The weird thing is this type of traditional snooping will be defeated as more content providers are switching over to HTTPS. AT&T aren't technical dummies, so they know that. I'm wondering if their scheme doesn't require a special browser plugin that automates an MITM attack on https....
What's weirdest of all is that until now, federal law has protected the ISPs from liability over the content they transmit:
Section 512(a) protects service providers who are passive conduits from liability for copyright infringement, even if infringing traffic passes through their networks. In other words, provided the infringing material is being transmitted at the request of a third party to a designated recipient, is handled by an automated process without human intervention, is not modified in any way, and is only temporarily stored on the system, the service provider is not liable for the transmission.
The rationale behind that statue was that ISPs can't be held accountable for copyright-infringing material going over their wires because filtering it would be too onerous. If AT&T sets up such a monitoring system, it pretty well defeats the claim they don't know what their subscribers are transmitting / receiving.