Business Secretary Lord Mandelson is one of the advocates of the Digital Economy Bill. Photo: Peter Gallina/Wikipedia

The Digital Economy Bill, which requires internet service providers (ISPs) to disconnect users who are accused of illegal filesharing, will cost consumers up to £500 million, the Daily Telegraph reports.

The Bill, which is expected to become law next year, will add £25 a year to the cost of broadband, according to ISPs. The Government’s impact assessment document, which examines the likely effects of the Bill, estimates that around 40,000 households will give up their broadband connections entirely to avoid the higher fees.

The impact assessment, written by Lord Young, of the Department for Business Innovation and Skills, and Lord Davies, of the Department of Culture Media and Sport, estimates that the measures in the Bill will result in an extra £1.7 billion for the entertainment industry over the next ten years. However, over the same period, it is estimated that consumers will pay between £290 and £500 million extra as ISPs pass their increased costs on to consumers.

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