BT and TalkTalk have applied for a judicial review of the Digital Economy Act, citing worries over the compatibility of the legislation with European rules on privacy and "the role of ISPs in policing the internet".
On Thursday, the companies — two of the largest UK ISPs, with a combined subscriber base of more than nine million — said they were "seeking clarity from the High Court before they and others are asked to implement the act". They also said they believed provisions in the act had "received insufficient scrutiny before being rushed through into law at the tail end of the last parliament".
"It's disappointing that we feel the need to take action, but we feel we have no choice. We have to do this for our customers who otherwise run the risk of being treated unfairly," BT Retail chief executive Gavin Patterson said in a joint statement. "Our dispute is not with the current government but with the previous administration which pushed this through without due process. We need clarity about whether this legislation is compatible with important EU laws."
The Digital Economy Act, which was in part designed to crack down on the unlawful online file-sharing of copyrighted material, created several obligations for ISPs. Described in a draft code from Ofcom that is still open for consultation, these include the responsibility to notify subscribers by letter when their IP address has been identified by a rights holder as having been used for unlawfully sharing content. In addition, they are called upon to set up systems that can match IP address allocations with subscribers, so repeat offenders can be identified and penalised.
Penalties, which would only become an option after the letter-writing scheme has been shown to have cut infringement by insufficient amounts, could include subscriber disconnection or other technical measures, such as bandwidth throttling. The act also created a mechanism through which rights holders could force an ISP to block access to a website that may aid infringement — another element of the legislation opposed by ISPs.
According to Ofcom's draft code, only the biggest ISPs — those with 400,000 or more subscribers — will have to participate in the letter-writing campaign at first. These include BT, O2, Orange, the Post Office, Sky, TalkTalk and Virgin Media. Smaller ISPs are exempt for now, as are mobile operators.
"The companies share a concern that obligations imposed by the act may not be compatible with important European rules that are designed to ensure that national laws are proportionate, protect users' privacy, restrict the role of ISPs in policing the internet and maintain a single market," BT and TalkTalk said in their statement.
"If clarity is not gained at this stage, then BT, TalkTalk and other industry players may end up investing tens of millions of pounds in new systems and processes only to find later that the act is unenforceable and the money wasted."
Charles Dunstone, the chairman of the TalkTalk Group, said the Digital Economy Act's measures would cost the UK hundreds of millions, adding that many people believe they are "unfair, unwarranted and won't work".
"It's no surprise that in Nick Clegg's call for laws to repeal, this act is top of the public's 'wish list'," Dunstone said in reference to the coalition's Your Freedom site, set up by Clegg to solicit suggestions for which laws should be repealed for their inconsistency with civil liberties.
According to Dunstone, "innocent broadband customers will suffer and citizens will have their privacy invaded", and the fast-tracking of the Digital Economy Bill in the pre-election 'wash-up' had "resulted in flawed legislation". The ISP has already warned that it will fight in court any attempt to make it disconnect one of its subscribers for unlawful file-sharing.
A spokesperson for the Department for Business, Innovation and Skills (BIS) said in a Thursday statement that the government believed the act's measures are "consistent with EU legislation and that there are enough safeguards in place to protect the rights of consumers and ISPs".
However, Open Rights Group head Jim Killock, whose organisation spearheaded the campaign against the Digital Economy Bill, said BT and TalkTalk's concerns were exactly what the pressure group and 20,000 supporters warned their MPs about.
"The act was rushed through and is already working extremely badly," Killock said in a statement. "It threatens basic rights and large chunks need to be repealed."
The European Commission did not respond by the time of writing as to whether it believes the act complies with EU legislation.