KEY POINTS:
Serious discussions are going on in Europe and America about the shape of the internet and the debate keeps coming back to the F word - file-sharing.
In London last week, I was horrified to read that the Government was considering turning internet providers into traffic cops, responsible for identifying and shutting down customers using file-sharing services to download content illegally.
In the US, the Federal Communications Commission has been mulling over the contentious issue of net neutrality and whether it should impose rules on internet providers and telcos to prevent them from discriminating against types of internet traffic, namely file-sharing.
The British Government's plans were revealed in Creative Britain: New Talents for the New Economy, a strategy paper it drafted after lobbying from a music industry outraged that CD sales dropped 10 per cent last year while illegal music downloading thrived.
As the paper rightly points out: "Online intellectual property infringement, in particular, continues to grow. If creative artists cannot earn a living as a result of their work, then our creative industries will not thrive."
The Government has undertaken to introduce by April 2009 measures, either in the form of voluntary codes or legislation that will require internet providers to take action against illegal file traders.
Not surprisingly, the plans have put the internet industry into a spin. Already operating on thin margins as local loop unbundling and wholesaling provisions allow new players to undercut the traditional broadband providers, British ISPs are panicking about the compliance costs.
Then there's the bad will created by internet providers having to go after their own copyright-flouting customers and the technical nightmares involved in discriminating between legitimate and illegal file-sharing traffic.
Around the world, by and large, the internet industry operates on the principle of common carriage where communications providers are not responsible for the content that passes through their servers.
Law enforcement has been left to the likes of the Department of Internal Affairs, which uses sophisticated software to check internet traffic for inappropriate content such as child pornography, though the ISPs have been known to dob in spammers and illegal file-sharers.
ISPs have stubbornly resisted the urgings of the music industry to hand over the details of customers suspected of trading digital music illegally.
Putting the onus on the ISPs to police downloading changes the game and, frankly, creates the potential for some scary scenarios.
All of this comes as the entertainment industry, for the first time, actually begins to take steps to make content available in forms that could discourage illegal downloading.
Last week I had the pleasure of test-driving the BBC's iPlayer service, which will allow people in Britain to view the BBC's content as web-streams or files downloaded over a peer-to-peer network, all for free.
Commercial broadcasters around the world are following its lead with advertising-supported video-on-demand services such as Hulu.com and all sorts of music download services.
With the exception of movies, which are more problematic to protect because of the staggered release window between box office debuts and DVD releases, the new business model for delivering digital content is starting to emerge. I'd rather bet on this keeping the creative industry alive than measures designed to clamp down on file-sharing.
The debate under way in the US is murkier. Comcast, a cable operator, has been in the gun over its admission that it throttles traffic related to the Bittorrent file-sharing network, where high volumes of content are traded illegally. Many ISPs are guilty of this and while they claim that throttling peer-to-peer file-sharing is necessary to keep their networks functioning properly, the discriminatory policy has raised the hackles of a new generation of internet companies using P2P networks to more efficiently deliver content to web users.
The crux of the matter is this - the likes of Comcast are content providers which puts them in competition with web-based content providers who have no control of the communications pipes over which their content is delivered.
Without some kind of oversight, the telcos and ISPs will favour their own interests.
Why let people use Skype unhindered when you want to sell them a phone package? Why let them download movies via Bittorrent when you want to sell them pay TV?
The reality however is that file-sharing is a leading sap on bandwidth and the alternative to unlimited access to file-sharing networks could well be a return to data download caps on broadband accounts. American consumers would howl with outrage if that happened.
On both issues some middle ground has to be found, somewhere where the interests of the internet industry, consumers and content creators and distributors are well served. But middle ground seems to be in short supply.
