What if everyone who wish to leave it open just made the password "password" (or the German equivalent)? Would they be liable for not having a strong enough password? Who would they hold liable if the WiFi was locked with a strong password, but there was good reason to believe that the password had been compromised by other means?
Insight Communications has a similar "five strikes" plan. Each of the first three results in service being cut off until you call them so they can explain stuff to you, then they turn it back on. The fourth gets your service suspended for a month. The fifth "may result" (their words) in you being banned from their service. With that intentionally weak wording, I'm not sure how often that gets handed out.
I only got one strike from them. If I had to guess (from talking with them), the extra couple strikes they give you are for the benefit of the doubt with respect to open wifi and shared connections. They give you a chance to get informed about those things and how to deal with them, then after that you are on your own. Amusingly, the person I talked with told me several times about how they "have to do this" in order for them not to get in trouble. I might have given him a hard time about that if I didn't know that he was just some random guy reading a script off of his screen.
Insight Communications is doing something like this. When they receive an accusation they immediately "quarantine" a users internet access. All the user can access is an automatic redirect to a page notifying them of their account's suspension, along with a number to call to get more information and get the "quarantine" removed.
As I understand it, the first three quarantines are just notices, so that they know you have been notified and so that they can talk to you about the dangers of file-sharing and unsecured wireless connections. You call them and listen, then they turn your internet access back on. The fourth accusation results in a thirty day suspension of the customer's internet access. The fifth accusation MAY result in permanent banning from that ISP. (They use the word "may", but I don't know what determines if one is or is not banned.)
"At one point he implies that they'll have agreements in place with record labels in time for this vote, and if they don't, then people will vote against the deal -- but then says that it will take much longer to get those deals in place, and there's no way they'd be ready in time for the vote."
If you pay close attention, he is actually talking about two different agreements here. The first one he brings up is the one you are seeing (that will take months). However, BECAUSE those agreements will take too long, they are looking to get some kind of PRELIMINARY agreements that will buy them time (and set up how the final agreements will take shape). Those are the ones they need to get in place before the vote.
He doesn't explain it that clearly, and honestly I might have not figured it out if I hadn't watched it just after reading your criticism of it.