Twitter says it’s stopped sending out tweets via SMS in the UK, claiming the popularity of the service has made the cost too prohibitive (but I’m still getting messages). Without Twitter actually having figured out a business model yet, it was always destined to be this way. Though it has struck carrier relationships in the US, Canada and India, co-founder Biz Stone said it could cost $1,000 per user per year to send elsewhere: “When you send one message to Twitter and we send it to 10 followers, you aren’t charged ten times - that’s because we’ve been footing the bill.” Seems obvious really.

After some digging, we found a big part of the problem may be Twitter’s choice of UK SMS distributor. Its UK-bound messaging is handled by an off-shore telco owned by O2, making SMS termination rates to mainland carriers more expensive.  Still, many other companies, including the BBC, already use the Isle Of Man gateway, so perhaps the problem lays more with the economics of Twitter itself. This is just the latest part of the Twitter service to bite the dust - the instant messenger link was recently shut off, too - but the UK closure is a particular blow because Twitter is said to be growing faster in the UK than the US.

Twitter first got spooked about the problem when it capped UK SMSes at 250 per week in November, but the site has raised $15 million VC since then, taking it up to $20 million. If that money isn’t going in to carrier fees, where exactly is it going? More at PCUK...

Tricia adds: A plan is in the works for UK Twitters to still get texts. The big catch is that they’ll have to pay for them. A company called Zygo said it will be launching a service called Zygotweet around September for non-U.S. and non-Indian users, to allow users to forward their tweets to cellphones. The person receiving the tweets will pay and will have to have an account with Zygo, which can be topped off with more credits as you receive more messages. The company’s original service, called ZygoHubs was to provide group SMS services to private groups and small businesses, but who’s to blame them for being opportunistic in an instance like this?

• Twitter ‘Bigger In UK Than US’, White Van Man Taking It Mainstream?
• Twitter Officially Announces Its Funding; Jeff Bezos Participates
• Twitter Limits UK Tweets; Feeling The Pinch On SMS?