Developers will not be able to put free SMS sending modules to their applications anymore. In fact it is not a surprise to anyone, google was planning to compensate the SMS with advertising. But even they could not find a way to attract the optimum traffic.
This step by google has affected Innerfence more than anyone else. Innerfence is a company (or should I call was) whose iphone application allowed buyers to send SMS messages around the world while Google paid the network operators for the traffic. I believe there will be trials between the buyers and innerfence, which is a shame for a nice application.
The only way to offer free SMS is start a program just like blyk. For every commercial watched, some free sms could be offered. In fact there are lots of examples for this but none has succeeded yet. The formula might be (Social Network + Commercials) = FreeSMS.
For one example of this visit the Facebook Sponsored SMS application, FaceSMS - http://apps.facebook.com/sponsorsms/ I have to warn you, if there is not a sponsor at the moment you click, you are not allowed to send text.