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The country's six nationwide wireless operators will have to pony up big bucks to capture new spectrum and 160 million users in key markets this November.

But just how much companies like

AT&T Wireless





and a consortium of






will have to shell out is the question -- and a $10 billion one at that.

"If the U.S. licenses sell for $10 billion, the market will love it," says an analyst who is watching the auctions but did not want to be named. "If they go for $20 billion, the market will hate it."

And the "hate it" option is now more of a worry than ever. That's because of the drubbing European telcos have taken the past two weeks after throwing $80 billion at third-generation mobile-phone licenses in Britain and Germany. As a result of the higher-than-expected prices, giants such as

British Telecom



Deutsche Telecom

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France Telecom


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have seen credit-rating downgrades, a postponed bond offering, broken alliances and plummeting stock prices.

While the bidding for most of the U.S. spectrum should not reach European levels, prices could soar in hot spots like New York, Los Angeles and San Francisco.

A particularly intense battle is expected for New York, which is arguably the country's most important city for wireless. It will have spectrum for sale that has been divided into three blocks covering just over 18 million potential users.

"SBC/BellSouth needs New York. They can't lose it. This is their only shot at it," says Art Poole, an analyst with

Raymond James

. "And Nextel, you name it and they need it. I just don't envy the situation they're in."

AT&T has notoriously poor service in New York, while the SBC/BellSouth joint venture does not yet own licenses there. But AT&T, SCB/BellSouth and Nextel won't be alone there. While not as desperate for spectrum as those three,

VoiceStream Wireless



Sprint PCS




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about-to-go-public wireless unit will also be making a run for these and other licenses. And that could push New York prices up, perhaps to the U.K. level of $150 per subscriber.

So should wireless investors fear a European-style meltdown after the U.S.-spectrum auction in late November? Not necessarily.

Analysts think that in some ways, losing out on additional spectrum may be more painful for some of these companies than paying too much. And there is a fundamental difference between the European and U.S. auctions.

"The U.S. auction enables these companies to complete their business plans as described," Poole says. "It's not predicated on next-generation technology and service." U.S. companies may cough up record sums to own licenses in markets critical to their national reach, but it's to provide a service well proven -- technically and financially.

The European auctions, by contrast, were not for licenses that will simply give mobile-phone companies the ability to extend their current reach. These licenses are for the universal mobile telecommunication services known as 3G, for third-generation service. These services, once devised, will enable mobile-phone users to transmit data, to search the Internet and to make purchases as well as to display pictures and live video.

The problem with 3G, some industry experts say, is that there are no guarantees about whether the prices paid to own these licenses will be justified by the services they will eventually provide. Next-generation technology exists now in theory more than in practice and is not expected to take off for another few years, at best.

"We feel some

operators will end up with the winner's curse," says telecom consultant Herschel Shosteck of

Herschel Shosteck Associates

. "They'll find the prices paid for these licenses aren't warranted."

The U.S. auction has taken on an even greater significance in light of the uncertainties of another major domestic spectrum sale. It has already been delayed twice and is now scheduled for March 2001. And despite comparisons between the March auction (which at least one analyst believes will be delayed a third time) and Europe's 3G auctions, Shosteck says the spectrum to be sold in November is actually better suited for 3G service in the country's more populated areas.

The spectrum to be sold in March is currently being leased by television stations that have use of the licenses until 2006. The U.S. government is eager to reap the profits of selling that spectrum to wireless carriers -- going so far as to eliminate restrictions on how much spectrum any one carrier can own in a market -- in an effort to promote competiton and higher prices for those licenses. But carriers are wary of spectrum that they may not have the right to use for another half-decade or that may require purchase from existing holders.

This only increases the importance of winning the November licenses, even if investors now have to start fretting about the possible cost.