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UPDATE 3-Juncker upsets Web firms with EU internet plan

* Post-Brexit, Juncker seeks to show EU works for voters

* Telecoms operators see benefit from proposals

* Reform plan expected to be fiercely contested

* Showdown seen between content rights holders, websites (Edits, adds detail on reform plans)

By Foo Yun Chee and Alissa de Carbonnel

BRUSSELS, Sept 14 European Commission President Jean-Claude Juncker announced measures on Wednesday to rein in the world's technology giants, improve broadband speeds and cut the cost of internet access, trying to rally popular support for an EU battered by Brexit.

The reforms are likely to shift some wealth from internet services such as Google and Facebook to European telecom groups, which have largely missed out on the tech sector's surging growth and have lobbied hard for more flexible rules that would give them more money to invest in faster broadband access.

They complain that Google, Facebook's WhatsApp, Microsoft's Skype and other services have made billions by piggy-backing on their networks for free.

Among the changes, Juncker wants to roll back European Union rules that bar the likes of Deutsche Telekom, Orange and Telefonica from co-investing or sharing network capacity. The Commission would expand rules covering security and confidentiality for phone providers to internet-based communication services.

"We propose today to equip every European village and every city with free wireless internet access," Juncker told the European Parliament in Strasbourg, without giving more details of how the EU would help to achieve this goal within the next decade.

The plan would also extend the copyright powers of publishers, music artists and other content owners to seek a share of the revenue which internet services make from linking to publishing snippets of content such as news.

Juncker said the EU would also help to protect the personal online data of EU citizens through legal framework changes. The Silicon Valley tech giants are accused by European consumer groups of stockpiling users' data for commercial ends.

The unveiling of Juncker's reform plan starts what is expected to be a fierce fight among EU lawmakers, member states and industry groups before it can become law.

INTERNET SETBACK

The plan will add weight to accusations from across the Atlantic that EU measures in recent years to protect competition and privacy and crack down on illegal state aid are targeting the U.S. tech giants unfairly.

Critics, including U.S. President Barack Obama, have said the Commission is using tighter regulations against Silicon Valley companies in the hope of creating regional versions of Google or Apple. Last year, Obama dismissed these moves as "commercially driven", taken because European tech firms "can't compete" with U.S. rivals.

The tech industry expressed its displeasure on Wednesday.

EDiMA, a trade group backed by top U.S. and European tech firms ranging from Airbnb and Candy Crush game maker King.com to Amazon and Google, called the copyright framework more 1916 than 2016.

"It does not reflect the current environment in which users access and consume content online and lacks the ambition called for by most European stakeholders and consumers to realise a Digital Single Market," EDiMA said in a statement.

Juncker's plans, highlighted in his annual State of the Union address, will be seen as an effort to counter euroscepticism by showing how technocratic institutions in Brussels can deliver improvements to people's lives.

The Commission's broader efforts to create the "digital single market" are seen widely as favouring domestic telecom and media companies. Only eight of the top 100 global tech companies are headquartered in Europe, according to an A.T. Kearney study.

Some of Juncker's consumer-friendly measures are also likely to impact the telecom industry, including a plan for free mobile roaming and wireless internet in cities across the EU.

In a surprise move this month before the speech, Juncker withdrew proposals to limit the number of days consumers can use their mobile phones abroad without paying extra fees after criticism that the rules favoured telecoms firms.

He ordered the draft to be revised in what allies and officials said showed the EU executive wanted to be seen to listen to voters three months after Britons opted to leave the bloc.

COPYRIGHT STORM

Juncker said that the EU would work to defend people's right to privacy, saying: "Europeans do not like drones overhead recording their every move, or companies stockpiling their every mouse click. In Europe privacy matters."

His copyright proposal could give publishers more bargaining power with Google when demanding payment from the world's most popular internet search engine. The outlines of this proposal stirred controversy when they were leaked last month but Wednesday's plan provided few specifics.

"The creation of content is not a hobby, it is a profession," Juncker said. "As the world goes digital we have also to empower our artists and creators ... I want journalists, publishers and authors to be paid fairly for their work."

Google called the plan a backward step for copyright in Europe that would limit its ability to help news publishers generate advertising revenue by sending traffic their way via Google's Google News and Search properties.

"After all, paying to display snippets is not a viable option for anyone," Google Vice President for global policy Caroline Atkinson wrote in a blog.

The Society of Audiovisual Authors, speaking on behalf of media licensing rights groups, praised elements of the package. However, it said the plan failed to provide an "unwaivable right to remuneration" for European film, TV and multimedia screenwriters and directors to make a living from their works.

Benoît Machuel, General Secretary of the International Federation of Musicians, said: "What we need is a right for all performers to be paid each time a performance is used online on iTunes, Netflix or Spotify."

Grassroots internet rights groups said the draft proposal to extend copyright for news publishers even to short sections of news repeats the mistakes of laws passed in Germany and Spain, which hurt publishers and internet users alike.

"We now have a proposal that is poison for Europeans' free speech, poison for European business and poison for creativity," said Joe McNamee, Executive Director of European Digital Rights. "It could not conceivably be worse."

The EU initiatives got a thumbs up from ETNO, the European telecoms operators' association whose members include Orange and Telefonica.

"We need to ensure that the new Code (proposal) provides technologically-inclusive incentives, allowing our members to deliver a further increase in broadband investment," ETNO Chairman Steven Tas said.

The telecoms industry had already lobbied against the burden of the original proposal of allowing them to charge extra only for clients who use their phones abroad for more than 90 days a year or 30 in a row.

The European Consumer Organisation welcomed Juncker's reforms but expressed concerns they would favour dominant market players and do little to lower prices on international calls.

"Consumers need operators to compete with one another in the market to deliver innovative services at cheaper prices," its head Monique Goyens said in a statement. (Additional reporting by Marilyn Haigh in Brussels, Eric Auchard in Frankfurt and Alastair Macdonald in Strasbourg; editing by Tom Pfeiffer and David Stamp)

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