* Telecom firms will have to "treat all traffic equally"
* Industry says prioritising some types of data is necessary
* EU member states, European Parliament finalising telecoms reform
By Julia Fioretti
BRUSSELS, May 28 (Reuters) - Draft European Union proposals limiting how telecom operators manage the traffic on their networks will not make welcome reading for firms in the industry as they look to prioritise and earn potentially vast income from some types of data.
The draft text on so-called "net neutrality" put forward by Latvia, which holds the EU's rotating presidency, and seen by Reuters, would force telecom companies such as Orange and Telefonica to treat all data equally, something they say is technically impossible.
It is due to be discussed by EU ambassadors on Friday, ahead of the third and possibly final round of negotiations next week between EU member states and the European Parliament to find an agreement on net neutrality and ending mobile roaming charges across the 28-member bloc.
Telecom companies want leeway in being able to dedicate network capacity to services such as providing connectivity for driverless cars and facilitating the exchange of medical data between patients and health professionals.
But net neutrality advocates counter that it would set up a two-speed Internet and violate the openness of the web.
EU lawmakers last year voted for a very strict version of net neutrality. But member state representatives have over the past few months inched towards a lighter approach, allowing operators more flexibility in how they treat data.
The latest text reintroduces the obligation to "treat all traffic equally" and only allows specialised services where there is enough network capacity to ensure other users' connections are not materially impacted.
"If restrictive rules on traffic management and specialised services are approved, we risk to worsen the user experience and to reduce the overall growth and job creation potential of Europe's digital economy," said Steven Tas, head of industry group ETNO, whose members include Deutsche Telekom, Telefonica and Telecom Italia.
The Latvian proposal will also irk telecom firms by bringing forward the date for the abolishment of mobile roaming charges when travelling across the EU.
While EU lawmakers want the fees to go by the end of next year, member states had earlier been reluctant to set a date, effectively delaying the abolition of roaming until at least 2018.
But the text now proposes 15 June 2017 as an end date as both sides seek to reconcile their positions.
In the interim a transitional system, running from May 2016 until June 2017, would apply in which consumers would get at least 50 minutes of calls, 50 text messages and 150 megabytes of data at their domestic rates when travelling abroad.
Reporting by Julia Fioretti; editing by Susan Thomas