My first ISP (which also was the first one in our town) used FreeBSD and I'm pretty sure it was FreeBSD 4 at the time. I knew this because they allowed their dial-up users shell access and, in fact, their official instructions on how to change your dial-up password involved using HyperTerminal in Windows. I still wonder if giving out shells was generosity or carelessness on their part  but about a year later they changed it so that everyone who dialed in just got passwd(1) as their shell.
 Although since I never really did anything untoward with mine and didn't know of anyone who did maybe they'd actually calculated the risk correctly.
Your ISP might have existed back then, or been founded by someone who did, or had customers who expected the service.
>Your ISP might have existed back then, or been founded by someone who did, or had customers who expected the service.
That's a good point. Ours was a small post-Soviet factory town, though, so PPP was well established by the time consumer Internet over phone lines came to us (late 1990s-early 2000s). The local ISPs in the nearest big city, which got online earlier, may have had shell access for their customers at first but by the time I got on the Internet shells were far from expected.
A "founder" (or rather, "employee #1") explanation is the most likely. Our particular ISP was itself part of the government monopoly phone company. An interesting thing was that, as far as I know, at the time they didn't have a standard software setup to run their servers and modem pools. For that reason they gave their locally hired admin a free reign. In our case the admin happened to be an old-school programmer lady who started back in the Soviet days. She might have been the one responsible for giving their customers FreeBSD shells.