Nov. 5 (Bloomberg) -- The European Union moved closer to gaining more powers to open the networks of companies such as Deutsche Telekom AG when EU lawmakers settled a dispute over an unrelated issue: Internet access for consumers.

Representatives of the European Parliament and EU national governments struck an accord on balancing individuals’ Internet access and the protection of copyright, clearing the way for a broader package meant to give regulators new authority to expose dominant telecommunication companies to greater competition.

“This package really pushes liberalization of the sector,” Alejo Vidal-Quadras, a Spanish member who was one of the Parliament negotiators, said today in Brussels after the overnight deal with the Swedish government, current holder of the 27-nation EU’s rotating presidency. The full Parliament and the governments must still give their approval, usually a formality after such agreements among negotiators.

The draft legislation holds out the prospect of greater competition for incumbent operators that also include France Telecom SA and Telefonica SA by establishing a pan-European agency responsible for enforcing market-opening decisions by national regulators. The agency will be called the Body of European Regulators for Electronic Communications, or BEREC.

The new rules also allow the European Commission, the EU’s regulatory arm, to ensure that national market-opening steps in the bloc are consistent. The commission will work with the new body in this area.

‘Functional Separation’

In addition, the new legislation gives national regulators across the EU the power to split the telecom networks and services of dominant companies into separate units, a measure known as “functional separation.” The U.K. took this step in 2006.

The 736-seat Parliament plans to sign off on the package, which the commission proposed two years ago, the week of Nov. 23. Final approval by EU governments would then typically follow within weeks.

The dispute over Internet access arose six months ago when the Parliament approved an amendment stipulating that a government authority couldn’t shut off Internet service “without a prior ruling by the judicial authorities.” This provision was a response to a French measure, since reformulated, to impose sanctions on households that illegally download music and movies from the Internet.

‘Forerunner’

The compromise takes up much of what the Parliament demanded, saying restrictions on users’ Internet access “may only be imposed if they are appropriate, proportionate and necessary within a democratic society.”

The agreed text also says that such steps “may only be taken with due respect for the principle of presumption of innocence and the right to privacy” and that “a prior fair and impartial procedure shall be guaranteed, including the right to be heard of the person or persons concerned.”

This “protects the fundamental rights of European citizens as users of the Net,” said Vidal-Quadras. “Europe is a forerunner here.”

To contact the reporters on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net; Matthew Newman in Brussels at mnewman6@bloomberg.net

Last Updated: November 5, 2009 05:42 EST