July 23, 2008 11:36 pm

UK deal to fight internet piracy

A groundbreaking deal between broadband companies and the music and film industries to tackle illegal downloading, in which thousands of people will be sent warning letters, will be announced on Thursday.

Ministers will call the move the internet industry’s last chance to avoid statutory regulation or levies. It will back up this threat by publishing proposals to force internet service providers to take responsibility for their users’ actions and pledging to enact them next year if the voluntary measures are ineffective.

Online piracy has crippled the music industry’s revenue on CD sales. An estimated 19 out of 20 downloads from the internet are made for free on illegal sites.

The six biggest ISPs that make up 90 per cent of the broadband industry have now signed a memorandum of understanding with the BPI, the recorded music trade body, and the Motion Pictures Association of America. It commits them to working towards a “significant reduction” in illegal file-sharing.

ISPs will send letters to 1,000 prolific illegal downloaders a week under a three-month trial.

If the voluntary code does not work, a compulsory levy on ISP users to compensate the music and film industry for lost royalties is one regulatory option to be set out in the Department for Business consultative paper on Thursday. The levy, which has yet to be negotiated, is analogous to a charge that was imposed on blank audio cassette tapes.

Options for a draft bill to be set out by Baroness Vadera, the business minister, include a requirement for service providers to install filtering software to curb illegal file-sharing. A “three- strikes-and-you’re-out” threat to disconnect users who ignore warnings about illegal downloading will be listed as an option, but is thought not to be favoured by ministers.

The government believes the voluntary code shows the success of its threat to legislate, which overcame the resistance of service providers to take action against illegal downloaders. The providers, notably Charles Dunstone, chief executive of Carphone Warehouse, had asserted they were “mere conduits” for data and could not police the net.

The latest move echoes an initiative undertaken by Virgin Media, the second largest broadband group. “There’s evidence that letters work, even if no specific sanctions are threatened – people are paranoid about being caught,” an official said.

The service providers have agreed in principle to a code of practice for dealing with persistent offenders, setting out agreed sanctions. The voluntary code would be overseen by Ofcom, the broadcasting regulator.

The BPI last night told the FT that getting service providers to tackle repeated unlawful file-sharing would “represent a significant step forward”.

A senior executive at an ISP said: “This is the best chance of getting the government off a sticky wicket, because although they were threatening legislation, it was by no means clear how they could make it work.”

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