On the block

(Upstart) We watched in awe as British politicians counted 22 billion pounds from spectrum auctions. And then our telecom brethren were quickly punished by analysts for running up more debt than a drunken college student in the Caribbean with his parents’ Amex. (Mom, I swear that all those charges were emergencies!)

It looked like when the U.S. ditched off that little bit of spectrum somewhere in the 700s, things would be a lot tamer. That maybe during the C and F block, re-auction people would keep their heads about the cost of licenses, the cost of build outs. They’d keep in mind that the only reason they were having a shot at this in the first place was because the entrepreneurs who bought the licenses in the first place couldn’t afford to do anything with them, let alone pay for them.

But people in the wireless market can’t seem to keep their heads about anything recently. And now that the FCC changed the rules to allow non-entrepreneurial companies pose as little start-ups , the biggest players in the U.S. are looking to outspend their counterparts—you know how it is with the Joneses—and bidding has gone through the roof.

Already U.S. companies have dumped over $12 billion into licenses and the auctions aren’t even close to being done. Some areas in New York are worth a couple of billion alone. It’s starting to look like an eBay auction for an Elvis cape, and the government’s sitting and waiting to count its cash.

The real trouble isn’t with spending money to pick up new usable spectrum. The trouble is that a lot of the largest bidders have already been pounded in the market due to little things like missed revenue projections. Continuing to look healthy will get harder when they try to digest a few billion in expenses.

Investors are already skittish on everything high-tech and especially telecom. The largest CLECs and ISPs have been getting slaughtered like cattle (as we all know). Picking up a bunch of spectrum well over retail, just to make sure no one else gets it, doesn’t seem like a good way to calm everyone down. But maybe after this holiday break in buying, carriers will realize they’ve maxed-out their credit cards like so many holiday shoppers and slow down.

What Staff Writer David Schober thought was an Elvis cape was just a dirty bath towel someone swiped from a Motel 6. Share eBay horror stories at david_schober@intertec.com.