Although I would note firmware is software. But yes, they are not banning Free Software. This is more an issue with making the routers into treacherous computing platforms [1].

[1] https://www.fsf.org/campaigns/drm.html

The radio firmware is usually included in the OS. Thus if you want to change the OS on a router, phone, tablet, whatever else and that is the case you won't be able to do it at all.