High-priced air

In the wake of a startling universal mobile telephone service auction in the U.K. in which winning bids raised totaled more than $35 billion, European governments and wireless carriers are reassessing their approaches to spectrum distribution.

Selling UMTS spectrum represents a windfall that can make a large dent in government debt structures. As a result, more countries - most notably, France and Italy - are considering auctions instead of "beauty contests" to sell spectrum.

For wireless providers, the unexpected high prices for spectrum leaves them in a dilemma. They must have spectrum rights to exist, but committing so much money in rights fees is daunting - especially when a significant investment in building a network is needed to start generating revenues.

As a result, many companies interested in spectrum rights plan to submit bids as teams in the upcoming German auction, thereby defraying the cost of spectrum rights. Analysts project that the winning bids in the German auction could total almost $50 billion.