An EU bid to make internet broadcasters subject to the same laws as traditional television is "seriously misguided", a House of Lords committee has said.
The directive aims to regulate online video content
Proposals risk damaging the new media industry, pushing broadcasters to set up outside Europe, the committee said.
The committee was discussing European Commission plans to update the 1989 TV without Frontiers EU directive.
The Audiovisual Media Services Directive aims to reflect huge changes in broadcasting in recent years.
It has proved controversial as the EU attempts to increase regulation of video content on the internet, and create a "level playing field" between traditional TV-based and online broadcasts.
The EC argues that new broadcasters are effectively competing for viewers and advertising and should be subject to the same rules.
But the all-party Lords European Union Committee rejected this, saying it was not the role of regulation to protect established broadcasters from new competition operating under different business models.
"Burdensome and inappropriate" rules risked damaging the thriving British new media industry, the committee said.
Committee chairman Lord Freeman said: "We believe that this attempt was seriously misguided and any future efforts to do the same would be in grave error.
"Such an attempt risks damaging the new media industry, which is a vibrant and important sector of the UK's economy."
The committee said enforcing the new directive would be difficult, as the pace of change in new media was so quick the definition of services covered may not offer enough legal certainty.
There was also particular concern about attempts to water down the "country of origin principle", which allows broadcasters to offer pan-European services, while complying with the laws of the country they are based in.
Lord Freeman added: "Most of our concerns on the proposed directive rest on whether the country of origin principle, which we see as essential to the proper operation of single market legislation, will be maintained.
"We are firmly convinced that it should be."