EU to probe if Internet providers hinder content

BRUSSELS (Reuters) - The EU's telecoms chief threatened on Tuesday to impose tougher rules to ensure Internet providers do not discriminate against some content companies such as internet voice call providers like Skype.

Europe has to date adopted a more hands-off policy on net neutrality -- the principle that all internet traffic be treated equally -- compared with U.S. regulators.

But analysts said this is likely to change as competition intensifies between mobile operators and service providers such as Google, Skype or Facebook that offer practically free voice communications and messaging.

Internet providers say they should be free to manage their networks for the benefit of all users, but content providers are worried about disruption of access and anti-competitive behavior.

"The Commission has asked the Body of European Regulators for Electronic Communications (BEREC) to undertake a rigorous fact-finding exercise on issues crucial to ensuring an open and neutral Internet," EU Commissioner Neelie Kroes said in a statement.

She cited possible barriers including the blocking of internet traffic in areas such as voice over internet.

"If BEREC's findings and other feedback indicate outstanding problems, the Commission will assess the need for more stringent measures," Kroes said.

The European Commission plans to publish the results of BEREC's investigation by the end of the year.

CONSUMER POWER Lobbying group Cable Europe, whose members include Liberty Global, Virgin Media Inc and Kabel BW, said there were already enough safeguards to deter providers from favoring their own services.

"Individual companies that behave anti-competitively can be sanctioned through current provisions in telecoms legislation and competition rules," Cable Europe's managing director Caroline Van Weede said in a statement.

"But, in the end, the sanction of the customer is most swift, given countless social networking tools, blogs and fast-moving web publications."

The European Telecommunications Network Operators' Association, whose members include Telefonica, Orange and Telecom Italia, pointed to the risks of more rules.

"In highly competitive markets for fixed and mobile broadband, any further regulation that would restrict traffic management and service differentiation would undermine Europe's digital economy and hamper innovation," ETNO chairman Luigi Gambardella said in a statement.

Skype said its research showed that a majority of mobile operators in several EU countries discriminated against voice-over-internet services and other users.

"The EU appears to be alone in the developed world in tolerating on such a wide scale these types of arbitrary restrictions on Internet use, put in place by private telecoms operators," Skype's spokesman Sravanthi Agrawal said.

"It has to cease, and we look to European authorities to unambiguously protect consumers and online innovation by stamping out ... such arbitrary restrictions."

European Consumers Organization BEUC criticized the Commission for missing an opportunity to adopt specific rules to protect users.

U.S. communications regulators adopted rules in December last year that banned high-speed Internet service providers from blocking lawful traffic.

(Additional reporting by Georgina Prodhan in London; editing by Charlie Dunmore and Will Waterman)