UK reports indicate that the rules for the UK's three strikes system will exempt all ISPs with under 400,000 subscribers. While the move is described as creating "piracy havens" it is consistent with the regulatory assessment that identified the competitive impact on small ISPs of such a system and raised the possibility of exemption. I discussed the issue in a column earlier this year on the significant cost of three strikes.
UK Three Strikes Plan To Exempt Small ISPs
May 19, 2010
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Episode 245: Kate Robertson on Bill C-2’s Cross-Border Data Sharing Privacy Risks
byMichael Geist

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The fate of the 3 strikes plan is uncertain right now. It may end up being scrapped:
Lib Dems vote to axe parts of the Digital Economy Bill:
http://www.broadbandgenie.co.uk/news/20100519-lib-dems-vote-axe-parts-digital-economy-bill
Another very good read:
Chair Of The Featured Artist Coalition Explains File Sharing Isn’t Going Away; Artists Need To Innovate
http://www.techdirt.com/articles/20100506/0249579318.shtml