Death Knell Sounded for Free SMS? Thursday 1 February 2001 PDF Print New SMS "Txt Tax" Forces to SMSboy.com 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 SMSboy.com, 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. SMSboy.com founder Shakil Khan has slammed the new charges, accusing the major telecoms companies of killing innovative new services and squeezing out competition. 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 message to cover "message handling between different networks". Shakil Khan says this is simply a ploy to squeeze out Web-based SMS services. He said: "The cross-network charges mean nothing to the operators themselves, because in practice they cancel each other out. It is simply a tax applied by a cartel on those trying to develop and deliver innovative services. SMS messaging costs the major operators almost nothing yet generates huge profits." SMSboy.com 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 SMSboy.com pays per message. As SMSboy.com is a pure Web-to-SMS service, this increase in its operating costs has forced it to withdraw its service. SMSboy.com 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 nationwide, 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 egg. 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 SMSboy.com, 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 SMSboy.com 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 SMSboy.com 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 SMSboy.com, contact: Shakil Khan, shak@SMSboy.com (+44) 20 8594 0635 / 07940 123 789 The Edge Partnership (+44) 1625 511966 / 511967 (fax) This press release was distributed by ResponseSource Press Release Wire on behalf of Context PR in the following categories: Consumer Technology, Personal Finance, Business & Finance, Computing & Telecoms, for more information visit https://pressreleasewire.responsesource.com/about.