This was probably due to mechanical (Strowger, Crossbar) mechanical switches. https://en.wikipedia.org/wiki/Crossbar_switch ×
These had a very limited ability to make connections; only a small proportion of telephones on a given switch could call each other at a given time. I believe these were called "blocking switches".
These things, called "switches", often had the ability to connect to 10,000 subscriber loops.Later, electronic telephone switches allowed more extensive connections. https://en.wikipedia.org/wiki/Electronic_switching_system ×The big problem is, these switches might have been replaced only after decades of use. It probably didn't take all that many long-term (modem) connections to use up a mechanical switch's connection ability.
Jim Bell
On Thursday, December 27, 2018, 4:07:24 AM PST, P.J. Westerhof
I think there was a time in the late 1970's when phone companies expressed resentment that their users were employing modems on their phone lines.