Using wireless technologies could we just link up everyone’s houses to each other to create a internet instead of going through ISP’s?
Yes. It’s called a mesh network. OLPC does this.
Well, it’s not quite that simple. That is, it depends on what one considers “a internet”. Hmrf. Let me try again.
Certainly, mesh (or, perhaps more appropriate here, ad-hoc) networks can operate. My reservation in giving an unqualified “yes” is that many (most?) people don’t really get what “a internet” is; for instance, without DNS and its corresponding authority servers, we don’t really have world wide web capability (because root authorities are mutually exclusive with a pure ad-hoc network). Furthermore – although I’m not well-versed enough in current mesh network theory/practice to be sure – I’d suspect that there are practical limitations on the size/scalability of an ad-hoc network; for instance, an inter-continental network would clearly have connection issues without pre-existing routes. Yet I think that many (most?) people assume (that is, don’t put much thought into it, if any at all) that the internet is necessarily global.
Perhaps a more concise answer is: theoretically, yes; practically, not really.