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MUMBAI, India -- A recurrence of familiar old problems -- regulatory roadblocks and foot-dragging by state-owned competitors -- is threatening to cool expansion in India's red-hot cellphone sector and is frustrating telecommunications investors.

While India has the world's fastest-growing cellphone industry, expanding more than 50% a year and adding five million subscribers a month, slow-moving regulators and state-run phone companies could stymie future expansion, industry analysts and executives say.

Cellular companies are spending billions of dollars on infrastructure each year to meet booming demand, but call quality in many areas is deteriorating because of bureaucratic bottlenecks beyond their control. Consumers in some cities complain that the quality of their service is deteriorating, with a rising number of dropped calls and lousy reception. Meanwhile, cellphone companies aren't raking in as much revenue as they could because connectivity problems are jamming up networks and making it tougher to sell value-added services such as those that let users download games.

The delays, while unlikely to derail the telecommunications sector, point to the continued tendency of Indian politicians and regulators to meddle with even the most liberalized industries. They also underscore the inability of the state-run infrastructure to keep pace with booming private-sector growth. Economists point to similar chokepoints across the economy -- such as insufficient roads, ports and power -- that are bridling India's huge economic potential.

Phone-company executives want Indian regulators to make it easier to expand and to pressure the national state-run phone service to take steps needed to give millions of new private-network subscribers access to the state-owned network. Analysts say government-created barriers to growth are a throwback to a more-socialist era in India, when industries were strangled by competition from subsidized state-owned companies and too many rules from bureaucrats -- known as babus here.

"The history of the telecom industry in India is that babudom and the public-sector companies have conspired to make life tough for the private sector," says John Band, president of Zoom Cortex, a financial consultancy here in India's commercial capital. He says the situation has worsened since Prime Minister Manmohan Singh's coalition government -- which includes Communist and other leftist parties -- took power in 2004: "On all policy matters to do with liberalization, this government is the prisoner of the left."

The left-wing parties that support Mr. Singh's Congress-party-led coalition have been blocking many plans to revamp the Indian economy. They oppose foreign and private-sector control of key Indian industries because they fear that will lead to a loss of jobs and drain wealth from the country.

Ironically, India's telecommunications industry often has been cited as an example of how deregulation can unshackle growth. It has been one of the biggest corporate-success stories since the government opened the sector to private investment in the 1990s, in part, because it was one of the first sectors in India opened to foreign ownership.

The influx of foreign capital and technology and reduced restrictions on competition have allowed the number of cellular users to more than triple over the past three years. With India's economy expanding more than 7% a year recently and the aspirations of the growing middle class soaring, India now has more than 100 million subscribers among its one-billion-plus population and demand could double in the next two years, industry analysts say.

"Many, many people in India have never heard a dial tone," so they jump at the chance for cellular service once it reaches their small town or village, says Manoj Kohli, president of Bharti Airtel Ltd., the largest Indian cellphone company in terms of numbers of subscribers, which plans to add about 1,500 towns to its network this year.

The higher-than-expected growth has caught the industry unprepared and call quality has suffered. "The quality of service is definitely an issue" at most Indian cellular companies, says Nripendra Misra, chairman of the Telecom Regulatory Authority of India in New Delhi. "They had never, ever expected this kind of growth rate."

While the agency this year reprimanded private-sector cellular companies for unacceptable service, operators say they can't maintain the quality of calls because of foot-dragging by the government-run national phone network, Bharat Sanchar Nigam Ltd. They say BSNL, which operates the largest landline services outside New Delhi and Mumbai and is the country's third-largest cellular provider, must invest more in the equipment for connections between its network and others. Analysts say the reason is a combination of BSNL being a slow state-run company and its desire to thwart the advance of private-sector competitors.

Phone companies -- including India's fourth-largest cellular company, Hutchison Essar Ltd., which is 45%-owned by Hutchison Telecommunications International Ltd. of Hong Kong, and Bharti Airtel, in which Singapore Telecommunications Ltd. owns a 31% stake -- plan to spend more than $12 billion in the next four years to meet demand. They say they need state-owned BSNL to keep up if growth rates and service quality are to be maintained and improved.

"This is the part causing the most grief," said S.P. Shukla, president of the wireless division at Reliance Communications Ltd., referring to carrier-connectivity problems. "When it comes to making a call go through on another network you need a point of interconnection. If you are on one side of the river and someone is on the other side, you need a bridge."

Cellular companies say they also have been held back by long waits to get more broadcast spectrum so they can handle more calls. The battle over spectrum space has been going on for more than a year.

Meanwhile, companies, regulators and politicians have been squabbling about which service providers deserve more spectrum and how they should pay for it. Some companies say spectrum should be auctioned off, while others say it should be allocated equally and paid for through revenue-sharing with the government. Still others want bandwidth to be allotted at a set price to only the largest operators that need it most.

"The delay in the policy with regards to spectrum is a concern," because it slows the growth in the number of calls and services companies can handle in urban areas, says Ajay Srinivasan, a telecommunications analyst at Crisil Research in Mumbai. "If phone companies don't get additional spectrum, then they have to put up more towers, which is difficult in urban areas."

In addition to these concerns, uncertainty about how much foreign investment will be allowed in India's telecommunications sector has slowed investment from overseas and blurred growth outlooks. The government this year lifted the foreign-shareholding cap for telecommunications companies to 74% from 49%. New Delhi has yet to clarify the circumstances under which the foreigners are allowed to invest.

"They are fixing the problems, but the magnitude of new customers is so high," says Anil Prakash, secretary general of Telecom Users Group of India, a nongovernment organization that represents consumers. "They need to set their house in order quickly."