many of the new service's providers.

Kirkpatrick says that compares to about $7 billion in equipment costs spent by the two major satellite television operators – News Corp.'s DirecTV and EchoStar's Dish Network.

"Their equipment has to be hardened for space and launched on a rocket," he said. "Our equipment you put up on mast, carried on someone's back."

Cable and satellite operators insist they're used to dealing with competition and that the cost of programming, more than technology, is the major driver in pay television rates paid by consumers.

"We have been and will be competitive with any pay TV provider," said Mercer. "We're spreading our costs over a wide customer base.... It's unlikely another competitor in the market place will have an effect (on rates)."

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For taxpayers, the FCC's auction could raise tens of millions of dollars. The minimum bid for a license in one of the nation's 214 markets is $14.3 million, but bids to 20 times that are expected, especially in the largest markets. Unlike the cell phone spectrum licenses, which allowed competition, the winning bidder will have exclusive rights in the markets they win.

That exclusivity, plus the relatively cheap cost of the technology involved, means total licenses are expected to fetch at least $100 million, with estimates ranging to more than $1 billion although the outcome is very tough to determine before the bidding starts.

"Folks (at the FCC) are rubbing their hands as to how wild it could go and at the same time popping aspirins as to how disappointing it could be," said Doherty.