The European Parliament voted to stop internet providers from charging for preferential access to their networks on Thursday, a step cheered by consumer groups but bemoaned by the telecommunications industry.

The bill on “net neutrality” will force internet providers to treat all traffic the same, regardless of its source. That will prevent major telecom and internet providers such as Vodafone and Deutsche Telekom from reserving the best of their network for their own services, or selling the lions’ share of bandwidth to big companies like Google and Netflix, while leaving a slower internet for everyone else.

European Commission Vice President Neelie Kroes, who proposed the bill, hailed Thursday’s 534-25 vote as “historic.” She said it will help “to get rid of barriers and to make life less expensive” for consumers.

But while startup companies, consumer groups and online freedom activists welcomed the bill, large European telecommunications companies protested, saying they are increasingly operating at a disadvantage to counterparts in the United States, where a similar law was shot down this year.

The European bill must pass a final hurdle before it becomes law: approval by the leaders of EU countries at a Council of the European Union meeting, likely in October.

“Now the pressure turns to European leaders to listen to the people — not Vodafone, Orange, Deutsche Telekom and Telefonica,” said Luis Morago of activist group Avaaz.

“The beauty of this is that everybody with a laptop and an internet connection can conquer the world,” said Wienke Giezeman of Amsterdam startup WappZapp, which offers a personalized video service. He helped launch a campaign called “Startups for Net Neutrality” to lobby for the bill’s passage.

Telecoms say law will impair investments

Telecommunications companies, on the other hand, warned of dire consequences if net neutrality is enacted in all European countries. So far, only the Netherlands and Slovakia have adopted strong national net neutrality legislation.

“Europe’s telecoms operators are facing decreasing revenues … compared with operators in the U.S. and Asia,” said the GSM Association, an industry group for mobile phone companies. In a statement signed by director Anne Bouverot, the group said European laws are “impairing their ability to invest in the infrastructure required to put Europe back on the path to growth and jobs.”

Etno, an industry group of European telecommunications network operators, said the law will hurt consumers’ access to not only on-line medical services and education, but “would also affect existing services such as IP-TV, tele-presence and Virtual Private Networks for businesses.”

Chairman Luigi Gambardella predicted “a dangerous situation, in which the European digital economy will suffer and EU businesses will be put in a difficult competitive situation with respect to other regions of the world.”

European policy appears to be departing from the route taken in the U.S., where net neutrality rules imposed by the FCC were struck down by a court in January. The following month, Netflix struck a deal with Comcast to pay for preferential treatment of Internet traffic bearing its film streams.

Netflix complained Comcast had left it little choice but to pay or see the quality of its service deteriorate. Comcast shot back that Netflix should pay, because it uses so much bandwidth. According to estimates by Canadian Internet monitoring firm Sandvine, Netflix and Google’s YouTube together account for about half of all U.S. internet traffic.

After the U.S. law was struck down, Europe’s Kroes tweeted: “Maybe I (should) invite newly disadvantaged U.S. startups to EU, so they have a fair chance.”

Thursday’s bill will also forbid internet providers from blocking or hindering companies that compete with their own voice and messaging services, such as Microsoft’s Skype and Facebook’s WhatsApp.

“Roaming” charges that mobile phone users pay when travelling in other countries will also be banned within the European Union by 2016.

Etno estimates telecommunications companies will lose 7 billion euros ($9.6 billion) in operating profit through 2020 as a result.

Of course, that loss is consumers’ gain.