>Here's how the average "privacy-focused" service actually works:
> ...
>5. Confirm identity for "fraud prevention" (now we have your ID)
I can't tell whether OP is being hyperbolic but it's certainly not representative of the average "privacy-focused" service I've came across. The typical service only asks for an email and maybe billing information (can be prepaid card or crypto). The only exception is protonmail, which might require SMS verification[1], but given the problem of email spam I'm sympathetic, and it's bypassble by paying. It's certainly not the "average" service, and no service asked to "Confirm identity".
A phone number IS identity these days.
Yeah, so many places ask for phone number that don't really need it that I assume the phone number is a unique identifier used to combine individual's data across websites.
Most of the time I use a made-up 555 number or if it needs to send an SMS to verify, I'll use a free SMS numbers.
Not if you buy a SIM or eSIM anonymously. This is easy in the U.S. with cash in a store, or online (silent.link).