Well, OK, they have agreed to throttle the bandwidth of those accounts found to be indulging in the illegal downloading of music via file-sharing networks if their customers do not take heed of a warning letter or two.

The BPI (formerly known as British Phonographic Industry) which represents the British music recording industry has announced that it has successfully reached a 'groundbreaking agreement' between record labels and major UK internet service providers, as well as the British government, on measures to help significantly reduce illegal filesharing.

"Following negotiations facilitated by the Department for Business, Enterprise and Regulatory Reform (BERR), BPI on behalf of hundreds of UK record companies big and small has signed a Memorandum of Understanding (MOU), with the UK’s six largest internet service providers. The Motion Pictures Association of America and BERR have also signed."

This places joint commitments on the signatories to continue developing consumer education programmes and legal online services. But it also, for the first time, requires ISPs to work with music and other rights holders towards a “significant reduction” in illegal filesharing.

To this end hundreds of thousands of warning letters will be sent out by ISPs in the first year. Any customers whose accounts are identified by the BPI as being used illegally will get a letter. Repeat offenders are likely to see the bandwidth of their broadband connections reduced if they do not take heed. Ultimately, they could be cut off from the Internet at least by those ISPs which have signed up to the MOU.

The BPI Chief Executive Geoff Taylor says "This MOU represents a significant step forward, in that all ISPs now recognise their responsibility to help deal with illegal filesharing. Government has played an important role in bringing all parties together to arrive at this point, but the work really begins now. We look forward to creating the procedures necessary to effectively tackle repeated unlawful filesharing with the other signatories and Ofcom. BPI has always believed that a partnership approach is the best way forward, as we showed with our education campaign with Virgin Media, launched in May. This has demonstrated that ISPs and the music business can work together positively to raise awareness about illegal filesharing. And, working with government, we have been able to build on that progress and encourage other major ISPs to start taking a responsible approach. In addition, the music business is constantly innovating to offer new, safe and legal ways to enjoy music online, and to create a future for digital music where creativity and copyright are respected. This MOU will help to create an environment in which such new digital services models can flourish."

There been already ISP blocking access to certain domains. What would be interesting to know is how they will distinguish what is user doing? For example user can be either downloading movies/music from a server but on another hand he may be simple sharing large collection of personal photos on same server. How do they want to distinguish it?

If they don't have a good way of distinguishing illegal filesharing from legal then I think that there could be law suits against the MOU. I also think that one of the best moves they could make would be to stop using DRM on music brought online. It's the sole reason I still buy CDs. I would prefer to be able to buy my music in 320 bits mp3 or OGG online but there's no way that I will pay for music that is going to restrict my rights to use it in the first place.