> In many scenarios, the building owner technically owns the wiring, but the service provider made the original investment in wiring the building and entered into a contractual arrangement to recoup the initial investment.

Exactly, and that's why it's anti-competitive. Those deals permit ISPs to effectively purchase customers from developers. The future customer-residents have no say, and because of substantial information asymmetry in practice customer-residents aren't in a position to judge the relative costs of renting a building locked into a contract versus renting in another building.

It's obvious on its face the dominate reason to enter these contracts is to extract additional profit from renters and distribute it to the developer, landlord, and the ISP. There are situations where exclusivity might be a necessary condition to make a service viable, but decades of evidence has disproven this when it comes to ISPs.

As someone was quoted saying in the article, San Francisco has $40/month 1Gb/s fiber. Sonic.net didn't demand exclusivity to provide that. Some background facts in SF: for years AT&T's plan was to install FTTC (fiber-to-the-cabinet) throughout the city. Sonic.net decided to do the same--also install their own cabinets around the city using the same regulatory approval AT&T would get. Once AT&T got wind that Sonic.net was also going to do this, they began to drag their feet in the regulatory process and actively began to sabotage it. Sonic got frustrated and decided to take a real business risk, scrapped their own FTTC plan, and began to plan and build-out FTTH throughout San Francisco.

This completely caught AT&T off-guard. Within substantially less time than AT&T spent petulantly dragging its feet to avoid facing competition, Sonic.net had built-out fiber to a substantial fraction of the city, charging only $40/month.[1]
Eventually AT&T scrapped their own FTTC plan and started building FTTH, except AT&T is doing it haphazardly and charges twice per month what Sonic charges. We shouldn't be surprised that it was the pursuit of profits in a competitive environment that spurred Sonic and then AT&T to aggressively roll our fiber, rather than the promise of guaranteed, monopoly profits.

(EDIT: I forgot to point out here that the SF ordinance was passed because AT&T and Comcast were already beginning to use exclusivity agreements to prevent Sonic.net and Monkey Brain from expanding their service offerings, particularly among the existing housing stock, not just the big, new apartment towers in SOMA and Mission Bay. Sonic.net had to keep their FTTH plans secret for as long as they could because those are the kinds of strategies AT&T and Comcast use to "compete". Thankfully the SF ordinance closed off one such avenue.)

Policymakers like Pai have claimed for years that exclusivity arrangements are necessary and that government should refrain from prohibiting, or should even affirmatively support exclusivity, based on a theory that it's necessary to incentivize telecom investment. But the reason this is necessary, if at all, is because people like Pai continue to hold out the promise of these exclusivity arrangements. Pai and his ilk are literally manufacturing the opportunity costs upon which their arguments are premised. The promise of being able to achieve exclusivity is why AT&T spent years obstructing the regulatory process in SF.

More to your point, your I-66 example is not comparable. AFAIU the SF ordinance doesn't prohibit existing exclusivity arrangements. I'm pretty sure that would be unconstitutional as states are prohibited from interfering with existing contractual rights. The SF ordinance was only prospective. And, yes, as a theoretical matter such "interference" in the so-called free market could lead to unintended, negative consequences. But it's unlikely to do that, and much more likely to have the salutary impact intended.

In a free market nobody wants to compete; everybody is looking for a way to avoid competition. Among other ways to do this, market actors exploit information asymmetry to capture more profits than would be possible if their customer had full information. That has manifestly been the case when it comes to typical ISP exclusivity arrangements.

As someone else said elsethread, Pai is a fanatic--he's committed to a theory about the way the telecom market works despite evidence to the contrary. Municipalities do dumb things and pass a lot of dumb regulations with unintended consequences. (Sonic loudly complained that SF wouldn't permit microtrenching, so for now they say it's only cost effective to build out FTTH to the parts of city using with utility poles, which fortunately is more than half, IIRC.) But simply because that happens doesn't mean all such regulation is bad. Such policies need to be considered on a case-by-case, sector-by-sector basis, and reassessed as the facts play out. It's exhausting but the only proper thing to do. There are no easy answers.

[1] To be fair $40 is the teaser rate. The long-term rate is... wait for it... $50/year.