Portugal telecoms in breach of net neutrality rules, regulator says

LISBON, Feb 28 (Reuters) - Portuguese telecoms regulator Anacom accused the country's main operators - MEO, NOS and Vodafone - on Wednesday of violating European Union rules on internet neutrality, which are intended to ensure a free and open internet.

The regulator gave the providers 40 days to change some of their internet packages, which it said distinguish between caps on general traffic and caps for certain applications.

In other words, they offered preferential pricing for some services, a violation of the concept of net neutrality, which requires internet service providers to offer access to all content without favouring or blocking any particular service.

"This differentiation is deemed to be in breach of net neutrality rules and undermines innovation in the Internet ecosystem," Anacom said in a statement.

Local (Stuttgart: 19549987.SG - news) telecoms provider MEO, a unit of Dutch-listed Altice (Other OTC: ATSVF - news) , has previously been accused of two-tiered pricing of mobile internet packages, which critics see as a departure from net neutrality.

Vodafone said in a statement after Anacom's decision that "Vodafone, MEO and NOS are perplexed by this decision, which involved no previous presentation or discussion with the operators."

Net (LSE: 0LN0.L - news) neutrality has become a big issue in Europe after the United States ended it last year. The EU is now the biggest market where Internet neutrality still prevails, but Portugal has been singled out as allowing practices that undermine it.

Anacom said certain packages offered by MEO, NOS and Vodafone violated the Telecom Single Market Regulation. Still, Anacom Chairman Joao Antonio Cadete de Matos said the law was unclear on what sanctions could ultimately be applied to the operators.

(Reporting By Axel Bugge and Daniel Alvarenga)