There was something almost pathetic about the revelation last week that AT&T had censored a live webcast of Pearl Jam concert, slicing out a few lyrics that were critical of President Bush. Was this a boot-licking effort to curry favour with the Bush Administration, with the ultimate aim of influencing regulatory policy? Was it simply arrogance and presumption on the part of Bush-loving AT&T executives (the company is based in Texas after all)? Or was it just rock-headed stupidity (and perhaps boot-licking as well) on the part of a contractor, as AT&T has claimed?

Any of these explanations, at first glance, prompt more eye-rolling than fear. We do after all live in a time when basic constitutional liberties have been suspended in the US, with the government asserting the right to detain people without charge or trial and eavesdrop at will without a warrant. Next to this, idiotic and unethical but very public acts by large corporations – and the Pearl Jam concert apparently was not the only one in which AT&T webcasts were censored on political grounds – don’t seem especially scary.

But the incident does underscore something that is very worrisome indeed to anyone involved in the internet business: the ability, and apparent willingness, of the big phone companies to use their enormous clout to whatever end they desire.

AT&T has insisted that the situation has nothing to do with the debate over so-called net neutrality – a proposed regulatory regime under which internet providers would be required to treat all internet sites equally – since the webcasts in question were being offered by AT&T itself. But the attitude displayed by the censorship incident suggests just the opposite.

Telephone company culture, born of monopoly, is all about control. For years, in the 1960s, the old AT&T argued that attaching any equipment other than Ma Bell equipment to the network would cause disastrous technical problems. It lost that argument, but then spent a decade asserting the same thing about alternative long-distance companies. It lost that argument too – and in both cases the "network damage" claim was entirely specious.

The real issue was economic: if you control what flows across the network (and if your network is dominant enough that people have to use it) you can make a lot of money on it. If you're required to offer everyone the same kind of access and service, and let them do what they want on the network, you make less money.

In the wireless world, the phone companies are already well down the road on a "pay to play" model for anyone who wants to reach mobile phone users. The handset makers have to design their phones to network specs (rather than the other way around), and the carriers go out of their way to ensure that customers can't use the same phone on multiple networks. In the wireless data world, special software makes sure that not just any website is accessible from any phone; if you want to offer your sports scores over the cellphone networks, you'll have to cut a deal with the carriers for the privilege.

The terrestrial internet could very easily move in that direction too – and the phone companies will do everything they can to push it that way. If you access the internet via DSL service from AT&T, you may eventually find that only websites that have cut a deal with AT&T are readily accessible. That kind of system would be a disaster, certainly for small internet companies like NewWest.Net but also for just about everyone who uses the net.

AT&T and Verizon, which have been permitted by federal regulators essentially to consolidate the telephone business into something that looks remarkably similar to the old monopoly structure, say they would never do such a thing. (And, in fairness, there is an argument for allowing people who want to pay for better service to do so).

But the Pearl Jam incident shows all too clearly that, culturally speaking, surprisingly little has changed in the phone business over the past few decades. The phone companies believe that it is their right to decide how people use their facilities (even though the long-established principle of "common carriage" dictates just the opposite). They are willing and able to assert that perceived right on something as trivial as a few political lyrics by a rock band. I shudder to think how they might use their power when the stakes were truly high.

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Jonathan Weber is the founder and editor in chief of NewWest.Net, a regional news service focused on the Rocky Mountain West in the United States. He was previously the co-founder and editor in chief of the Industry Standard