The setup will fail during e911 so I thought that was the problem, but it’s only a symptom.
Activating the Apple Watch requires them to do it. The impression that the process is automated during the watch setup is false. Maybe it will be, but it’s not now. The Watch needs a new phone number for data and billing (Only. You can’t call this dedicated number) even though it uses Number Share for calls and text. So it has both. The setup process can only do Number Share which isn’t enough.