Following a legal battle with the 4 major record companies, Eircom have settled out of court by agreeing to voluntarily implement a controversial "Three Strikes" policy.

While this "Three Strikes" policy may be better than the alternative which the record companies (labled the "Big Four", and consisting of Sony, EMI, Warner and Universal) were seeking — to actively monitor users' IP traffic using special software like Audible Magic — it brings up privacy issues.

The agreement made between Eircom and the record companies means that they will now be working closely with one another to cut down on copyright infringement through use of peer-to-peer (P2P) file-sharing on the Internet.

The record companies will use a service called DetecNet, which poses as a P2P file-sharer to target the offending downloaders and supply Eircom with the IP addresses of suspected copyright thieves.

Upon receiving the first complaint, Eircom will issue a friendly warning to the suspected user. The second complaint will be followed by a second and final warning. After receiving a third complaint, Eircom will suspend and disconnect the user's account.

Customers accused of illegal file-sharing will be left helpless as there is no judicial or appeals process, so the presumption of innocence will not apply and users will have no way of defending themselves.

Since the settlement last Wednesday, this graduated response policy has been widely critized, and the chairman of the Alternative Licensed Telecoms Operators group, ALTO, (whose members include BT Ireland, Magnet Networks, NTL, Chorus, Smart Telecom, Budget Telecom, Cable & Wireless, Colt Telecom, Complete Networks, Digiweb, ESB Telecoms, Verizon and 3 Play Plus) Ronan Lupton said issues over breaches of privacy over IP addresses could be raised.

The deal could also hit other potholes along the way. Between the media companies' documented history in the US and elsewhere of creating false accusations of copyright infringement; shifting IP addresses due to widespread use of Dynamic Host Configuration Protocol (DHCP) digitial subscriber line (DSL) connections; and the prevalence of unsecured wireless networks, there can be little confidence in the validity of any illegal file-sharing allegations, whether those allegations are made in good faith or not.

On the other hand, because of shifting IP addresses, the record companies will have no way of knowing whether or not a user's account really has been suspended and disconnected. Most home DSL users, as well as business customers, are assigned dynamic IP addresses when they connect to the Internet. This means that the same IP address could be assigned to numerous customers throughout the country at different times within a 24 hour period. Static IP addresses are rarely used, especially by home users.

However, if Eircom do intend to honour their agreement with the record companies, it may face expensive class-action lawsuits in the future if customers decide to retaliate due to infringement of their liberty and privacy rights.