In consumer broadband, FTTC/VDSL and onwards, as PSTN shuts down, more and more people are going to be pushed into using the ISPs provided device, at best with a DMZ mode.
95% of people neither know nor care what that means. They just want a service that works, and is cheap. The other 5% have market choices to select a more sophisticated service.
Of course, on this forum, the 95% and 5% are probably reversed
Virgin Media’s “modem mode” software approach should be copied by all these big ISPs (BT, Vodafone, etc).
BT sell only Openreach, and Openreach already provides you with a modem that you're free to connect your own router to, and handle your own NAT or whatever - so I see no issue there.
The problem only comes with the bundled telephony: if you remove the BT-supplied router, you lose the BT-supplied voice. That's a different question entirely, and again, for the 5% who care, the voice is trivially unbundled.
As for service from Altnets: soon I would expect there is very little of the country that's covered by an Altnet which is not also covered by Openreach FTTP. So the more sophisticated users always have that as a choice, even if it's a bit more expensive.
It seems reasonable to me to have the Altnets concentrate on the "value" end of the market. They need volume to get return on their investment, and they'll only get the volume if they sell cheap and simple.