> A single pipe can only handle so many providers

A single pipe can handle only so many customers. I don't see how it limits the number of providers?

There actually are countriess with such rules, and they seem to work well. The difficult part is the need to set some uniform price providers must pay for that "last mile" connection to their customer. I seem to remember something like $8/month in Germany. That's actually low enough, it would allow healthy competition even if you set wholesale price 50% higher than neccessary.

The same mechanism is used for competition among power and natural gas companies.