A European Union proposal to regulate internet TV and other new-media services has created an uproar among internet and telecommunications companies, which banded together and released a paper detailing their complaints today.

Companies including Cisco, BT, Vodafone, NTL and Yahoo signed on to the paper, which argues that the EU proposal would drive new-media players from the European market and encourage those companies to invest elsewhere.

As part of the proposal, the EU recommends applying a basic set of minimum principles to on-demand services that would support some of the same regulations around broadcast TV, such as rules designed to protect minors, prevent incitement to racial hatred and outlaw certain types of advertising. The idea is to harmonise a minimum set of rules to allow companies to deliver on-demand video services across Europe without having to comply with many different rules in each country, according to EU documents.

"At the highest level we support what is taking place in the draft but we don't think that what is proposed is the right way to go about achieving those aims," said Vicky Read, program manager at Intellect, a UK telecommunications, electronics and technology trade association that spearheaded the response to the proposal.

If the proposal was passed, regulators would be faced with monitoring not just the limited number of existing broadcasters but countless and potentially elusive companies as well, she said. An individual maintaining from home a video blog that includes advertising would be subject to the rules, Read said.

The companies say that the rules should allow the industry to continue to be governed by the E-Commerce Directive as well as existing self-regulatory efforts, Read said. The E-Commerce Directive was adopted in 2000 and is largely a set of rules meant to protect consumers and other businesses such as ISPs (internet service providers) relating to e-commerce. The industry is currently monitored by self-regulatory groups, such as the Association for Television On Demand, but such groups wouldn't be able to continue to regulate under the current proposal, Read said.

The companies hope to better define what types of businesses might be affected by the final EU proposal. "We're suggesting that the industry works with the EU to try to find some precise wording to narrow down the definition to be very precise, as opposed to now which is very broad and all-encompassing," Read said.

Read said that the EU has been working on this proposal since 2002, but input from the industry was largely limited to the traditional broadcasters until late last year when the new-media players were invited to participate. The draft proposal came out in December and it's planned to take effect in 2010. Intellect has been talking to other organisations in Europe and hopes to involve them in the initiative to change the proposal in the near future, she said.