The British ISP industry has spent a small fortune of its customers’ money fighting the people who would, in a saner world, be its business partners – only to suffer a crushing defeat. On Tuesday Lord Justice Richards threw out BT and TalkTalk’s judicial review against the 2010 Digital Economy Act.

Yet as trench warfare goes, they may consider it worth every penny.

It should be remembered that the telcos’ reasons for opposing the Act are very different to those of “digital rights” activists. For the activists, every day is the first day of the Counter Reformation. Every copyright enforcement proposal is fatally flawed: the task is quite simply to say “no” to every one that pops up. But ISPs are in fact a lot more pragmatic.

For the ISPs, it’s all about minimising risk and, at the end of the day, lowering their compliance costs. They don’t think copyright enforcement is spoiling the unicorn’s grazing meadow – they just think it’s going to be scarily expensive. And this concern takes precedence over innovation, the creation of new markets, growth, and ultimately profits. In short, they see more value from keeping the wild west much as it is today than they do from building on it – despite empirical evidence (pronounced “Sky”) that people cheerfully pay for content if it’s convenient and good value.

There is another advantage to the ISPs for pursuing a strategy of prevarication, in that it has successfully delayed the introduction of the 2010 Act. The original timetable envisaged letters being sent to copyright infringers in early 2011 and, should file-sharing have miraculously failed to cease after that, technical measures being imposed against diehards round about now. This is the sanction that copyright-holders wanted – attaching a real consequence to what today is a casual and risk-free grabbing of a bunch of movies and music. The first letters may not now go out until mid to late 2013.

In a shorter timeframe – in under three years, in fact – France introduced the vastly more ambitious (and more bureaucratic) HADOPI framework.

So focus has instead turned to the much vaunted successor to the 2003 Communications Act, and that’s where ISPs and copyright industries have come to blows. Remember that the DEA was a series of amendments to the 2003 Act. The Ministry of Fun says it wants draft legislation by April, and as you read this the Green Paper is being rewritten; the first draft was acceptable to nobody. So MPs will in effect be discussing the DEA’s replacement. Given the foot-dragging from the Mandarinate – our permanent government – it is hard to see how the Act has a vigorous life ahead of it.

In the meantime, private legal cases are filling the vacuum. Last year the Newzbin2 ruling established that ISPs were liable under copyright law – and despite shrill squawks from Consumer Focus and other activists that complying with this would bankrupt ISPs, the cost turned out to be minimal: £5,000 a pop to block a site with the ISP picking up the bill. Sky preemptively halted access to Newzbin2, avoiding the need to reach into its pockets.

But as I wrote when the SOPA hysteria was at its peak, copyright enforcement hasn’t kept pace with the technology; it’s all too easy to evade a web block which means the demand for cheap and effective redress hasn’t gone away.

Mechanisms and agreements must be created to stop the rip-off of creators ranging from you, dear reader, and the wedding photographer bloke down the road to Sony Pictures – and it must scale to encompass all these examples. These agreements don’t have to be legislation if enlightened self-interest prevails. But ISPs remain in a game theory-like trap; the first to move is judged to lose, so nobody budges an inch.

All this leaves the internet looking shabbier than it should be. Britain has a long historical legacy of enlightened private agreements and its citizens pay for movies and music. It should be a testbed for radical market experiments for the world to observe. But can you think of a decent service that’s launched over an IP network since Spotify? The action takes place off the net.