UPDATED: What the Digital Economy Bill (now Act) means for small businesses

It's not often that I spend my evening watching a debate in the House of Commons but last night I joined the thousands of others who tuned in to view MPs discussing the government's controversial Digital Economy Bill. The interest was so high that at one point '#debill' was the third most popular Twitter phrase in the world.

If you're unaware of what the Bill involves it is an attempt by the government to crack down on internet copyright infringement. Not a bad thing necessarily but what is causing anger is how the rules define an infringer. As it stands, an individual whose internet account is used by someone they don't know - say on the street outside their house - could be classed as breaking the law and risk having their internet connection cut off. Some 20,000 people wrote to their MP urging them to vote against the Bill.

But the protests failed and last night the Bill passed its third reading in the Commons and got through the House of Lords this afternoon. It is expected to receive Royal Assent later this week.

So what does it mean for small businesses?

Under what will soon be the Digital Economy Act, small companies such as coffee shops offering free wifi will face the prospect of a closed down connection if a customer uses the service to illegally download copyrighted music or video files. Great. Just what small businesses need! And I haven't yet even mentioned the potential of the Bill to put off the next generation of entrepreneurs from creating internet companies!

Tom Watson MP, the former digital engagement minister, fiercely opposes the Bill and yesterday tried to get an amendment passed which classed small businesses, libraries and universities differently to other organisations. He failed.

Stephen Timms, the government's Digital Britain minister, admitted such organisations needed "help" with how to protect their wifi connections from legal activity but refused to support Watson's amendment.

Speaking to ZDNet in February, Lilian Edwards, professor of internet law at Sheffield University, said: "This is going to be a very unfortunate measure for small businesses, particularly in a recession, many of whom are using open free Wi-Fi very effectively as a way to get the punters in,

"Even if they password protect, they then have two options — to pay someone to manage it for them, or take responsibility themselves for becoming an ISP effectively, and keep records for everyone they assign connections to, which is an impossible burden for a small café."

So more red tape! Fancy some of that?! I thought not.

There is no doubt that copyright infringement does impact on music acts but the ill-thought out legislation needs a re-think. Much of the criticism surrounding it this week focuses on the fact the government has rushed it through before the general election and failed to give it the scrutiny such an important issue needs.

We're promised a public consultation before the Bill becomes law. It's crucial that small companies are included in that process and if we have to live with such legislation, the "help" that Stephen Timms briefly mentioned in the Commons must be real and proper assistance which prevents small companies loosing a valuable resource for no fault of their own.

UPDATE: 09/04/10 10:45

The Digital Economy Bill has received Royal Assent and is now law.