Under Bush Jr. and Colin Powell's son appointed to head the FCC this was all rolled back. No more independent telco companies, no more independent ISPs.
Yes and no. There are still plenty of CLEC (Competitive Local Exchange Carriers)/independent ISPs out there. But their prominence has been diminished, partly because of the FCC and partly not.
The bad thing the FCC did was to exempt fiber or cable systems from line-sharing requirements. CLECs were chartered under the idea that "the copper TDM PSTN has been around forever, it's paid off, so the ILECs who maintain that copper infrastructure should have to wholesale it at reasonable rates." But the ILECs and big cable companies said (not unreasonably, BTW), in effect, "well, it will cost us $billions to roll out all-new fiber or coax infrastructure to every customer (a la FiOS) so you can't expect us to wholesale that out to other people because it will make the time for us to recoup the investment so long that we just won't bother." The FCC said, "Okay, we accept that logic, so non-TDM/copper infrastructure doesn't have to be shared." The problem was that you could be competitive as an ISP providing DSL over copper, but once higher-speed cable and fiber Internet service speeds badly outstripped DSL, there was just no market demand for DSL. So the market window for CLECs to provide competitive services if they didn't want to spend the money to roll out their own pipes gradually dried up."
The flip side, though, is that many of those CLECs were bubble companies at best, having been set up to exploit an assumed (in the late '90s, anyway) neverending surge in demand for home phone/fax lines, DSL subscriptions, etc. Many were poorly capitalized bubble-fed "me too" companies that had little chance of long term success ... and furthermore the recent "cord-cutting" trend in favor of mobiles would have killed off most of those guys anyway. There is, by the way, plenty of ability in the US to set up a Mobile Virtual Network Operator (MVNO) using the cellular carriers' infrastructure and be your own cellular provider, which partly fulfills the CLEC vision.
So it's partly the government, and partly the CLEC/independent ISPs themselves. There are many still around, but usually because they have found a comfortable niche in an underserved geographic area where that business is sustainable instead of, for example, trying to go head to head with Verizon in the big cities.