Copyright holders will be responsible for monitoring networks
The controversial Digital Economy Bill has been passed into law during the wash-up period, which sees outstanding legislation rushed through before a general election.
The most controversial aspects of the bill - which could see persistent illegal file-sharers disconnected from the web and copyright holders given the power to block access to websites hosting illegal content - survived the process.
What is the Digital Economy Bill?
It is a broad suite of legislation aimed at bringing Britain into the digital age. It follows proposals about digital media set out in the Digital Britain White Paper published by the government in June 2009.
There are various aspects of the bill, which cover everything from local television provision and video game ratings to the powers of regulator Ofcom and how internet domain names are registered in the UK.
It has now been given Royal assent, which means that it is now law. The government says that some measures will be introduced immediately, whilst others will come in over the next two months.
In practice, the next Parliament will be able to study the most contentious aspects of the bill before they are enacted and there will be an extended period of public consultation on many aspects.
What happens now?
The bill will touch on many areas of our digital lives. However, the aspect that has received the most attention is measures designed to curb illegal file-sharing.
This is basically a long set of instructions to Ofcom to draw up guidelines for rights holders and ISPs on how they deal with net piracy.
This will take at least six months, whilst regulator Ofcom consults with interested parties and gets clearance from the EU.
This code of conduct will then be introduced for a year.
Measures could include sending letters to people identified as downloading illegal content and asking them to stop and pointing out legal alternatives.
At the end of the 12 months there will a review. If illegal downloads do not fall (by at least 70%) Ofcom will be asked to consider whether technical measures - which could include limiting the speed or capacity of an individual's service or temporarily suspending their service - are needed.
These would likely be brought in in 2012, if agreed upon. Anyone targeted by the measures would be give the right to appeal, the government says.
What does this mean for me?
In theory, if you do not upload or download copyrighted content, these plans should not affect you. If you do, the government and creative industries hope that these measures will eventually encourage you to use legal services.
Is cutting people off from the net the only controversial aspect of the bill?
No. There are also concerns about how the file-sharing measures could affect public wi-fi services. Specifically, people are concerned that the owner of a connection could be held liable even if they are not personally responsible for downloading pirated material.
So, for instance, if someone used wireless connectivity in a cafe to download free content, the cafe owner would be held responsible. Universities and libraries are also concerned about this aspect.
Opponents are also concerned about laws to force internet service providers to block websites that host copyright free material.
The part of the bill that refers to this, Clause 18, was dropped by the government during the wash-up period. But a new amendment was inserted elsewhere, giving the government similar powers.
Originally the clause was intended to future-proof the legislation against other methods of copyright theft not yet thought about.
While it still allows copyright owners to force service providers to block access to certain sites, the process will now be subject to further debate and would need approval before being implemented.
Why are these measures being brought in?
The government says it wants to protect the UK's creative industries, which it says is under threat from piracy.
It is difficult to measure how much illegal file-sharing is going on. It is reported that more than half of all the traffic on the net in the UK is content being shared illegally but service providers say they cannot measure it exactly.
The creative industries estimate that six million people in the UK regularly file-share copyright content without permission, costing the industries revenue that they cannot recoup.
A recent industry study, by economics firm TERA Consultants, estimated that the UK's creative industries experienced losses of £1.2bn in 2008 due to piracy.
But campaign groups contest these figures and argue that the music industry has been slow to adapt to the internet age. They say that the legislation has been brought into appease big business, whilst penalising individuals.
Why else do people oppose the bill?
MPs from all parties have voiced concern that the laws have not received enough debate and have been rushed through parliament.
Campaigners say that the legislation will not work and will only drive illegal file-sharing underground.
They are also concerned that innocent people could be caught out by the legislation if their net connections are hijacked by pirates.
Companies such as Google have expressed concerns about the plans to block websites, which it says could result in legitimate content also being blocked.
Some ISPs have also long said they do not want to become the internet police, and have also pointed out that they are mere conduits of the traffic on the net.
How will illegal file-sharers be detected?
The responsibility of tracking down pirates will lie with content rights owners, although ISPs will bear some of the costs.
They plan to monitor websites which offer links to copyright content and then obtain the Internet Protocol (IP) address of the online computer being used to share that data.
ISPs tend to own blocks of IP addresses, so it is relatively simple to identify the broadband account holder that is tied to a particular IP address at a particular time.
Will the proposals reduce illegal file-sharing?
The music industry hopes so, but campaigners are sceptical.
The difficulty is that the problem is a moving target. More persistent file-sharers are already beginning to use software which masks their IP address while online, and the files being exchanged are encrypted, so it is harder for ISPs to detect.
However, the music and film industries are more likely attempting to target the "soft, underbelly" of file-sharing: the teenagers who are doing it because they are either apathetic or believe they can get away with it.
They hope that the threat of being watched will be enough to prompt these people to use legitimate services.
But targeting these groups raises another difficult issue in the debate about temporarily suspending the accounts of file-sharers: they may be sharing their internet connection. Teenagers are likely to be using a connection at their parents' homes, and shared housing may see a number of independent users with just one file-sharer in their midst.
How have other countries dealt with the problem?
Countries around the world are grappling with how to control internet piracy.
In the US, student Joel Tenebaum, who has admitted downloading 800 songs, was last year ordered to pay $675,000 (£412,000) to various record labels after being found guilty on 31 charges of sharing music online.
In May 2009, the French parliament passed legislation which would see a new state-agency sending warning letters to file sharers. If they are caught three times, they will be cut off.
There have been protests against similar proposed legislation in Australia and New Zealand.
In response to the French legislation, European politicians ruled that cutting off someone's internet connection could be a breach of their human rights.