Let me make one thing clear: I am not a Google fanboy. I love it when Google releases open source software... but that's mostly because it's open source, not because it's Google. So when Google announced that they've been in talks with a major ISP about the future of the internet, I was a bit uneasy. (Oh, yeah, and I do hate ISPs. And telcos. Yeah. Verizon's both.)
So basically Google and Verizon want net neutrality for the internet as it is today... but only for wireline providers. Oh, and they want to fragment the internet by allowing ISPs to offer extra services to their customers in addition to internet access. Alright, so some are already doing this (think Epix and ESPN3). It may not really be anything new, but I really don't think it should be encouraged. A few services are fine, but what we're talking about here is essentially dividing the internet based on your service provider.
Think of it this way. If you feel your ISP is charging too much or has substandard service, what can you do? Well, if you're lucky, you can switch to another ISP. This is one problem with them: there isn't enough competition. In most cases, you could at least switch to DSL from cable or vice-versa. But once you've switched, you're back up and running with exactly the same access you had before. It might be a little faster, it might be a little slower, but you're on the internet.
Now imagine the world as Google and Verizon would like it. You want to switch ISPs? Alright, but you can't get to the videos you used to watch. Oh, and maybe your health care monitoring, smart grid, and advanced educational services might not work too. See the problem here?
Ideally, as Internet Service Providers, their job should be simply to provide you access to the internet. This would effectively turn them into dumb pipes, and they are fighting to prevent this from happening. The reality of the situation is that they do want to lock you in by any means necessary.
Oh, and let's not forget that the net neutrality portion of this would not apply to wireless providers. They would continue to keep blocking access to whatever they want, slowing down whatever traffic they want, etc. It's a mess now, and this won't make it any better.
I realize this is a bit out there, but imagine what would happen if AT&T customers could only call other AT&T customers. Same for every other carrier. Nobody would switch carriers because their friends and family all use that carrier, and their friends and family wouldn't switch because they wouldn't switch. You already see this happening with their "in network" free calling, but to entirely segregate the different networks would increase this lock-in exponentially.
It's much like the current situation with VoIP and IM services. AIM, for example. If you use AIM, there's a good chance you use it because your friends use it. You won't leave because then you won't be able to IM them. There are open IM services (Google Talk, other Jabber/XMPP services), but they go largely unnoticed by the general public because they are either locked in or are not aware of an alternative. In most cases they don't know how these services are more open than what they use, nor do they care, because they've been using it for as long as they can remember and it's what they're used to.
The situation is similar with Skype, though they are starting to see competition... Apple for one. (And if Apple does actually make FaceTime an open standard, I will applaud them for that, but given their history with such things I seriously doubt that will happen.) But for the most part they are the dominant video chat service, and attempting to get any long-time Skype user to even try anything else is a rather difficult task.
In fact, the internet was like this at one point. Just take a look at early online systems to get an idea of where the internet could be headed. Granted, traditional websites are here to stay - people aren't going to abandon standards entirely, and they are the best way to reach the most possible users. But who is going to be making deals with the ISPs? Content providers. There's a good chance that, if this goes through, internet media will be split between ISPs, much like it is with TV. If you want this content, you have to pay for it separately from this ISP.
If this is how the internet ends up, I seriously hope it ends with the content providers. We do not need health care monitoring systems locking us in to a single ISP. But let's not see this go through in the first place. It's simply a bad idea. Sorry, Google, but I'm not with you on this one.