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.
Shell access used to be a standard part of all ISP accounts. If you go back far enough, there were no standards like PPP and SLIP to extend TCP/IP to dialup customer computers, and no graphical clients for internet services, so to "get on" the internet, you needed a shell on your ISP's systems.
Your ISP might have existed back then, or been founded by someone who did, or had customers who expected the service.
>Shell access used to be a standard part of all ISP accounts.
>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.