The end for free SMS?

The cost of sending SMS messages is rising

By BBC News Online internet reporter Mark Ward

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.

Knock-on effect

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.

European explosion

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."

Offsetting costs

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.