Credit ratings agency Fitch Ratings says European ISPs might increase consumer bills to help pay for network investment and ease cash-flow pressures if recent EU net neutrality proposals by commissioner Neelie Kroes are passed by European Parliament.

Under Kroes’ ‘open internet’ proposals, operators will not be allowed to block or throttle-back rival services, such as WhatsApp and Skype, or put the squeeze on bandwidth-hungry applications, such as YouTube and Netflix.

“Forcing ISPs to treat all data traffic equally would prevent them from transferring some of the costs to the content providers by charging premium rates to carry or prioritise their traffic,” said Fitch in a statement. “It would also reinforce the trend of services such as Apple’s iMessage and Skype video calls taking over from mobile operators’ own messaging and voice-call services, which is already hurting revenue.”

As Fitch notes, however, Kroes is not following the US example where FCC’s net neutrality rules discourage operators from offering faster service to customers that are willing to pay extra.

“That means ISPs would still be able to offer different levels of service to their customers at different price levels,” said Fitch, “which could therefore choose to partially offset the high cost of new infrastructure by increasing tariffs for end-customers.”

The credit ratings agency nonetheless adds that while high-speed internet services are increasingly a ‘must-have’ for consumers, it is unlikely that tariff increases would be enough to fully cover the cost of investment. This, says Fitch, could also affect cash flows, which are already under strain – particularly among southern European incumbents, such as Portugal Telecom, Telecom Italia and Telefonica.

With strong EU competitive forces in play, though, Fitch does not envisage that net neutrality regulation would put a dampener on network investment.

“Markets like the UK, the Netherlands and Portugal have all had a relatively high level of fibre investment, driven by the presence of strong cable and pay-TV competition,” noted Fitch. “Investment in content in markets like Belgium and more recently the UK are also a function of the competitive environment.”