Brazil's local Internet data storage plan runs into opposition

By Anthony Boadle and Esteban Israel BRASILIA/SAO PAULO (Reuters) - A government plan to shield Brazil from alleged U.S. spying by forcing global Internet companies to store data on Brazilian users inside the country has run into mounting opposition in Congress, politicians said on Monday. The legislation was proposed by President Dilma Rousseff following revelations that the U.S. National Security Agency conducted surveillance on her emails and phone calls, along with those of average Brazilian citizens. Brazil's largest political party, which is a Rousseff ally, is not supporting the requirement, which has Internet companies up in arms. Not even the bill's author is convinced. The measure was added to a bill drafted in 2011 aimed at protecting the civil rights and privacy of Internet users in Brazil that could be put to vote in the lower chamber of Congress as early as this week. A Justice Ministry official said the government was anxious to see the final text to be debated in Congress on Tuesday. The requirement for in-country data storage is opposed by companies such as Google and Facebook, who contend that it would increase their costs and erect unnecessary barriers in what is supposed to be a frontier-free World Wide Web. If passed, the new law could impact the way Google, Facebook, Twitter and other Internet giants operate in Latin America's biggest country and one of the largest telecommunications markets in the world. Despite the criticism of international business lobbies, Rousseff is pressing lawmakers to vote as soon as possible on the bill, which was dubbed Brazil's "Internet Constitution." The bill's author, congressman Alessandro Molon of Rousseff's ruling Workers Party, opposes the requirement. "There is a lot of pressure from the government for the data centers to be here in Brazil," a spokesman for Molon told Reuters. He said Molon was still trying to negotiate the exclusion of the controversial proposal from the bill. Brazil's largest political party, the PMDB, also opposes the requirement of in-country data centers, according to its leader in the lower chamber of Congress, Eduardo Cunha. Cunha initially favored Rousseff's proposal requiring localized storage of data on Brazilian Internet users, but told Reuters he would follow the party line on the issue. NET NEUTRALITY Cunha has been a critic of another requirement in the bill - net neutrality - which is opposed by telecom companies operating in Brazil because it would bar them from introducing differential pricing according to Internet usage and download speeds. Rousseff's government has insisted that net neutrality, which ensures service providers and regulators cannot restrict users' access to Internet content, must remain at the heart of the legislation. However, following the U.S. spying revelations based on documents leaked by former NSA contractor Edward Snowden, requiring Internet companies to store their data on Brazilians who are inside the country has become a priority for Rousseff. Angered by the revelations of U.S. espionage, Rousseff canceled a state visit to Washington and denounced massive electronic surveillance of the Internet in a speech to the U.N. General Assembly. "The spying revelations created demands on the government to quickly come up with a law that guarantees the privacy of Internet users," Marivaldo Pereira, the Justice Ministry's legislative affairs secretary, said in an interview. Net neutrality was fundamental to guarantee freedom of expression on the Internet, said Pereira, who stressed that personal data on Brazilian users must be stored locally so it is subject to Brazil´s laws. Global Internet companies, he added, should not be able to refuse to provide information as they have done in court cases arguing that it is stored in the United States. The mounting opposition in Congress to Rousseff's insistence on in-country data centers could become a bargaining chip to persuade her government to drop its defense of net neutrality. According to Ronaldo Lemos, a Rio de Janeiro State University professor who helped craft the original bill, telecom companies have become more vocal in their opposition to net neutrality and want it watered down or removed altogether. If that happens, what was once considered a model law for the Internet could end up becoming a model for what is wrong with the Internet, Lemos said. "We could end up with a law that gives up on net neutrality and forces companies to have data centers in Brazil," he said. "This would be worse than espionage. We would be giving a business sector, the telecommunications companies, the power to decide the future of the Internet in Brazil," Lemos said. (Editing by Todd Benson and Christopher Wilson)