As far as monitoring the WTBS private network, no doubt it's done. With a DHCP server it's possible to trace not only what Web sites a user visits, but also every page on every Web site they click on. Most big LANs and WANs have a DHCP server and a proxy server that allows connections to the outside world. The company I worked for kept all DHCP log files for up to six months, and they were able, if the need presented itself, to search the logs for a particular user, a particular IP address (which would reveal the actual computer the user was on), or sort by a particular Web site and find all user accounts that visit that Web site.
As Jeff said, someone has to have a good reason to write a query into such enormous logs, no one would have the time to sort through every user account on the network and monitor everything a user was doing. I seriously doubt anyone at the Borg does such a thing other than spot checking accounts. If someone wanted to watch a certain individual or group of individuals, that could be done, and no doubt has been done at Bethel and every other big corporation. It's perfectly legal if you have a policy for doing so. With such a policy, it is also perfectly legal to install "remote monitoring" software on any computer in a corporate network. We did it all the time for support and trouble shooting purposes.
As for connecting to an outside network and feeling safe, don't count on it. A few weeks ago I watched someone use a "packet sniffer" on an outside network and he showed me how easy it was to find unsecured communications, such as e-mail and chat sessions. If you have a wireless network in your home, (and you haven't done anything to secure it) someone could be down the street watching (and logging) everything you do; there are very easy and unsophisticated ways of watching wireless traffic (it's actually a hobby of many computer geeks called "War Driving"). It's like your home... if someone really wants to break in, there is little you can do about it. You can discourage most crooks by taking some basic precautions, and that will repel 95% of the attacks.
It would not take much effort for someone on the inside of a LAN to install a packet sniffer (a free download from the Internet) and watch other users' traffic. In that case, we would have Bethelites watching Bethelites, and there may be IT administrators at Bethel who are monitoring the LAN for packet sniffers. That can be done too.
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Yammer.