The article is commenting on disconnecting the ISP’s customers due to unproven allegations made by the recording industry. This is more or less equivalent to asking the phone company to disconnect your phone service because the gas station down the street thinks you’re using the phone to plan a robbery. At the very least, the ISP would be forced to do enough investigation to defend itself against a breach of contract lawsuit. That sort of investigation is not cheap, nor are the legal bills in defending against a lawsuit negligible. If the recording industry wants that kind of service, then either pay for it up front, or accept full liability for any damage claims from the disconnected customers. As far as I can see, the recording industry is not willing to accept any liability for anything, and it is not fair to force this onto someone who is guilty of nothing more than providing a communication service.

Anyway, did you interpret the correspondence sent on behalf of the copyright owners to be anything other than notice sent pursuant Section 512? The correspondence I read had all the elements of a 512 notice, including identification of the works alleged to be infringed and the “under penalty of perjury” boilerplate.

Remember, the DMCA safe harbor concerns more than just hosted content, but also transmissions of content and search engines. What’s more, I don’t think any of us should be so naive to assume that if the copyright holders were to pursue an infringement action against Bayou, that Bayou wouldn’t shout “DMCA Safe Harbor!” as loudly as it could, right out of the gate.