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Larger broadband providers will form the backbone of the government’s attempts at combating terrorism by storing their customers’ e-mail details, internet phone calls and website visits, it has emerged, with junior internet service providers (ISP) exempt from the scheme.

This week, the second stage of the Data Retention Directive into force. The regulation is intended to offer the government a much wider base of information, which would help it crack down on terrorists’ online activities.

The scheme is being funded by the government, with the Home Office estimating that the total cost will come to £45.8 million. It was originally thought that all ISPs would be forced to comply in order to ensure maximum effectiveness of the operation.

However, today it has been revealed that large broadband providers such as BT, Virgin Media, Sky, Orange and TalkTalk/AOL will be assuming sole responsibility for tackling terrorism online.

The exemption of junior players in the UK broadband market has been revealed today by The site has reported that a two-tier system is being implemented, which puts less onus on smaller broadband providers. The Home Office believes that in so doing they can avoid recording duplicate data. Furthermore, because the majority of UK internet traffic is via the larger players, it is believed that this is the most cost-effective approach.

To back up its claims, the site quoted a representative from a small ISP. He said that the Home Office told him that unless the company has already been contacted and ordered to comply, they are exempt from the ruling.

In 2007, Ofcom found that the UK is home to around 686 junior ISPs who serve the needs of around two million people.

The government has countered claims that the information has little practical purpose by claiming that it will enable the police to identify suspects. It will also uncover links between individuals, the authorities say.

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