IP-based text service aims to undercut rivals
Published: 27 Mar 2006 13:25 BST
A UK start-up is looking to undercut existing mobile operators with an IP-based text messaging service.
Hotxt — pronounced "hot text" — launched on Monday and allows subscribers to send each other as many text messages as they want for £1 per week. Texts can also be sent to non-subscribers for around 6p each.
At present, SMS charges vary considerably between mobile tariffs; while some customers will get a certain number of texts bundled with their subscription, messages can cost as much as 12p each.
"Hotxt will effectively defeat the charges that mobile operators impose on their users," said Doug Richard, chairman and co-founder of Hotxt. "A disproportionate amount of their profits come from SMS services, and you usually get disproportionate profits when you charge too much for something."
The Hotxt service is based on a Java applet that is downloaded to a user's phone when they first subscribe. Rather than using SMS technology, Hotxt transmits text messages via IP over a GPRS data connection.
This means that users will have to pay a data charge on top of their £1 subscription. According to Richard, this is likely to range from 0.1p to 2p per text, depending on how their mobile operator charges for data traffic.
Hotxt is aiming its service at those from 16 to 25, as they are typically the heaviest texters. There's no restriction on who can sign up, though.
Mobile operators are currently facing pressure over their charges, with the European Commission keen to drive down overseas roaming rates. SMS has been a very lucrative service for them over recent years, but a service like Hotxt could force them to trim their fees.
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