The volume of internet traffic coming into New Zealand has dropped sharply since new anti-piracy rules came into force, says an industry insider.

An employee from one of the country's largest internet companies, who did not want to be named, said the demand for international traffic had fallen after the Government's copyright law came into effect last Thursday.

The "three strikes" law requires internet companies to issue warning notices to customers suspected of illegally downloading copyright content - such as movies or music - if a rights holder requests it. After a third notice, rights holders can bring a case before the Copyright Tribunal, which can fine an offender up to $15,000.

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