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Digital Economy Bill [HL]

My Lords, it is worth setting out why Clause 15 is part of the Bill. The apportionment of costs is, not surprisingly, one of the most contentious parts of the process for industry; it is an area where it is not realistic to expect the different industry parties to agree. Both copyright owners and internet service providers are adamant that their view of who should pay is the right one and there is little common ground between them. That is why we decided to include the sharing of costs as part of the Bill, rather than leave it as a matter for the code, which might have made reaching agreement on the code an intractable problem. We have already discussed in Committee Amendments 200 to 206 and the principle of cost sharing. The draft statutory instrument with which we provided your Lordships set out our working assumption that copyright owners should meet 75 per cent of the costs—both those incurred by ISPs in complying with the initial obligations and the other costs that will arise for Ofcom and in relation to the appeals processes. We are quite clear that the bulk of the cost should apply to the copyright owners. Before the Horsemen of the Apocalypse ride in with somewhat melodramatic comparisons with the poll tax, I stress that in this working assumption ISPs would meet the remaining 25 per cent of those costs. We have been clear that in our view the bulk of the cost should be met by the copyright owners as the main beneficiaries of the process, while leaving internet service providers—I stress this—with a strong incentive to ensure that they keep their costs to the lowest effective level. Finally, let me address the point about seeking to prevent internet service providers from passing costs on to their subscribers. This just is not practical. It is not appropriate for the Government to dictate how any of the industry parties should cover their costs or to prohibit any particular route. I suggest that the amendment would, in practice, be virtually impossible to police and could lead to endless disputes. I shall spend some time on how this will be paid for. It will be paid for by industry through a flat-rate fee that copyright owners will pay, which will be set in a way that incentivises both copyright owners and ISPs to keep the process efficient and cost-effective. It is only right that copyright owners should bear the cost of infringement identification and any court action that they choose to take. They will also have to pay a flat fee to an ISP for each notification that the ISP has to process. However, the fee will be set at such a level that it will not cover all the ISP’s costs. Placing part of the costs on ISPs should ensure that the systems that they put in place to comply with these obligations are both effective—in other words, delivered rapidly—and cost-efficient. It will also provide ISPs with incentives to minimise the number of notifications that they receive either through commercial content deals or by taking voluntary action to limit file-sharing on their network. In light of that explanation, I hope that the noble Lord will withdraw the amendment.