I don't think the issue is really that the software is free but rather that open source allows much more flexibility and control for the ISP.
I know that we (I work for a large cable company) have selected perl, mysql, and apache on linux over our previous Solaris/Oracle implementations for a new system I am involved in deploying because it offered us everything we needed, was easy to develop for, and allows us to make changes as we see fit in the future.
With open source we are no longer yoked to a vendor and their interpretation of how we should run our business.
The software licensing costs are trivial in the grand scheme of things, though the lack of these in most open source is certainly a welcome side effect
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