When Apple and AT&T announced that iPhone 3G service plans would not include SMS (Short Message Service) text messages with the base plans, and SMS messages would be billed for either individually or in prepaid blocks, I was annoyed, along with pretty much everybody else. To make matters worse, AT&T (like many other cellular carriers) now charges SMS recipients, as well as senders.
That's why I was delighted when Jeff Carlson pointed out that AIM on the iPhone could send SMS messages for free. Unfortunately, the iPhone AIM app is pretty lousy. It's unstable, and IM messages I send from it are rarely received.
Fortunately, there are several alternatives for both phones and desktop/laptop computers. Note that these vary by cellular carrier - I am most interested in AT&T/US options.
Method 0: Plain SMS -- SMS from a phone. 500 SMS messages are included "free" with the standard AT&T data plan for the original (EDGE) iPhones. For iPhone 3Gs, the base data plan doesn't include any.
Method 1: Email to SMS Gateways -- For desktop users, Jeff's method is fine - AOL's IM-SMS gateway works consistently. My issues were with the iPhone AIM client. iChat or AOL's Mac client are reliable, and another iPhone client using AOL's IM service would presumably have been fine, but I barely use IM since I switched to Twitter, so I have not looked for alternative clients.
My favorite way to send email to iPhone using friends is to send email to their 10-digit cellular number @txt.att.net. txt.att.net is AT&T's email-SMS gateway; it generates an SMS message that looks something like an email, with minimal 'FRM' & 'SUBJ' headers adapted from the original message, and forwards that as an SMS to the specified 10-digit cellphone number. Long emails are broken into multiple SMS messages. Now that I know the recipient is charged, I'll probably use this less, and avoid long messages that would be fragmented and cost double or triple.
Email SMSes are easy to recognize - they come from strange looking "phone numbers", like 1 (010) 100-010, for my 10th message received from the gateway. There's no charge for sending email to an SMS gateway, although many cellular carriers now charge for receipt of SMS messages (including spam!). Unfortunately, they are generally specific to individual carriers - AT&T's gateway works only for AT&T subscribers. Teleflip used to offer such a multi-carrier service, but has gone bankrupt. Notepage offers a long list of gateways. If you're not sure what gateway to use, try sending an SMS to your email address (which may entail an SMS charge to the celluar account) - the email should show a valid return address at the appropriate SMS gateway.
Method 2: SMS Web Pages -- Many cellular carriers, including Verizon & Sprint, offer public web pages for sending SMS messages to their subscribers. In contrast, AT&T's page is only available to logged-in AT&T customers, although hopefully that means it can reach any SMS number. I am not aware of a web page which enables non-AT&T subscribers to send text messages to AT&T subscribers.
[[I need a non-AT&T cell phone number I can test against; I know JC & GF have iPhones - what about the Engsts & Mr. Duncan? -cp]]
Method 3: SMS Applications & Widgets -- There are a variety of applications and Dashboard widgets for full-size computers to send SMS messages. Many of these charge the sender, although they appear to operate across cellular carriers. I suspect they use commercial gateways which have the same access to cellular providers as other providers, but nobody except AOL appears to do this for free.
MMS: Multimedia Messaging Service -- In addition to SMS for short text messages, MMS is used for sending pictures and small videos. iPhones do not include MMS support, although Mail is perfectly suitable for emailing attachments to an MMS gateway, if you'd like to reach a non-iPhone cellphone that supports MMS. Messages sent to iPhone cellular numbers via @mms.att.net are silently dropped.
Conclusion -- I hope this helps you stay in timely (and free, or at least cheap) touch with friends and family.