India Moves to Revamp Telecom

India is finalizing an overhaul of its telecommunications policies to address criticism that regulations are wrecking one of the nation's hottest industries by fostering price wars, degrading service quality and blocking much-needed consolidation.

Kapil Sibal, India's minister of communications and information technology, said in an interview that the new policies, which will be in place by September, will relax restrictions that have prevented mergers and will aim to consolidate the wireless industry to only six carriers per market within India, down from 12 or 13 in many markets now. He also promised to free up radio spectrum, the airwaves that carry wireless signals, and allow companies to share spectrum. India's cellphone rates have plunged in the past several years in a hypercompetitive environment. Averaging about seven-tenths of a U.S. cent per minute, the rates are among the world's lowest. That has helped to bring mobile phones to the masses and turn India into the world's second-largest wireless market, after China, with more than 800 million subscribers. The industry's rapid growth over the past decade is frequently cited as one of modern India's greatest success stories and has attracted billions in foreign investment. But the setup has battered cellphone companies, whose revenue and earnings have declined sharply.Average revenue per user per month at Bharti Airtel Ltd., the nation's largest wireless carrier, dropped to just over $4 in the quarter ended March 31 from about $10 four years ago. Other carriers have reported similar drops.