If

Verizon Wireless

couldn't pull off its initial public offering in 2000, then, by God, it is making sure that it will have more spectrum than any of its competitors once 2001 rolls around.

The

Federal Communications Commission's

auction of spectrum in the 1,900 megahertz band took a break for the holidays after Thursday's bidding and will resume on Jan. 5, but after 23 rounds of bidding, Verizon is a few billion dollars ahead of its nearest rival in net high bids.

And though the auction is not on track to surpass the prices by telecommunications carriers in Britain and Germany paid for spectrum, the company, like some of its rivals, seems prepared to spend as much as necessary to acquire spectrum and build out the networks needed to use it.

Worries about the huge costs involved have driven down wireless providers' stock both here and abroad. Though it's far-fetched to believe that large carriers in the U.S. will default on the debt burdens they will undoubtedly amass, it's difficult in current market conditions to raise capital.

So far, the FCC has racked up $11.1 billion in total net high bids, and Verizon, a 55%-45% joint venture of

Verizon Communications

(VZ) - Get Report

and

Vodafone

(VOD) - Get Report

of Britain, has offered up more than half that total, at $5.5 billion.

Next on the list is

Alaska Native Wireless

, the bidding partner of

AT&T Wireless

(AWE)

, with $2.1 billion in bids, and

Salmon PCS

, the bidding partner of

Cingular Wireless

, with $1.6 billion.

Spectrum is the range of electromagnetic frequencies used in the transmission of voice, data and video. Only a fixed amount is available, which makes spectrum a coveted commodity. The more spectrum a carrier has licenses for, the more services it can offer, especially as data traffic increases with the development of third-generation, or 3G, networks.

Estimates of the amount of money that carriers will spend on spectrum in this auction vary, but Frank Marsala, an analyst at

ING Barings

, calculates it will total $13.5 billion. Carriers in Europe spent about $90 billion on various licenses there.

"Here we are, coming off a pretty bad equity year for telecoms in a period when many companies upstream from the service providers are suffering huge market cap losses because of telecom spending and the uncertainty of wireless data," observes Tim O'Neil, an analyst with

Wit SoundView

. "But the carriers aren't concerned and are looking at frequency as critical to their business plan."

Investors were concerned about

Nextel Communications

(NXTL)

spending too much on spectrum, but the company's stock rose 5% on Thursday after Nextel dropped out of the auction on Wednesday. The stock had dropped 31% before that, since the auction began on Dec. 12. "For Nextel to add critical mass, it would have ruined its business," Marsala says. "They would have used up their cash and had to raise a bunch of money. The market was worried." He rates Nextel a strong buy and his firm has done no underwriting for the company.

Nextel can try to

gain spectrum in the FCC's auction in March of spectrum in the 700 MHz band, should that spectrum occur.

Verizon Wireless is not publicly traded, as its IPO was

postponed last October. But Marsala notes the company, the largest wireless service provider in the U.S., has a good balance sheet, with good access to capital. He has no rating on Verizon.

"The level of activity for Verizon has surprised me," says Marsala, adding that the company did not participate in the spectrum swaps before the auction that alleviated the needs of some of its competitors. In November, Cingular and

VoiceStream Wireless

(VSTR)

swapped spectrum, while AT&T Wireless and

Sprint PCS

(PCS)

did the same.

Among the national carriers, Verizon is the only bidder that has not reduced its bidding eligibility at all during the auction. (Bidding eligibility is measured by the maximum amount of licenses that the bidder can bid for at any one time.)

Currently, Verizon holds licenses in all the top 50 markets but Oklahoma City. Though it clearly possesses nationwide coverage, expanding capacity in its markets is equally important. The additional capacity can then be used to offer wireless data services more quickly than the competition. Verizon was not immediately available for comment.

With perhaps two more weeks left in the auction, however, the other big players are not out of the game yet. "There are carriers with huge resources that are extremely desperate," says O'Neil. "Cingular has huge resources and huge needs."

TheStreet.com

pointed out as much in a

story last month. AT&T and VoiceStream are also bidding for additional capacity as well as "buying into virgin territory," as O'Neil says.

"This is a build-it-and-they-will-come sort of plan," explains O'Neil. "We are moving to a wireless society. If these companies want to have a long-term sustainable business plan, they need spectrum."