I don't believe in the death penalty... for people: If there were a death penalty for corporations, AT&T may have just earned it. [...] Imagine, they have designs of selling access to movies and stuff over the Internet, so they decide to join with the MPAA and the RIAA to spy on and prosecute their customers. (Via Scripting News).
In a police state (as I know from personal experience), your every move, word, writing, communication, relationship is open to surveillance and potentially suspect.
What AT&T is considering is the net equivalent of a police state. Even if we accepted the overbearingly expansive view of copyright that the RIAA and MPAA are trying to impose on us, no automated method can distinguish reliably between deliberate infringement and guilt by association. How many innocent people would be caught in the dragnet and treated as criminals because their computers are zombies?
The excellent arguments in this paper apply directly to network-embedded infringement detection and enforcement.