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ISP issues

This guide is based on UK law. It was last updated in May 2005.


ISPs play a central role in the development of e-commerce and use of the internet. Presently, the majority of people use an ISP to access the internet. For some time ISP s have been arguing that they should be treated as 'common carriers', i.e. that they should not be held liable for the content which merely passes through their systems. As we shall see from this guide, the law is moving towards granting ISP s this protection, subject to certain obligations which will need to be satisfied.

This guide is intended to provide an overview of some of the issues which face ISP s, V ISP s (Virtual ISP s) and web hosts in respect of their day to day business. For ease of reference this guide will only refer to ' ISP s', although the same issues will apply to all three. The guide will look at issues relating to connectivity, an ISP 's relationship with its customers, third party content, spam and data protection. Where there are other related guides, you will find links to them within the text.


The main business of an ISP is to provide its customers with a connection to the internet. So far as the customer is concerned, he or she wants to be able to dial into the ISP and get connected without getting an engaged tone. They also want a fast service and will not necessarily recognise that the speed with which they can download information will be governed by their own connection and equipment.

No one can control all of the interconnections between the various networks, and any network failure may be outside the control of the ISP . An ISP needs to make sure that in its terms and conditions it makes it clear that it does not give any guarantee that the service it provides will be uninterrupted or error-free. Where the services are being provided to consumers free of charge or for only a relatively small fee, then such a clause will probably suffice.

However, when an ISP is hosting a commercial web site and is being paid to do so, its customers will often expect some form of service level agreement. Typically this will be expressed as being the percentage of time which the server on which the web site is hosted will be available for access via the internet.

When considering a service level agreement, it is particularly important to bear in mind two things. First, that allowance should be made for any planned downtime for maintenance of the server which should be excluded from the calculation of the time during which the server is unavailable. Second, it is not possible for anyone to guarantee a 100% connection success rate. However, depending on the period over which the availability is to be calculated, the percentage will most likely be in the range of 98%-99.9%. It is also necessary to consider what "teeth" (if any) the service level agreement is to have. An effective service level agreement will usually contain a provision for a rebate of part of the fees paid to the ISP and the right to terminate the agreement if the service levels are not achieved.

Another big issue for ISP s is that of bandwidth. At the moment bandwidth is very expensive. It is important that in its terms and conditions an ISP limits the amount of bandwidth that its customers can use at any one time. Where an ISP is providing a free service, it will want to be able to restrict the availability of bandwidth for any particular customer. Where a customer is paying an ISP to host its web site, it is essential that the ISP clearly sets out in its agreement how much bandwidth will be available for that customer and reserves the right to charge for any additional bandwidth which is used over and above that provided for in the agreement.

Dealing with customers

Most ISP s will have two distinct categories of customers, namely consumer and business customers. In many respects, the issues which arise in relation to each category are the same, although it should be borne in mind that consumers have additional layers of protection under English law, Scots law and European legislation. See our guide on Dealing with Consumers.

The basis of the relationship for doing business with a customer is contractual. It is important that the customer is made aware of the provisions of the relevant terms and conditions before the ISP begins providing its services. If no terms are agreed with a customer, then it may be possible to imply certain terms into the agreement. However, it is much better for all concerned for there to be certainty as to the terms upon which the services are to be provided.

A typical ISP will need to ensure that it has clear terms and conditions for one or more of the following services:

  • Dial-up accounts for consumers (this will often be a free service including the provision of e-mail services and free web hosting);
  • Dial-up accounts for businesses;
  • Leased line services for businesses; and/or
  • Web hosting services for businesses.

An ISP 's terms and conditions need to be clear, need to deal with all the necessary issues and be properly incorporated into any agreement that it enters into with its customers. For further information with regard to incorporation of contractual terms see our guide, Online Contract Formation.

