Once we thought the phone network was a “natural” monopoly. But history proved otherwise. Look beyond the electric grid’s “natural monopoly” and look backwards at telecom deregulation and the internet to see how big the Smart Grid can be for America.

I want to cover my home’s roof with solar cells that generate electricity. I want a co-generation unit (heat and power) in my basement. That sounds like the internet: freedom to plug in your own personal devices.

Today, we blog, upload videos to YouTube, FTP files to our websites and download music (legally, of course). We can buy a dot-com address and launch a website in an hour. Bits of information flow in and out of our house driven by our media hunger or creativity.

If the electric grid was open and smart (it is neither), we might all be creating a bit of power from our rooftops or our basements or we’d sell a promise NOT to use power for an hour on a hot day. But the grid is not designed to track and control thousands of small devices. It only thinks big, ordering power plants to turn on and asking factories to turn off to avoid brownouts. Like the phone network in 1983, today’s grid is closed, dumb and hostile to interconnection.

If geeks ran the power grid, we would buy photovoltaic systems by mail order from Dell and install them on our roof (hopefully on the south side). Sears would sell co-generation units to heat our homes in the winter and we’d sell the excess power back to the grid in the summer. On a July day, when air conditioning loads peaked, a smart grid with real-time pricing might turn off my water heater and air conditioner for fifteen minutes to free up power so downtown offices can stay cool.

In August of 2003, 50 million people lost power because an Ohio utility didn’t trim the trees! And a nuclear power plant in Florida went offline after a wire was severed. In contrast, the internet was designed for war: nuclear war. If Dallas were bombed, the internet would reroute. The internet is very flat with no vulnerable points to shoot at. There is no central management that can be knocked out by a missile or a tree.

By design, no one “runs” the internet because central management would have been a point of vulnerability. Despite its military origins, the internet is open and so innovation is rampant. Lay people (and my teenager) can easily add components. It is a paradox that the internet’s architects created a fault tolerant network to survive nuclear Armageddon, while power planners fostered a centralized network that would wither under the same assault. The internet was created from scratch by engineers who were not protecting investments in generation.

When I was a kid in Scotland, I clung to the electric heater in the morning as the last bit of warmth faded. Every house had a clock that turned off the heat at 7 AM. Power was scarce. Industry had priority during the day.

But today, a clock that could turn off your home appliances would be on the leading edge of the Smart Grid. When this recession is over, the best source of power will be a smart grid that can shed loads as needed and can shunt wind power where it is needed. Conservation (“demand side management” in industry jargon) is the lowest cost solution and it needs a smarter grid. Smart grid and smart billing are also needed so we can get paid for our home-grown solar power.

You can bet that there won’t be many new jobs in Boston or the Bay area making the copper or towers for the power transmission lines that are a hot topic in Washington. But “building” a software- and IQ-intensive smart grid………that is an opportunity that these tech growth regions understand.

Steve Kropper is a Founding Fellow at the New England Clean Energy Council, the CEO of WindPole Ventures and T. Boone Pickens rep in the Seventh Mass. Congressional District.