Packet sniffing may sound like something which goes on in the backrooms of less salubrious nightclubs, but it’s use is becoming increasingly commonplace among ISPs who want to build a detailed, real-time picture of how customers are using their networks, in order to manage demand; as well as to turn down the tap or surcharge heavier users.
In a more sinister twist, the same technology is also being used to comply with U.S. government-ordered internet wiretaps and by the Saudi Arabian authorities to keep a watchful eye on what its citizens are doing online.
By far the most comprehensive and accessible piece I’ve read on the subject so far is this one by Nate Anderson, over on ars technica. Recommended reading.
The Beyondness of Things 