Digital Economy Act: back from the grave

In the dying days of the Labour government, Lord Mandelson ushered in a law to allow Internet users to be cut off for receiving mere allegations of copyright infringement. In a foretaste of the later protests against SOPA, PIPA, and ACTA, this offensive piece of legislation became the focus of widespread Internet protests.

The outrage was not just about the small minded and vindictive approach that copyright lobbyists seemed determined to pursue. It was also about the way the legislation had been rammed through in the "wash up", suffering from little democratic scrutiny.

The Act was bound to go wrong, it seemed. How could Parliament push forward such a crude and ill-thought out proposal? How was it that commercial lobbyists from the entertainment industry could possess such a stranglehold on political power?

Not that it was going to save Labour, as the Act merely added to the toxic haze of incompetence and sleaze that was surrounding them, but deeply uncool politicians want the favour of media industries to help promote their political cause.

The appeal of celebrity "endorsements" is one factor, and the power of the publishing industries is another. Close to an election, a measure like the DEAct was one way to demonstrate to those industries who their real friends are.

The industries key lobby groups, especially the International Federation of Phonographic Industries, has been pushing for 'three strikes' legislation around the globe for many years. These pushes were part of a build up to legislation in the USA that culminated in the SOPA and PIPA proposals for broad controls on the Internet and new censorship tools.

Similar legislation has been proposed in a number of countries, and has reached the statute books in New Zealand, France and South Korea as well as the UK. Many other countries have rejected the idea, including Germany. Attempts to introduce it through the EU also failed. The industry cannot realistically hope to introduce a law like this in the USA, so has tried to persuade the ISPs to introduce it through contract with end users instead.

IFPI and its local UK branch, the BPI, argue that they need to be able to punish and deter illicit downloading ("online copyright theft"). They say that users must be dissuaded from sharing or acquiring files without payment. They claim that investment will not be forthcoming unless action is taken to reduce infringement.

They also state that the UK digital market grew by nearly 25% in 2011, and that many digital services are delivering new and exciting products to their customers.

According to IFPI, P2P infringement is declining in France, and digital sales have gone up more than expected. Others claim that the main impact on infringement has been to shift it around, primarily to streaming websites, which is harder to detect robustly.

Working through industry statistics is notoriously difficult. But one thing is clear, which is that digital revenues in both France and the UK went up in 2011, while only one had letters being sent out. That rather implies that the DEAct may well not be necessary, but that doesn't seem to be worrying the government.

Rather, their main concern seems to be to honour the commitment made to the music and film industries to implement the Act. So far, that has been very difficult.

Internet protesters weren't the only group that was unhappy with the new Act. ISPs, especially BT and TalkTalk did not wish to be acting as the Internet police and have to administer rough justice to their customers, or bear unwarranted costs.

Thus they challenged the Act through a Judicial Review (JR). This helped delay implementation for about two years. However, the sheer poor drafting of the Act has also contributed to the delay.

The Act is implemented through "Henry VIII" clauses – sweeping powers to draft secondary legislation ("Statutory Instruments") which would normally receive only minimal scrutiny in Parliament.

Drafting errors meant that the original SIs have had to be resubmitted. And now that the real SIs are going to be submitted for what the government hopes is a final time, problems are continuing to emerge, and Parliamentary scrutiny committees are asking questions. This is extremely unusual for this type of legislation, which is meant to be used to for boring and unimportant administrative actions.

Unfortunately, for the hundreds of thousands of families and businesses that will receive letters, the "Initial Obligations Code", "Costs orders" and "Appeals" will be neither boring nor unimportant. They could well be disturbing and will require very swift action.

The copyright lobbyists have pushed hard to make sure very few people appeal. They have claimed that people may campaign to stop the Code from working by bombarding it with appeals. So only twenty days is being given to appeal, which will be challenging for many people, who will not understand what it all means.

The copyright owners have a significant financial interest in limiting the numbers of appeals, as they will be paying around £400 to administrate each one.

This illustrates the inadequacy of semi-privatised judicial processes in this case. Access to justice should not be limited because of financial considerations.

The process will also threaten open wifi. Although commercial Wifi has been exempted, hotels, bars and cafes are still at risk if they share their normal ISP connection with customers. Libraries are campaigning strongly, but have been given little comfort.

So far, disconnection or other means of restricting people's Internet seems far off. Given that this will take two years to get in operation, that will be a battle for after the next election. Meantime, music and film revenues will keep increasing: but will the pressure to limit and control the Internet reduce?
Lobbysist and governments still want the Internet to be more like cable TV. They are often willing to place inappropriate restrictions, and damage one part of the economy which is growing strongly.

However, these pushes have created backlashes, in the SOPA, PIPA and ACTA debates, showing that we can win. By the time the Digital Economy Act is in operation, it may seem like a policy from another, long gone era.

The Act is still a mess.

How it works

Detecting Peer to Peer

  1. Copyright holders employ private companies to detect peer to peer file sharing
  2. The private companies download a copy of a shared file. They verify it is a copy of a work whose copyright is held by their employer
  3. The copyright owners 'lurk' on the P2P network, and ask for parts of the file from other users. They take parts of the copyright file from other users, verify that it matches, and record the IP address and time. This should show that a file is being actively shared by someone – who could be anyone – at that IP address.
  4. Matching dynamic IP addresses to customers at the ISP could be tricky. Although ISPs have to record this information under our anti-terrorism Data Retention law, and would log it for a time in any case, ISPs probably get this wrong a fair amount of the time. Small errors could mean allocating infringement notifications to the wrong account holder.

The Initial Obligations Code

  1. Copyright owners will guarantee to send a certain number of letters: they get big volume discounts, so they will opt to send a lot. They pay 75% of the total costs, and the sum is non-refundable. This also encourages the copyright groups seeking to participate to band together for bulk discounts.
  2. Copyright owners supply the IP address and timestamp of alleged infringers. ISPs match these against their records to find out whose account was used. This does not identify an actual infringer, of course.
  3. Once a notification is lodged against an account, a warning letter is sent by post. Warnings are sent at intervals of at least a month.
  4. Each warning letter allows the account owner to appeal against the infringement notifications.
  5. There are only 20 days to seek advice, prepare documents and file an appeal. The appeal costs £20, refundable if the appeal is won. The grounds of appeal have been narrowed, and the catch all, "any other grounds" has been removed, limiting discretion of the Appeals body
  6. The Appeals will cost around £400 each to administer. The cost is born in full by the copyright holders.
  7. If three warnings from the same copyright holder have been lodged, the account is placed on a 'repeat infringers list', which the copyright holders can claim access to in order to prosecute account holders for copyright infringement.
  8. There is an exemption for commercial Wifi operators like The Cloud, but none for small businesses or libraries opening their own network over Wifi for their customers.

The future: disconnections?

  • If Ofcom do not report a significant drop in infringement, the government can add new Obligations to disconnect accounts for a period of time, or limit access in other ways.

A version of this article was first published in Custom PC Issue 108 June 2012

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