No texting (SMS) from Apple Watch on OS 3

Since upgrading to iOS 10 on my 6+ and WatchOS 3, i am no longer able to send normal text messages from my watch unless I disable iMessage on my phone. iMessages are no problem, it is only when I try to send to a non apple product.

I have tried toggling iMessage and "Send as SMS" off and on, with rebooting both phone and watch and all the combinations in-between. Nothing works. Sending SMS's from my phone works fine. I even unpaired and reset my watch and then re-paired it.

I now suspect it is a bug in the watchOS 3. Has anyone else seen this problem? Has anyone any other ideas as to how to fix it?

Otherwise, I love all the new features of the new OS's