BERLIN -- Ever since the U.K. third-generation wireless auction raked in a staggering $35 billion a few months ago, the share prices of Europe's major telcos have been weighed down with fears of massive outlays to obtain licenses throughout the Continent.

Companies that had once been touting the snazzy wireless broadband applications that third-generation (3G) mobile -- what the next generation of wireless phone services has come to be known as -- would offer began to behave like kids who don't like the way a soccer game is going. "It's just not fair!" you could almost hear them grouse.

And faced with a huge bill to become a pan-European 3G player, telecom giants began one by one to act like the miffed lad who took his ball and went home. Such corporate pouting has threatened to turn the German

universal mobile telecommunications system

(UMTS) auction, which begins on Monday, into a nonevent. The field has been whittled down from 13 to only seven bidders for four to six licenses.

Regulators disqualified one bidder before the process even began. The five other telcos have either joined up with rivals to lower bidding costs or, like

WorldCom

(WCOM)

, have given up their German 3G dreams entirely. The effect is likely to be dramatic, as, naturally, the fewer bidders there are, the cheaper the UMTS licenses should be. That means the telcos that successfully obtain a license in the German auction might see their share prices bubble higher, not only for relief they didn't pay too much, but also for gaining access to Europe's potentially most lucrative 3G wireless market.

Due to the size of Germany and its relatively low mobile penetration, the German auction had long been expected to fetch considerably more than the U.K. licenses did. However, after the contenders began to drop out as if they had caught UMTS ebola, observers began to ratchet down their estimates of $60 billion for the German government coffers. A tepid 3G auction in the Netherlands last week, which netted a third of what had been expected, hasn't helped the mood either.

"We all saw the disaster that happened in Holland," says Robert Halver, an equity strategist for

Delbrueck Asset Management

in Frankfurt. "I'm estimating it'll bring in 50 billion marks

$24.1 billion."

How much of a disaster the Dutch auction was depends, of course, on who you are. For the telcos such as

Deutsche Telekom

(DT) - Get Report

and

Vodafone

(VOD) - Get Report

still bidding in the German auction next week, the smaller UMTS fees could mean the pressure on their share prices from expected high 3G costs may begin to gradually dissipate. Lower prices could help shareholders stomach Telekom's rather pricey planned acquisition of

VoiceStream

(VSTR)

, too.

Both Deutsche Telekom and Vodafone's

D2

are expected to garner licenses, as are other current German GSM (global system for mobile communications) network operators

Viag Interkom

, backed by

British Telecom

(BTY)

, and

E-Plus

, backed by

KPN

(KPN)

, and

Hutchison Whampoa

.

MobilCom

, shored up with support from

France Telecom

(FTE)

, is the other likely candidate, leaving

Swisscom

(SCM) - Get Report

and the 3G consortium made up of Finland's

Sonera

(SNRA)

and Spain's

Telefonica

(TEF) - Get Report

the ones most likely to go home empty handed.

Each operator has to bid for two blocks of paired frequencies, but both DT and Vodafone are expected to go for the maximum of three blocks allowed. That theoretically should leave room for three more successful bidders. However, according to a report detailing the German UMTS auction by the Dusseldorf-based

WestLB Panmure

, the four established GSM operators could attempt to muscle out a newcomer in the hopes of holding on to their current wireless-market share. "All four could bid for three blocks to keep the status quo. Considering the financial strength and the common interest, such strategic bidding wouldn't be completely unrealistic."

But then again, having just gotten past the horror of the U.K. auction and its nasty fallout, the bidders may choose to be less aggressive in the hopes of a dead boring -- and cheap -- auction.