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Broadband provider Andrews and Arnold (AAISP) has reportedly found a potential loophole in the Digital Economy Act which could encourage people to set up open Wi-Fi hotspots rather than discouraging them.

Under the terms of the act, there is a potential threat that owners of public Wi-Fi networks will face legal action or disconnection if someone using the network is downloading illegally.

However, according to AAISP, people should tell their internet service provider that they want to buy their broadband as a communications provider rather than a subscriber, reports ISPreview.co.uk.

In a blog post, the firm's Director Adrian Kennard stated: "Now you have done that you are not a subscriber as defined by the Digital Economy Act 2010. But as you have no agreement with the public for them to use the Wi-Fi so you are not a service provider either. So you don't have nasty obligations under the Act either."

Mr Kennard did add that copyright holders could get hold of people's details via court orders; however, he said that if people are threatened with legal action, they have the excuse that they are running a public Wi-Fi so it is likely someone else did the downloading.

Last week, it was reported that Nick Clegg had suggested that if the Liberal Democrats win the election they will repeal the digital economy bill.

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