Over the coming weeks, the Federal Communications Commission will set guidelines for an auction of the largest block of mobile wireless spectrum ever to be offered in America. The advanced wireless services auction, as it is popularly known, will assign thousands of different licenses and will be one of the most closely watched auctions in history.Investment analysts are carefully watching the auction, which is scheduled for later this summer,as a gauge of the health of the wireless sector.

The entire wireless industry depends on one resource: spectrum. At first glance, the health of the wireless industry should lead to extraordinarily high prices at the auction. But spectrum auctions are more complicated than that.

If spectrum were a truly fungible commodity like petroleum or wheat, the prices in the AWS auction would be an accurate reflection of the value of all spectrum licenses and the health of the entire wireless industry. But spectrum, while substitutable, is not a pure commodity. Licenses for spectrum have different geographies, different physical characteristics, different types of available equipment that take years to develop, and different regulatory treatment for such important considerations as protection from interference.

Even within the same band of spectrum, values vary widely. For example, in an auction a little more than a year ago, the price of one license was more than 40 times greater than the price of a similar license in a different geographical area, even after adjusting for population differences. Prices vary because of the idiosyncracies of individual licenses in distinct markets. Tens of thousands of commercial spectrum licenses cover the country; for each license, no more than a handful of other licenses are truly close substitutes.

Auctions are an efficient means of assigning licenses, not a governmentsanctioned measurement of an industry’s health. But many countries, including Korea, which is technologically ahead of the rest of the world, do not use auctions for spectrum.And much of the spectrum used in America was as signed by methods other than auctions. Spectrum is no less valuable, and the wireless industry no less promising, when auctions have not been used.

The Congressional Budget Office estimates that the AWS auction will raise about $12.5 billion in receipts. The Office of Management and Budget estimate is slightly lower.Private estimates vary widely and depend on many factors ranging from the exact structure of bidding discounts awarded to small businesses to the possible participation of giant Internet companies such as Google and Yahoo. Reasonable individuals disagree about the size of government receipts to be expected in the auction, but no one seriously disputes the expectation of substantial growth of the wireless industry.

The wireless industry started from nothing in the early 1980s and today has a market capitalization of hundreds of billions of dollars.America has more than 200 million wireless subscribers, but only a small share of total global wireless users. The Telecommunications Industry Association recently released estimates that the industry would experience 9% compounded growth in America for the next few years. Since the overall American economy will almost certainly grow at less than half that rate, the wireless industry is destined to be a much larger share of our national economy.

In the industry’s brief 25-year history, the values of businesses and spectrum have been volatile, but the trend has been upward. Having a healthy market to buy and sell wireless companies and licenses helps to alleviate some of the volatility of the wireless markets. Last year, Sprint purchased Nextel. Recently, AT&T agreed to buy BellSouth and its share of Cingular Wireless. Verizon has offered to buy out Vodafone’s share of Verizon Wireless. All the major wireless companies have made smaller acquisitions in the past year.

Predicting the amount of receipts the spectrum auction will collect this summer is extraordinarily difficult, and such predictions have not been accurate since spectrum auctions began 11 years ago. Regardless of the actual amount of the receipts, the industry is growing rapidly.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott–roth.com.