OTTAWA (Reuters) - It could take up to a year to see increased competition in Canada's cellphone market in the wake of a wireless spectrum auction, Industry Minister Jim Prentice said on Tuesday.

"I've seen estimates ... that it will be approximately a year before we see new competition, but I certainly anticipate that at some time between now and that date that we will begin to see new competition in the marketplace," Prentice told reporters from a news conference in Edmonton, Alberta.

Ottawa has taken steps to avoid "hoarding" the airwaves over which wireless services are delivered by prohibiting new market entrants from selling their spectrum licenses to the three big incumbents for the first five years of the 10-year license, Prentice said.

He added he expects those who won licenses will put the spectrum to "its highest productive use."

Prentice also hinted at another auction of spectrum in about 18 months from now for the "700-series bandwidth."

"It too is a highly prized spectrum for different reasons," he said without providing further details.

The auction of wireless spectrum ended on Monday, raising C$4.25 billion ($4.25 billion) after almost two months of bidding. The proceeds were more than twice the amount analysts had expected.

The government had set aside a chunk of airwaves exclusively for new players in the industry, a move aimed at fostering more competition and lowering prices for consumers.

It has conditionally assigned 282 licenses to 15 companies but will only award the final licenses after ensuring the firms comply with a series of financial and ownership requirements, which could take weeks.

Prentice declined to comment on whether he would like to invest part of the windfall from the auction on improving the national broadband infrastructure, a strategy pushed by the political opposition and also by Canada's second-biggest phone company Telus Corp.

"The prime minister and his cabinet will assess the fiscal parameters. How these funds are allocated, the process by which they are accounted for ... the decisions that need to be made between reducing debt, other governmental priorities, reducing taxes, are decisions that remain to be made," he said.

Rogers Communications Inc, which owns Canada's largest wireless firm, was the top bidder in the auction with offers totaling C$999.4 million. The amount let the company secure spectrum in every area of the country.

Telus had C$879.9 million in standing high bids. BCE Inc, the biggest telecoms company in the country, had bids totaling C$740.9 million.

The newcomers that appear to pose the most serious threat to existing carriers are Quebecor Inc, which bid a total of C$554.5 million, and Globalive Communications, with bids totaling C$442.1 million.

($1=$1 Canadian)

(Reporting by Wojtek Dabrowski and David Ljunggren; writing by Louise Egan; editing by Rob Wilson)

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