Bad news for many International Twitter users: The messaging service is shutting off one of its most popular, attractive features — updates via SMS text message — because the costs of sending texts from its U.K. account are getting out of control.
But this is much worse news for the carriers themselves: By not cutting deals with Twitter, they’re proving that they’re willing to cut off a long-term revenue stream in an effort to milk maximum money in the present tense.
Twitter users will still be able to update their Twitter status via text message, but won’t be able to receive updates from other users through SMS. Why not? Twitter says that even with a limit of 250 messages per week, it can cost up to $1,000 per user, per year, to provide the service. “We’ve arrived at a point where the responsible thing to do is slow our costs and take a different approach,” Twitter cofounder Biz Stone says on the company’s blog.
Why so expensive? Because mobile carriers — who hold a monopoly on SMS — can charge whatever they want for companies like Twitter to hook their messaging platforms into the text messaging system. And outside the U.S., Canada, and India, Twitter hasn’t been able to get good deals for bulk texting.
Why the resistance? Because Twitter makes bulk texting cheaper for consumers — and therefore, less profitable for carriers. As Stone points out, when you tweet an update to 10 followers, you only have to pay for one text message — not 10. Twitter takes care of the rest, including paying whatever the wholesale costs are to send that text message to 10 people. So Twitter’s bill increases exponentially with each new user.
We understand carriers’ plight — selling mobile data services like text messaging is their only near-term hope for growth. So to some extent, they’re right to be scared of services like Twitter, which treat the carriers like a dumb pipe, and offer free services that carriers would like to charge money for.
But carriers who don’t offer Twitter reasonable terms, ASAP, are shooting themselves in the foot. We’re willing to bet that Twitter’s tech-savvy users pay for far more text messages and mobile Internet subscriptions than non-Twitter users — even accounting for the freebies that Twitter itself pays for.
And, bigger picture, shouldn’t carriers want their customers to be spending more time with their mobile phones than less — and using them for more Internet services than fewer?
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