Yes it definately will. We already have a spy infrastructure in place to rival the NSA, with far less oversight and public awareness - I doubt things will be improved by centralizing all of the control to a single company.

This new system allows for "service providers" with no infrastructure of their own at all, basically just handling billing and customer support - things like network wiretaps happen at a level above this sort of ISP and they would have zero control or knowledge.

This is like choosing to start the Telstra monopoly all over again imo :(