Back in December, I found a not-so-nice surprise in my Sprint cellular bill. Sprint had quietly raised the cost of an SMS text message from 10 cents to 15 cents per message. I complained to customer service that this was a breach of my original contract. However, after a couple of e-mail exchanges, it was clear that I would be stuck with the rate increase. I later found out that Cingular had also raised their SMS rate to 15 cents. It is also expected that both Verizon and T-Mobile will follow with increases of their own in order to keep their ARPU (Average Revenue Per User) competitive.

So how does this rate increase affect the typical cellular customer? Well, the typical American customer is not affected because he/she does not text much, if at all. Of course, this rate increase will only serve to discourage these users from embracing SMS. For the millions of customers who do use SMS to communicate with friends and colleagues, my hunch is that the 5 cent increase will not result in a significant change in their usage. Let’s face it, most cellular customers will hardly take notice at the extra couple of dollars on their monthly statement. The carriers know this and that’s why they don’t seem to be afraid of customer backlash. The unsympathetic reply I got from Sprint’s customer service supports this.

The real losers of SMS rate increases are companies who provide SMS-based services. One such company is 4INFO. 4INFO provides consumers with easy access to information like stock quotes, sports scores, flight status, and the weather. They utilize a simple, “natural language” query interface (e.g. “weather 94304″ or “49ers nfl”). Very useful. One of the primary challenges 4INFO faces is the lack of SMS adoption here in the US. In foreign markets, SMS is cheap (or even free) compared to voice airtime so it is very popular, even amongst older-age cellular customers. 4INFO is quick to emphasize in their marketing that the service is free. While it is true that 4INFO itself does not charge for their service, the cellular carrier is charging for SMS access. With SMS costing 15 cents per message, a simple roundtrip to 4INFO costs 30 cents. Out to dinner with the girlfriend but want to check the football score every half hour? 4INFO works perfectly for this. The problem is that by the time the game is over, you’ll have paid a couple bucks in SMS fees. That’s pretty expensive. There’s a good chance I would utilize this service if I was in a pinch, but I couldn’t afford this luxury on a daily basis.

What’s the alternative to SMS? Internet access on your mobile device. Carriers have successfully been upselling 2.5G and 3G data plans for the past couple of years. Now we’re seeing devices which support Wi-Fi and Wi-Max isn’t that far away. Combined with the trend in mobile devices of offering ever-more rich display screens and sophisticated Internet software applications, we’re slowly going to see a convergence between the way we access information on our PC’s and the way we access the same information on our mobile devices. As Internet access becomes ubiquitous on mobile devices, services like SMS will quickly becomes extinct. Need to send a quick message to another person? Use IM or e-mail. Need to get alerts? RSS. Etc, etc.

For now, even in light of Sprint’s rate increase, I doubt my SMS behavior will be altered. I will, however, take solace in the expectation that SMS will soon be a distant memory.

Note: I do think there is a future for companies like 4INFO. To be able to understand and satisfy short-hand queries like “UAL SFO JFK” (results in a timetable for United flights from SFO to JFK) is very valuable in the mobile context where keypads and displays are tiny. My expectation, however, is that they will find ultimate success in the future piggybacking off of Internet technologies rather than SMS. Hopefully these companies will manage to stay afloat until then.