Internet companies voice alarm over Italian law

ROME, Jan 26 (Reuters) - Internet companies and civil liberty groups have voiced alarm over a proposed Italian law which would make online service providers responsible for their audiovisual content and copyright infringements by users.

The draft, due to be approved next month, would make Internet Service Providers (ISPs) like Fastweb (FWB.MI) and Telecom Italia (TLIT.MI), and Web sites like Google's (GOOG.O) YouTube, responsible for monitoring TV content on their pages, industry experts say.

It comes as Google's YouTube unit is engaged in a legal battle with Mediaset (MS.MI), controlled by Prime Minister Silvio Berlusconi. Italy's largest media group wants 500 million euros in damages from YouTube for copyright infringement.

"As it is written at the moment ... the law would certainly help Mediaset in the procedure it has open against Google," Paolo Nuti, president of the Italian Internet Providers Association, told Reuters. However, he said he did not think the law was written expressly for this purpose.

The proposed regulations would make Internet sites as liable as television stations for their content and subject to hefty fines by the AGCOM media watchdog, according to a 33-page draft.

"If this happens it would sweep away Internet 2.0," Nuti said. "It would transform Internet platforms into judges or tribunals."

Italy's parliament, which is holding consultations with civil groups and Internet associations, is due to present a non-binding opinion to Silvio Berlusconi's government by early February. The draft decree only requires presidential approval.

Raffaele Nardacchione, director of the Asstel association of telecommunications providers which represents ISPs like Fastweb and Tiscali (TIS.MI), said the decree far exceeded the terms of the original European directive by extending the definition of audiovisual media to Internet firms and by tightening copyright.

Marco Pancini, senior European public policy counselfor Google, said that if the decree remained unchanged it would materially affect the company's business in Italy.

"The first step is to discuss this with Italian authorities to try to find a solution and we think this is do-able," he told Reuters. "The next step, if the law stays as it is, is going to be to discuss this with the European authorities."

COMMISSION COULD INVESTIGATE

EU sources told Reuters on Tuesday the Commission could open an investigation into the decree for infringing EU norms.

Even the head of AGCOM, Corrado Calabro, told reporters on the sidelines of a parliamentary hearing on Tuesday the decree should be revised because it would "deform" the EU directive.

The draft legislation has also raised criticism from freedom of speech groups like Italy's Article 21, which said in a statement the decree "deviously attacks the freedom to operate on the Web" and would "block any possibility of modern development of the country".

Italy has one of the lowest rates of ADSL Internet usage in western Europe, according to the European Commission's 2009 Information Society Report. E-commerce is also struggling. Only around 10 percent of Italians buy online compared with around 55 percent of Britons and Germans.

Industry officials warned the new decree would postpone the development of the Web even further.

"Any Internet company will make investments where the legislative system is economical and the opportunities for investment are greatest," said Nuti