I think that may be a picture of phone lines when they were point to point i.e. each connection had a dedicated line rather than going through a switch. I don't think it had anything to do with thousands of telecom companies.

"Under Theodore N. Vail from 1907, AT&T had [...] acquired many of the independents, and bought control of Western Union, giving it a monopolistic position in both telephone and telegraph communication. A key strategy was to refuse to connect its long distance network — technologically, by far the finest and most extensive in the land — with local independent carriers. Without the prospect of long distance services, the market position of many independents became untenable. Vail stated that there should be "one policy, one system [AT&T's] and universal service, no collection of separate companies could give the public the service that [the] Bell... system could give.""

https://en.wikipedia.org/wiki/Kingsbury_Commitment

Hahaha holy crap!