SMS ban is a lucrative business opportunity for Twitter

14 Aug 2008

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Today’s decision by social media messaging service Twitter to no longer deliver outbound SMS is actually a potentially lucrative opportunity for the web phenomenon to strike up relationships with mobile operators and embark on a monetisation strategy.

Twitter is a social media and mini-blogging tool that allows users to tell other ‘followers’ what they are doing in a short, 140-character message known as a ‘tweet’.

The service has so far claimed to have attracted some 1.2 million users worldwide and has been followed by a range of tools and services such as a message mapping tool like www.twittervision.com and desktop clients like www.twhirl.org. In Ireland, entrepreneur Pat Phelan has developed a voice application for Twitter users.

The technology has been embraced by web developers, social entrepreneurs and IT workers across the world and businesses like Cisco, SAP and Dell have embraced it as a way of communicating with customers and employees.

Many of its users tend to opt to update their followers and receive tweets via SMS, which until now has been done on Twitter’s account via a UK mobile number.

However, this morning Twitter founder Biz Stone emailed Twitterers the world over to let them know Twitter will no longer deliver outbound SMS via its UK number.

However, he said that Twitter will begin introducing several new local SMS numbers in countries throughout Europe in the coming weeks and months.

“Why are we making these changes?,” Stone asked. “Mobile operators in most of the world charge users to send updates. When you send one message to Twitter and we send it to 10 followers, you aren’t charged 10 times – that’s because we’ve been footing the bill. When we launched our free SMS service to the world, we set the clock ticking. As the service grew in popularity, so too would the price.

“Our challenge during this window of time was to establish relationships with mobile operators around the world, such that our SMS services could become sustainable from a cost perspective.

“We achieved this goal in Canada, India and the US. We can provide full incoming and outgoing SMS service without passing along operator fees in these countries,” Stone said.

However, according to social media expert and fervent Twitterer, Damien Mulley, there is an opportunity for Twitter to establish strong relationships with mobile operators like O2 and Vodafone, who typically give users up to 300 free web text messages a month.

“In countries like Canada or the US, where Wi-Fi and internet access is fairly ubiquitous at this point, SMS is less of an issue for Twitter users. However, in countries like Ireland where you don’t have ubiquitous data, the average user with mobile updates switched on would have been costing Twitter around €1,000 a year.

“There is an opportunity now for Twitter to forge an alliance with a mobile operator that is switched on to the fact that Twitter is the new text message. In the same way that Meteor, for example, gives free texts for life, operators can do a deal with Twitter to allow a certain amount of messages or tweets a month.

“Everyone understands that as a business Twitter needs to make money. In the same way that people are happy that Google does search ads, they want Twitter to make money because they are fans of the system.

“One survey I read recently, users were asked would they pay for the service – some 50pc of people said they would pay for it because it is useful but would want a guarantee that there would be no outages. That’s a potential captive audience of 600,000 and Twitter and any mobile operator worth their salt would be mad to ignore it,” Mulley said.

By John Kennedy

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com