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ISP's would be hard pressed to monitor individual connections in order to police what their users are accessing. However, certain media organisations can easily trace a users IP to a media source (shared via a torrent or on a fixed ftp location) and determine if it's a copyright infringment or not. Once they have verified the content is copyrighted, they are then in a position to get in touch with the infringing IP's service provider and make the ISP's aware of the illegal activity.
Now, government legislation may force ISP's to issue warnings and force disconnections on those that break the law in this way, but it won't happen any time soon since they will have to establish an official regulatory body (this wont fall under Ofcom's domain as they would be inadequate to manage it) and then force a change in the law to make it able to penalise ISP's for allowing it to go on.
So, not doable short term. However, in 2-3 years if it gains momentum, it will probably go into effect.
Downside of this for ISP's is that they will have harshly treat their customer base in future as well as impliment new technologies to be able to automatically issue warnings for infringement by their users - an additional expense they will have to pass onto their userbase.
End result, one of two things will happen. ISP's will be forced to compete even harder with eachother (having to raise prices to ballance the new legislation) or begin talks with digital download merchants in order to help their user base legally access this material, for a reasonable price.
Further in the future, this will eventually break down the barriers between traditional media merchandising and do away with the US vs Rest Of The World with material release to the public.
Potentially, this sort of thing, if it becomes common world wide will enable a much wider broadening of products and services becoming available to the consumer at a much quicker rate than currently. Think about it, getting new film and TV releases days or weeks after a US release rather than months or in some cases, years.
It's both a good and bad thing, but definately the first step to globalising entertainment.