Government ignoring business cost of Digital Economy Bill

BIS has championed the Digital Economy Bill without considering its impact on the UK economy

The Digital Economy Bill has been a matter of high public interest in recent weeks, as the government looks increasingly set to pass controversial copyright legislation.

The Bill proposes to punish illegal file sharers in order to stem the revenue losses of copyright holders in industries such as film, music and software.

While attention has generally focused on how the Bill will curb consumers' internet freedoms, the legislation will also have serious ramifications for many businesses.

This impact has been largely ignored. In fact the latest economic assessment of the bill by the Department for Business, Innovation and Skills (BIS) only recognised that the Bill will pose a cost to internet service providers (ISPs) and mobile network operators, even though many other businesses argue that compliance with the policies will be costly and cumbersome.

The Bill proposes two new regulations for ISPs aimed at reducing illegal downloading, both of which are proving a concern.

So-called 'three strikes' legislation would see culprits kicked off the internet after multiple attempts to download copyrighted material, while an amendment proposed by the House of Lords at the beginning of March would give copyright holders the power to pressure ISPs into restricting web sites seen to be promoting illegal file sharing.

The Digital Economy Bill was published on 20 November and is now ending its passage through parliament. It is likely to be rushed through the House of Commons and passed before the general election.

BIS estimates the cost to ISPs of the three strikes laws could be up to £500m. ISPs will have to monitor internet use to ensure that no copyrighted material is transferred, and then send warning letters to customer accounts used to share illegally downloaded content. The highest cost to ISPs will be the technical measures they will need to employ to restrict internet access if the warning letters do not work.

The ISP Association (Ispa) has been up in arms over such costs, and said that the legislation will deal a heavy blow to its members' business customers. Ispa believes that businesses could be held liable for employees found to be downloading illegal content, although this will depend on whether a business is classed as a 'provider' by the three-strikes policy.

"It is not clear in the Bill whether businesses will be classed as subscribers or providers of their internet connection," said an Ispa spokesman.

"If the business were to be classed as a provider then they would face a lot more liability and responsibility over the use of their connection.

"Ispa questions whether it is ever proportionate to suspend the whole business if one employee bypasses the protection in place."

When reviewing the legislation in the House of Lords, Labour peer Lord Larry Whitty said that he was concerned that the business impact of the three-strikes policy had not been given enough consideration.

Whitty believes that the hotel trade, which provides internet access to guests, and colleges that have Wi-Fi facilities would both be classed as internet providers.

A spokesman for the British Hospitality Association (BHA) claimed that the organisation had been discussing the implications of the Bill with the government, but that its concerns had only been "noted".

"We are presuming that the hotel will be responsible if guests download illegally which, of course, is our main concern,” he told V3.co.uk. " I'm afraid we just don't know the costs involved in dealing with this."