While you're correct it's not fine, not everyone has a smart phone or a TOTP device. There are some cases where SMS makes sense as 2FA since it's a reasonable compromise between having no 2FA or a TOTP device.
Most feature phones can also easily run a TOTP application (and have/do). There are J2ME TOTP applications that will run on hardware far back into the ancient past. There are all sorts of fun TOTP apps in the AdaFruit, Arduino, RPi hacking worlds.
The algorithm is rather straightforward. The "hardest" part is the SHA1 hashing algorithm and people have written versions of that for just about every hardware under the sun, including 6502 assembly. (Hmm, an old Game Boy would make an amusing TOTP device. I should add that to my list of possible future hack project ideas.)
Just noticed the tab I had opened mentioning 6502 SHA1 hashing was to do it on old Tamagotchi hardware. Forgot that was also a 6502. Wonder if that person ever finished a TOTP Tamagotchi.
My claim is that SMS as the only 2FA option never makes sense. Wherever 2FA is enabled, a TOTP option (or equivalent that doesn't rely on third parties) should be provided.
You don't need a "TOTP device". It's software. You can easily write an authenticator for a smartphone, a pc, a digital dumb phone, or pretty much anything.
I think the real issue is that companies like SMS because of the tracking it enables. With a single number you get instant geographic + general socioeconomic data on user along a unique tracking ID. But the particularly nice thing about this ID, from a corporate perspective, is how blithe users are with it. People will happily "validate" away on numerous sites. Now, by "sharing select information with our trusted partners" (as seems to be the preferred T&C jargon) companies can create extensive profiles on their users well above and beyond their activities on any given site.
Obviously you get none of this with a TOTP. Instead you get better security, better portability, and less external dependencies. But no tracking. So SMS wins in the current state of the internet.
You don't need a smartphone or 2FA device to generate TOTP codes, and in fact, can use applications like Bitwarden. SMS is obviously not adequate, or the Jack Dorsey wouldn't have been hacked.
