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    Internet Service Provider (ISP) Law

    Thursday, March 24, 2011

    The internet service provider (ISP) industry is cutthroat and merciless and one where only the strongest players can survive. And this is not just due to the fierce competition caused by the ever-increasing number of ISP startups; it is also due to the myriad of laws, codes, policies, protocols and regulations that ISPs attempt to maneuver - but often stumble - their way through. In this article, Alan Arnott, technology lawyer, describes some of the more pressing legal issues faced by ISP resellers today.


    Churning, which facilitates the efficient transfer of ISP customers (aka tails) between ADSL providers, is a common cause of dispute amongst resellers. Churning is strictly governed by a range of protocols, laws and industry codes. Unless this framework is strictly adhered to, churns may be cancelled and the tail returned to the original ISP. In such circumstances, the churning ISP could be fined or even sued for engaging in an illegal poaching arrangement.

    Acceptable Use Policies (AUPs)

    The AUP can be the key to success for an ISP. Without a robust and effective AUP, an ISP can be without recourse where customers engage in illegal activity on the network or simply do not pay their bills. The AUP sets out the “rules of the game” for the customer and is the first point of reference when disputes arise. As a result, it is vital to have an AUP in place that is broad enough that covers all legal issues.

    Wholesaler Relationships

    Another significant issue for the industry is the contractual arrangements that govern the unique relationships between telecommunications carriers, subwholesalers, resellers and customers. Each relationship will need to have a contractual framework put in place that clarifies the rights and obligations of the relevant parties. From a reseller's point of view, it is imperative that the correct terms and conditions are inserted into the relevant agency, franchise, wholesaler or reseller agreement and that the terms are expressive enough to protect the reseller at all times. In addition, the contracts may need to be interconnected, for example, a reseller should only promise a 99% uptime service level to its customers if the reseller's wholesaler can guarantee the uninterrupted supply of the services at the same or higher level.

    Relevant Law

    Apart from the general civil and criminal law, depending on their particular circumstances, resellers may need to comply with laws such as the Telecommunications Act, comprising a hefty 609 pages! It is important that ISPs obtain advice on which laws they are required to comply with and stay up to date. For example, new obligations came into force earlier this year which require ISPs to report child pornography and child abuse material. Failure to comply with the relevant laws may result in significant adverse consequences, including but not limited to hefty fines imposed by the Telecommunications Industry Ombudsman (TIO).

    Broadband Wireless Access (BWA) and Voice Over Internet Protocol (VoIP)

    New technologies such as BWA and VoIP are governed by an additional layer of laws, codes and regulatory arrangements over and above what is required by the traditional reseller of a modem pool. For example, ISPs providing broadband wireless internet over their own infrastructure must generally hold a telecommunications carrier licence and comply with all relevant radiocommunications laws and electromagnetic radiation (EMR) standards.

    A different language

    This post has touched only the tip of the iceberg. There is a whole stack of additional legal issues facing ISPs, suchas those to do with privacy, e-security, and encryption (to name just a few). As an ISP, it is imperative that you are able to convey the facts of any particular case to the court in a language that can be understood by judges and magistrates. A good technology lawyer can act as an interpreter, by translating technical jargon into legal lingo for the court, and vice versa. What hope have you got if your lawyer doesn't understand the difference between a bit and a byte?

    Disclaimer: This column is for general informational purposes only. It is not legal advice nor is it a substitute for legal advice. Readers should seek legal advice on their own particular circumstances. Alan Arnott is a technology & telecommunications lawyer with qualifications in computer science and law with Arnotts Lawyers Jones Bay Wharf in Sydney. For more information, please visit

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