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Britain’s new government has the chance to save the digital economy

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This guest post was written by Jeff Lynn, Chairman of The Coalition for a Digital Economy (Coadec). Jeff is also CEO and Co-Founder of Seedrs. He explains how the coalition government between the Conservatives and the Liberal Democrats could result in Britain being spared from the effects of a harmful new law, namely the Digital Economy Act.

The UK tech startup community and the government tend not to cross paths all that often. Aside from setting up a handful of more-or-less helpful funding schemes and tax incentives, the folks in Westminster and Whitehall direct most of their commercial energies toward the world of large banks and industrials and, thankfully, let us entrepreneurs go about our business of creating and innovating and driving forward the UK digital economy.

In the waning days of the last Parliament, however, we collided head on when a piece of legislation called the Digital Economy Bill (now the Digital Economy Act) was rushed into law with minimal scrutiny or debate. The Act includes a hodgepodge of unobjectionable provisions on things like the digital radio switchover and broadcasting in Gaelic, but front and centre is a set of copyright infringement measures with significant negative ramifications. Largely drafted by music industry lobbyists, these provisions were nominally designed to target large-scale file-sharers but in practice will have severe consequences for anyone who uses the Internet to innovate. Among its effects are:

Arbitrary disconnection. If a copyright owner believes that its rights are being infringed by a user at a certain IP address, the owner can write a warning letter to the relevant ISP, which then must pass the warning on to the user. If a few warnings go to the same user, the ISP can be obligated to cut off the user’s access. At no point in this process is the copyright owner required to prove infringement: the user is presumed guilty until he or she shoulders the burden of going through a potentially expensive and time-consuming appeals process.

Reduction in public wi-fi. A by-product of the disconnection provisions is that it will be nearly impossible for small businesses, community institutions and others to offer public wi-fi. Anytime someone browsing the web at a café is accused of infringing a copyright, it will be the café that gets the warning letter, and soon enough their wi-fi will get disconnected.

Website blocking. A separate provision allows the government to block websites that are likely to be used in connection with any activity that infringes copyright. In practice, this means that anyone who maintains a website that allows user-generated content to be posted runs the risk of having the website shutdown if it turns out that even a relatively small portion of that content infringes a copyright. There is also the risk that web locker and infrastructure as a service platforms may be blocked for their entire user base because of a small quantity of infringing content.

So, if you’re a entrepreneur working to create the next big thing, and you find that…

(1) your Internet connection is randomly cut off because you may (or may not) have viewed some copyright-infringing material…

(2) you can no longer work on-line at your university student centre or local coffee shop and…

(3) even if you could get Internet access you can’t allow user-generated content on your website and the SaaS apps that you run stop working as the underlying infrastructure gets shut down, you’re going to have a pretty big problem, assuming you want to stay in Britain.

In turn, Britain is going to have a pretty big problem if the people who would be the key drivers of the digital economy—which by all accounts will be one of the main sources for growth and job creation in the coming years—are forced to choose between ceasing innovation or moving abroad.

As obvious as that probably is to most TechCrunch readers, it wasn’t quite so clear to Members of Parliament. Proposed by Labour and supported by the Conservatives, the legislation made its way through with little objection. A handful of MPs—including most notably Labour backbencher Tom Watson—waved their arms in the air to warn of the harm that would come, but most of their colleagues seemed deaf to these cries and adhered to their party whips.

There are two possible explanations as to why this happened. One is that Parliament doesn’t care about the digital economy and is only interested in protecting record labels’ profits. The other is simply that many MPs don’t understand how the digital economy works, and in particular that they don’t understand the difference between the large-scale file-sharing that they thought they were tackling and the Internet’s broad culture of openness (which includes, among other things, openly-available wi-fi and user-generated content) that forms the backbone of digital innovation.

A group of entrepreneurs and supporters of the entrepreneurship community (including TechCrunch Europe Editor Mike Butcher) thought it was most likely the latter, so we formed The Coalition for a Digital Economy, or Coadec.

Coadec’s goal is to give a voice to the tech startup community so that the country’s leaders—both politicians and civil servants—can understand what we do, how innovation actually happens and how laws like the Digital Economy Act threaten to make Britain’s economy substantially less innovative and less competitive.

Until Tuesday, it looked like repeal of the Digital Economy Act would be a very long shot. We planned to push for it regardless, but we expected to have our strongest effect by participating in the consultation processes for implementation, in order to mitigate the effects of a few parts of the Act. (Much of the devil of the Act is in its details, and as part of the compromise involved in rushing the legislation through, the former Business Secretary, Lord Mandelson, agreed to defer some of those details to Ofcom codes and Parliamentary instruments, all of which require consultation with interested parties.)

The stakes suddenly changed when the Liberal Democrats joined the new government. They were the one party to oppose the Digital Economy Act from the beginning, and Nick Clegg said during the campaign that he felt it needs to be repealed. They’re also the party that seems most focused on protecting civil liberties, one of which must be using due process before disconnecting a user’s Internet connection. And they’re the party that’s most focused on political reform and changing the way business is done at Westminster, which surely includes not rushing through legislation like the Act in a way that even the Conservatives acknowledge was deeply problematic. Suddenly, the prospect of repeal seems to have become much less distant.

So will it happen? The coalition agreement was silent on the issue, but it does promise a “Great Repeal Bill” to undo certain of the previous government’s more controversial policies. The key will be persuading the new government—and in particular the new Business Secretary, LibDem Vince Cable—to include the Act among the repeals.

Coadec will work hard in the coming weeks to make both Conservative and LibDem MPs understand just how important this issue is to the future of Britain’s digital economy.

If we can succeed in getting our message through, then we can get back to our business of innovating, the government can go forward in dealing with the various issues it faces, and with any luck we’ll manage to keep out of each other’s way for at least the near future.

If you want to show your support for Coadec’s work, please add your name to our supporter’s list.

You can also follow us on Twitter @Coadec, join our Facebook group and check our blog for regular updates.

  • Martyn Walker

    It will take the average pirate 30 seconds to setup a VMS with terminal services in the USA for $9.99/month to download anything and everything they want with complete anonymity.

    This law does however allow hugely wealthy and disenfranchised organisations to pick on teenage hackers. It could start an interesting underground war.

    It might be time for them to realise that legislation like this will only fuel anger and drive hackers to take action against them.

    IMO there is a reason for the losses these companies are suffering and they need to look at their own lack of innovation and creativity rather than trying to hold on to a dead regime.

    Still, it is amusing to watch them. It seems every step they take they look more foolish. They may have the money, but they no longer have the power.

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