But with a software-based solution, they can argue that due to the lack of updates your device is now vulnerable and your SIM can be cloned, spoofed and so you should get rid of it.
With a physical SIM those hacks are not possible even if I'm on a 20 yr old dumb-phone, because all the auth logic resides in the SIM itself.
Not nearly all parts of authentication and encryption happen in the SIM, and older generation phones are regularly deprecated (most recently for CDMA in the US and 3G in Germany for example, but also for non-VoLTE-capable devices on some networks in the US).
This is quickly turning into all networks. I'm seeing a lot more people running into VoLTE issues now in dumbphone and digital wellbeing groups that are picking up old/cheap LTE capable phones to try out the lifestyle. T-Mobile was the last to fold and start whitelisting even in the MVNO space where usually we don't run into problems. There are cheap VoLTE capable phones that are available, but its become an easy way for carriers to thin out older devices from the networks.
https://en.wikipedia.org/wiki/SIM_lock#European_Union
It seems sim locking is legal, but unlocking has to be allowed after some time.
I couldn't see anything that would differentiate between a carrier lock by esim vs a sim.
I'm not sure that would happen wouldn't most telcos be interested to allow as many users on the network as possible?
With the above in mind, note that it just so happens that telcos sell mobile devices as well as the service. This means they'll make money on increasing device churn.