The telecom regulator's view that Internet companies offering wireless services should start commercial operations within 12 months of airwave allocation will prevent players from unnecessarily holding on to spectrum, industry body ISPAI said on Wednesday.

"It is a step in the right direction. It will prevent players from holding on to spectrum unnecessarily, given that spectrum is a national resource. If an operator has applied for spectrum, they should be ready with technology and prepared for rolling out services," said Internet Service Providers Association of India (ISPAI) President Rajesh Charria.

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On March 7, TRAI recommended that ISP licensees with spectrum assigned should offer the commercial service to its subscribers on demand within 12 months from the date of spectrum allocation, failing which the airwaves assigned to them may be cancelled.

The suggestions are part of TRAI's recommendations on spectrum usage charges and presumptive adjusted gross revenue for Internet service and commercial VSAT service providers.

The regulator has also provided relief to Internet providers by suggesting to the DoT that spectrum usage charge (SUC) should not be levied as percentage of revenues, and that existing formula-based mechanism should continue.

"This will boost broadband penetration, especially in rural areas, and facilitate Digital India initiatives. In fact, TRAI's recommendations are in line with our views that formula-based method for spectrum charges should continue. Any move to link spectrum usage charge to annual revenue would have led to steep hike in broadband prices," Charria said.

Radio spectrum usage charges are levied on ISP licensees in accordance with the provisions of licence agreement.

ISP licensees having Broadband Wireless Access (BWA) spectrum need to pay 1 per cent of AGR (earned from BWA spectrum) as annual spectrum charges. Reliance Jio, Bharti Airtel and Tikona at present hold BWA spectrum.

However, the method to levy SUC fee on BWA spectrum holder was modified by the DoT in August 2016 by introducing weighted average SUC.

For all other assigned spectrum, the spectrum usage charge applicable on Internet service providers is formula based and has no linkage with adjusted gross revenue.