You seem to be confused here AC.
The issue with renting the telephone, (and this being the reason why modems were all accoustically coupled, and hobbled at 300 baud!) was because BELL TELEPHONE, a PRIVATE COMPANY, held a NATIONAL MONOPOLY. This was a Bell Telephone corporate policy, not a government mandated requirement. Bell telephone refused to service any device that did not have their brand on it. This is similar to the approach nintendo took with the NES, with the NES10 chip, and the Nintendo Seal of Quality--- the major difference being that Nintendo had competition. Bell Telephone had NO competition. It was untouchable. It could shit on customers with impunity-- They had nowhere else to go. This was entirely the reason for the comedy skit for the fictional telephone operator played by Lilly Tomlin, "Ernestine."
(Note how "Ernestine" quips about not being subject to city, state, or federal regulations. Approximately 2:00 in.)
It was *NOT*, I repeat, *NOT*, because of government regulation!
Once Bell Telephone's monopoly was busted, the new "baby bells", had to compete with each other, and in addition to this, Title II regulation forced those baby bells to allow any tom, dick, and harry telephone service to operate on their wires.
Title II was a stock part of the US telecommunications act of 1934, and WAS NOT REPEALED, and TELEPHONE COMPANIES WERE NOT EXCEMPTED FROM IT AFTER BELL's DIVESTMENT.
The boom in competition was BECAUSE of regulation, NOT deregulation. The regulation in particular, was antitrust regulation.
While there was a major push for deregulation during the reagan administration, such deregulation was predominantly geared toward industrial and manufacturing companies, along with oil compnies, especially in regard to environmental protection policy and import policy.