Hotxt bypasses SMS charges

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Hotxt, a UK startup, has launched a new messaging service in the UK, which enables the exchange of text messages over the mobile operators’ data networks, rather than using SMS technology.

This means users avoid paying SMS charges, instead they pay a £1 per week subscription to Hotxt and data traffic charges to their operator (in the form of per-kb charges or GPRS/UMTS data subscriptions). Users need to have a Java-enabled phone and install a software application. According to Hotxt, the service works with all UK networks, except for prepaid handsets from O2 and 3.

Comment: This is actually an instant messaging service, whereby the user needs to manage a list of contacts and handles messages through the Hotxt application. The main benefit for the end user comes from a substantial reduction of the cost of exchanging text messages, even though the user has to pay both to send and to receive messages (receiving SMS is free). While an SMS typically costs £0.10 in the UK, data charges for sending a short text message over GPRS can be less than £0.01. Due to its subscription model (£1 per week is not particularly cheap) the Hotxt service will mostly appeal to heavy SMS users, who send dozens of messages every day.

However, this service is not a full substitute for SMS services. Mainly because to fully enjoy its benefits, all users within a communication group have to install the Hotxt application (on a compatible phone), which is a major barrier, and subscribe to the service. In addition, it can’t use the address book stored in the phone; the user has to create a separate contact list.

Mobile operators have been warned for some time about the growing threat of IP-based messaging services. They have been protected so far by limitations on the handset side, which in general led to a poor user experience and difficulties in downloading applications from third parties. But the future will bring more open handset platforms, available in a wider range of devices. In addition, mobile users’ interest in new mobile messaging applications should not be underestimated. For example, the MSN Messenger i-mode service is among the most successful i-mode services in France.

Vincent Poulbere – Ovum