Government ignoring business cost of Digital Economy Bill

Steve Nicholson, chief executive of ISP The Cloud, disagreed with the three-strikes policy, but argued that it could benefit his business in the long run because it could lead to small businesses partnering with new internet providers.

"The risk to small businesses offering their own public Wi-Fi access to the public is very real. Businesses need to be seeking an alternative. Offering a public Wi-Fi service will evade all risks of prosecution relating to anonymous access or copyright infringement," he said.

While the government has failed to acknowledge many of the risks to businesses posed by the three-strikes policies, and has yet to assuage their fears, it admitted that it did not have time to consider the economic cost of the House of Lords amendment, which will force ISPs to restrict access to web sites that host copyrighted content or make copyrighted content easily accessible to file sharers. The amendment is referred to as Clause 18 in the Bill.

"The clause has not been subject to prior consultation and, due to the limited time between the introduction of the clauses and the finalisation of the impact assessment, it has not been possible to assess the impact of these costs and benefits," noted the BIS revised economic impact assessment.

The 324-page document explained that an initial look at the clause had raised significant cost issues relating to ISPs and communication service providers because of the expense involved in blocking web sites, and the costs to businesses and subscribers who use the web sites as part of their legitimate business.

The government also acknowledged economic damage caused to the owners and operators of the web sites concerned, and the legal costs to the owners and operators of the web sites, the ISPs and the court system itself in seeking to contest the High Court action.

"This is an entirely new measure to tackle online copyright infringement and, as set out above, information on the nature and level of the costs and benefits involved is not available at this stage," the BIS document concluded.

Saskia Walzel, policy advocate at Consumer Focus, also believes that the legislation has not undergone a proper impact assessment.

"This is a grave shortcoming as the economic impact assessment for draft legislation should fully consider the costs for business and the not for profit and public sectors," she said.

"As no proper impact assessment has been done, the government risks implementing legislation with a significant, but as yet unknown, cost to the economy. This is symptomatic of a Bill that has been rushed through parliament and is unlikely to realise the potential of Digital Britain."

While the majority of businesses recognise that copyright holders need more protection against the revenues they lose from an unregulated internet, rushing through legislation without considering the affect on the economy is likely to be a dangerous move.

The hurried approach to passing the Digital Economy Bill could hinder the UK in its competition with the US and the rest of Europe. While the policies endorsed by the Bill would protect innovation in the music, film and software industries, other businesses may choose not to innovate because of the increased cost of doing so.