The primary reason there is usually only a very small number of ISP's that serve a particular area is simple, and it doesn't involve tin foil hats or conspiracy theories. It is that building broadband infrastructure is fucking expensive. Everything from the hardware, to the permits, but especially the construction.
The problem with that theory is that I was actually alive and paying attention when the local monopolies were created...and your argument is EXACTLY the argument made by the various cable companies to get the government to GRANT them a monopoly in the various local areas. What nobody in government thought about (and if you tried to say it, you were called a crackpot) was, if cable was a natural monopoly, why did they need the government to grant them a monopoly? Wouldn't the company that did the best just end up with a monopoly?
Except that isn't what happened. What happened was that local municipalities were allowed to grant local monopolies for cable service. Then once every area where it was profitable to offer cable service had cable service, the big players began buying up everyone else. It didn't matter that they had lousy service, they had a monopoly, and the local municipalities discovered that they no longer had any leverage because they could no longer take the franchise for the local area back and give it to someone else because there was no one else.