Technology that enables service providers to know more about what their customers are doing online is constantly improving. That's good news for network operators that need to protect content from piracy, guarantee quality of service on a per-application basis and manage network traffic — but potential bad news for those who fear Big Brother's influence.

Groups such as the Electronic Freedom Foundation are already lining up against technology that lets network operators know when users are watching copyrighted content. Companies such as Audible Magic and Vobile have designed technologies to enable network operators to detect what is being transmitted via an Internet connection and check if the consumer is authorized to view that content.

Universities are using Audible Magic to filter content on their networks to reduce student piracy through peer-to-peer traffic. Vobile has created what it calls VideoDNA and has, according to BusinessWeek report, caught the eye of AT&T, which has invested in the company and is considering using its technology to test anti-piracy efforts.

Consumer groups and Net neutrality advocates say operators can use this technology to spy on consumers and put competitors' services at a disadvantage.