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New SMS "Txt Tax" Forces to to Withdraw Service

Free web-to-SMS company slams cross-network tariffs levied by
major network operators: "cartel" tax is strangling rivals,
claims SMSboy founder, one of the newest and most successful sites to offer free,
no-strings Europe-wide text messaging from the Internet to mobile phones,
is being forced to cease operation by the recent announcement of a cross-
network SMS "txt tax" by the major mobile network operators.
founder Shakil Khan has slammed the new charges, accusing the major
telecoms companies of killing innovative new services and squeezing out

Until two weeks ago, mobile network operators charged each other by volume
of messages, but they will now be levying an extra charge of 3p per text
to cover "message handling between different networks". Shakil Khan says
is simply a ploy to squeeze out Web-based SMS services.

He said: "The cross-network charges mean nothing to the operators
because in practice they cancel each other out. It is simply a tax
by a
cartel on those trying to develop and deliver innovative services. SMS
costs the major operators almost nothing yet generates huge profits." was able to offer its service by sending messages via European
networks, which offer much lower charges than in the UK. However the new
charge levied by UK network operators for handling messages across their
networks - e.g. from Vodafone to Cellnet -- more than doubles the amount
that pays per message. As is a pure
Web-to-SMS service, this increase in its operating costs has forced it
to withdraw its service. has attracted over 1 million unique users - not just visitors
since its launch on 9th November and has handled over 3 million messages.
Still attracting a daily 20,000+ users, it has high brand recognition
particularly among 16-24 year olds. It has over 20% of the market for
web-to-SMS messages according to Khan's own estimates.

Shakil Khan said: "There are about five million users in Europe who
send messages via free online services and they will be forced to use
other services which charge. UK users pay the equivalent of one voice
minute for a single message - much more than anywhere else in Europe.
The consumer is losing out thanks to these punitive and unfair charges,
and the operators run the risk of killing the goose that laid the golden
Without new services being developed, SMS messaging will lose its impetus.
The operators are being very short-sighted over this.

"Although there will be no significant redundancies at,
it's a real shame that innovators in an exciting new market are being
squeezed out in this way. Without outside funding a suspension of
service is my only course of action, despite our success," he added.

From Thursday 1st February, the site will feature a web-
based mobile phone retail service. Shakil Khan is currently in talks
with major UK web portals to provide web-to-SMS service links to visitors. Khan estimates that clickthrough rates for
this type of traffic will be as high as 25-35%.

SMS text messaging statistics

Monthly SMS traffic worldwide grew from 3 billion to 15 billion messages
in 2000, according to the industry-wide GSM Association. Per subscriber,
over 30 messages per month were sent at the end of 2000, a 200 per cent
increase on the preceding year.

Research by the investment bank CSFB has found that European
mobile operators now derive between 4 and 11% of their revenues from
SMS. However, SMS is a by-product of the GSM standard, using the
excess capacity of the networks which is otherwise idle. According to
CSFB: "SMS is probably the most profitable mobile data revenue
stream the European industry will see."

Issued on behalf of, contact: Shakil Khan,

(+44) 20 8594 0635 / 07940 123 789

The Edge Partnership

(+44) 1625 511966 / 511967 (fax)

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