Governments successfully managed this before. It was called Local Loop Unbundling.

They recognised where the monopoly was: the incumbent telcos with millions of customers that had to go through them to get anywhere else.

So the government insisted that such incumbents make available space in their exchanges for third parties (not for free!), and to allow their customers to use the third parties for telephone and/or internet service, rather than themselves.

A similar argument and regulation could be made today. It could only apply to ISPs with a significant number of endpoint customers. It could require that the ISP make peering available to third parties, at the third party's cost, but the resulting transit should be settlement-free. It could require that if a peer asks the ISP to upgrade, because the ISP is deliberately underprovisioning, the ISP is compelled to allow the third party to pay reasonable costs to upgrade both sides (so the ISP can't sit on its hands, can't brazen it out, and can't set an impossible price)