The end for free SMS?

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UK fans of free text-messaging services for mobile phones should use them while they can.

Changes to the way mobile phone companies charge each other mean many of the web operators that allow users to send SMS messages for nothing are having to rethink their plans.

As costs begin to soar, some of these firms have already begun to limit the number of messages people can send.

And with the tariff changes due to take effect in February, free messaging facilities could disappear altogether.

Earlier this week, it emerged that the UK’s mobile phone companies are changing the way they charge each other to deal with the short text messages.

Until now, the network operators have charged each other by volume, but the booming popularity of the messages has forced them to levy a charge of 3p per message.

Because the numbers of subscribers to the UK’s biggest mobile phone companies are almost equal, these costs are expected to balance out among the larger players.

However, the changes are having a knock-on effect on companies that route free SMS messages from UK mobile users to other UK users through foreign networks. Currently companies such as Lycos, Excite, Genie, SMS Boy and Quios offer free SMS services.

The cost to consumers of an SMS message is standardised across Europe, but the rates for wholesale messages are not. The cost of bulk sending SMS message across a GSM network in Europe varies between 1.5 and 7.5 US cents.

Networks in Switzerland, Germany and Italy are the lowest cost networks and to cut costs many of the free SMS services are routed through these countries.

But the introduction of the 3p per message charge will change all this. UK mobile phone users are unlikely to send text messages to people in Germany and Switzerland which could leave these mobile phone networks with a hefty bill.

“We’ve been told that the cost is going to go straight to the Swiss operators,” said Shakil Khan, founder of free text message provider SMS Boy. “They tell us the extra cost is going to be passed on to us.”

Mr Khan said it was now in talks to find a partner that could provide a revenue stream to offset the cost of providing the free service.

Lycos is known to be rethinking its free service, which currently deals with up to 400,000 SMS messages per day. Excite has already decided to limit its users to three messages per day.

Simon Buckingham, founder of consultancy Mobile Lifestreams, said the charging changes were to be expected because phone networks were being swamped by SMS. He said the changes could threaten the existence of the many free SMS services.

But he said it was odd that the networks could not do more to offset the cost of sending SMS. “All four of the UK networks are part of large multi-national operator groups yet none of them offer the chance to send one SMS and terminate it on their local networks,” he said.

The medium, the message and the money

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The popularity of mobile text messaging is forcing Britain’s network operators to change the way they charge each other to pass the data around.

To cope with the boom in text messaging mobile phone firms will soon start charging each other for each message they pass to a rival network.

But despite the change in pricing the operators say consumers won’t be asked to pick up the bill.

Telecommunications watchdog Oftel says it is keeping an eye on the changes to ensure consumers are not exploited.

t’s well known that the short messages that can be sent via GSM mobile phones can send are hugely popular. It is estimated that at the end of 2000 15 billion of the short text messages were being sent every month.

But the boom in SMS is bringing problems for the mobile phone companies who are re-writing the price list for carrying the messages to cope with demand.

“Originally it was a flat fee for a fixed volume of messages,” said Neil Bent, marketing and PR manager for One2One, “now we’re moving to an easier system of a rate per message.”

From next month all the mobile phone operators will start charging rivals 3p for every text message they pass to that network.

Although Mr Bent said this could produce “winners and losers” if consumers on some networks receive more messages than they send but he didn’t think this would mean phone owners paying more. He added that One2One had no plans to change the price it charges to transport SMS messages.

The changes could impact the virtual mobile phone firms such as Virgin and Sainsbury’s that piggy back on the existing systems and are looking for ways to win customers.

When contacted by News Online spokespeople for the other networks said they didn’t think that the charging change would lead to higher prices. Most networks currently charge 10p per message.

A spokeswoman for Oftel said it knew that the charging changes were imminent and it was currently investigating what this would mean for consumers. She added that because BT Cellnet and Vodafone have significant market power they are obliged to let it know when they are about to change prices.

The watchdog has yet to hear from the two biggest operators but the spokeswoman said it is keeping an eye on the situation to ensure consumers do not suffer.

The changes could effect the companies such as Lycos that currently offer free SMS messages.

There are already big differences in the prices networks across Europe charge to send SMS messages and some companies offering message based services may be tempted to send them on a more circuitous route that takes advantage of lower charges elsewhere in Europe.