The use of the phrase “dumb pipes” is doing terrible damage to the progress of the Internet.

A dumb pipe, in the world of telecommunications, is one where the network operator’s revenue only comes from the network transport itself.  Clearly the cable companies and wireless telephone carriers don’t want to get out of the business of offering their own content and applications (yes, the telephone is an application that is separate from the connectivity).

In reality, the loudest proponents of dumb pipes in the net neutrality debate are really just asking for open pipes.  They still want their HBO.  They still want to be able to call people over the telephone network.  They just don’t want the networks to stand in the way of innovation by blocking content and applications that compete with their own.

But that doesn’t make the pipes dumb.  What they really want is good pipes; fast, reliable and fair.  By calling these good pipes “dumb pipes” we set back the cause.  Who wants to be dumb?  Every network operator I’ve ever met with has a visceral reaction to the term.

Recently I attended an event sponsored by Alcatel Lucent where I witnessed a conversation between carriers, technology providers, and an assembled group of outspoken members of the millennial generation.  In pre-recorded interviews as well as live discussions time and again the millennials showed their bias towards free content and applications.  Most weren’t bothered by whether the free content was legal or not.

Interestingly, the one thing all of them paid good money for was their “pipe.” The value of a good, fast and reliable pipe was paramount.  That was what made the whole online experience better, both for their cell phones as well as their computers.  While most of the conversations in the room centered around the shocking disregard for the value of content and the desire of the people in the room to keep from becoming just a dumb pipe, there was no recognition of the fact that those same network operators were providing the one service that was most desired by the participants and the only one all of them were willing to pay for.

I’m not going to tell you that I know how the business models will evolve for the music industry, the newspaper industry, the movie industry, or any other content business.  But, it is clear that the business of providing Internet connectivity will continue to grow profitably.

The core product of the networks at one point might have been telephone service or TV, but increasingly it is Internet connectivity.  All of humanity is working to create content and applications for the Internet.  I know of no firm, telco or otherwise, with more talent and capability than all of humanity combined. If a network operator chooses to cripple their pipes to prop up their content and application business they are fighting a losing battle.  That is my definition of a really dumb pipe.

Those networks that offer the best service will own something incredibly valuable.  They will own the customer relationship, including a billing relationship.  They will have plenty of opportunities to offer additional content, applications and services.

There is only one possible strategy for the network operators in the long run.  First, they have to offer the best pipe they can.  It needs to compete on speed, reliability, coverage, cost and openness with other connectivity options.  Second, they need to build their content and application businesses as stand alone businesses.  They can offer bundled services and leverage their customer relationships, but they can’t cripple the one business young people demand most without damaging the long term success of their businesses.