The Digital Economy Act 2010 (the Act), enacted April 8 2010, imbues the Secretary of State and (by extension) the Office of Communications (Ofcom) with new powers to regulate and intervene in several areas regarding digital media. Its most divisive features pertain to the establishment of forced cooperation between copyright holders and Internet Service Providers (ISPs) to notify and apply sanctions to infringers.

The notification involves six steps:

  1. Rights holders monitor for suspicious activity (e.g. peer-to-peer sites).
  2. Upon discovery of copyright infringing activity, the copyright holder generates a "copyright infringement report" to the ISP, including evidence of the apparent infringement, and associated IP address(es).
  3. The ISP then forwards notification to the IP address' subscriber.
  4. The ISP then documents and files the process as evidence (in case a prosecution results).
  5. Upon request from a rights holder, ISPs must provide "copyright infringement lists" detailing information about infringing subscribers.
  6. ISPs may be required to block access to sites that allow "substantial infringement".

The technical measures available to apply sanctions to infringers include service disconnection, bandwidth reduction, and other measures "considered appropriate" by the Secretary of State.

Liability under the Act is restricted to "subscribers". This is defined as a person receiving supply serviced under an "agreement" who is not receiving that service as a "communications provider". A potential result of this is that businesses which fall within the definition of a "subscriber" and which provide "free wi-fi" at their premises may be held liable for the actions of their "wi-fi" users. This designation appears to be entirely based on the technical structure of the supply agreement, rather than any particular feature of the supply or its use. Notably, as long as an infringement "appears" to occur, copyright holders will not be liable for inaccurate or careless infringement reporting and there is no mechanism to object to, report, or dispute such inaccuracies. The subscriber, by contrast, will be responsible for all copyright infringements that appear to derive from his IP address; no proof of his complicity is required.

The difficulty with file sharing, that this Act skirts, lies in how to appropriate blame. File sharing is a process that involves a tangled web of elements each of which is necessary for infringement to occur. Server hosts of websites process and handle stolen materials, ISPs assist in the transmission and transfer of stolen materials, and at each end of the chain material is provided and received by unknown users affiliated with ports that may be shared by a number of different users. Either way, many of these users may not realise that they are engaged in or facilitating illegal activity. This Act places the onus of rights protection on the rights holder and therefore rather than deal with the overarching problem of file-sharing for all copyright holders it may only serve those rights holders who have enough resources to force cooperation from ISPs. A heavy unrecompensed burden is placed on ISPs to notify, apply sanctions to and maintain records on "apparent infringers". Since ISPs and subscribers are identified, in terms of the Act, by loose operational definitions it is possible that many smaller ISPs and commercial premises offering customers free wi-fi, may have to shoulder a disproportionate share of that burden.