The regulator has published a consultation, The Future of Radio, which sets outs its vision for the industry in the coming years.
Under the proposals, radio groups would be allowed to own more than one station in a given area, as long as they did not have a monopoly. Such a move would have to be approved by the Government.
Ofcom is also preparing to review the AM and FM analogue frequencies, in 2009 and 2012 respectively, with a view to switching them off in years to come. Ofcom forecasts that up to 90% of radio listening will be done via digital platforms by 2017.
The media watchdog has said that once that figure reaches 50% or more, it could put the existing analogue spectrum to a different use.
Ed Richards, chief executive of Ofcom, acknowledged the existing rules were out of date and that broadcasters were facing "increased costs from having to invest in new platforms" as they deal with increased competition from other media.
He said: "There is evidence that the changes in listening habits, together with emerging new technologies, have had a more rapid and profound impact on the radio industry than was foreseen just a few years ago when the existing legislation was put in place."
The closing date for responses to the consultation is 29 June.
Analysis, page 20.
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