A couple of questions here...
The first two times are just letters. So why not just download like crazy until you receive two letters? I mean people know they are only going to be warned two times to start, so why not just keep doing it until you receive those two 'warnings?'
On step three, it says it takes you to a landing page where you have to admit guilt. Aren't there legal issues involved in that here in the USA? Is it a legally binding thing? Do I get to refuse to accept guilt, and continue using my internet? What happens if you are falsely accused, now you've admitted guilt, but are not actually guilty? The Fourth step does the same thing, and I again, raise the same questions.
Also, do these rules re-apply each time you change subscribers? So let's say you get caught on AT&T, get your two warnings, then decide to go sign up for a different subscriber. Does the system re-start and you get your two letters, then go sign up for a different subscriber and just keep repeating the cycle so that you never reach step three?
This system is stupid, to say the least.