It's worth noting this involves two different layers of regulatory separation.
Most ISPs don't run their own LLU operation. They buy access from one of BT Wholesale or TalkTalk Wholesale (who are technically LLUers and both, in turn, use the last-mile network run by Openreach). As you say, the prices which both of the BT Group companies are allowed to charge are regulated and published and companies can "innovate" at quality of service or features offered.
The relevant part here is that the US has never AFAIK had the same wholesale access model. With that, an upstart ISP could have the same coverage as Verizon/Comcast/etc but have the option of not doing these scummy things and/or being as network-neutral as they pleased, within the limits of their business model, without having to spend boatloads of money building a network to access those customers. LLU, on the other hand, requires way more investment so it's not surprising that it never really took off in the US where DSL always seemed like the poor relation compared to the cable networks.
In my time in the US several years ago I was horrified at the cost and quality of internet (and mobile) service compared to the UK.
Any strong libertarian ideals I once had were crushed by the reality of things like this. (Healthcare too but that’s another discussion).
It's worth noting, though, that this is the EU's doing, through the Telecoms Directive, not something the UK government did of its own accord.
The EU member states implementation of deregulation of the telecoms sector is far from perfect, but most of them have ended with something that works reasonably well.
E.g. in the UK, while the cable operator (there's only one of note left standing) has mostly escaped regulation, but BT had it's last-mile infrastructure subjected to heavy regulation to the point where it's been split out into its own company (OpenReach) that maintains the network and is legally obliged to resell access to anyone at the same terms.
You can even get the prices to terminate an IP connection with a subscriber on their website.
ISPs can put equipment in the BT exchanges and get a raw connection, or can pay for "backhaul" to a set of central locations.
I know the US also has a form of local-loop unbundling, but it's clearly not working very well given the level of complaints people have about these services in the US. Possibly because of the price-setting mechanism?
As a result there's a lot of competition in the ISP space in the UK (as there is elsewhere in the EU).
(Where it's not perfect is that the way the regulations have been set up gives too few incentives for BT to invest and innovate in the last mile network and is often accused of milking OpenReach for profit; two ways of improving on that would be to restrict how much profit they could take out as dividends to a proportion of how much they reinvest in network improvements and/or split maintenance/operation into regional franchises and force companies like OpenReach to bid for it on a franchise basis; though the latter is hard to get the evaluation-criteria right for)