"no rational company would bid so much"
"No rational company would bid so much that they could not offer either a) competitive pricing, or b) compelling features, or c) both a and b."
As Gordon already briefly pointed out, history says otherwise. In the UK, the 3G licence bids were clearly ridiculous; here's how easy it was to see it (if you could do sums).
I don't have the exact numbers with me but around that time I remember being at a lunchtable in Valbonne with some techies and a former cellco marketing person. The lunchtime conversation wandered briefly onto 3G licence costs which were recent headline news, and likely recovery plans.
You start with the money the 3G operators paid for licences (I forget, look it up, it's huge). You pick a period of time to recover the cost of those licences (7 years would normally be generous for a big business investment). You pick a plausible number of 3G customers (averaged over the 7 (or whatever) years, given that initially it's small and later it should be bigger). Obviously several years into 3G in the UK, that number of customers still excludes iPhone users. And 3G coverage isn't exactly universal across the UK. Perhaps that indicates that there is still no compelling "killer app" for 3G; maybe next year, eh chaps? Or maybe the one after that...
The sums: Cost of licence divided by average number of punters, then divided by number of years = ARPU (annual/average revenue per user) just to recover the licence costs. Then add the other costs of running a cellco including the startup costs of a network infrastructure which doesn't yet exist, which aren't exactly small.
It was many hundreds of pounds to be billed per customer year just for the licences, a sum which was demonstrably ridiculous. The techies said "it's not going to happen". The former marketing person said something to the effect of "do you think us cellcos are stupid?". There wasn't really any need for a reply.
Boffin, 'cos you need to be a boffin to do that kind of sums, apparently.