SMS is far from "free". It's often bundled into a package consumers buy, so "included" perhaps, but the actual data costs for SMS traffic are insanely higher than data connection traffic.
I think a better argument for the standard is simply that it's built into the protocol, and therefore unlikely to vanish anytime soon. Can't say the same for the trendy app of the week.
I have a cheap prepaid, still using SMS every day because I know I have unlimited use of it, to several countries even. Data is where they make their money
But this isn't a question about how much SMS costs the carrier, it's how much they charge their customers for it. Retail price is often completely divorced from the actual cost of the goods and services provided.
As someone else pointed out, it's SMS across borders that's ridicules. There is no reason why that should cost €0.5 per SMS.
Sure, the total bitrate of sms messages is low, but the software and services are all legacy, require people with special skills to setup, and have quite high license fees to keep running.
Set up your own SMSC and tell us how easy it was...?
And some of these areas aren't even that remote, just unintentionally RF shielded.