Exclusive Tiscali, the UK's fourth largest broadband provider, implemented a "three strikes" arrangement with the record industry to disconnect illegal filesharers last summer, The Register can reveal.
But over a matter of hours yesterday any deal that Tiscali thought it had made with the BPI evaporated in a row over money.
Relations between the pair are in disarray as they battle over who should cover the costs of sending warning letters to peer to peer users and then disconnect persistent copyright infringers. The system the two-million-customer ISP believed it had agreed with the BPI is the same one that the government is pushing all ISPs to enforce.
It had been thought that the dialogue between the BPI and Tiscali would serve as a model for the rest of the internet industry, which is threatened with legislation if it does not come to a voluntary agreement to act against copyright infringement. The issue hit the mainstream at the beginning of this week, when leaked documents confirmed Westminster's plans to bring in new laws.
Last summer, the BPI sent Tiscali a list of 21 IP addresses it identified as having engaged in illegal peer to peer filesharing. Warning letters were sent out, and eventually four customer accounts were shut down.
That Tiscali became the first ISP to attempt this kind of deal with the record industry is not surprising. The pair had been in negotiation since a stand-off over 17 filesharers in 2006. At the time, Tiscali refused to hand personal details to the BPI without a court order, saying it had failed to provide any evidence. The three strikes system they subsequently developed does not require any personal information to be handed over, as the ISP acts as enforcer rather than the courts.
A Tiscali spokeswoman said late on Thursday: "The BPI led us to believe we had concluded an agreement to implement their preferred process in October last year, which not only demonstrated joint leadership in this area but also that both of our industries could work together to tackle this issue."
In a statement however, the BPI told The Register: "We are pleased that Tiscali agrees that our three step proposal is an appropriate way to begin dealing with the problem.
"While there have been discussions between BPI and Tiscali, we have not been able to reach agreement on a long term solution. That's because Tiscali is trying to force us to pay a substantial levy to enforce its own terms and conditions.
"Discouraging customers from using their accounts unlawfully is an obligation that any ISP should bear as part of its core business. That is the socially responsible thing to do, and it's disappointing if Tiscali sees illegal behaviour on its network as a further opportunity to make money at the expense of the music community."
Tiscali replied: "We certainly take our responsibilities very seriously and have never sought to make money out of this process. We are very disappointed with the BPI's response and we will of course continue our conversations with them."
The question of who will pay for a three strikes process seems a major stumbling block for the broader negotiations between ISPs and the BPI. The ISP Association (ISPA) said on Tuesday its members want money to indemnify them against court cases.
Tiscali had said it was satisfied that giving people two chances to stop sharing music illegally means wrongful disconnections are highly unlikely. The payments it thought it had agreed with the BPI covered cost of warnings and disconnections, it said.