Telcos know that authentication is about the only remaining use case for SMS and are not going to turn down the revenue stream.
And it can't die fast enough, as it's essentially the same as broadcasting your sensitive information over unencrypted radio.
Apart from security, phone number based user identification is such a half-assed approach and I still don't get why Signal wants to die on that hill. It's inconvenient, yet trivial, for anyone to register a second, third or tenth phone number. With a bit more knowledge and inconvenience, even anonymously. It adds so little.
I'd love to be able to disagree in any of your points, but I can't.
The vast majority of users want something that simply works, is polished and intuitively usable. Reading docs, remembering anything other than the bare minimum, running into issues that don't get magically resolved within 5 minutes will turn them away forever.
Even people with a technical background will at least partially compromise and migrate towards the services with the most users to not isolate themselfs.
Matrix is neat, Lemmy is neat, Nextcloud is neat (well, in theory), Immich is neat, so many other privacy friendly solutions are neat. But they'll always be irrelevant in the global context.