Free SMS services under threat

Internet portal Lycos.co.uk said it may be forced to withdraw its free text messaging service following plans by the UK mobile phone operators to charge each other a fee for every text message sent to a rival network.

As reported earlier, all UK mobile operators plan to introduce an interconnection charge between operators for each cross-network text message from next month. The charge is expected to be 3p per message.

According to the operators, the charges will cancel each other out as messages are sent between networks, thereby ensuring that the extra costs will not be passed on to customers.

But Lycos, which offers free text messaging via its website in conjunction with BT Cellnet, has warned that the 3p charge will "hugely affect" customer pricing. Currently, the company allows users to send an unlimited number of text messages from a PC to a UK mobile phone free of charge, but said it may now be forced to review the offering.

Alex Kovach, managing director of Lycos in the UK and Ireland, said: "SMS [short message service] is proving to be a huge success at the moment and we are not saying we will definitely have to stop the free offering. But we will need to look at the situation. I am bemused and amazed by the interconnection cost of 3p a message. I can't see how this won't hugely affect the price of SMS messages. I think the consumer will certainly lose out."

Lycos said users send a massive 200,000 to 400,000 SMS messages a day via the Lycos.co.uk site.

Other portals which offer free text messaging include BTinternet and Excite. The former said it is already charged around 3p to send messages to mobile phones and does not expect this fee to affect customer pricing unless there is too much demand.

Stephen Brown, head of marketing at BTinternet, said: "We are charged that amount now and we cover costs within BTinternet. We have no intention of passing this charge onto our customers. We are seeing strong growth and want customers to use the applications on our site. But we have 850,000 customers at BTinternet and if the large proportion send text messages then certainly we will need to review the offer."

Excite, which was unavailable for comment at the time of going to press, has recently reduced the number of text messages users can send from around 15 a day to just three.