Carphone Warehouse owns Talk Talk, the UK's third biggest internet service provider (ISP). The company's chief executive Charles Dunstone has said that Talk Talk will not participate in a music industry-promoted scheme to monitor and ban customers who violate copyright law through illegal file sharing.
Dunstone said last week that the scheme was an intrusion into user privacy, that the problems facing the music industry were of their own making, and that making ISPs catch copyright violators was like asking a bus company to catch a thief because they had ridden on the bus.
The British Phonographic Industry (BPI), which wants to run the scheme, has hit back at Dunstone.
"You would think a socially responsible company would want to put policies in place to ensure that its network is not used illegally," said a BPI spokesman. "But so far – and despite Government's calls on ISPs to come to the table – we've been stonewalled by Talk Talk."
"We want to work with Carphone Warehouse, but given its persistent and unreasonable refusal to take any action to address illegal activity on its network – activity of which it is fully aware – we have written to Mr. Dunstone, explaining our position and also reminding him of the legal rights that we have," said the spokesman.
In 2007, a Belgian ISP was ordered to filter customers' traffic for unlawful file-sharing. A court in that country contrasted Europe's main legal protection for ISPs, the E-commerce Directive, with provisions of a subsequent law, the Copyright Directive.
The E-commerce Directive exempts intermediaries like ISPs from any general obligation to monitor traffic where they act as 'mere conduits'. But the Copyright Directive states that copyright owners should be able to get court orders against intermediaries if their services are used for piracy. The Belgian court ordered Scarlet to filter its network. It suggested that filtering was not the same as monitoring.
No British court has examined the potential for such a clash between the E-commerce Directive and the Copyright Directive and their respective implementations in the UK.
There is international pressure for ISPs to take a role in policing their customers' activity and helping content industries to catch users who violate copyright law. France will shortly trial such a system and the UK Government has said that unless the ISP and music industries can come to agreement a law forcing a similar measure will be passed in autumn.
Talk Talk is the first of the UK's major ISPs to denounce the scheme, and Dunstone last week strongly rejected the argument that ISPs should monitor users' activity.
"Our position is very clear, we are the conduit that gives users access to the internet, we do not control the Internet nor do we control what our users do on the internet," he said. "I cannot foresee any circumstances in which we would voluntarily disconnect a customer's account on the basis of a third party alleging a wrong doing."
"The music industry has consistently failed to adapt to changes in technology and now seeks to foist their problems on someone else. Rather than threatening us, the BPI's time would be better spent facing up to the reality of our times and adapting its business model accordingly," said Dunstsone.
The BPI has hit back, and the Daily Telegraph reported that its chief executive Geoff Taylor sent a fax to Dunstone threatening legal action.
"Unless we receive your agreement in writing that within 14 days Carphone Warehouse will implement procedures set out above, we reserve our right to apply to court for injunctions and other relief without further notice to protect our members' rights," the fax said, according to the newspaper. The BPI spokesman did not confirm or deny the accuracy of those reports.