It did need a dedicated line. Same with the people who ran a BBS out of their home. I knew people who had 3-5 dedicated phone lines running into their houses to support that. Paying per minute for dial up was thankfully not something I had to deal with (unless I was calling into a PoP that was long distance). I can see how the costs of that would get insane very quickly.
In addition to that, dialup was paid per minute where I grew up, so either option would have been prohibitively expensive.