I'd assume that part of the problem is them tying up frequency that could be used for more-valuable things.

The telecom companies just charge their customers for it, who are basically "taxpayers" too. You pay either way, so a better question is what action is expected to offer best benefit-cost ratio?

The taxpayer gets a bit back when the freed frequencies are auctioned off.

According to the article, 3G was switched off, while 2G is mandated to be shut down in 2033; but the telcos are preemptively planning to do this in 2029/30.

Nah, I think networks have until 2030-something to turn it off

Consumer phone use will probably get cut off before then, but as the article indicates, there're a lot of non-phone devices that make use of 2G networks too.

I'm probably running on out of date knowledge, but I think I remember reading that some rail signals depend(ed?) on 2G networks, similarly some alarm systems