America's ISPs set to spy on your network access to help entertainment industry

Douglas Rushkoff writes on CNN about the new US "six strikes" copyright regime, an unholy alliance between the major entertainment companies the the nation's largest ISPs, which gives your ISP carte blanche to spy on all your private Internet traffic on the off chance that you might be interfering with Universal Music's profit-maximization scheme. If you attract enough unsubstantiated copyright accusations, you and your family -- or your business -- could lose your Internet access.

As I understand the new agreement and subsequent comments, which are about as cryptic as a copy-protected DVD, ISP's have agreed to implement a standardized "graduated response plan" through which offending users are warned, restricted and eventually cut off from the Internet for successive violations. The companies are supposed to be developing systems that keep track of all this, so that the letters and usage restrictions happen automatically. The fact that they are all agreeing to participate makes it harder for any one company to win the disgruntled customers of those who have been disciplined by another.
But now that they're free from individual blame, there's also the strong possibility that the ISPs will be doing the data monitoring directly. That's a much bigger deal. So instead of reaching out to the Internet to track down illegally flowing bits of their movies, the studios will sit back while ISP's "sniff" the packets of data coming to and from their customers' computers. While they're simply claiming to be protecting copyright holders, ISPs have a lot to gain from all this as well.
For instance, in many cases the Internet subscriber might have no knowledge of the infraction that the ISP detects. A houseguest might log onto one's home network simply to check e-mail. Because his sharing software might be running in the background (even when he's not downloading files himself) he is in effect sharing his own movie files wherever he goes. Your ISP sniffs the packets, so you are nabbed. The same is true for those of us who run "open networks" so that neighbors and others nearby can get free Internet access when they need it. (In the old days, that used to be considered polite.)

Will your Internet provider be spying on you?