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U.S. investors are sizing up the next frontier in the North American cellphone industry – and they're looking to Canada.

Some of the largest bidders vying for a slice of the market in upcoming auctions of wireless spectrum will be heavily financed by U.S. and overseas backers, according to bids submitted to industry Canada.

M/C Venture Partners, a Boston-based investment firm whose executives sit as directors on U.S. wireless companies, has revealed itself as one of the bidders in the May auction that will allow new cellphone companies to launch.

The bid, which was submitted last week using a numbered company, will see M/C Venture and Virginia-based Columbia Capital align themselves with Canadian investment firm Novacap in an effort to buy enough spectrum to become a national player.

They are among several potential bidders that will be significantly backed by foreign money, putting down a deposit of $154.9-million with Industry Canada to take part in the auction. They join others that are believed to have large amounts of foreign venture capital, including Globalive Communications Corp. and Niagara Networks Inc.

“Between us and Columbia Capital, we have experience in almost every single kind of wireless carrier you could imagine,” said Salvatore Tirabassi, a partner at M/C Venture Partners.

“We think there's a lot of opportunity up there,” Mr. Tirabassi said.

It's not the first time U.S. companies have invested significantly in the Canadian wireless industry. However, such foreign alliances could spark controversy.

The entry of new players will be welcomed by some consumers who want more competition in the wireless sector, but it could raise questions about whether they will meet Canadian ownership requirements.

Foreign investors have previously been involved in the Canadian telecom sector. SBC Communications Inc. sold its stake in BCE Inc. in 2003, and Verizon Communications Inc. unloaded its stake in Telus Corp. the following year.

T-Mobile had a stake in Microcell Telecommunications Inc. before it filed for protection from creditors in 2002.

Mr. Tirabassi wouldn't discuss his group's strategy for Canada, but he is optimistic about the industry's prospects considering the lower rate of wireless penetration here than in the U.S., Europe and Asia, he said. M/C Venture Partners has backed many cellphone carriers in the U.S., including MetroPCS Wireless Inc., which offers unlimited cellphone calling plans in a number of big cities.

Other bidders may include foreign investors, but the size of the stakes is not known. They include Data & Audio-Visual Enterprises Wireless Inc., submitted by fast-food and satellite radio executive John Bitove, and Triple Five Universal Enterprises Ltd., said one source who intends to participate in the auction.

More details about the ownership structure behind the applicants will be revealed on March 31.

Industry Canada will make sure the winners of the auction, set to begin May 27, comply with foreign ownership rules.

Some believe at least half of the money invested must be Canadian in order for the bid to be approved.

“Something south of 50 per cent is probably what we're looking at,” said industry consultant Iain Grant of the SeaBoard Group.

According to the rules governing Canada's telecom industry, foreigners can only hold 20 per cent of an operating company and one-third of the holding company. But there are different ways to meet those requirements, and Industry Canada examines each case separately. A spokeswoman declined to comment yesterday.

Mr. Tirabassi insisted the syndicate will meet foreign ownership rules. “We've had very professional regulatory advisers advising us along the way,” he said in a phone interview.

Yak, a unit of privately-held Canadian firm Globalive Communications Corp., has some foreign backers: Weather Investments, which is controlled by Egyptian billionaire Naguib Sawiris, and Novator, which has wireless investments throughout Europe.

While Globalive chief executive officer Anthony Lacavera declined to give details about each partner's holdings, he said there are no issues with regulatory compliance.

“I'm very confident that we are not only in compliance, [but] that we well exceed the requirements and Industry [Canada] will be very happy to see the structure and to see we put together a plan that makes us a formidable, viable competitor,” he Mr. Lacavera said.

Then there is Niagara Networks, which put down the biggest deposit of all: $881.4-million. The president of the company, Douglas Evashkow declined to comment on the backers or on whether the application will comply with foreign ownership rules. One analyst speculated U.S. private-equity investors could be involved.

While Mr. Grant of SeaBoard expects Ottawa will carefully probe the ownership structure of these bids, he also believes Industry Canada will try to keep as many suitors in as possible by letting them restructure their bids.

“The government wants to make as many potentially qualified bidders as qualified as possible,” Mr. Grant said. “It's in their interest to ensure that the auction process is lively.”

M/C Venture Partners has backed many cellphone carriers in the U.S., including MetroPCS Wireless Inc., which offers unlimited cellphone calling plans in a number of big cities.