How the costs of the Digital Economy Bill add up for ISPs

Internet service providers face a host of extra costs that could add up to £15m a year if provisions in the Digital Economy Bill become law.

Internet service providers (ISPs) face a host of extra costs that could add up to £15m a year if provisions in the Digital Economy Bill become law.

This emerged from a consultation document published by the Department of Business, Innovation and Skills on how best to split the costs to fight online pirates.

The cost estimate depends on the number of CIRs or notices sent to customers who allegedly infringe copyright by downloading files illegally. The government expected this to reach "several million" a year.

ISPs will also have to keep anonymised records of how often an individual subscriber has been accused of copyright violations, to keep a list of the worst alleged offenders, and provide copyright owners with the lists on request.

Processing these volumes of data efficiently will require automation and "significant capex", the government said.

There were also costs for setting up and running of an appeals mechanism and Ofcom's own costs in fighting online pirates.

The Digital Economy Bill will also let the secretary of state ask ISPs to impose "technical measures" - ie, to block persistent offenders. But as this will not come in for at least a year, the Department of Business, Innovation and Skills will consult on who should bear the costs of implementing technical measures later.

The government proposes to let copyright holders pay 75% of an agreed (or an Ofcom-imposed) "flat fee", with ISPs picking up the rest.

The costs to be taken into account in setting the flat fee include:

  • Contributions to the development of the proposed industry code of practice.
  • The detailed specification of the standards used to support the code.
  • The detailed specification, development and operation of systems, either by the ISP itself or payments to a third party to act on behalf of the ISP.
  • To store CIRs.
  • To obtain subscriber ID relating to each CIR.
  • To manage IDs.
  • To send notices to subscribers.
  • To compile and send lists to digital rights owners.
  • To provide documentation in support of court cases.
  • To answer questions from subscribers about notices they have received.
  • To maintain security and access control to data to comply with the Data Protection Act and any extra requirements under the code.
  • To monitor regulatory compliance.

They exclude:

  • Costs paid, or likely to be paid, separately under a court order.
  • Costs attributable to other activities and purposes, including handling requests from law enforcement agencies under the Regulation of Investigatory Powers Act.
  • Costs caused by the failure of the ISP or any related operators in its supply chain, to maintain accurate subscriber records - eg, in the provision of shared or full local loop unbundling.
  • Costs of lost economic opportunities.

"As the main beneficiaries from the policy, there was a strong argument that copyright owners should therefore bear all of the costs incurred," the government said.

However, government felt ISPs should bear some of the costs because:

  • It gave them an incentive to minimise the cost of sending infringement notices.
  • It provided incentives to take voluntary measures to reduce online copyright infringement and thereby reduce the number of notifications they might have to process.
  • It provided incentives to take part in bilateral industry talks to agree how to cut the numbers of notices.

If the code allowed for a threshold based on numbers of notices, sharing costs added an incentive for ISPs to tackle infringement so that they fell under the threshold, the government said.

It said the weight of the cost falling on ISPs should be heavy enough to ensure it was in ISPs' own interests to keep it as low as possible.

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