Free texts to hurt carriers' bottom line?

New Apple iMessage platform will allow people to bypass the SMS text-messaging network--as well as wireless carriers' texting charges.

Steven Musil Night Editor / News
Steven Musil is the night news editor at CNET News. He's been hooked on tech since learning BASIC in the late '70s. When not cleaning up after his daughter and son, Steven can be found pedaling around the San Francisco Bay Area. Before joining CNET in 2000, Steven spent 10 years at various Bay Area newspapers.
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Steven Musil
2 min read

Apple plans to launch a new platform Wednesday that could put a big dent in wireless carriers' bottom line.

Introduced at Apple's Worldwide Developers Conference in June, iMessage lets users on iOS devices chat with one another like they would send a text message. Like the BlackBerry Messenger, iMessage allows them to bypass the SMS text-messaging network--along with carriers' texting charges.

Instead of routing the text message over the cellular network using SMS, it sends the message over a wireless Internet data connection. The service itself is not tied to any carriers and is designed to work on the iPhone, as well as on non-cellular devices like the Wi-Fi only version of the iPad and current model iPod Touch.

At a time when many wireless carriers are charging customers 20 cents to send a text to a phone, and another 20 cents to the person receiving the text, Apple is poised to take a big bite out of the sector.

Text messaging generates more than $20 billion in revenue for the wireless industry, Craig Moffett, an analyst at Sanford C. Bernstein told The New York Times. Texting revenue accounts for 12 percent of Verizon Wireless' revenue, he noted.

Apple is "undermining the core business model for an industry that makes most of its money from services that are high priced and low bandwidth, like texting," he told the newspaper.

Microsoft, which is in the process of acquiring Internet phone giant Skype and group messaging service GroupMe, is widely expected to incorporate similar features in its Windows smartphones. A handful of apps also allows people to inexpensively text their friends.

However, some carriers have anticipated the shift and possible lost revenue. AT&T recently announced that it was phasing out its $10 for 1,000 texts plan in favor of a $20-per-month unlimited plan.