The UK's content and new media industry is "extremely disappointed" by proposals contained within the European Commission's Television Without Frontiers directive, according to pressure group Intellect.

The directive gained a high profile this week after the EC announced plans to loosen the rules on product placement in TV programmes.

But Intellect, which represents IT and telecoms firms in the UK, said that its members see the new directive as an attempt to regulate the internet.

Intellect, whose members include BT and Microsoft, stated that such regulation can already be achieved voluntarily under Ofcom guidelines.

An Intellect spokeswoman said that the group had been opposing the directive for six months, but had "hit a brick wall". It maintains that the new media industry is moving so quickly that the rules "would need changing again in 2010 ".

The main concern is the distinction between linear services, i.e. scheduled television broadcasting, and non-linear services such as programmes accessed through video-on-demand or clips downloaded onto mobile phones.

Ofcom has suggested that such regulations would be unenforceable and that its own impact assessment had found that the costs would outweigh the benefits.

The EC is currently carrying out its own impact assessment.