He never claims that the ISPs have a right to regulate traffic because they have to remain competitive (whatever that means). He makes it very clear that ISPs have a right to regulate traffic because they own the infrastructure.

The alternative is "government control of the privately owned infrastructure that makes the Internet possible."

How many choices you have doesn't determine whether something is or is not a free market. That's like saying that there is no free market in tablet computers because you can only buy iPads or JooJoos. Men are free to create and sell their own tablets, just as men are free to create their own ISPs. That is what makes it a free market.

Of course, the ISP market isn't totally free, but the solution is to remove regulations that violate the property rights of the ISPs. Net neutrality only makes the market less free.