Luckily this is never going to happen because business users will not stand for it, so it's totally unrealistic for that reason outside the home market. But I can quite understand ISPs not wanting to have to support kit that they know nothing about, which may have bugs in, and worse still duff modems that may cause all kinds of apparent line faults. The whole business of terminating the service boundary before a dodgy dsl modem is rather problematic. Of course having enough choice so that you can get the absolute best modem is important in a way. But I have a lot of sympathy with the idea of BT delivering FTTC with a bundled Huawei modem, since after all modems are a commodity item and they either work or don't, and may or may not be less performant, but apart from service definition things like MTU they are just protocol converters so there is an attraction to say that the service is presented as Ethernet (x protocols delivered in Ethernet). It is then up to BT to get together a superb modem in order to make the service look good. The Huawei did have a naughty bug in it as I recall, corrupting user data under certain special circumstances. But there is also an opportunity to get a stunningly high quality modem put together and to get huge economies of scale.
Someone like, say, AA, in contrast with BT, has to try and find really good modems from somewhere, and I doubt they can realistically commission their own. Perhaps they could, if they banded together with others eg ISPA (earlier thread about the 'dream modem').