Whitehall has told ISPs they have until April next year to crack down on file-sharing of copyrighted material.
The Department of Business, Enterprise and Regulatory Reform (BERR) said on Friday that while the emphasis was on ISPs and industry working together voluntarily, the deadline would apply if that failed to happen.
"The emphasis is on finding a fair solution lead by the individual stakeholders — that's far more desirable than legislation," a BERR spokesperson told ZDNet.co.uk. "However, should ISPs and industry not come to a compromise by April 2009, we're looking at possible legislative measures."
However, the spokesperson added that this would be a "fluid process", and that the deadline could be pushed back if ISPs could demonstrate they were "conscientiously working on a solution" before April 2009.
The BERR spokesperson said that while Whitehall would "welcome discussion on legislative options", it had no preference as to what any eventual legislation would look like. However, any legislation would cover all unauthorised downloads, including file-shared software.
BERR along with the Department for Culture, Media and Sport (DCMS) and the Department for Innovation, Universities and Skills (DIUS), have given this deadline, published on Friday in a paper entitled Creative Britain: New Talents for the New Economy.
The BERR spokesperson said that the impetus for Whitehall imposing the deadline was to protect business by protecting intellectual property.
"The music industry has estimated that it has lost £500m in the UK to piracy," said the spokeperson. "As the Department for Business we're looking to protect the interests of business."
However, the UK Internet Service Providers' Association (ISPA) does not accept the claim that the internet is to blame for declining music sales. "Rights holders have been battling piracy for many years prior to the internet's widespread adoption", states ISPA on its website. "In fact in the second quarter of 2006, digital sales and downloads helped the UK singles industry record its best results in six years, with the market reaching 58 million units on an annual basis."
Currently ISPs bear no liability for illegal file-sharing as the content is not hosted on their servers. Although such files may be transmitted across an ISP's network, ISPs are "mere conduits" of information, as per the E-Commerce Regulations 2002.
ISPA said it does not support abuses of copyright and intellectual property theft. However, it warned that ISPs cannot monitor or record the type of information passed over their network.
"ISPs are no more able to inspect and filter every single packet passing across their network than the Post Office is able to open every envelope," said ISPA. "ISPs deal with many more packets of data each day than postal services and data-protection legislation actually prevents ISPs from looking at the content of the packets sent."
The Federation Against Software Theft (FAST), which lobbies government over intellectual property issues, attempts to "educate" businesses about file-sharing on their networks, and tracks file-sharers, welcomed the deadline.
"If ISPs take sanctions against illegal file-sharers, there wouldn't be a need for legislation," said John Lovelock, FAST chief executive. "Collaborate rather than have this foisted upon you."
Lovelock called for ISPs to deny internet access to illegal file-sharers, to maintain a blacklist of file-sharers so if a subscriber goes to another ISP they can be denied access, and for ISPs to give FAST the names of companies whose employees had been involved in illegal downloading so FAST could go and impound computers at those businesses, to perform forensic analysis on them. Lovelock claimed FAST was acting in the interests of business, and denied FAST's actions could alienate businesses.