In principal it's quite wrong and scary, but in reality I have to believe the government is too incompetent to actually do anything with their mountains of AT&T collected data.
An even scarier thought is that what if they get access to data 30 years down the line, with vastly more computing power?
(Heck, what happens if someone gets a hold of old tossed out ISP hard drives with logs on them?)
Go rent the movie Brazil. It's a movie about what would happen in a society with strongly defined elites and suffocating bureaucracy, dominated by a fear of terrorism, practicing torture in secret. The information professional class is relatively privileged, although oppressed at the workplace like everyone else. For fun some can snoop on citizens at will. Yeah I know, it's science fiction, but it could happen some day.
The entire plot is set in motion when a fly falls into a mechanical typewriter and causes the government agents to break into the house of Archibald Buttle (instead of Tuttle).
As for the mountains of data: how many HN'ers for instance would love to climb them for no other reason than to use some BigData tools on them without questioning that cause?