They were not always free, and when they were, they were up to a limit. Yes the limit was something absurd, but surprisingly, some people did hit them.
That’s why as soon as phones had easy access to the web and enough bandwidth to last a month, people started treating SMS like a last resort, and I have not met a single culture on Earth that didn’t think this way in the transition period up to when what you said became universally true.
Plus… People don’t want to message only their “contacts”, nor want their phone address book filled with trash. Mindblowing, know, who would have thought (other than US apple users???). Facebook’s Messenger was one of the earliest to give that to the wide public and it got heavily adopted. But people moved on from even that.