Should telcos be worried about Twitter?

As telecom service providers race to build the next killer application – stealing ideas from Web 2.0, battling over-the-top-video and placing major IPTV bets – could the communications service to beat really be the humble, no-business-model, 140-character-limit, micro-blogging, pseudo-SMS service Twitter?

Events in the past week have only heightened hype around the service. News that Twitter might start charging businesses to send out messages and accumulate followers had the “twitterverse” a-flutter. A virtual event kicking off Thursday, dubbed a “Twestival” is aiming to raise $1 million for charity. A Twitter account for the Dalai Lama was proven to be fake, but not before accumulating 20,000 followers. Celebrity Twitter accounts are now the norm – the most obvious tipping point – with several accounts, including the odd pairing of Bill O’Reilly and Britney Spears even being hijacked last month. Even one of the first reports of the US Airways Flight 1549 crash into the Hudson was a Twitter “tweet.”

And oh yeah, even Telephony has a Twitter account -- @telephonyonline – where you can consume the latest news and direct message us directly (though we’re still admittedly getting our feet wet).

It’s hard to criticize telcos – and especially mobile operators – for not inventing Twitter. After all, we’re talking about an industry that invented the text message, a multi-BILLION dollar industry onto itself. But watching Twitter gain its own momentum offers some valuable lessons to telecom service providers aiming to compete for next-generation services. Here’s a few worth noting:

• Community and viral distribution is key - Twitter grows via network-effect-on-crack. Not only is every new network member valuable, every new message proliferates broadly, including off-Twitter (via search engines to the Web, via mobile clients to wireless devices, etc). Twitter not only benefits from word of mouth marketing, it essentially is word of mouth.

• Don’t let revenues hold you back - In this economy, this might seem like blasphemy. And for most Web services, it probably is. But there’s still a case to be made that if you create a service that people can’t live without – and this includes text messaging too – eventually they’ll pay for it. Twitter might be the last great experiment in this idea. If the companies and its users are smart, an economic ecosystem will follow –pun intended— the user/software/service/content ecosystem that is already thriving around Twitter.

• The best ideas come from third parties – Twitter is basically a Web site and message routing infrastructure. But the best ideas, many of which have helped propel increased use, have come from third parties, including standalone Twitter clients (like Twirl and TweetDeck), Twitter search engines (Summize, which Twitter subsequently acquired) and Twitter new media add-ons (like TwitPic for pictures or TweetCube and TwitterShare for MP3 and file sharing). Making this possible was a public, published Twitter API with few limits. It’s a model telcos are trying to take advantage of, but lacking the momentum of Twitter, have been unable to score a win with—at least yet.

Let us know what you think in the comments below, or via @telephonyonline.