Internet is centralized when a government can cut your access or limit it. It is centralized when you're paying your ISP for the ability to connect to the web.
It is centralized because somebody owns the cables. Those fiberoptics did not produce and lay themselves. Your local network at work is also centralized because someone owns the computers and someone pays the bills.
Exactly. That's my point. If the Internet is controlled by the hands of a few (ISPs, Governments, etc), then it's considered centralized. Since Bitcoin depends on the Internet, it's not fully decentralized as we've thought it would be. Even Tor has been compromised by the FBI some time ago. The only way to achieve decentralization with Bitcoin would be to run the same via a mesh network. Satellite connections would work too, but they aren't very reliable (as far as I'm aware).
As long as the public Internet is controlled by big corporations, they could have a final say over which devices are allowed to run a node and support the Bitcoin blockchain. Imagine if worldwide governments started cracking down on Bitcoin and the entire Blockchain industry. They could easily hit the "kill switch" by forcing ISPs to ban connections to the BTC network. Something like this is being done in Russia with the aim to prevent people from accessing the public Internet. Thanks to the open source nature of Bitcoin, someone can easily come up with a solution to maintain the Blockchain ecosystem without interference (radio waves, perhaps?).
Can you elaborate? As I know, the Internet network is still largely decentralized, and thanks to tools like encryption, ToR, VPN, proxies it's impossible to control users. It's impossible to make a "turn Bitcoin off" button, so I wouldn't worry about it. There are problems with lack of competition between Internet service providers in some places, but it doesn't have any strong implications for Bitcoin.
I'm aware there are tools that would provide a level of privacy to Bitcoin users at some extent. However, these same tools can be easily intercepted by the government. It's no secret that VPN & proxy providers are centralized, while the Tor network it's said to be compromised by the FBI (look on Google for more info). The best way to use Bitcoin in a completely decentralized manner would be to run our own personal networks that are "off the grid". Something like a mesh network or even a PAN (Personal Area Network) could further decentralize Bitcoin. Of course, most people still connect to the public Internet to use Bitcoin. But in the event governments decide to collaborate with ISPs to prevent devices from connecting to the BTC network, other decentralized means could be used to maintain the blockchain over time.
As most Bitcoin nodes rely on the public Internet, the risk of centralization will always be there. This is something unavoidable since there's no such thing as 100% decentralization. Sometime in the future, we might be able to interact with new kinds of network protocols that would simplify the task of interacting with the Bitcoin blockchain in a decentralized manner. All in all, I hope that Bitcoin remains decentralized for years to come.