The UK Internet provider Virgin has struck a deal with Universal to offer their customers unlimited DRM-free music at a fixed monthly rate. As part of the deal Virgin committed to doing everything in their power to prevent people from sharing music on its network, including the option of disconnecting persistent offenders.

There really is only one way to stop people from downloading music illegally, and that is to offer an alternative that can compete with file-sharing networks. Today, Virgin announced a deal where the ISP will offer its customers unlimited access to Universal’s music library for approximately 10-15 pounds a month. Whether this is a good enough deal to get people off their old file-sharing habit still has to be seen.

Anticipating on the possibility that not all customers will be interested in the monthly subscription service, the deal between Virgin and Universal also includes an anti-piracy section. That is, Virgin have pledged to go after their customers who share files illegally on BitTorrent and other file-sharing networks.

How exactly Virgin will prevent or discourage illegal file-sharing is unclear but the ISP itself will not spy on the download behavior of its customers or intercept traffic. Instead, they plan to warn those who download copyrighted content, based on evidence provided by third party tracking companies. Those who receive multiple warnings will experience a suspension in their Internet connection, lasting from “a few minutes to a few hours.”

Interestingly, less than a year ago Virgin publicly said that it would never disconnect alleged file-sharers, after they mistakenly threatened some of their customers with such a measure. There is “absolutely no possibility” of being disconnected, the company said at the time. Clearly they’ve had a change of heart.

In addition to this temporary disconnection, repeat infringers might face speed bumps or humps, meaning that their Internet speed could be decreased significantly, a measure that probably wont be very effective as a deterrent. The music industry is nevertheless happy with the deal and hope that many ISPs will follow Virgin’s lead.

“This is the kind of partnership between a music company and an Internet service provider that is going to shape the future for the music business internationally,” IFPI chairman and chief executive John Kennedy told Reuters commenting on the new deal, adding “It also marks new ground in ISPs’ willingness to take steps to protect copyrighted content on their networks, and that sets a very encouraging example to the whole industry.”

Geoff Taylor, head of the BPI was equally delighted about the deal and told the BBC: “It is very encouraging to see an ISP and a record label working together as creative partners. At the same time, the fact that Virgin Media will apply a graduated response system to tackle persistent illegal downloaders demonstrates that graduated response is a proportionate and workable way forward.”

Tomorrow the UK government will release the final version of the Digital Britain report where it will come up with detailed solutions on how ISPs and the creative industries should deal with the ‘piracy problem.’