In addition to provisions dealing with bandwidth and availability, you will also need to ensure that you have clear terms limiting your liability and also incorporating an authorised use policy. The purpose of the authorised use policy is to ensure that, so far as possible, all of the obligations to ensure that a site is lawful and complies with all necessary regulations are placed on the owner of the site. The authorised use policy will set out the basis upon which an ISP is willing to provide a service and will be used to protect the ISP against liability for third party material and for any loss of data. The authorised use policy will impose certain obligations on users, for example, to ensure that they have obtained all necessary third party consents and licences for the material which they include on their web site (see our guide on Branding and Intellectual Property) and to ensure that all the material on their site is lawful. With regard to the difficulties which an ISP may be faced with regard to unlawful material, see our guide on Defamation.

An ISP may wish to include terms relating to the e-mail accounts and, in particular, what such accounts can be used for and whether the ISP may remove emails stored on a server from time to time in order to free up space on that server.

As the world of the internet is moving so quickly, it is sensible for an ISP to include a provision in its terms and conditions allowing the ISP to amend its terms and conditions from time to time. However, a mechanism will need to be included so that any such amendments are clearly bought to the attention of the customer and are properly incorporated into the agreement with the ISP before taking effect.

Liability for third party content

ISP s need to ensure that they do not incur liability for any of the material which they host on their servers. There have been a number of cases over the years both in the UK and in the US where third parties have sought to make an ISP liable for material which has been hosted on its server. The position, broadly speaking, is that an ISP should not perform any editorial function. If an ISP monitors and removes unlawful material from its sites on its own initiative, then it will run the risk of being seen as a publisher of any material which remains on its servers.

In order to protect itself, an ISP must remove any unlawful material from its servers as soon as it has been advised of its existence. In this respect, an ISP must do two things:

First it must have a clear contractual term, which has been brought to the attention of its customer giving the ISP the right to remove material without incurring any liability for loss of data or loss of profit etc. The right to remove material should not be limited solely to unlawful material, as on occasions it may be difficult to determine whether material is lawful or unlawful. There may be situations where the material is not necessarily unlawful but is certainly distasteful and something which the ISP wishes to distance itself from. The reason that it is important that such a term is included is to ensure that the ISP is not put in the unenviable position of either facing a claim for damages for breach of contract or prosecution and/or a claim for damages for hosting unlawful or defamatory material.

Secondly, the ISP must also make sure that it has in place proper procedures to ensure that if a complaint is received it is dealt with immediately. This is a lesson that Demon Internet Limited learnt to its cost in relation to an action brought by Dr. Laurence Godfrey. Demon Internet failed to deal promptly with a complaint that it had received from Dr. Godfrey. The material in question remained on the relevant newsgroup hosted by Demon Internet for a period of 10 days after the complaint had been received. Demon Internet was liable for the 10 day period during which the newsgroup posting remained on its servers. The parties in that case agreed an out of Court settlement. Whilst the damages element was not huge, Demon Internet Limited reportedly ended up paying Dr Godfrey's costs which were in the region of £250,000.

For further information with regard to unlawful material, see our Guide on ISPs' Liability for Third Party Content and also our guide on Defamation.


Spam is unsolicited commercial e-mail and has been the subject of debate for a number of years. In the UK, we are seeing our first spamming legislation coming through in the Consumer Protection (Conclusion of a Contract by Means of Distance Communication) Regulations 2000. The Regulations will provide that anyone receiving junk mail will be able to tell the person who sent it to them that they do not wish to receive such mail in the future. A central register will be created whereby people will be able to opt out of receiving junk mail. It will be unlawful for anyone to send junk mail to anyone who has requested that you do not send junk mail to them or whose name appears on the central register.

The EU Directive on certain legal aspects of electronic commerce in the internal market also deals with spam. The EU Directive tackles the problem in a different way. Anyone sending commercial e-mail will be required to include within the e-mail header a statement that the email consists of an advertisement. The EU Directive also imposes obligations upon businesses in respect of the content which must be included within such communications.

Data Protection

Data Protection legislation is a particularly important issue for an ISP . As an ISP will inevitably be dealing with personal data, it is essential that it has properly notified the Data Protection Commissioner under the Data Protection Act 1998, and that it trains its staff to ensure that personal information is kept confidential at all times. For further information, you should refer to our Data Protection guide.

Any questions? Please contact struan.robertson@out-law.com / 0141 249 5422 or one of our other contacts.

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