Where few, or no, barriers to entry exist new firms can enter a market and compete for a share of the profits earned by others. This leads to an increase in supply and a falling price. Consumers gain but excess profits are competed away.
The telecom companies used to be able to earn a lot of money from text messages (SMS), but this market is changing. There are no barriers to entry for free apps that allow free text or even calls. So the days when O2 or Orange can charge high fees for texts is going and so are their profits.
This, slightly odd, piece from The Age in Australia explains how this market is changing. Not news at all to you I'm sure, but an excellent example of how things you took for granted have an economic explanation.
This is even more true now that BBM and iMessage are on and running these days, so Internet Usage tends to be more of a problem that SMS usage, 02 and Orange may not charge high SMS prices these days with all these alternatives, but that had led to the price for calling on Pay As You Go increasing to a ridiculous amount, 21p a minute mobile to mobile is nearly 10 times the amount than calling the US. I had a Vodafone SIM previously and when I realised the price I was shocked, I presumed that due to the lower prices of texts, around 5p, they pushed calling prices to restore profits. As SMS shifted outward on the supply curve, calls shifted inwards.
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